The Vanguard Group quietly got a new CEO on Jan. 1.

Mortimer J. Buckley, better known as Tim, is the fourth CEO in Vanguard’s 44-year history. He joined the company as an assistant to legendary founder John Bogle, and was previously chief investment officer.

While Bogle went after mutual fund fees with index funds and then exchange-traded funds (ETFs), eventually bringing about $4.5 trillion under management, Buckley has his own big idea.

He’s going after investment advisors.

Investment advisors take big chunks of investors’ capital, supposedly for understanding client needs and customizing investment plans.

But most of what they do is marketing. Their performance is often no better than the indices.

Buckley’s vehicle is Vanguard Personal Advisor Services, which combines human advisors with the company’s collection of funds. The pitch, as with the index funds, is low fees — just 0.3% of the principal each year, about one-third the industry average.

Vanguard, A Quiet Transformer

Index funds work for investors. Berkshire Hathaway Inc. (NYSE:BRK.A) founder Warren Buffett recently won a $1 million bet that an index of the S&P 500 could beat a group of hedge funds. It wasn’t close.

It’s now standard practice for investment experts like Buffett, who make their livelihoods betting on individual stocks, to tell small investors that index funds are the place to be.

Before Vanguard, such funds didn’t exist. Neither did ETFs, mutual funds with defined goals that trade like stocks and allow investors to move in and out of market sectors cheaply and quickly.

There’s no great trick to it. Vanguard automates the investment process, trying just to match the market’s performance rather than out-smart it. The low costs get passed on to investors since Vanguard is a mutual company owned by its customers.

Bogle himself, now 88, spent a lifetime making money for other people but is worth less than $100 million. On Wall Street, they’d call him a chump. On Main Street, he’s a hero and a legend.

Investment advisors are among the last high-margin businesses left on Wall Street. They take large amounts of investor money to do what index funds and Vanguard do for a low cost.

Buckley, who was formerly chief information officer at Vanguard, is automating investment advisors. Vanguard Personal Advisor Services, which launched in 2015, already has $100 billion under management. The service is growing by $3 billion each month and already has 500 advisors working for it.

Vanguard’s Competition

Discount brokers like Charles Schwab Corp (NASDAQ:SCHW) have tried to get into the investment advising business with “robo-advisor” services. These are fully-automated systems that use the input of online questionnaires to build a complex portfolio of automated funds for clients.

As a matter of full disclosure my own daughter, with less than $50,000 to invest, recently decided to move her money into Schwab’s service. She found herself with over a dozen assets that may work well, but were difficult for even me to understand.

By contrast, Vanguard uses real people to conduct investor interviews, and builds portfolios with low-cost funds that are easy to trade and understand. Investors get regular reports, created by computers, but in clear English.

The Bottom Line for Vanguard Personal Advisor Services

Market volatility, another word for losses, is expected to rise in 2018 as governments take away the punch bowl of cheap money and increase interest rates. Only 20% of Americans own any stock investments at all, thanks in part to past losses and high fees.

Anything that can lead to disciplined investing, people socking away money regularly and trusting that the resulting returns are fair, is going to boost stock prices. ETFs do that by letting investors get out, as they would get out of a stock.

Vanguard Personal Advisor Services puts a human face on a fairer market.

Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he was long SCHW.