Toastmasters speech on the making of Vanguard

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BeachPerson
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Joined: Sun Feb 25, 2007 5:39 pm
Location: Northern VA

Toastmasters speech on the making of Vanguard

Post by BeachPerson »

How is the following for a Toastmasters speech on the making of Vanguard? Any suggestions???



Today I am going to tell you a story of how one man transformed the financial industry to what it is today.

When Jack Bogle graduated from Princeton in 1951, he went to work for the Wellington Management Company in Philadelphia. Jack quickly rose up the ranks and became CEO. Jack saw a problem with one fund, it became a strain on the company during economic down turns. Unlike today, companies like T Rowe Price and Fidelity can have 200 fund offerings.

Jack decided to look for a merger. American, Putnam, and Franklin all turned him down. In 1966, Wellington Management Company merged with TDPL of Boston. TDPL was the initials of the four founders. TDPL had the hot selling Invest fund, and managed college endowments and pensions.

Jack liked to make decision himself, and the four from Boston made decisions as a group. Jack was conservative and they were aggressive. In 1973 the four founders frustrated with Jack, went to the board of directors with a recommendation to fire Jack. The board of directors approved it. After being fired, jack went to the board of directors asking if he could stay on to do a Future Structure Study. That would be to see

• If the company would be split
• Another partner brought on
• Kept the way it is
• Mutualize the company.

Mutualize is when a for-profit company is converted to being owned by the employees or the clients. Jacked wanted the clients since he was seeing the financial industry as a rip-off. Jack felt the owners kept making decisions to benefit themselves and not the clients. By the clients owning the company, would make it a nonprofit.

In 1974, during the shareholders’ meeting, the vote was 30 in favor and two against to reinstate Jack. The board of directors decided to do a compromise on the Future Structure Study. The group in Boston would get the stock picking for the funds and the distribution working with the stockbrokers selling the funds with for the 8.5% commission. Jack being in Philadelphia got the book keeping along with 28 employees. His part was mutualized and called it Vanguard.

First thing Jack does is go to the independent board members saying if you want to be truly independent, you need to remove two from Boston who were on the board. That was done.

Second thing Jack did in 1975 was create an index fund. It was called “Bogle’s Folly” by the press. Who in their mind would want average returns, when you can go and pick the best stocks and be above average? Jack believed in the “Cost Matters Hypothesis”. You can pick the winners, but the costs you incur are too great to overcome. Stock picking became a loser’s game to just buying an index fund.

Third thing Jacked did in 1977 was to skip using the stockbroker distribution and selling directly to the consumer. The SEC said you cannot do this since the 8.5% commission also called a load pays for the advertising. The SEC then decided to let Vanguard sell directly to the consumer, but could not advertise the funds as no-load. Four years later the SEC came up with the 12B-1 (named from the SEC code) fee that allows funds to charge a separate fee on the yearly fees to pay for advertising.

Fourth thing Jack did in 1981 was create bond and money market funds, and to manage them internally.

Vanguard is now where Jack envisioned for the company.

Vanguard’s progress:
• Market share
o 1987 – 4%
o 1997 – 9%
o 2007 – 13%
o 2019 – 26%
• From 2013 – 2017, Vanguard took in 65% of all money going into the mutual fund industry
• Vanguard has a 15-year winning streak with the inflows for the mutual fund industry

Did anyone see this domination coming? During the Future Structure Study, Jack had a trip to Los Angeles, and the CEO of American Funds, Jon Lovelace, got ahold of Jack and said we need to talk. Jack had a 7:30 AM flight out the next day, and said let’s meet for breakfast at the airport at 6:00 AM. Jon sternly warned Jack that he would destroy the financial industry if the company was mutualized. Two years ago in Jack’s final book before his death, he wrote, If Jon just would of added the phrase, as we now know it, today we could credit him with almost perfect foresight.

The great “what if”, had American Funds would of merged with Wellington Management Company, would we still be paying 8.5% commission to buy mutual funds, and would the ultra-low cost index funds even exist???

From Jack’s Bogle’s work we no longer pay the 8.5% commission to buy a mutual fund, and we can use the ultra-low cost index funds were we can keep 99.9% of the stock market returns instead of the investment firm taking a 20% cut as it was in the 1980s with the high expense ratios. The consumer has benefitted from the work of Jack Bogle.
From Jack Brennan's "Straight Talk on Investing", page 23 "Living below your means is the ultimate financial strategy"
marc in merrimack
Posts: 577
Joined: Tue Feb 20, 2007 9:15 am
Location: Massachusetts

Re: Toastmasters speech on the making of Vanguard

Post by marc in merrimack »

BeachPerson wrote: Sat Apr 17, 2021 12:25 pm How is the following for a Toastmasters speech on the making of Vanguard? Any suggestions???



