It's only 7 a.m., but John C. Bogle, 79, is already throwing elbows. He's impatiently boarding the Amtrak Acela in Philadelphia en route to Washington, where he's giving a lunchtime talk to a group of investment advisers. Today's speech is just the latest in a career-long campaign, on behalf of small investors, to wrest the financial system from overpaid financial middlemen. It's a quest he began even before he founded Vanguard Group, a pioneer in low-fee mutual funds, in 1974.
Bogle slowly takes his seat on the train, then contorts his arthritic hands to push the recline button. After taking a pull from his coffee, he ticks off some grim statistics: U.S. family wealth plummeted 18% last year, the most since the 1930s; $9 trillion in stock market value has vanished since 2007; the Dow Jones industrial average touched 6500 in March, a level not seen since Bill Clinton's second inauguration. And yet (and yet!) the financial services industry took home some $500 billion in fees last year. "What the hell for?" he thunders. "If they looked after other people's money with the same care they look after their own, we wouldn't have to be bailing out banks."
Bogle's latest mission may be his most ambitious yet: to persuade regulators to overhaul the U.S. retirement-savings system by simplifying account options, clamping down on fees, and making risk more understandable. It also might be his last. Bogle tells BusinessWeek his body has started to reject his 13-year-old transplanted heart. The attack, which began last summer, has landed him in the hospital on four separate occasions. Not that he's looking for sympathy. "I'm not introspective about my health, nor do I live in fear of dying," he says. "Your life expectancy is not enormous when you're 80."
Surely no one would begrudge Jack Bogle, who created the world's first "index" mutual fund in 1975 and retired from Vanguard a decade ago, the right to take it easy. But he won't hear of it. Much to the consternation of Eve, his wife of 52 years (who declined to comment for this story), Bogle spent seven hours a day during hospital stays last summer editing his seventh book, Enough: True Measures of Money, Business, and Life. In May he's bringing out a new edition of his 1999 best seller, Common Sense on Mutual Funds, and he has accepted at least eight speaking invitations between now and then. He's also making regular rounds on TV. "I need to be out here doing this," he says. "I'm a worker by temperament."
"It's a calling," says Jeffrey A. Sonnenfeld, a professor at the Yale School of Management. "He is the country preacher of finance. Henry Fonda would have played Jack Bogle in the movie."THE GADFLY GENE
As the train reaches cruising speed, Bogle's rhetoric heats up. The financial system, he charges, is too far skewed toward Wall Street and money management firms. At the same time, he says, individual investors have far too much freedom to make ruinous decisions with their retirement accounts.
So how would he fix things? Bogle proposes the creation of a federal retirement board to simplify and clarify the retirement-savings process. The board would oversee a new kind of defined-contribution account to replace the salad bowl of options—401(k), IRA, Roth IRA, Roth 401(k), 403(b)—that currently confront and confound investors. It would also monitor savers' investment choices to help them determine just how much risk they can tolerate and would emphasize low-fee mutual funds over pricier ones. Just as important, Bogle is urging Washington to require retirement plan providers—and all money managers, for that matter—to meet basic client protection standards. He wants fuller and clearer disclosures of all potential conflicts of interest and any other information that might affect investing decisions.
If there's a gadfly gene, it runs in Bogle's family. Way back in 1868, his great-grandfather, Philander Banister Armstrong, needled his fellow insurance executives. "Gentlemen, lower your costs!" he challenged in a speech. In 1917, Armstrong, whom Bogle calls his "spiritual progenitor," published a 258-page diatribe called A License to Steal: How the Life Insurance Industry Robs Our Own People of Billions.