Vanguard’s newest U.S. ad campaign will air on television, online starting in 2019 and going into 2020
Vanguard's assets have grown to $5 trillion, yet it faces competition on many fronts. Charles Schwab, Fidelity, and other mutual fund companies are copying Vanguard’s low-cost model, introducing zero commissions.
Just in time for the holidays, Vanguard Group has launched another national U.S. advertising campaign, coming to your TVs, computers, and smartphones.
Why a Vanguard ad campaign now? Based in Malvern, the mutual fund and indexing investment giant now manages over $5 trillion in assets and ranks as one of the largest firms in the world.
However, competitors such as Charles Schwab, Fidelity, and other mutual fund companies are copying Vanguard’s low-cost model, introducing zero commissions and aiming to narrow the performance gaps. Schwab on Thursday made an offer to buy and combine with its biggest rival, TD Ameritrade.
“Vanguard is committed to continue growing and in order to do so they have to continue to advertise and spread the message and reach more people,” said investment industry expert Michael Kitces, especially as competition heats up.
The 2019-2020 ads are mostly set to music, such as Chronixx’s “Legend” reggae song. The ads are more hip than prior campaigns and airing on sports channels.
It’s unclear how much Vanguard is spending on the campaign.
In 2010, Vanguard launched “Vanguarding,” an advertising campaign with a major investment behind it, according to AdAge. The post-financial crisis ad campaign included media from TV to radio, and increased the firm’s measured-media spending to $61 million from $20 million the year prior in 2009, according to Kantar and company figures. In 2011, Vanguard spent $54 million on measured media.
At the time, nearly a decade ago, Vanguard was managing just under $2 trillion in assets. The firm is now more than twice that size — managing over $5 trillion in assets.
In 2014, financial planner Michael Piper pondered “what compels Vanguard clients to recommend the company so frequently?” He wrote in the Wall Street Journal, “their strong performance is primarily the result of low fund expenses [a very reliable factor] rather than brilliant active management [a factor that can come and go]. Vanguard’s low expense ratios are due to the fact that Vanguard runs everything ‘at cost.' ”
That low-cost model is the same that everyone else on Wall Street is now chasing. Schwab ramped up competition in the retail brokerage space earlier this year by eliminating almost all commissions for online trades, causing rivals E-Trade and Fidelity to follow suit. Eliminating the $4.95 per trade commission will cost Schwab $90 million to $100 million in quarterly revenue, or about 3% to 4% of its total.
Schwab on Thursday confirmed an offer to buy TD Ameritrade, which began as First Omaha Securities, founded in 1975. In 1988, TD became the first firm to let clients make trades by Touch-Tone phone. TD bought Scottrade in a $4 billion cash-and-stock deal in 2017, tying up two major players in the industry.
And this isn’t Vanguard’s first crack at television ads. The firm has been advertising for a few years in different markets for its new Personal Adviser Service.
In recent years, Vanguard’s online ad campaign went something like this:
Now there are new Vanguard TV ads highlighting how “boring and comforting" good investing should be:
Finally, ads for Vanguard have aired in Australia for many years.
The campaign “is designed to emphasize what differentiates Vanguard from the rest of the industry,” said Vanguard spokesperson Melissa Kennedy.
“As the only firm owned by the mutual funds it offers and operated solely in the interests of its fund shareholders, we’re the only investment firm that truly puts its investors first. As a result of Vanguard’s unique ownership, we’re able to pass along the benefits of our continued growth to clients in the form of lower fund-expense ratios,” she said in an email.
Longtime Vanguard investors seemed indifferent to the ads, claiming they are already satisfied customers.
“Personally, I would like to see Vanguard spend money on improving its service and lowering its fund costs rather than trying to get bigger,” said Taylor Larimore, a cofounder of Bogleheads.org and author of The Bogleheads’ Guide to the Three-Fund Portfolio.