Vanguard isn’t your normal investment firm, and its client experience team isn’t charged with a mandate typical to investment firms.
Fifty years ago, Vanguard began offering low-cost investments to better benefit the client and their outcomes. It moved the financial industry; by offering low-cost investments, other funds lowered their fees to stay competitive in what’s widely become referred to as “the Vanguard effect.”
Today, the company sees “the client experience as the next space” to improve client outcomes and lead the financial industry, according to Nathan Zahm, head of investing and saving digital experience at Vanguard.
The company is using behavioral nudges in its digital experience design for a dual mandate: to create easy and intuitive digital experiences and nudge investors toward better financial decisions.
Behavioral nudges encourage positive financial behaviors, Aurélie L'Hostis, principal analyst of digital business and strategy and financial services at Forrester, told CX Dive. They can take the form of default options like auto-enrollment, prompts to increase savings or timely reminders. Adding personalization into the mix ensures these nudges align with a customer’s individual goals, risk tolerance and stage of life.
“These elements collectively lower friction, boost confidence and reduce anxiety, leading to higher satisfaction as customers feel supported and competent in their decisions,” L’Hostis said in an email.
Three years ago, Vanguard redefined a product team to focus on behavioral nudges. It was staffed with a behavioral scientist, a financial planner, a UX researcher, a UX strategist, a UX designer and analytics. The team looks at “not just a client problem as defined by the client, but also an outcome problem,” Zahm told CX Dive last month at Reuters Customer Service and Experience East.
Both are necessary to set up the client for success, Zahm explained.
“If we did just an outcome problem, we might technically be solving an investment outcome,” Zahm said. “If it wasn't on the terms that the client wanted us to solve it, it really wasn't going to help them. If we were just solving what a person wanted without the lens of, is this going to make them better off in the future, or not? That wasn't going to be true to Vanguard's mission.”
As the company completes a modernization effort to better meet customers’ digital expectations, it is also rolling out behavioral nudges to encourage responsible investing in a seamless experience.
Behavioral nudges from the start
Investing can be overwhelming, and so Vanguard redid its onboarding process and early investing experience to make it less daunting.
“We found even after they got through that onboarding process, that process of making your very first investment is overwhelming,” Zahm said. “So after you've opened the account, even funded it from your bank, there's actually still another step to take: actually investing.”
About 70% of Vanguard’s clients are saving for retirement. But leaving that money in cash would miss out on the growth investments in stocks and mutual funds can provide.
The firm started its CX Alpha initiative to help clients meet their goals during this early experience. Vanguard sends personalized nudges through SMS, email and in-experience prompts to guide clients through next steps and build a portfolio aligned to their goals. It revamped its product selection pages to make it more intuitive for new investors to find the right product based on their attitude toward investing and preferences. And it redesigned its IRA experience to help retirement savers find products aligned with their needs.
The changes have resulted in more than 100,000 clients putting about $6.2 billion into long-term investments for retirement that may have otherwise sat in cash, Zahm said.
“When firms design digital experiences that are easy and intuitive while incorporating behavioral nudges to help customers make better financial decisions, they leverage two powerful levers: usability and choice architecture,” L'Hostis said. “Executed well, this means interfaces that reduce cognitive load through simplicity and clarity, using streamlined workflows and clear language to prevent decision fatigue.”
One of Vanguard’s efforts was to provide information awareness to better serve their outcomes — thus making their next step clearer and narrowing down optimal options.
“That could be letting people know if you do this transaction versus waiting, the tax consequences can be pretty different,” Zahm said. “Some of it is helping people understand the implications of upcoming contribution deadlines and saving for retirement.”
Over time, such experiences can reinforce trust, L'Hostis said. These nudges signal genuine customer-centricity, foster habit formation through reliability, and can drive advocacy if customers share positive outcomes.
“Ultimately, this approach strengthens both emotional loyalty, trust and confidence, and customer engagement, creating a virtuous cycle of satisfaction and retention,” she said.
