Vanguard Plans $900B Advice and Wealth Management Division

The Vanguard Group Inc. is preparing to launch a new advice and wealth management business unit, carving out the firm’s retail investor business from its personal investor division as a stand-alone entity, the asset manager and recordkeeper announced Monday.

The new division will manage more than $900 billion in assets and integrate Vanguard’s institutional business, which includes its retirement plan business and third-party intermediary operations.

Leading the division will be Joanna Rotenberg, who will join Vanguard in January 2025 as a managing director and a member of the senior leadership team. As the former president of personal investing at Fidelity, Rotenberg led retirement, brokerage and wealth management businesses, overseeing services for more than 20 million U.S. investors.

Matt Benchener, managing director of Vanguard’s Personal Investor business, will continue overseeing the digital client experience, brokerage and savings solutions. Rotenberg and Benchener will both report to Vanguard CEO Salim Ramji.

Vanguard’s Vision

The move is a signal that Ramji, who joined the firm from BlackRock Inc. in July, is “making more of a concentrated effort to focus on the advice side of the business and signal that it will be a more important part of the strategy in the U.S. market,” says Dan Sotiroff, a senior manager research analyst for Morningstar Research Services LLC.

Sotiroff notes that Vanguard has been making incremental steps toward personal advice and wealth management. He notes the firm’s 2021 acquisition of Just Invest, which focuses on personalized index investing, and Vanguard’s work to offer robo-advisory services, including lowering asset minimums in September.

“You can start out with the robo-adviser for individuals who don’t have as much money, and then work up in the tiers as people need more personalized advice,” he says of the strategy.

Leadership Changes

Vanguard also announced several additional leadership changes. John James, the current managing director of the Institutional Investor group, will lead the Workplace and Advisor Solutions group, focusing on enterprise client relationships. Meanwhile, Lauren Valente, currently managing director and chief human resources officer, will head the Institutional Investor group. Jon Couture, an HR executive most recently at Principal Financial Group, will join Vanguard as a managing director and senior leadership team member, succeeding Valente.

“For nearly five decades, Vanguard has been a positive force in democratizing investing, helping to give tens of millions of investors the best chance for investment success,” Ramji said in a statement. “With the addition of Joanna to our leadership team, our goal is to further democratize our advice and wealth management offerings for our clients through enhanced technologies and offers.”

Morningstar’s Sotiroff notes that Ramji, while known for his work at BlackRock leading iShares and index investments divisions, had also spent time as head of the firm’s U.S. wealth advisory business and in many ways is the “right person” to build out this advice and wealth strategy while continuing with Vanguard’s strength in low-cost index investing.

He says it remains to be seen how the new division might connect to the recordkeeper side of Vanguard’s business. But he does see the general push toward wealth management as a way to “keep revenue coming in” for the long term while it continues in the low-cost-indexing space.

“They are thinking about what they can charge for while keeping with the Vanguard ethos of keeping the investor first,” he says.

Prior to Fidelity, Rotenberg served as group head of BMO Wealth Management at BMO Financial Group and was a partner at McKinsey & Co.

Prior to Principal, Couture was executive vice president of human resources for consumer lending, payments, virtual channels, operations and innovation at Wells Fargo.

Correction: Fixes error in CEO Ramji’s background.