VALLEY FORGE, PA (January 11, 2017)—Vanguard today announced the newly established Center for Investor Research (CIR), an enhancement of the company’s efforts to drive investor success through behavioral research and experimentation.
The new Center will be initially dedicated to the study of the behavior of individual investors. CIR will examine how investors make decisions through observational studies based on Vanguard’s administrative data and the growing pool of digital interactions. The Center will also design experimental interventions—or “nudges”—to directly improve investor outcomes.
“Ultimately, Vanguard’s mission is to propel better investor outcomes. The Center will take a data-driven, scientific view of investor behavior, and transform this knowledge into practical application,” said Steve Utkus, principal and head of the Center for Investor Research. “Our research agenda will advance our understanding of the fundamental nature of investor decision-making and uncover strategies to improve the financial lives of our investors.”
CIR is an evolution of the Vanguard Center for Retirement Research, renowned for its proprietary research assessing the developments in defined contribution (DC) plan participant behavior and retirement plan design since its founding in 2001. The CIR will continue producing DC-centric research such as How America Saves, Vanguard’s flagship DC publication, which is widely leveraged by plan sponsors, consultants, regulators, and academics alike. Analogous to the global and diverse set of clients Vanguard serves, the new Center’s reach will extend to a range of individual investor types and demographics, including direct and advised clients, and 401(k) participants, as well as millennials, accumulators, and retirees.
The Center’s expanded reach encompasses a wide range of potential research topics addressing the behavioral and psychological aspects of investing. Planned research topics include investor expectations for stock market returns, the role of trust in advisor-client relationships, and the transition from work to retirement. In addition, with more than 90% of U.S. direct and 401(k) client interactions at Vanguard conducted online or via a mobile application, the new Center will explore how investors make choices in the digital realm, informing test-and-learn strategies to guide online investor behavior.
Vanguard has already demonstrated the efficacy of behaviorally-oriented interventions, particularly among 401(k) plan participants, with the growing use of automatic enrollment in DC plan design, and the design and application of online experiences to increase savings rates. Online savings “nudges” provide personalized, specific guidance on how much participants should save to maximize their critical earnings years, and a simplified—often “one-click”—path to take action.
“We know that successful investors exhibit smart behavior—they keep costs low, diversify their portfolio, and refrain from trading,” said Vanguard CEO Bill McNabb. “Investor behavior is at the heart of successful outcomes, and the aim of our new Center is to advance the case for better investor outcomes through research and experimental techniques in an increasingly digital world.”
Vanguard is one of the world’s largest investment management companies. As of December 31, 2016, Vanguard managed more than $3.9 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers more than 350 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com.