John C. “Jack” Bogle is a financial hero. His heroism benefitted millions of Americans. He founded the Vanguard Group of investment companies based on a senior thesis he wrote while a 20-year-old at Princeton. In it, he wondered why all the mutual funds were owned and controlled by big financial companies which operated the funds for their own benefit. Mutual funds, after all, are technically owned by their investors. Why, he wondered in his thesis, couldn’t the mutual funds own the parent company and operate it for the benefit of the funds, and therefore the underlying investors?
That thesis went on to become a company. And that company has gone on to become the largest mutual fund company in the world.
Because Vanguard is owned by its funds, there is no entity taking a profit out of the investment returns. The Vanguard Group is run at cost to serve and benefit the funds. As a result, Vanguard’s funds are consistently the lowest cost investments available. Thus, Jack Bogle’s college thesis and its after-work have put billions of dollars into the pockets of ordinary Americans that would have ordinarily gone into the coffers of the rich guys on Wall Street. For this, I believe he deserves a Congressional Medal.
We must note though that the biggest obstacle to achieving what Bogle did was overcoming his own greed. Bogle, in a sense, gave away to all his customers the billions of dollars that he could have easily appropriated for himself. And while I’m sure Jack Bogle earned a handsome living, he specifically declined to become a billionaire when it was easily within his reach.
Is it too much to make the argument that Bogle’s decisions and actions make him a hero and a patriot of the highest order?
(For an opposite example, we look to the Johnson family and its privately-held Fidelity funds. The Johnsons are billionaires many times over from the profits of running the Fidelity funds.)
A different example of financial heroism comes to us from Andrew Carnegie. Carnegie noticed that a major problem in our society was that teachers tended to retire into poverty. He decided he wanted to set this right by creating a company to manage pensions and insurance for teachers. Such a company would need to be highly skilled and highly honest and dedicated to the ultimate goal of the enterprise. So he decided to fund his pension insurance company as a non-profit charitable enterprise. That company went on to become TIAA-CREF which, until unfortunate set of circumstances in the early years of the 21st century set it on a bad course, was a national treasure. It offered educators a pension system managed at the highest levels of Wall Street skill yet charged a minimal amount. Like Bogle’s Vanguard, the difference between those charges and what Wall Street would have extracted amounted to billions of dollars in the pockets of elderly people who had served us all as teachers.
Again, I would argue that this was an act of financial heroism.