Chapter 22

On Human Beings

My account of Vanguard’s founding, our persistence through the struggles of 1974 to 1981, and the qualities of leadership that seem to have been required is a story that is part tragedy and part triumph. Each crushing disappointment was eventually followed by serendipitous success. Not until 1981, when the modern Vanguard was fully formed, did we begin to sail on an even keel. But even in the rough seas of the early years, when the horizon dissolved in darkness and our very survival was in doubt, I retained my conception of those who would serve within our ranks and those whom we would strive to serve: human beings.

If simplicity was to be the focus of our investment principles, human beings would be the focus of our management principles. Over the years, I have come to love and respect the term human beings to describe both our clients and our crewmembers. In December 1997, I gave a talk at Harvard Business School on how our focus on human beings had enabled Vanguard to become what at Harvard is called a “service breakthrough company.” I challenged the students to find the term human beings in any book they had read on corporate strategy. As far as I know, none could meet the challenge. But “human beingness” has been one of the keys to our development.

How often I have said, over these long years, that those whom we serve must be treated as “honest-to-God, down-to-earth human beings, each with their own individual hopes and fears and financial goals.” This credo says nothing about aggregate billions of dollars of assets; nor millions of investors; nor, Lord forbid, market share; nor even about corporate strategy; nor the need for financial controls, technological support, and focused marketing, although all of them are, to one degree or another, necessary. They are secondary to our primary goal: to serve, to the best of our ability, the human beings who are our clients. To serve them with candor, with integrity, and with fair dealing. To be the stewards of the assets they have entrusted to us. To treat them as we would like the stewards of our own assets to treat us. This mission is not very complicated, but anyone who preaches it had better live it, every single day.

It should go without saying that the concept of human beingness should also apply to those who serve on our Vanguard crew. Those of us who earn our livelihood at Vanguard should treat one another in the way we would like to be treated. The keys are: respect for the individual; recognition that even one person can make a difference; and financial incentives to each and every crewmember, based on how the rewards we earn for our fund shareholders compare to those earned by our peers. Our crew has made me look good for almost 25 years, and that is the least that I owe to them.

In this final chapter, I offer some thoughts on what it means to treat those we serve, and those with whom we serve, as honest-to-God, down-to-earth human beings. The idea is not very complicated, but it has a profound impact on the institution’s relationship with its investors and with its crew. When you treat the investor as a human being, you must necessarily pursue a fiduciary relationship with a client, as opposed to a business relationship with a customer. And when you treat those who work for the institution as human beings, rather than as soldiers of fortune paid to execute a certain task in a certain period, policies and practices that respect individuals and reward their contributions necessarily follow. In short, a focus on human beings must be manifest in every action of the enterprise.

TEN YEARS LATER

The Rise of the Bogleheads

When the previous edition of this book was published back in 1999, any number of persons asked me, “Why on earth would you include a chapter on human beings in a book about investing?” To which I responded, likely with a bit of a snap, “Who do you think we are investing all that money for?” In any event, I have no regrets about my focus on human beings, which has found its way—in one manner or another—into every book I’ve written.

I’ve come to know and love hundreds, perhaps thousands, of these humble souls, these good citizens who exemplify the millions of investors who have followed the sound investment principles described in this book, and have been well served by doing so.

Shortly after the 1999 publication of the original edition of Common Sense on Mutual Funds, my conviction that human beings represent the heart and soul of any sound investment process was confirmed—and then some. For on March 10, 2000, at a speaking engagement at “The Money Show” in Orlando, Florida, I first met Taylor Larimore—an army veteran who served with America’s “Greatest Generation”—then, as now, considered the unofficial leader of a growing group of community-minded, largely self-taught, integrity-laden investors who would soon become firmly established as the “Bogleheads” (originally known as “Vanguard Diehards”). Taylor and I struck up a friendship that, a decade later, is stronger than ever.

