Vanguard Group Inc. plans to add hundreds of new employees to its institutional staff to accommodate its continued growth — and to mitigate customer service problems.
Vanguard is projecting to hire about 1,700 full-time employees in total this year, said company spokeswoman Laura Edling. This is roughly the same number of full-time employees the firm hired last year. Ms. Edling did not break down how many of these employees would be in customer service roles.
The Malvern, Pa.-based manager has approximately 15,000 employees globally. Ms. Edling also did not disclose how many work in the firm's institutional vs. retail businesses.
Martha G. King, managing director and head of the institutional investor group at Vanguard, said in a phone interview that, of this estimated 1,700 new staffers, the company plans to add “hundreds of new crew members” to the institutional division. She declined to provide a specific number.
Vanguard's growth has been at least partially due to successfully selling itself as a low fee provider. And it continues to do so.
After reaching more than $4 trillion in assets under management at the end of January, Vanguard announced Feb. 24 that it cut expense ratios on 68 mutual funds and exchange-traded funds — the third round of fee cuts the firm has made in three months.
Critics note, however, that due to the company's cost-cutting alongside rapid growth, Vanguard is perhaps ill-equipped to handle the demands from so many clients.
Daniel P. Wiener, editor of the Potomac, Md.-based newsletter Independent Adviser for Vanguard Investors, which has no affiliation with the company, said “there have been huge service issues” at Vanguard.
“Their computer systems can't handle the pressure; their people can't handle the pressure. If you're going to be bringing in a lot of money and cut costs everywhere, something's going to give, and what's giving is service,” Mr. Wiener said.
Jeff DeMaso, director of research at Newton, Mass.-based manager Adviser Investments and contributor to the Independent Adviser for Vanguard Investors newsletter, also noted that some of the complaints he's heard from Vanguard's clients — which include DC participants — “relate to long wait times” on the phone “or issues with the website being down.”
“All of this is related to size,” Mr. DeMaso said.
In response, Ms. Edling said in an email that although Vanguard's growth has challenged the firm's “ability to provide the premier service that our clients expect and deserve,” this growth has enabled the company “to continue to lower costs for (its) clients, while also making considerable investments in people and technology.”
Added Ms. Edling: “We've invested heavily the past few years in our plan sponsor technology platform, My Plan Manager, and will continue to enhance plan participant experience through ... digital initiatives aimed at improving retirement outcomes for millions of participants who invest with Vanguard through a DC plan.”