Vanguard plans Philly innovation center
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.
A Vanguard sign