Individually and collectively, the Bogleheads have come to passionately believe in Vanguard’s mission of investment simplicity—economy, efficiency, asset allocation, widely-diversified portfolios of high quality and low cost, and, above all, a commonsense focus on the wisdom of long-term investing and the folly of short-term speculation. They also share a confidence in Vanguard’s philosophy of trusteeship, holding the interests of our shareholders above those of all others.

After congregating for several years at a dedicated web site on Morningstar.com, the Bogleheads launched their own web site (bogleheads.org) in 2007, and word of their mission spread like wildfire. The Bogleheads web site now attracts some 9,000 unique visitors daily. Each month, more than 100,000 investors visit the site, more than 300,000 times in all, collectively poring over the one million pages of text. The forum is a treasure trove of information, as its contributors and visitors alike help one another, with no axe to grind, on all manner of topics that essentially cover the entire field of investing.

In 2006, three of the Bogleheads (Taylor Larimore, Mel Lindauer, and Michael LeBoeuf) got together to write a marvelous self-help book for investors, The Bogleheads’ Guide to Investing, which quickly became a best seller. In 2009, two of the original authors (Taylor Larimore and Mel Lindauer) were joined by fellow Bogleheads Richard Ferri and Laura Dogu in publishing a sequel, The Bogleheads’ Guide to Retirement Planning, already winning the accolades of readers. The Bogleheads’ story is one of a community of successful investors who have joined together to spread the wisdom of their simple investment philosophy, and share their own personal investment experiences.

Beginning with a wonderful dinner prepared by Taylor’s wife Pat in their Miami condominium, when I met with some 20 Bogleheads in 2000 for the first time (“Bogleheads I”), these committed believers in Vanguard’s principles have gathered together each year thereafter. For example, in Denver in 2004, in Las Vegas in 2006, in San Diego in 2008, and most recently in Dallas in 2009 (“Bogleheads VIII”). There, once again, this diverse band of wise and happy investment warriors convened to share their investment wisdom, their experiences, and the stories of their lives and careers.

I’ve attended every one of these gatherings except 2009’s, when illness precluded my traveling. Being with these “real, honest-to-God, down-to-earth human beings, each with their own hopes, fears, and financial goals” (a phrase I’ve used to describe Vanguard investors, well, forever) has been one of the brightest highlights of my long career.

Yes, investing is all about human beings.

The Investor as Human Being

When human beings are the focus of an enterprise, certain practices follow naturally. The primary goal is to help clients succeed in the activity of investing, an all -too-human pursuit in which reaching one’s goals seems to depend as much upon emotions as economics. Success in investing in turn allows clients to achieve human goals such as purchasing a home, paying for a child’s education, or enjoying a comfortable retirement. Failure means that these basic human goals will not be met. In this long bull market, the mutual fund industry seems to have lost sight of these realities. Instead of helping people to develop prudent, long-term investment plans, fund firms have mounted aggressive marketing campaigns that suggest that they have found the holy grail of investment superiority. Too many funds have followed imprudent policies, and, despite the long bull market, their shareholders have paid a heavy price. When investment returns eventually revert to more normal levels, even more funds will disappoint their shareholders. Firms that focus on human beings, on the other hand, act as fiduciaries, not as aggressive asset gatherers. They strive to uphold fiduciary values: candor, integrity, trust, and fair dealing. Such firms should be far more likely to weather any storms that may come to the financial markets.

How do these values shape Vanguard’s dealings with clients? Candor means that, in communicating with our shareholders, we must follow a policy of full disclosure: tell the whole truth and nothing but the truth. This policy seems unremarkable. But candor is conspicuous by its absence from the mutual fund industry’s promotional materials and shareholder communications. Long-term returns of the stock market are presented without adjustment for the costs of owning stocks through mutual funds. Fund advertisements trumpet past performance that will not be repeated in the future. Fund prospectuses fail to describe the importance of costs. And, too often, mutual fund annual reports neglect to discuss the risks inherent in particular investment strategies. When we see investors as human beings rather than target markets, however, we realize that, if they are to invest successfully, our clients need straight talk and common sense: frank discussions about risk and return, an honest accounting of a fund’s success (or failure) in matching its benchmark and its peers, a review of the rudiments of a sensible program of balanced investing, and attention to the critical role that costs play in shaping long-term investment returns.

