Global Director, Financial Services,
based in Landor New York
“That will be 28 cents please!” Not something you hear every
day, especially in New York City.
I was so delighted I asked to hear it again. That’s the price of
a cup of coffee from The At-Cost Café, which was parked on Union
Square yesterday afternoon.
This unexpected treat is from Vanguard, and sadly is only in New
York for a few days. The message is simple and
compelling: Vanguard’s mutual fund fees are about 1/5 of the
average charged by the US mutual fund industry. And you guessed it,
28 cents is 1/5 of $1.38, the average price of a cup of coffee in
Putting the math aside, the clear message to investors is that
fund management fees really matter. Vanguard describes two funds
with typical industry performance other than fees—the one with
Vanguard’s fee level will typically provide the investor with 95
percent of the gross return over a 20 year period, while the one
with industry average fees delivers only 74 percent of the return
On the other side of Union Square, another challenge to the
status quo is in progress: Occupy Wall Street has arrived with
banners and protesters loudly proclaiming their anger at the
This juxtaposition brings to mind the dramatic contrast in
approaches taken by financial brands in today’s turbulent market.
On one side, Wall Street is still struggling to counter public
perception that the game is rigged in the banks’ favor, with fresh
self-inflicted wounds from the recent uncomfortable encounter with
Sesame Street. The standard response “we only succeed when our
clients succeed” sounds hollow when evidence continually surfaces
that these firms may be acting in ways that are misaligned with
their clients’ interests. No matter how much money they spend on
citizenship activities, these will only return pennies on the
dollar while they remain overshadowed by public distrust of their
Returning to the other end of the public square, there are a few
financial brands that have always lived on Main Street, acting
transparently and doing the right thing for clients. Chief among
these is the sponsor of my at-cost coffee, who has made
“vanguarding” a verb synonymous with responsible finance.
Our belief is that a brand is as a brand does. Closely aligning
a company’s actions with its message is essential to building a
consistent brand, and this goes double for financial brands.
Vanguard can authentically convey its message through a simple cup
of coffee because they already have the public’s trust, and
everything they do reinforces this.
This approach is more than good public relations—it builds a
brand reputation that enables a financial firm to retain clients
through inevitable market cycles, build strong business
partnerships, attract talent, and protect its license to operate
from public pressure or regulatory action.
Those financial firms that embrace this and make it core of
their business will reap the benefit. Those that don’t will at
minimum suffer a missed opportunity and continue to waste resources
on activities that do very little to build a durable