Vanguard has revolutionized retail investing over the past 50 years — now, it’s got its eye on financial advice. 

The Malvern, Penn.-based firm announced a restructuring of its wealth management division this week, effectively carving out the $900 billion business into a separate unit, in a move designed to speed up investments and meet increasing demand for advice. It’s the $10 trillion asset manager’s largest restructuring in more than a decade. It’s also one of the first major moves by new CEO Salim Ramji, who was poached from BlackRock in July, and could spell new, and extremely low-cost, competition for prospective wealth management clients. 

“Vanguard is recognizing that customers who need advice have different needs and investing behaviors than self-directed investors,” said Vijay Raghavan, a senior analyst at Forrester. 

Load Up the Van

Vanguard is known for cheap investing products and it’s no different in its wealth business. The company’s Personal Advisor Services digital platform was originally launched in 2015 with a $50,000 minimum, but a second, all-digital robo-advisor got tacked on in 2020. Vanguard now charges just 15 basis points on the latter option, called Digital Advisor, and slashed investment minimums from $3,000 to just $100 in September. 

To lead the revamped business unit, the company tapped Joanna Rotenberg, former head of personal investing at Fidelity (which coincidentally also restructured its wealth unit in August), according to a release. She’s not alone. The firm also brought on a handful of top industry executives, including:

• Matt Benchener, who will become head of Vanguard’s Personal Investor business, which currently includes the firm’s wealth management products.
• John James, who was promoted to head of the company’s workplace and advisor solutions business.
• Jon Couture, who joined the company as a managing director, previously heading HR at the Principal Financial Group.

“Creating separate units allows them to truly differentiate the two offerings,” Raghavan told The Daily Upside. “These structural changes reflect a broader movement towards attracting the next generation of investors.” 

Where’s My Money? Vanguard will have its work cut out for it. According to research firm Forrester, client satisfaction at the company ticked lower year over year, and it was one of only a handful of brokerages to see declining scores. For all its low-cost options, Vanguard has been plagued by technology issues and glitches that even saw customers get locked out of accounts for days on multiple occasions. 

“For this strategy to be successful in the long run, Vanguard will also need focused improvements in their digital experience, and customer service, to effectively serve both,” Raghavan said. That’s especially true for new advised clients that are paying Vanguard for the privilege.

Artificial intelligence may be a great tool, but it’s no Don Draper just yet.

The use of generative AI in marketing efforts, through advertisements, blog entries, and social media posts, can create more engagement from prospects — and that’s always a positive for financial advisors. But, since the content is fundamentally based on pre-existing work, there’s plenty of room for inherent biases, errors, and some trippy hallucinations. 

Worse, the content may not comply with regulations, or could plagiarise right from a competitor. Most importantly though, the content just might not be all that effective without a real person at the helm. “As AI proliferates content, a lot of this is going to have the same format, tone, and feeling, and people are just going to scroll right past it,” said Robert Sofia, CEO of the martech firm Snappy Kraken.

Fake Images, Real Thoughts

When used properly, AI tools like copy editing programs or image-generating software can help advisors enhance their promotional content. Better marketing materials lead to more engagement, which in turn leads to more business, Sofia said. “There’s just no scenario where if you increase your lead volume by 20% that you’re not going to increase your client acquisitions,” he told The Daily Upside.

• Overall AI use is still fairly limited, with only 12% of advisors using it daily, according to a survey from consulting firm Horsesmouth.
• However, of those advisors, 41% use AI for marketing copy and 56% use it to convert ideas and outlines into drafts.

But AI is not a panacea, and it can be a finicky devil for marketing efforts. That’s especially true when generating people: hands often have too many fingers, faces fall into the uncanny valley, and everything has a surreal, oily sheen that lets you know these are not actually humans. Eric Roberge said his financial planning firm, Beyond Your Hammock, initially tried generating AI ads with people, but they always looked “a bit off.”

“We will only use generative AI on graphics rather than trying to replicate a realistic photo,” he told The Daily Upside. “This business should be based on trust and real relationships. Putting out fake images undermines that.” 

The same principle applies to content in blog and social media posts, Roberge said. He likes to use AI as a “thinking partner” to brainstorm or expand on the firm’s original ideas. He’ll also take transcripts from podcasts he’s recorded and have ChatGPT turn them into articles. “It helps us efficiently recycle existing content into something a little more unique than simply copy/pasting the transcript,” he said.

Not a Robot. In Sofia’s opinion, advisors shouldn’t use AI to generate all promotional content because it can look average in an already highly competitive market. It can also create distrust, and, in some cases, make you look downright lazy. “There’s a hard-to-quantify aspect of the human psyche that if we’ve seen something before, we tend to ignore it,” Sofia said.

Send backup.

The RIA industry is grappling with a talent shortage, and as 2025 quickly approaches, the competition for skilled professionals is only intensifying. Independent advisors will need to hire more than 70,000 new employees over the next five years, according to a Charles Schwab report. That’s without accounting for resignations and retirements. 

Ironically, the shortfall is due in large part to the industry’s own success. With markets on an extended run, assets are growing and client retention is through the roof, making demand for more experienced advisors a top priority. It’s a growing issue the industry is trying to solve through hiring and career development programs.

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