Candor reinforces a second element in the relationship between fiduciary and client: integrity. Integrity comes down to the ability to trust that, when the self-interest of the institution’s managers comes in conflict with the interests of the institution’s clients, the interests of the clients will be held paramount. Vanguard’s unique corporate structure, in which the financial benefits of our success accrue to the fund shareholder rather than to the management company, has eliminated many potential conflicts of interest between a financial institution and its clients. Yet, integrity demands additional practices not necessarily dictated by corporate structure. Integrity means putting the client first in all aspects of the relationship, investing prudently with the sole purpose of meeting a particular investment objective, and operating strictly under generally accepted principles of business conduct. Such practices arise, not from an organizational structure or policy manual, but from a recognition that our clients are human beings who deserve the highest standards of respect.

No organization dedicated to the best interests of its clients—rather than to profits, assets, or market share—would be interested in such a transient shareholder. A short-term transaction of that size would have imposed on the remaining shareholders of the fund unnecessary transaction costs in purchasing and then selling the portfolio investments. We refused to accept the order. Irate, the investor informed us that he would advise his colleagues “never to do business with Vanguard again.” What is more, he took his story to the press, and it wound up on the front page of the Money & Investing section of the Wall Street Journal, which duly reported that the client “would no doubt find many eager takers at other mutual fund companies, especially since an investment that size . . . could earn the fund company roughly $30,000 in management fees.” To accept the investment and earn the fees, however, would have placed the fund organization’s business interests above its fiduciary obligation to the fund’s remaining shareholders. In response to the article describing our rejection of this $40 million order, the scores of letters I received from our shareholders, 100 percent of which supported Vanguard’s position, were so favorable that I felt obliged to write to the Journal’s editor that I was “a bit embarrassed that such favorable public notice arose from the simple act of choosing the path that was honorable and ethical.”

TEN YEARS LATER

Fiduciary Values

When in the earlier edition I included integrity as one of the key fiduciary values, I was reluctant to do so for two reasons: (1) important as integrity is, bragging about it seemed a little too self-serving; and (2) while 100 percent of the leaders I’ve known or read about describe integrity as the principal quality of leadership, less than 100 percent of them actually deliver on that promise in their business and personal lives. But include it I did, along with candor, trust, and fair dealing. During the passage of a decade, however, the observance of these traditional fiduciary values in our financial system has seriously deteriorated.

So my latest crusade is to demand that our money managers be required to measure up to the traditional standards of fiduciary duty that have existed for centuries under English common law. A fiduciary society would guarantee those last-line owners—largely the mutual fund shareholders and pension fund beneficiaries who have committed their capital to equity ownership and whose savings are at stake—their rights as investment principals, rights that their money-manager/ agents have failed to adequately honor. (I’ve described my agenda in Chapter 18.)

It will take federal government action to foster the creation of this new fiduciary society that I envision. Above all else, it must be unmistakable that government intends, and is capable of enforcing, standards of trusteeship and fiduciary duty under which money managers operate with the sole and exclusive purpose of serving the interests of their beneficiaries—in short, allowing “no man to serve two masters.”

Shareholders Respond

Everyone wants to be treated as a human being. No one wants to be part of a target market. I believe that Vanguard’s development in recent years is in part the result of public recognition that Vanguard treats the investor as a valued individual, not a dollar sign. In the many letters I receive from shareholders, a common theme is their appreciation of our efforts to deal with them candidly, fairly, and with integrity, to help them achieve important investment goals. Consider these excerpts from some recent letters. The first is from a shareholder who read the Wall Street Journal article just noted:

I always knew you talked the talk. Now I know you walk the walk, too.

