“The Vanguard Effect” has been cited in the media in both the United States and abroad to describe the tendency for investment providers to lower mutual fund and ETF expense ratios when Vanguard enters a new market. The positive result is, obviously, lower investment costs for investors. While flattering, I believe it may overlook a very important partner in this trend: advisors.After all, unless the benefits and value of low cost investing had been well understood by advisors, Vanguard funds and ETFs would not have likely found their way into investors’ portfolios in the first place. Hence, we also have “The Advisor Effect”—the growing tendency for financial intermediaries to invest their clients’ assets in low-cost products.
