Make better pitches with a valuable partner


Mike Lucci

Mike Lucci
Principal Vanguard Financial Advisor Services™

Imagine yourself as a pitcher in the big leagues. A barrel-chested slugger named Skeptical Client struts to the plate. You look to the catcher, your trusted partner on the diamond, for a signal. What can I throw here? But instead of a solution, you get a blank stare and a slight shrug.

Thanks for nothing, partner.

When you’re pitching solutions to clients, a partner who grasps the “inside baseball” aspects of advice can be indispensable. Your partner needs to understand what an investor looks for in an advisor. More important, your partner needs to help you deliver that experience.

Vanguard can play that role for you. Put us behind home plate, and let’s play ball.

What’s your partner’s VORP?

In baseball, value over replacement player (VORP) is a stat that, in layman’s terms, measures how much more valuable a player is compared with the average backup at his position. While there’s no real VORP for advice partners, we can highlight the areas that would pump up Vanguard’s number:

Industry and investor accolades

Earlier this year, active investing at Vanguard, which doesn’t always get the attention it deserves, gained industrywide recognition for superb performance from Barron’s Best Fund Families of 2017:1

Barron’s Best Fund Families of 2017

And we can’t forget that named Vanguard the 2017 ETF Issuer of the Year.2 Add in the fact that investors respect our reputation and you get an even clearer picture of how using Vanguard helps strengthen your reputation with clients.

Because our brand can help to strengthen your brand, you may find that, rather than spending time on investment selection, you will spend more time on fortifying existing client relationships, coaching clients on how to reach their investment goals, and acquiring new clients.

At cost

Vanguard’s passion for low-cost investing has been—and will always be—one of our driving forces as we strive to reduce the all-in costs for your clients. Plus, our relentless mission to lower the cost of investing doesn’t just affect how much your clients pay for Vanguard products—it helps to drive down costs across the industry.3

Long-term performance

Our funds don’t crumble under the bright lights; they thrive. Over the ten years ended March 31, 2018, 93% of Vanguard funds, 95% of Vanguard ETFs®, and 91% of active Vanguard funds outperformed their peer-group averages, as determined by Lipper, a Thomson Reuters company.4

Resources and insights

From Vanguard portfolio analytics to the Client Relationship Center™, we have a collection of portfolio-building and practice-management resources designed to streamline your business. Think of them as your bullpen. Use them to stay fresh and focus more energy on relationship building and less on portfolio construction.

We’ll help with the relationship aspects of advice, too. Research such as delivering advisor’s alpha and our Advised investor insights™ series focuses on the intricacies of client relationships to help you enhance your value as an advisor.

The open secret to Vanguard’s growth has always been that the client comes first, no matter what. Combine that approach with the integrity, honesty, and transparency associated with our brand to help support your client retention and referral generation.

Advice is a team sport

Advisors and Vanguard might play different positions in the advice field, but we all share the same clubhouse. Giving you what you need to help your clients succeed is our top priority.

So the next time you’re planning your pitch to a client, check to see who is covering home plate and ask yourself: Could their VORP beat Vanguard’s?

1 How Barron’s ranks the fund families

Barron’s aims to measure managers’ skill, independent of expenses beyond annual management fees. It calculates returns before any 12b-1 fees are deducted. Similarly, loads, or sales charges, aren’t included in the calculation of returns.

Each fund’s performance is measured against all the other funds in its Lipper category, with a percentile ranking of 100 being the highest and one the lowest. This result is then weighted by asset size relative to the fund family’s other assets in its general classification. If a family’s biggest funds do well, that boosts its overall showing; poor performance in its biggest funds hurts a firm’s ranking.

To be included in the survey, a firm must have at least three funds in the general equity category, one world equity, one mixed asset (such as a balanced or target-date fund), two taxable bonds, and one national tax-exempt bond fund. All told, just 59 asset managers out of the 848 in Lipper’s database had the diversified menu of equity and fixed income funds to meet the criteria for this ranking.

Barron’s historically has excluded single-sector and single-country stock funds, but those are now included, as part of the general equity category. It excludes all index funds, including pure index, enhanced index, and index-based. But Barron’s includes actively managed ETFs and ETFs with indexing strategies that are not the traditional capitalization-weighted or equal-weighted.

Finally, the score is multiplied by the weighting of its classification, as determined by the entire Lipper universe of funds. The category weightings for the one-year results in 2017 were general equity, 36.1%; mixed asset, 19.9%; world equity, 18.7%; taxable bond, 21.2%; and tax-exempt bond, 4.0%.

The category weightings for the five-year results were general equity, 36.6%; world equity, 18.8%; mixed asset, 19.2%; taxable bond, 21.2%; and tax-exempt bond, 4.2%. For the ten-year list, they were general equity, 38.1%; world equity, 17.6%; mixed asset, 19.8%; taxable bond, 19.9%; and tax-exempt bond, 4.6%.

The scoring: Say a fund in the general U.S. equity category has $500 million in assets, accounting for half of a firm’s assets in that category, and its performance lands it in the 75th percentile for the category. The first calculation would be 75 times 0.5, which comes to 37.5. That score is then multiplied by 36.1%, general equity’s overall weighting for one-year results in Lipper’s universe. So it would be 37.5 times 0.361, which equals 13.54. Similar calculations are done for each fund in the study. Then the numbers are added for each category and overall. The shop with the highest total score is ranked number one. The same process is repeated to determine five- and ten-year rankings.

2 Award winners are selected in a three-part process designed to leverage the insights and opinions of leaders throughout the ETF industry. The awards process began with an open nomination period running from December 4, 2017, through January 2, 2018. Following the open nominations, the Awards Nominating Committee—made up of senior leaders at, Inside ETFs, and FactSet—voted to select up to five finalists in each category. Winners from these finalists were selected by a majority vote of the Awards Selection Committee, a group of independent ETF experts. Committee members recused themselves from voting in any category in which they or their firms appeared as finalists. Ties were decided where possible with head-to-head runoff votes.

3 Vanguard and Morningstar, Inc., as of December 31, 2017.

4 For the ten-year period ended March 31, 2018, for all Vanguard funds, 9 of 9 Vanguard money market funds, 55 of 60 bond funds, 20 of 22 balanced funds, and 133 of 142 stock funds, or 217 of 233 Vanguard funds outperformed their peer-group averages. For Vanguard ETFs, 5 of 5 bond ETFs, and 30 of 32 ETFs, or 35 of 37 Vanguard ETFs outperformed their peer-group averages. For Vanguard active funds, 9 of 9 Vanguard active money market funds, 40 of 44 active bond funds, 17 of 19 active balanced funds, and 36 of 40 active stock funds, or 102 of 112 Vanguard active funds outperformed their peer-group averages. Results will vary for other time periods. Only funds or ETFs with a minimum ten-year history were included in the comparison. (Source: Lipper, a Thomson Reuters Company.)

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