My wife and I, now in our fifties, find we are now worth better than $1 million, have no debts and paid off the house. Not bad considering that we have never earned much more than $40,000 a year each, that I came to this country at 30 with almost nothing, and spent my first 4 years in college. I hope you know the impact you have on individuals such as us to enable us to reach our own American dream.

One reason why I invest with Vanguard is that it has been guided by Mr. Bogle’s Old Testament patriarch image . . . it is not ludicrous to liken old Bogle to Moses bringing the law down off Sinai amidst thunder, lightning, and a thick cloud: simplify, simplify, simplify. . . . I would like to see Vanguard stick to its roots. I’ m sure Bogle is a hard man to work for. People like that always are. I know. We have one in our family and the fact that he’s been dead for 53 years hasn’t lessened his influence much. But people like this strike a chord in the public because they stand for something good and pure and true.

The shock waves you have unleashed will not soon be quelled by those in the industry who should really be embarrassed by many of their actions, but, instead, will reverberate throughout for a long time to come. I gleefully say “Thank you!”

You “recognize the obvious, follow powerful ideas with prompt action, and press on regardless” . . . words of wisdom for steering a true course regardless of the seas you sail. I am in your debt.

You are a throwback to an age when a businessman’s handshake was worth more than a contract. Thank you for resisting many of the current popular trends that focus on high fees rather than quality performance and service. From all the working stiffs of America one more time: Thank you!

In style and substance you remind me of my Dad, who also talked often of the wisdom of low costs, mistake avoidance, and a long-term buy and hold philosophy. It rewarded him well. Please continue to spread the message of commonsense investing. You have been an important, clear voice of reason in an industry increasingly dominated by quacks.

TEN YEARS LATER

More Shareholder Responses

While I haven’t run Vanguard for many years, I’m still in my office on our campus pretty much all day, every day. And, almost daily, I still get wonderful letters from clients. Here are just a few examples:

I thought you’d be riding first class, but to my surprise you rode in coach. That tickled my heart because you were one of us, with us. Thanks for having the fortitude of character to do the right thing and to leave us a legacy to follow. (This one is from a shareholder whom I met on a flight to California en route to Bogleheads VII.)

I’m indebted to you for convincing me of the wisdom of index funds and (conservative) asset allocation.

I’ve seen my nest egg grow to unimaginable size, and am relatively unfazed by the recent market gyrations. I sleep well at night. It’s all so simple. Thanks.

Thanks for giving the wisdom of the ages, sprinkled throughout your books. I can’t even imagine the forces within you that have driven you. Despite overwhelming obstacles, you never slackened in your struggle to bring a chance for financial well-being to individual investors.

Do these few anecdotes accurately portray how millions of investors perceive Vanguard? The answer seems to be “Yes, they do.” A recent study by Cogent Research concluded that “Vanguard Group generates substantially more loyalty than any other fund company . . . and outshines all its peers.” The Cogent methodology is based on a poll of fund clients that asks whether they would “definitely recommend” or “definitely not (Continued) recommend” their mutual funds to friends and family, scaling the result from 10 (best) to 1 (worst).

Cogent then subtracted the percentage of fund “detractors” (ratings of 1 to 5) from fund “supporters” (ratings of 9 or 10), to arrive at “net client loyalty.” With a rating of +44, Vanguard was virtually peerless; the next three firms had scores around +25, and the 11th ranked firm (among 38) had a score of +1, barely positive. The remaining 27 firms all had negative loyalty scores, ranging all the way down to -54(!). For the funds as a group, excluding Vanguard, the average loyalty score was -13,- an astonishing measure of general dissatisfaction with mutual funds that so far seems to be ignored by the industry. But it cannot be ignored forever.

