1) How do you beat Vanguard?Vanguard is winning in every corner of investment management. Asset managers are under threat from its ETFs and mutual funds; financial planners are under threat from its robo-advisor. Last year, US mutual funds and ETFs took in $400 billion total assets, of which Vanguard took $320bn. Vanguard's robo-advisor, called Personal Advisor Services, boasts $83bn assets, which it ensnared in just three years. No other robo-advisor comes even close.
So how can asset houses compete?
One answer, from Pinnacle Advisory Group, is to remember the history of financial advisory. Financial advisors started out as salesmen. Only after advisors proved themselves as salesmen would their companies promote them to a job where they got to offer advice.
This distinction matters, Pinnacle says, because this business model - cometh the salesman, becometh the advisor - is now over thanks in large part to ETFs. People will still want impartial financial advice and strategists - and the kinds of financial advisors who actually offer financial advice still have a future. But the salesmen disguised as advisors do not.