The first outsider to take the helm of investing giant Vanguard Group is the son of Tanzanian immigrants who didn’t attend college but wanted to ensure their three children did. Salim Ramji grew up in British Columbia and spent summers working in the grocery store his father ran. During the school year, he debated.
“Salim, who has won every debate he has entered in four years, is the first Canadian to win the World Student Championship,” a local newspaper reported in 1988 after Ramji advanced all the way from Victoria, B.C., to a global competition in England.
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Vanguard on Tuesday named Ramji, 53 years old, its next chief executive. He will succeed Tim Buckley, who is retiring after six years. Ramji will run the $9 trillion asset manager, a behemoth responsible for the retirement assets of tens of millions of Americans.
Analysts say he’ll need to balance any ambitious new business plans with the conservative investing culture instilled by Vanguard’s late founder John C. Bogle. While Vanguard keeps its overall financial performance private, it remains a dominant player in the U.S. funds business, collecting $203 billion of new investor money last year. Ramji said in an interview he will hold off on discussing his mandate and mission for Vanguard until he sets foot in the door.
Ramji’s debate roots keep coming through in professional settings, in how he can win over a crowd, think quickly and communicate feedback both good and bad, former colleagues say.
“He could’ve said, ‘Let’s start a garbage removal practice,’ and he’d probably sign up half the office,” said Dominic Barton, former global managing partner at McKinsey.
Ramji says his mother gave him an early insight into his future customers. She put money away in the equivalent of a 401(k) plan each month, even if it was as little as $100, despite a lack of financial security and “a lot of ups and downs.”
After a stint as a lawyer in London and Hong Kong, Ramji joined McKinsey in 1998, where he rose to senior partner leading the asset management practice. From there he joined BlackRock in 2014, eventually heading up the money manager’s exchange-traded funds and index investing, the business that is Vanguard’s bread and butter.
Vanguard helped popularize low-cost, passive index investing under Bogle, who launched the first index mutual fund in the 1970s. The asset manager drove down fund fees by undercutting competitors over the decades. Its lower fees cascaded across the industry, ultimately lowering the cost of investing for average Americans.
Vanguard is the market leader in the U.S. funds business, though its ultracheap index funds no longer stand out among its peers. Competitors, such as BlackRock and Fidelity, offer identical funds for the same cheap fees.
Ramji will be tasked with growing other, newer revenue streams, such as fee-based financial advice, analysts say.
Unlike many of its competitors, the company is owned by its funds, a setup that it says helps it pass profits onto shareholders in the form of its cheaper fees.
When Ramji left BlackRock in January, he was one of a half dozen potential candidates to succeed founder Larry Fink. He was credited with the rapid expansion of BlackRock’s ETF business, which took in more new money than any other asset manager during his tenure. Ramji also oversaw the recent launch of BlackRock’s popular bitcoin-tracking fund—a product that Vanguard has publicly shunned.
While between jobs, Ramji has spent time back home in the Vancouver area, skiing and snowshoeing with family and high-school friends. He skis at Whistler and some of the smaller, local hills he grew up near.
He plans to relocate from New York to the Philadelphia area with his wife and two teenage sons and now finds himself torn over hockey team allegiance. He’s a Vancouver Canucks fan.
“If you see me in a Flyers jersey, please do not send it back to my mother or any of my friends at home,” he said, referring to Philadelphia’s hockey team.
Vanguard maintains an army of loyal customers who call themselves Bogleheads and adhere to a simple investing style that emphasizes following the market over active trading. Ramji, the first Vanguard leader who never worked directly with Bogle, will be under the microscope from skeptics in this group who are concerned that a former management consultant might ramp up fees.
Ramji says Vanguard’s focus on individual investors won’t change under his leadership.
“I view the competition as complexity. I view the competition as high fees and barriers that are getting in the way of individual investors accessing good wealth management and asset management services,” he said. “Bogle wrote a lot of books and gave a lot of speeches. I’ve read them all.”
Ramji will need to navigate national politics at the helm of Vanguard. Congress has recently turned up the heat on the largest asset managers, with critics pointing to their vast size and shareholder voting power. Politicians on both sides of the aisle have criticized asset managers for doing too much or too little when it comes to proxy votes on issues like corporate diversity or climate change.
“Our industry has been dragged into political battles. And I think he’ll do remarkably well in that, because he’s even-keeled, sensible and rational,” said George Walker, CEO of investment firm Neuberger Berman.
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