The Vanguard Crew

These letters are a tribute not only to the fiduciary values of candor, integrity, and fair dealing, but also to the human beings who uphold these values: the Vanguard crew. When we began operations in 1975, the choice of the word crew may have seemed a bit trite and corny. But it is well accepted now, suggesting, as it does, the nautical heritage of our HMS Vanguard symbol—the crew of a battleship, working together in partnership; fighting for each knot of progress on a sea voyage in which even one member’s failure to perform can sink the ship; doing our best to ensure a voyage that is safe and sound; and sailing purposefully and on course through calm and rough waters alike.

It almost goes without saying that any enterprise that aspires to measure up to the symbolism of a fighting ship must rely on the loyalty of its crew. And there are few leaders who do not invoke the need for loyalty—whether through a shared mission or through compensation programs or, for that matter, even through a climate of fear. But however loyalty may be built into a firm’s values and character, the one message that must come through is: Loyalty is not a one-way street. No enterprise, no matter what endeavor it pursues, has any right to ask for loyalty from those who do the hard work required for its success, without a reciprocal commitment that the enterprise will offer its own loyalty in return. If an institution is to care for its clients, it must care too about the human beings who assume the responsibility for serving them. The members of the crew are the heart and soul of the enterprise; without their care and effort, the enterprise will fail.

In my frequent speeches to our crew, I have, on several occasions, cited this marvelous quotation from Dean Howard M. Johnson, former chairman of the Massachusetts Institute of Technology, on the need for individual human beings to care for the institutions of which each of us is a part:

We need people who care about the institution. In an increasingly impersonal world, I have come to believe that a deep sense of caring for the institution is requisite for its success.

The institution must be the object of intense human care and cultivation: even when it errs and stumbles, it must be cared for, by all who own it, all who serve it, all who are served by it, all who govern it.

Caring, we know, is an exacting and demanding business. It requires not only interest and compassion and concern; it demands self-sacrifice, wisdom and tough-mindedness, and discipline. Every responsible person must care, and care deeply, about the institutions that touch his life.

If we ask those who work at Vanguard to treat the institution with care, to ensure that it meets the needs of the human beings we serve as clients, we must in turn care for our crew. We manifest our regard for the human beings who work here by treating each individual, from the highest to the humblest, with respect. We simply won’t tolerate a “big shot” demeaning one of the “working stiffs.” (If I learn of it, I’ m tempted to have the former do the latter’s work for a day—if he or she is able to do it!) This policy carries over to a “no perquisite” rule—no leased cars, no reserved parking places, no first-class flying, no officers’ dining room. One of the greatest treats of each of my workdays is to have lunch in our galley and chat with some of the crewmembers who are doing the work of serving our shareholders. And we trust our crewmembers. For years, I told our crew that we had just one rule of business conduct. “Do what’s right. If you’ re not sure, ask your boss.”

In addition to this list of values, we have established formal rituals to celebrate the efforts of our crew. The most important are the Award for Excellence and the Vanguard Partnership Plan. The former recognizes the achievements of a single outstanding individual; the latter rewards the collective efforts of our crew. Together, the Award for Excellence and the Partnership Plan recognize that to provide valuable services for our clients, we need the human beings who serve on our crew to uphold our values, corporate character, and spirit.

The Award for Excellence: Even One Person Can Make a Difference

When I created the Award for Excellence in 1984, my purpose was to honor those crewmembers who embody “the Vanguard spirit.” Since then, more than 350 crewmembers have received the award, which is presented in each quarter of the year to five to 10 individuals who demonstrate particular excellence in the performance of their duties. What makes these awards especially meaningful is that the recipients are nominated by their peers. At an award luncheon, we quote from the nominations submitted by fellow crewmembers, commending those who “give 110 percent,” demonstrate “speed, determination, energy, and smarts,” or are “unflappable, dependable, responsible, and indefatigable” (to cite a representative set of comments). In an organization that serves, and is served by, human beings, the ceremony is an opportunity to reaffirm our core value of respect for the individual.

