Why I Don't Have Much Confidence in Vanguard

[Another Reader]

About a month ago, I decided to transfer some money at another firm to Vanguard. I downloaded the Vanguard forms, filled them out, and mailed them off to Vanguard. Three weeks later with no change in either account, I called Vanguard to inquire about the transfer. Per the CSR, there was no record of the request. No concern expressed, no effort to locate it, just we haven't received it. Sorry!

I called the other company to notify them the transfer request was pending but the request was apparently lost in the mail and to be vigilant about anyone attempting to access the account. They were concerned, and added additional security procedures to the account access and notes in the record about the missing transfer form.

Yesterday, about a month after I mailed the request, I logged on to Personal Capital and discovered the money had left the other company but had not shown up at Vanguard. I logged on to Vanguard and found an inbound transfer notice from the other company to the proper account, with no details. Guess I will look again Tuesday and call Vanguard if the money does not appear.

My guess is they received the forms but did not process them timely. A more alarming possibility is Vanguard not have a system to track these transfer requests throughout the process and they mysteriously appear when they are completed.

I don't get the feeling from this experience with Vanguard that they would make much effort to resolve a serious problem on my behalf or that they are even capable of doing it. I'm seriously concerned about their account management software and practices if they can't track a transfer request. As a result, I am not inclined to put a large percentage of my investments with them, certainly not seven figures. I will continue to invest with them, but only a portion of my money will be held there.

[target2019]

I think no matter which company you do business with, there will be glitches, questions, etc. I've had Vanguard problems from time to time. Something like 1/2 of our investments are with them. The rest is split between employer 401Ks and Schwab. When it comes to customer service, I've not been disappointed with Schwab. When you rely too much on one company, you'll be let down. Just my opinion.

[Mulligan]

I had two transfers into Vanguard from separate brokerages, one was done in a flash...maybe a week. The other took over a month and the problem came from sending company. They butchered the process and I had to resend all paperwork back to them.
Hopefully Tuesday all will be good. I notice a one day "lag" on some of my dividends receive. Others I PM with will show receiving dividends from same stock issue the day company says it is distributed, while I get mine the following day. But it does show up and all is good then.


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[Another Reader]

Exactly. Most of the money is at Fido, but assets are also held at Vanguard, Schwab, and T Rowe Price. I do not have the confidence in Vanguard needed to put most of the money there. The lowest expense admiral shares of Wellington and Wellesley funds are only available at Vanguard, which is where the transferred money is going.

[Another Reader]

Quote:

Originally Posted by Mulligan I had two transfers into Vanguard from separate brokerages, one was done in a flash...maybe a week. The other took over a month and the problem came from sending company. They butchered the process and I had to resend all paperwork back to them. Hopefully Tuesday all will be good. I notice a one day "lag" on some of my dividends receive. Others I PM with will show receiving dividends from same stock issue the day company says it is distributed, while I get mine the following day. But it does show up and all is good then. Sent from my iPad using Tapatalk

Vanguard should have been able to tell me where they were in the process and what the hold up was. Not "we have not received the request."

[MRG]

Quote:

Originally Posted by Another Reader My guess is they received the forms but did not process them timely. A more alarming possibility is Vanguard not have a system to track these transfer requests throughout the process and they mysteriously appear when they are completed.

This ain't 1988.
I'm familiar with the software Vanguard uses to track work. Spent 20+ years of my life developing it. It's the same software used by the vast majority of fund companies(200 or so) and a bunch of insurance companies too.

I have no love for Vanguard, around 70% of our assets are at Fidelity. I'll agree Fidelity is better at customer service but Vanguard(or any other fund company) is not going to lose your money. If they do you have legal recourse, for your existing funds and any lost value to them.

ETA:

Looks like you mailed paper forms. Regardless of how you interface with any fund company you should always confirm they received the forms. On simple purch, or redeem you can see they have the transaction and it's to be executed. On a transfer YOU should call to validate it's received. If it did get lost before it's scanned in, it doesn't exist! Yes that happens, particularly with asynchronous communication between the concerned parties. Heck I recall a particularly ugly incident where some id10t faxed in a 10 million dollar exchange and was surprised when it didn't happen. Only about 90% of faxes go through, this one didn't. He was fully compensated(this was nothing to do with VGI).

