Vanguard Chairman and CEO John J. Brennan, who announced in February that he would relinquish the CEO post before the end of the year, has set Aug. 31, 2008 as his departure date. As previously announced, the family's current president and former head of retail and institutional businesses, William F. McNabb, 51, will take over the CEO post from Brennan, 54.

Brennan, who had been CEO for 12 years and will remain chairman, has maintained that he is stepping aside because he didn't want to overstay his welcome or usefulness; that a certain amount of change at the top can be good for an organization. He's certainly going out near the top, having shepherded Vanguard through a tremendous period of growth, as I wrote earlier this year.

As for McNabb, I hope to learn more about him in the future, but here's what I have written about him in the past:

Meet the New Boss
It's harder to predict what the McNabb era will look like. McNabb, 50, seems cut from a similar cloth as Brennan. Like Brennan, he attended Dartmouth as an undergraduate and went to an Ivy League school for his MBA (Wharton). He's been with Vanguard for 22 years and most recently ran Vanguard's $700 billion institutional and international businesses. He also is known outside of Vanguard, serving on the board of Employee Benefit Research Institute and testifying before Congress and the Department of Labor. Indeed, the transition seems set up to ensure continuity. If Vanguard were one mutual fund, this would be a comforting way to handle a manager change--pick a seasoned successor who has worked closely with the previous manager and allow their terms to overlap to ensure a smooth handoff.

McNabb is unlikely to make drastic changes, but Vanguard is sure to continue changing. Based on McNabb's background and published comments, you can expect Vanguard to keep courting financial advisors (McNabb spearheaded efforts to ramp up the family's efforts in that area). Overseas growth also will be important, as will the institutional business and solution-oriented funds like target-date retirement offerings and the new managed-payout funds. Vanguard's new leader will have to manage its continued growth. He also will have to be familiar with retirement markets because a good portion of the fund owners who grew up with Vanguard are nearing or in retirement. McNabb's experience with institutional benefit plans will help there. Finally, Vanguard needs a leader who is steeped in the family's culture to ensure that it's not compromised as the firm continues to develop. I can find nothing in McNabb's public record that implies he will be anything but a staunch defender of Vanguard's main edge: its mutual ownership structure and commitment to serving shareholders.

What do you think the McNabb era will look like? 

Dan Culloton
Editor, Vanguard  Fund Family Report