In this increasingly impersonal era, when bureaucracy and technology threaten to obscure the contributions of individual human beings, the Award for Excellence is a tribute to individual effort. Each winner receives a plaque inscribed with a phrase I have used throughout my career to recognize the potential of a single human being: “I believe that even one person can make a difference.” And so one person can, and does, at Vanguard. Even as we have grown, we continue to recognize that our crew is a group of individual human beings, and that, no matter the size of our fleet, even one person can make a difference.

Partnership: Sharing the Fruits of Our Labors

If the Award for Excellence celebrates individual effort, then Vanguard’s Partnership Plan recognizes the collective efforts of our crew in creating value for our shareholders. Each Vanguard crewmember is made a partner in Vanguard on the first day on the job, and, without investing one cent of capital in the organization, shares in the Vanguard Group’s earnings. Because Vanguard is effectively owned by the shareholders of its mutual funds, rather than third-party stockholders, earnings are defined as a combination of the value added to our shareholders’ returns by (1) the difference between Vanguard’s expenses and the expenses that would prevail if our average expense ratio equaled those of our largest competitors, and (2) the extra returns (net of any return shortfalls) earned for shareholders by the investment strategies of our funds and the portfolio supervision skills of our managers. In 1998 alone, based on our assets then under management, more than $3 billion of value was added to our clients’ returns. I have no doubt that the few percentage points of these annual savings that are shared among the crewmembers, in recognition of their contributions to the value created for our shareholders, are repaid manyfold by our operational effectiveness, efficiency, and productivity.

Since the firm’s founding, we have consistently reduced our average expense ratio. That achievement is the result of our unique mutual structure and the energy and initiative of the thousands of crewmembers who work tirelessly to better serve our owners. The crew is continually finding ways to offer enhanced services and to save our shareholders additional millions of dollars: the introduction of cost-saving services on the World Wide Web, the development of more useful account statements, the elimination of duplicate mailings, and more informative tax reporting, to name just a few. The Partnership Plan helps to reward these collective efforts.

Each spring, we distribute the partnership checks at the Vanguard Partnership Picnic. The checks can amount to as much as 30 percent of a crewmember’s annual compensation, leaving little reason to wonder why thousands of crewmembers seem so enthusiastic about gathering under a huge tent in our Valley Forge parking lot and listening to some informative and hopefully inspirational comments (mine have been called “sermons,” but I’ m not sure that word is used in a complimentary sense!) about Vanguard’s corporate values. Over the years, I have regularly reminded the crew that we ’re engaged in an important pursuit, serving our shareholder-owners, and that the efforts of each individual human being who serves on the HMS Vanguard crew make a difference. That sense of participating in a worthy human enterprise is evident in these excerpts from letters I have received from current and former crewmembers.^aj

I wanted to congratulate you for . . . building something . . . that is a source of pride for all of us who work here. Rarely do companies possess such high standards of ethics and honesty. The best thing about your talks . . . is that you always reminded us of our importance in the lives of others and our great responsibility.

... Having been away from Vanguard for about four months, I have had an opportunity to reflect on the organization and what it meant to serve as an officer and crew member. I have decided that there are three things I miss most: the crew, dedication to the cause, and the presence of a strong and visible leader.

What impresses me about this company is the positive attitude of all the associates . . . the environment here is unique and hard to find in business today. Everyone I come into contact with seems to enjoy their job. I ask myself why are all these people satisfied with Vanguard? Because Vanguard puts a high priority on the well-being of its crew—the extensive benefits offered, the opportunity for advancement, the friendly and helpful atmosphere fostered, and management’s genuine interest in the welfare of the staff.

Thank you for the opportunity and honor of serving for a great captain. Your leadership, caring, integrity and indomitable spirit are standards which I strive to emulate. The example you set every day has made a major difference in my life.

