Van­guard plans Philly in­no­va­tion cen­ter

Daily Local News (West Chester, PA) - - BUSINESS - By Brian McCul­lough bm­c­cul­lough@21st-cen­tu­ry­media.com @wc­dai­ly­lo­cal on Twit­ter

TREDYFFRIN >> Van­guard, the Malvern area-based mu­tual fund gi­ant, an­nounced Wed­nes­day it plans to cre­ate an in­no­va­tion cen­ter in Philadel­phia.

The op­er­a­tion, start­ing with 20 peo­ple, will be “at the nexus of the city’s ro­bust aca­demic and busi­ness com­mu­ni­ties, and in prox­im­ity to the re­gion’s trans­porta­tion hubs and the firm’s global headquarters in Malvern,” the com­pany an­nounced. An ex­act lo­ca­tion was not re­vealed. The Van­guard In­no­va­tion Cen­ter is ex­pected to open in the sec­ond quar­ter of 2017. It will fo­cus on de­vel­op­ing ser­vices to meet the evolv­ing needs of its in­di­vid­ual, fi­nan­cial ad­vi­sor, and in­sti­tu­tional clients, the com­pany said.

“In­no­va­tion is wo­ven into Van­guard’s DNA, from our unique mu­tual own­er­ship struc­ture to bring­ing the first in­dex mu­tual fund to mar­ket for in­di­vid­ual in­vestors,” Van­guard CEO Bill McNabb said in the state­ment an­nounc­ing the move. “The In­no­va­tion Cen­ter is a tan­gi­ble com­mit­ment that we’ll con­tinue our strong track record of build­ing ca­pa­bil­i­ties that we be­lieve give our clients the best chance for in­vest­ment suc­cess, and we’re pleased to take this sig­nif­i­cant next step in Philadel­phia.”

Van­guard said more than 90 per­cent of its in­ter­ac­tions with its 20 mil­lion clients oc­cur dig­i­tally, en-

abling the com­pany to in­crease pro­duc­tiv­ity, lower costs and im­prove the in­vestor ex­pe­ri­ence. A re­cent ex­am­ple, it said, is Van­guard Per­sonal Ad­vi­sor Ser­vices, one of the in­dus­try’s first hy­brid ad­vice of­fer­ing that com­bines the vir­tual en­gage­ment, cus­tom­ized fi­nan­cial plan, and com­puter mod­el­ing of robo-ad­vi­sors with the judg­ment and be­hav­ioral coach­ing of a hu­man fi­nan­cial ad­vi­sor.

In­tro­duced in May 2015, Per­sonal Ad­vi­sor Ser­vices now man­ages $47 bil­lion in as­sets.

While still in the early stages of de­vel­op­ment, Van­guard en­vi­sions the In­no­va­tion Cen­ter as an in­ter­nal, en­tre­pre­neur­ial team of ini­tially 20 em­ploy­ees, or crew mem­bers, “ded­i­cated to gal­va­niz­ing ex­ist­ing in­no­va­tion ef­forts and serv­ing as a cat­a­lyst for new ideas and so­lu­tions.”

The team will also eval­u­ate mu­tu­ally ben­e­fi­cial part­ner­ship op­por­tu­ni­ties with other busi­nesses and uni­ver­si­ties as a way to share ex­pe­ri­ence and ex­per­tise, from re­search to process to tech­nol­ogy, across in­dus­tries.

“We are in the midst of a great tech­no­log­i­cal revo­lu­tion – from self-driv­ing cars and pack­age-de­liv­er­ing drones to smart phones and 3D-print­ers – that is chang­ing the way we live, work, and, in Van­guard’s realm, in­vest. With a cen­tral­ized, and cen­trally lo­cated, In­no­va­tion Cen­ter, Van­guard seeks to har­ness emerg­ing tech­nolo­gies and new pro­cesses to cre­ate value for our clients by im­prov­ing their in­vest­ing ex­pe­ri­ence and their in­vest­ment out­comes,” McNabb said.

In an­nounc­ing the new ven­ture, the com­pany noted its Philadel­phia roots. The Welling­ton Fund, one of the mu­tual fund in­dus­try’s first bal­anced funds, was founded by Philadel­phia ac­coun­tant Wal­ter L. Mor­gan in 1929. To­day, Van­guard Welling­ton Fund is the largest bal­anced fund with more than $92 bil­lion in as­sets.

Van­guard also op­er­ated a walk-in in­vest­ment cen­ter in Cen­ter City from 1984 to 1999 to serve in­di­vid­ual in­vestors making de­posits to their mu­tual fund ac­counts or con­tribut­ing to their IRAs.

As of Sept. 30, Van­guard man­aged more than $3.8 tril­lion in global as­sets.

DIG­I­TAL FIRST ME­DIA FILE PHOTO

A Van­guard sign

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