[Texas Proud]

Quote:

Originally Posted by Another Reader Vanguard should have been able to tell me where they were in the process and what the hold up was. Not "we have not received the request."

I do not know why you think Vanguard should be doing anything if they do not have a request to to it.... it is not like they can read your mind and anticipate what you want...


From what you say, you filled out paperwork... and Vanguard said they never received it... so what are they supposed to do? Did you send it certified or overnight so it could be tracked? If not, then nobody knows where it is located... again, what is the person on the phone supposed to do They are sitting in front of a screen that says not paperwork... they cannot go around looking to see where your paperwork is located.... and it probably is not at Vanguard anyhow...

Now, it seems like they finally got your request and processed it... and you complain that there is no info on the funds... but, how does Vanguard know that Personal Capital has sent the money This is done mostly by systems and there is no phone call saying 'look for the money'....

It is not like anybody else is head and shoulders better than Vanguard... it is what it is...


BTW, when I was moving money... Fidelity REQUIRED that they send ME a check... yes, a paper check to me.... then I had to endorse it and mail it to Vanguard... there was no way I could get Fidelity to electronically transfer the money to Vanguard.... now, how stupid is that in this day and age....

[jazz4cash]

I guess I would not leave any funds with Vanguard if I lacked confidence they would be unwilling or unable to make things right in the end. Even if they did, I have no expectation of recuperating any lost opportunity costs/gains during the lag period.

I do have full confidence in Vanguard, but I am very reluctant to mail forms/documents to any institution without tracking information so I could at least confirm if the delay was in transit or after receipt. When I transfer funds, I prefer to use the online process if available and initiate the transfer with the institution that seems to be the most efficient (usually the recipient of the funds).

[Another Reader]

Quote:

Originally Posted by MRG This ain't 1988. I'm familiar with the software Vanguard uses to track work. Spent 20+ years of my life developing it. It's the same software used by the vast majority of fund companies(200 or so) and a bunch of insurance companies too. I have no love for Vanguard, around 70% of our assets are at Fidelity. I'll agree Fidelity is better at customer service but Vanguard(or any other fund company) is not going to lose your money. If they do you have legal recourse, for your existing funds and any lost value to them.

If they have a system to track the transfer request, why after three weeks can the CSR not see the request on their screen and tell me the request is in process?

[jazz4cash]

Quote:

Originally Posted by Another Reader Vanguard should have been able to tell me where they were in the process and what the hold up was. Not "we have not received the request."

How could they tell you where they were in the process if they had no record of receipt (e.g. held up in-transit)....or did you have tracking info?

[Another Reader]

Quote:

Originally Posted by jazz4cash I guess I would not leave any funds with Vanguard if I lacked confidence they would be unwilling or unable to make things right in the end. Even if they did, I have no expectation of recuperating any lost opportunity costs/gains during the lag period. I do have full confidence in Vanguard, but I am very reluctant to mail forms/documents to any institution without tracking information so I could at least confirm if the delay was in transit or after receipt. When I transfer funds, I prefer to use the online process if available and initiate the transfer with the institution that seems to be the most efficient (usually the recipient of the funds).

For an IRA rollover, Vanguard requires their forms to be used. Wet signatures are needed for the transferring custodian. US mail is the only option.

[jazz4cash]

Quote:

Originally Posted by Texas Proud BTW, when I was moving money... Fidelity REQUIRED that they send ME a check... yes, a paper check to me.... then I had to endorse it and mail it to Vanguard... there was no way I could get Fidelity to electronically transfer the money to Vanguard.... now, how stupid is that in this day and age....

This has been my experience with Fido also, but I thought it was due to the type of transaction (direct rollover from 401k to IRA). They sent me confirmations when the transaction closed and when the check was mailed. They offered to send overnight for $25 fee but I cheaped out. I received the check in exactly 5 business days. I was able to hand deliver the check to my credit union, but if I had to mail it, USPS Priority Mail is only $5.

