Katie Greifeld: Vanguard is launching its new collaboration with Amazon's Alexa, where the virtual assistant will take investors via voice command to Vanguard's retail proxy voting program, Investor Choice. Joining us now is John Galloway. He is Global Head of Investor Engagement at Vanguard. Joining us to break that news, John, great to see you in person.

John Galloway: Thanks, Katie, nice to see you.

Katie: Let's talk a little bit about this. So, my understanding is after I check the weather, I can say to Alexa, "take me to Vanguard Investor Choice," and basically, she'll do that. How did this come together?

John: So, we're really excited about the program, and we're excited about Investor Choice, as you and I have talked about before. It is an opportunity for us to let end investors in Vanguard's ETFs and index mutual funds express their voice in proxy voting. So, it was a natural collaboration with Amazon, given that Alexa is the default for many as a voice agent to allow the end investor to access our Investor Choice program in an easy way to get the information. And actually it can send you a link right to your cell phone that you can then go into our app and sign up directly in the app.

Scarlet Fu: Was there a lot of demand for something like this? Is this something that investors had voiced discouragement or, just complications with when it comes to engaging in these shareholder activities?

John: I think that the big opportunity we see is making Investor Choice easy. I think, as easy to buy or sell an ETF, if you can allow the end investor to express their preference or get their voice heard related to proxy voting, that's a good thing. We recognize that one of the challenges is both awareness and then reducing the friction, frankly.

One of the benefits of our approach to Investor Choice is that we're not asking investors to go to the S&P 500 Fund and say, I'm going to make proxy voting choices at 500 companies. Or, for our Total Stock ETF it will be 3,000 companies. This is the opportunity for an investor to go in and look at a set of balanced menu of policy choices, make a selection that they think best represents what they think is going to be in their interest to maximize the return on their investment when it comes to proxy voting, their views on CEO compensation or board member elections.

They can make that selection, and then whenever they want to change it, they can change it. But if they want to, they can just leave it. And it stays forever. And that's the ease of use that we're going after.

Katie: Well, it's interesting because you think about any type of vote, encouraging participation is a big hurdle. I imagine it's something you think about all the time. So obviously, a program like this trying to get to the heart of that problem. With that in mind, do you have any more of these types of partnerships planned that you're thinking about in discussion about?

John: So, we're really excited about the progress we've made for investors who come directly to Vanguard. As you know, there's multiple ways to buy a Vanguard ETF or a mutual fund. You can go directly to us through vanguard.com. And in that case, what we've done is we've built it actually into the digital experience. So, it's in the app. It's on the website. It's quite easy to do. And we're seeing good participation, where actually over 10% of investors in the funds that have been eligible are participating. Just great news from a retail investor in the first year or two.

Off platform, it's a little more complicated, and that's where you'll see us continue to innovate with different industry partners to make it easier for an investor wherever they hold a Vanguard fund to be able to express their interest in proxy voting.

Scarlet: I'm curious whether Institutional Shareholder Services, ISS, or any of those other proxy companies have come out and engaged with you on this because it seems like an opportunity, if nothing else.

John: It's interesting, we do have two third-party options in the menu. One of the things that we've been talking to regulators and policymakers about is there are lots of questions about the proxy advisory ecosystem, if you will, and the number of providers and the voices. And we actually see Investor Choice as a way to bring more voices into the system.

We have tens of thousands, over time, we'll have millions of investors now expressing their voice. And relying on third parties, different proxy advisors is a great way for them to do that.

Katie: So, in this partnership, I'm curious how you thought through elements such as cybersecurity risk and things along those lines. Because adding on a third party like this, obviously a way to boost engagement, participation, but there's some elements that you can't control as well.

John: So, you can imagine Vanguard has lots of very smart people working on these topics. We have a very thorough vetting process, and I think you can rest assured that Amazon the same is true on their end. So, it's been a long process to get us here through this collaboration. But we're really excited about working with the high-quality partner. And as I said, for us, the end goal is to make it as easy for an investor to voice their preferences on proxy voting as it is to do anything else.

Scarlet: How quickly can this be implemented?

John: It's up and running. I actually did it this weekend myself.

Katie: No kidding.

John: Yep, no, we did. My wife and I went through the process with some bated breath, but it works. It's exciting. So, if anyone wants to go to Alexa, you can simply say, "Alexa, take me to Vanguard Investor Choice." It comes up with information. It can actually, as I said, even send you a link directly to your phone that you can sign up and go from there.

Scarlet: All right, sounds good. John, thank you so much. Thank you so much for joining us today on ETF IQ.

John: Thanks for having me.

Katie: John Galloway is Global Head of Investor Engagement over at Vanguard.