Vanguard Changes

[Gearhead Jim]

Just got a letter saying that Vanguard Brokerage Services will "... assume the duties and responsibilities of our clearing agent, Pershing LLC."

Can someone explain exactly what that means, in English?

It may make them more efficient, but it may also raise the chances for some type of fraud or embezzlement. I like the idea of different people looking at what happens to my money, not just one.

Your thoughts?

[FinanceDude]

Sounds like it means Vanguard is now self-clearing. They're not the only ones who do that. Pershing has gotten a little big for their britches. I have had numerous problems in dealing with them over the years.

Obviously, VG thinks they can handle the clearing for less price and/or less hassle than dealing with Pershing..........

[saluki9]

FD is right. You may have noticed that Vanguard's ticket charges were a little higher than the other discount brokers. They were clearing everything through Pershing which as FD said has gotten a little full of themselves lately.

Pershing has to be one of the most difficult brokers to deal with, Vanguard will probably do a much better job (and make more money) self clearing. It doesn't mean much to you other than the fees might go down a little and the statements might look a little different.

[Rich_in_Tampa]

Same bad experience with Pershing.

That must be a major hit from Pershing's point of view.

[ziggy29]

Maybe it will mean VBS will finally start being competitive with Schwab, Fidelity and others when it comes to buying and selling stocks and ETFs now. The relatively high brokerage fees charged by VBS were the one stain on an otherwise rock-bottom fee organization.

[saluki9]

Quote:

Originally Posted by Rich_in_Tampa Same bad experience with Pershing. That must be a major hit from Pershing's point of view.

Not really Rich, it's like a hospital getting rid of it's medicare patients.

Vanguard was at the bottom of the Pershing fee schedule on most things. That part of their business is very low margin and I'm sure both companies were happy to part ways.

Pershing is under new leadership and they have been dumping a lot of their low margin business.

[FinanceDude]

Quote:

Originally Posted by ziggy29 Maybe it will mean VBS will finally start being competitive with Schwab, Fidelity and others when it comes to buying and selling stocks and ETFs now. The relatively high brokerage fees charged by VBS were the one stain on an otherwise rock-bottom fee organization.

I doubt it. Vanguard has to make money somewhere. It's not like their fund managers work for half of what the managed fund guys do.........

[Gearhead Jim]

It sounds like no one else thinks there is any additional risk by having everything inside Vanguard.

[FinanceDude]

Quote:

Originally Posted by Gearhead Jim It sounds like no one else thinks there is any additional risk by having everything inside Vanguard.

Not at all. It would be very difficult for them to get involved in a Madoff scheme, they would have to disallow online access to their accountholders, not issue statements, etc..........

[Gearhead Jim]

Quote:

Originally Posted by FinanceDude Not at all. It would be very difficult for them to get involved in a Madoff scheme, they would have to disallow online access to their accountholders, not issue statements, etc..........

I was thinking more like that British institution in Hong Kong that went under a few years ago because of unauthorized trading by a very junior person.

[Texas Proud]

Quote:

Originally Posted by Gearhead Jim I was thinking more like that British institution in Hong Kong that went under a few years ago because of unauthorized trading by a very junior person.

It was an investment bank and he was using the bank's money..

[saluki9]

Quote:

Originally Posted by Gearhead Jim I was thinking more like that British institution in Hong Kong that went under a few years ago because of unauthorized trading by a very junior person.

They aren't going to have any discretionary accounts.

[thefinancebuff]

Quote:

Originally Posted by Rich_in_Tampa Same bad experience with Pershing. That must be a major hit from Pershing's point of view.

By broker standard, VBS is very small. IIRC VBS has 600,000 accounts. Fidelity by comparison has 11 million accounts.

[Dennis]

Ditto Financebuff..VG never did strive to be a Major individual Stock Broker dealer like a Schwab, Fido, etc.. inhouse Mf's and even Non -ntf funds for $25-$35 is worth to me , but for buying individual stocks , I go elsewhere..

[Stevewc]

Like most of you guys.
I'm hoping that this will make vanguard a better brokerage and that they can be more competitive with other business's. Here's hoping I can soon buy in the seconary treasury bond market free of charge inside my IRA.
Steve