[LOL!]

I have had one or more accounts at Vanguard for almost 35 years.

Vanguard is the low-cost leader, so there are quite few things that they don't spend money on … including tracking incoming mail carefully. If one looks at fund in-flows published by morningstar.com, then Vanguard is a huge sucking vacuum cleaner. So with their low-cost business model and that huge sucking sound, there is no reason to be surprised by threads like this.

And though I am a long-time Vanguard client, I have most of my money at other financial institutions. For me I can never tell where my moving money is at Vanguard. I can only tell after it has been parked for at least a day or two where it is.

[Another Reader]

They show the transfer as submitted on Thursday, about 4 weeks after the letter was mailed. Likely was on the mail room floor for at least three of those weeks since it wasn't in their system. Lots of questions to ask them on Tuesday. And yes, I should have sent it certified, my mistake. Never again!

[MRG]

Quote:

Originally Posted by Another Reader They show the transfer as submitted on Thursday, about 4 weeks after the letter was mailed. Likely was on the mail room floor for at least three of those weeks since it wasn't in their system. Lots of questions to ask them on Tuesday. And yes, I should have sent it certified, my mistake. Never again!

Not in any fund companies mail room for 3 weeks, not in this century. In the old days(1988) that frequently happened, not now. Every fund company I've been at(including Vanguard) the mail is scanned into the system for processing day one.

[Another Reader]

Quote:

Originally Posted by LOL! I have had one or more accounts at Vanguard for almost 35 years. Vanguard is the low-cost leader, so there are quite few things that they don't spend money on … including tracking incoming mail carefully. If one looks at fund in-flows published by morningstar.com, then Vanguard is a huge sucking vacuum cleaner. So with their low-cost business model and that huge sucking sound, there is no reason to be surprised by threads like this. And though I am a long-time Vanguard client, I have most of my money at other financial institutions. For me I can never tell where my moving money is at Vanguard. I can only tell after it has been parked for at least a day or two where it is.

Vanguard funds have been in the family for probably 50 years. In the old days, the only fund family with a worse back room than Vanguard was Oakmark. My father used to complain about both their screw ups regularly. Apparently, nothing has changed.

Low cost is not the antithesis of efficient.

[MRG]

Quote:

Originally Posted by Another Reader If they have a system to track the transfer request, why after three weeks can the CSR not see the request on their screen and tell me the request is in process?

Because for whatever reason it's not there. See my updated post #6 for the step you missed.

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[travelover]

I have half my stash at Vanguard and half at Fidelity. When I transferred a large amount from Fido to Vanguard, it took forever to complete. Fidelity tried to talk me out of making the transfer, so maybe they were dragging their feet or maybe it was just bureaucratic drag.

That said, I have full confidence in both and I've never heard of anyone losing a dime with them, short of investment losses.

[Mulligan]

Quote:

Originally Posted by LOL! I have had one or more accounts at Vanguard for almost 35 years. Vanguard is the low-cost leader, so there are quite few things that they don't spend money on … including tracking incoming mail carefully. If one looks at fund in-flows published by morningstar.com, then Vanguard is a huge sucking vacuum cleaner. So with their low-cost business model and that huge sucking sound, there is no reason to be surprised by threads like this. And though I am a long-time Vanguard client, I have most of my money at other financial institutions. For me I can never tell where my moving money is at Vanguard. I can only tell after it has been parked for at least a day or two where it is.

Oddly enough, the only reason I keep a decent amount of my money with them is a reason that they are not heavily used for...Their brokerage.. I dont even have any money in their mutuals, but 4 different times they have been able to get to the trading floor and dig me out some Grey Market issues that my other 2 brokerages were totally impotent in finding any.


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[jazz4cash]

Quote:

Originally Posted by Another Reader For an IRA rollover, Vanguard requires their forms to be used. Wet signatures are needed for the transferring custodian. US mail is the only option.

How about certified/registered/priority mail? It seems to be generally accepted by many (including me) that VG is not the best wrt customer service.

We may be doing something similar at Vanguard in the near future, so thanks for the heads up.