Today I am going to tell you a story of how one man transformed the financial industry to what it is today.

When Jack Bogle graduated from Princeton in 1951, he went to work for the Wellington Management Company in Philadelphia. Jack quickly rose up the ranks and became CEO. Jack saw a problem with one fund, it became a strain on the company during economic down turns. Unlike today, companies like T Rowe Price and Fidelity can have 200 fund offerings.

Jack decided to look for a merger. American, Putnam, and Franklin all turned him down. In 1966, Wellington Management Company merged with TDPL of Boston. TDPL was the initials of the four founders. TDPL had the hot selling Invest fund, and managed college endowments and pensions.

Jack liked to make decision himself, and the four from Boston made decisions as a group. Jack was conservative and they were aggressive. In 1973 the four founders frustrated with Jack, went to the board of directors with a recommendation to fire Jack. The board of directors approved it. After being fired, jack went to the board of directors asking if he could stay on to do a Future Structure Study. That would be to see

• If the company would be split
• Another partner brought on
• Kept the way it is
• Mutualize the company.

Mutualize is when a for-profit company is converted to being owned by the employees or the clients. Jacked wanted the clients since he was seeing the financial industry as a rip-off. Jack felt the owners kept making decisions to benefit themselves and not the clients. By the clients owning the company, would make it a nonprofit.

In 1974, during the shareholders’ meeting, the vote was 30 in favor and two against to reinstate Jack. The board of directors decided to do a compromise on the Future Structure Study. The group in Boston would get the stock picking for the funds and the distribution working with the stockbrokers selling the funds with for the 8.5% commission. Jack being in Philadelphia got the book keeping along with 28 employees. His part was mutualized and called it Vanguard.

First thing Jack does is go to the independent board members saying if you want to be truly independent, you need to remove two from Boston who were on the board. That was done.

Second thing Jack did in 1975 was create an index fund. It was called “Bogle’s Folly” by the press. Who in their mind would want average returns, when you can go and pick the best stocks and be above average? Jack believed in the “Cost Matters Hypothesis”. You can pick the winners, but the costs you incur are too great to overcome. Stock picking became a loser’s game to just buying an index fund.

Third thing Jacked did in 1977 was to skip using the stockbroker distribution and selling directly to the consumer. The SEC said you cannot do this since the 8.5% commission also called a load pays for the advertising. The SEC then decided to let Vanguard sell directly to the consumer, but could not advertise the funds as no-load. Four years later the SEC came up with the 12B-1 (named from the SEC code) fee that allows funds to charge a separate fee on the yearly fees to pay for advertising.

Fourth thing Jack did in 1981 was create bond and money market funds, and to manage them internally.

Vanguard is now where Jack envisioned for the company.

Vanguard’s progress:
• Market share
o 1987 – 4%
o 1997 – 9%
o 2007 – 13%
o 2019 – 26%
• From 2013 – 2017, Vanguard took in 65% of all money going into the mutual fund industry
• Vanguard has a 15-year winning streak with the inflows for the mutual fund industry

Did anyone see this domination coming? During the Future Structure Study, Jack had a trip to Los Angeles, and the CEO of American Funds, Jon Lovelace, got ahold of Jack and said we need to talk. Jack had a 7:30 AM flight out the next day, and said let’s meet for breakfast at the airport at 6:00 AM. Jon sternly warned Jack that he would destroy the financial industry if the company was mutualized. Two years ago in Jack’s final book before his death, he wrote, If Jon just would of added the phrase, as we now know it, today we could credit him with almost perfect foresight.

The great “what if”, had American Funds would of merged with Wellington Management Company, would we still be paying 8.5% commission to buy mutual funds, and would the ultra-low cost index funds even exist???

From Jack’s Bogle’s work we no longer pay the 8.5% commission to buy a mutual fund, and we can use the ultra-low cost index funds were we can keep 99.9% of the stock market returns instead of the investment firm taking a 20% cut as it was in the 1980s with the high expense ratios. The consumer has benefitted from the work of Jack Bogle.
I was in Toastmasters myself for a year. My impression is that your speech is far too detailed for a general audience. I would rewrite it and assume the listeners have little or no familiarity with (or interest in) investment considerations. Your story should be immediately accessible to a lay audience.
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