ETF Movers & Shakers: Tom Rampulla

Tom Rampulla

Until early 2015, Martha King was the well-known face of Vanguard's Financial Advisor Services (FAS). Then she moved on to the institutional side of the fund provider's business, and Tom Rampulla, who had been leading Vanguard's U.K. and European operations, returned stateside to fill the void.

It was a homecoming of sorts. Rampulla has been with Vanguard for almost 30 years, and was on the original FAS team, working under King in 2002. He left in 2008 to help develop Vanguard's European operations.

But the FAS group he's returned to join has grown significantly. Today it works with 1,000 financial advisor firms, representing $1 trillion in assets, $450 billion of that in ETFs and the rest in mutual funds. Vanguard's total U.S. assets amount to $3.2 trillion, which means roughly one-third of the firm's assets under management lies with financial advisors.

"It's pretty amazing to come back to that," Rampulla said.

ETFs are only part of the equation alongside mutual funds, in his view. Nonetheless, ETFs are a growth area.

"There's still a ways to go: 34% of the market is passive," he noted. "There's significant growth there, and a lot of that will be in ETFs. The adoption rate of ETFs is continuing to rise."

And a lot of that adoption is happening among advisors. In 2015, the FAS business saw $129 billion in inflows, and $76 billion of that was in ETFs. Rampulla says that balance is shifting more and more to ETFs. And despite the dire predictions years ago about mutual fund firms that added ETFs to their lineups, Vanguard's mutual fund assets have not been cannibalized.

"It hasn't happened at all. First of all, if you're worried about cannibalizing yourself, then someone else can cannibalize you," he said, noting that for Vanguard, ETFs have been additive.

"It allowed us to offer low-cost passive investing to a much wider audience than before," he added, pointing out that advisors who had not had access to the mutual funds could invest in the ETFs.

Much of the FAS business' role involves more supporting advisors than selling them products. That includes providing education, thought leadership and tools, in addition to funds.

"We spend a lot of time figuring out what advisors want," Rampulla said.

The FAS group operates a client relationship center that allows advisors to create collateral materials articulating their value proposition with their own logo and brand. It also produces research to that end, such as the 2014 white paper "Putting a value on your value: Quantifying Vanguard Advisor's Alpha" by Fran Kinniry Jr. et al.

"We're interested in how we can help advisors be more effective and efficient in their business," Rampulla said. "It's not a product push."