The success of Vanguard is in very large part due to the values you have taught me, and thousands of current and past Vanguard crewmembers. Your values permeate the institution; they truly do! Asking the crew to “do the right thing” by clients while at the same time “doing the right thing” by the crew reinforces in us all a simple but powerful life lesson almost daily.

TEN YEARS LATER

The Vanguard Crew

When my participation in Vanguard’s management came to an end, I began a practice of meeting with each crewmember who had received our Award for Excellence (usually up to 10 persons each quarter), enjoying about an hour of private conversation on a wide range of personal, business, and investment subjects. The number of these meetings must now total more than 300, so I’m confident that my reading of the generally high morale of our crewmembers is pretty accurate. Letters like these three from Vanguard crewmembers seem to confirm my confidence:

Many of us believe so strongly in your ethical approach to investing. The culture you created makes this a great company to work for, and most importantly a great experience for our clients.

Thanks for building a company that I have felt honored to work for and be a part of. I’ll never forget how impressed I was by your gesture of welcome on the day I joined Vanguard (in 1988), and you stopped me in the hallway to introduce yourself and shake hands.

Ten years ago you and I had lunch after I received the Vanguard Award for Excellence. We talked about my love of archaeology and you talked about visiting Stonehenge and seeing the sun shining through the clouds. Ever since then, when I see sun rays through a cloud, I think of that conversation. I told you that I hadn’t planned on staying at Vanguard much longer, but you said you wouldn’t be surprised if I was still working at Vanguard ten years later. And so I am. I have three beautiful daughters, a wonderful wife, and am working on interesting challenges in our Institutional group. So thanks for that day, the memories, and for establishing a fine company.

Of course, quoting from this small sample of the hundreds of letters I’ve received from our crewmembers is self-serving. But I see no other path to reporting that the warship that we call Vanguard has a crew of fine human beings who continue to fully understand our founding values. For trusting and being trusted may not only be an appropriate ethical strategy, it may also be a winning marketing strategy.

The Golden Rule

The Vanguard story has been a unique combination of the unforeseen circumstances and unusual ideas recounted in Chapters 20 and 21 on entrepreneurship and leadership. As much as any of these odd twists of fate and flashes of inspiration, however, I believe that our decision to put human beings at the center of our enterprise has been key to everything that Vanguard has become. Like much of the wisdom presented in this book, the idea of treating people as human beings is common sense. It is a simplified, if dual, version of the Golden Rule: “Treat those whom you serve as stewards as you would like your stewards to treat you, and treat those with whom you serve as you would like them to treat you.” Once a firm puts these ideas at the heart of its organizational values, treating both clients and crewmembers as honest-to-God, down-to-earth human beings with their own hopes, fears, and aspirations, the result shapes everything the firm accomplishes.

Many will regard this vision as utopian. And even I am not foolish enough to think that every firm in the mutual fund industry is prepared to operate as a demanding, disciplined financial service organization that relies largely on simplicity as the cornerstone of its investment strategy and on the Golden Rule as the cornerstone of its service strategy, placing its future in the hands of all-too-fallible human beings and retaining the goodwill of its clients through rough and calm seas alike. However, as Christopher Hitchens, columnist for the Nation, has recently noted, “Man cannot live on Utopias alone. But as Oscar Wilde so shrewdly remarked, a map of the world that does not include Utopia is not even worth glancing at.” Thomas Paine, with his innate common sense, would surely have agreed.

TEN YEARS LATER

Still a Utopian Vision

A lot can happen in a decade! And surely the past decade has been filled with surprises, some delightful and some horrendous, many of which are destined to find their way into the history books. But, as I write in 2009, the utopian vision with which I concluded the 1999 edition of Common Sense on Mutual Funds remains serene and undisturbed, a beacon of wisdom and hope for years to come, not yet to be realized. But my mission to build a better industry for mutual fund investors continues unabated.