Why he is not leaving VG

[mickeyd]

Allan Roth gets it. He tells us why he is not leaving VG. Many of us could have written this, but he did. Enjoy!

https://www.etf.com/sections/index-...tm_medium=email&utm_campaign=weeklynewsletter

Why does Vanguard pay so much more? Nafis Smith, head of taxable money market funds at Vanguard, told me, “Our [ownership] structure enables us to keep costs low, so that investors keep more of their returns. Vanguard is returning all of their earnings from cash, less the 0.11% expense ratio that Smith noted had declined from 0.33% two decades ago.   

Vanguard also returns 100% of profits from securities lending to fund holders, while other firms don’t disclose what they do with the profits. One also has to wonder if for- profit firms are executing trades based on getting the best price for the investor or making the most money for directing order flow.  

 

[ERD50]

Allan Roth gets it. He tells us why he is not leaving VG. Many of us could have written this, but he did. Enjoy!

https://www.etf.com/sections/index-...tm_medium=email&utm_campaign=weeklynewsletter

Why does Vanguard pay so much more? Nafis Smith, head of taxable money market funds at Vanguard, told me, “Our [ownership] structure enables us to keep costs low, so that investors keep more of their returns. Vanguard is returning all of their earnings from cash, less the 0.11% expense ratio that Smith noted had declined from 0.33% two decades ago.

Vanguard also returns 100% of profits from securities lending to fund holders, while other firms don’t disclose what they do with the profits. One also has to wonder if for- profit firms are executing trades based on getting the best price for the investor or making the most money for directing order flow.  

I'm reposting with the "CODE" tags removed, which made it hard to read (you probably meant to use "QUOTE" tags?).

Anyway, after having a real need for a Brick & Mortar presence while helping to settle FIL's estate, I've been moving most of my stuff to Fidelity, as they have enough offices scattered around for convenience (others use Schwab for the same reason).

Seems like all those costs mentioned are reflected in the expense ratio, I'm not sure anything else matters, regarding cost?

-ERD50

 

[RobbieB]

And that is why I'll never be at Vanguard. I like brick houses.

 

[Another Reader]

The money market funds are where the difference shows. The equity index funds and ETFs seem to be comparable to other low cost index funds and ETFs at their competitors.

I will continue to keep some cash at Vanguard in their money market funds because of that difference. The equity investments will stay elsewhere. Although I do have some Wellington and a little Wellesley that I am not planning to sell.

 

[mrfeh]

I'm reposting with the "CODE" tags removed, which made it hard to read (you probably meant to use "QUOTE" tags?).

Anyway, after having a real need for a Brick & Mortar presence while helping to settle FIL's estate, I've been moving most of my stuff to Fidelity, as they have enough offices scattered around for convenience (others use Schwab for the same reason).

Seems like all those costs mentioned are reflected in the expense ratio, I'm not sure anything else matters, regarding cost?

-ERD50

+1

VG has nothing over Fidelity or Schwab these days. I'll take the better web experience and physical offices.

 

[VanWinkle]

I think I make it obvious that I agree with Alan on this one!! I have a Fidelity
account also, but see no advantage over Vanguard. I keep it simple, so maybe a person who needs more assistance would disagree with me. I find Fidelity's site as clunky and hard to navigate. I think it is what you're familiar with that counts when it comes to websites.

 

[steelyman]

I’m still getting used to Vanguard’s redesign of their mobile app (my primary method of access as I rarely use a desktop). Seems to be improving slowly.

 

[Phroig]

If you don’t exclusively index, the low-expense managed funds, especially from Wellington & Primecap, are very attractive, as are the municipal and some taxable bond funds.

 

[jebmke]

And that is why I'll never be at Vanguard. I like brick houses.

We have a local Schwab and also some high end wealth managers. A lot of folks locally use them. Everyone has different needs. I haven't been inside a financial institution since 2010 when I closed my BofA account.

Next year I start SS so I may never have another transaction with VG again until my wife and I both croak.

 

[Badger]

As much as I would like to have access to brick and mortar I like to keep things simple. We only have Wellington and Wellsley in our IRA accounts plus cash in MM accounts at Vanguard. Since I have the accounts set up for a few automatic processes including RMD I don't see any advantage to change and start the process all over again. I also do not have a need or desire to buy any new MF. The only changes that we make during the year are for the automatic RMDs. As a result our investment "life" has become so simple as to not need hand holding. Life is too short and getting shorter all the time.

Cheers!

 

[Rianne]

I look at the brick-and-mortar issue this way. I have 0 face to face relationships with any company/insurance/health agencies. All bill paying, utilities, HSA, and health insurance, car/homeowners/umbrella policies are online. Social Security and Medicare, and bank transactions are also online or over the phone. Even purchasing cars is online these days. Over the years, dealing face to face with FA's (we no longer do) was less efficient and got us invested in things that were losers. Corporate FA's were the worst.

I guess if you feel more comfortable face to face with a person, it's all good. I don't see the value in it.

 

[ERD50]

I look at the brick-and-mortar issue this way. I have 0 face to face relationships with any company/insurance/health agencies. All bill paying, utilities, HSA, and health insurance, car/homeowners/umbrella policies are online. Even purchasing cars is online these days. Over the years, dealing face to face with FA's (we no longer do) was less efficient and got us invested in things that were losers. Corporate FA's were the worst.

I guess if you feel more comfortable face to face with a person, it's all good. I don't see the value in it.

And that was exactly how I felt... until I needed a Medallion signature in the process of settling my FIL's estate.

I admit, the odds of needing any of these services is slim, but with no other real advantage to Vanguard at this time, I decided that sways it to an outfit with B&M.

I forget the details, but the other successor trustee was out of state, and there was another process in the settlement (this might have been my when my MIL passed a few years later) that was made simpler because he could just go to a local Fidelity office to co-sign on something.

-ERD50

 

[harllee]

I have been with Vanguard for about 40 years, I mainly have index funds with them. I used to get great service. I had a personal advisor I talked to every few months, got good advice and he could answer any questions I have. Now I no longer have a personal advisor and I have difficulty getting through by email or phone to get questions answered. Earlier this year DH had a qualified charitable distribution check from his IRA that got stolen in the mail. To get that check replaced he had to call Vanguard, sometimes he was on hold for hours and he would just get passed around to different people. It took 6 months to get the check reissued after many hours of hold on the phone. Ridiculous. We are looking at transferring all our assets elsewhere, to someplace that actually answers the phone. We don't need a bricks and mortar place, we just need a place that will answer phone calls or emails.

 

[Rianne]

I have been with Vanguard for about 40 years, I mainly have index funds with them. I used to get great service. I had a personal advisor I talked to every few months, got good advice and he could answer any questions I have. Now I no longer have a personal advisor and I have difficulty getting through by email or phone to get questions answered. Earlier this year DH had a qualified charitable distribution check from his IRA that got stolen in the mail. To get that check replaced he had to call Vanguard, sometimes he was on hold for hours and he would just get passed around to different people. It took 6 months to get the check reissued after many hours of hold on the phone. Ridiculous. We are looking at transferring all our assets elsewhere, to someplace that actually answers the phone. We don't need a bricks and mortar place, we just need a place that will answer phone calls or emails.

We've been with VG for 35+ years and never had to hold more than 10 minutes and were given a call-back option if holding would be longer. We got the call-back pretty quickly. If we had a general question, that would be taken care of by the initial person we spoke with. If we needed a specialist in bonds or transfers, tax questions (for the most part referred us to a tax accountant) could answer general questions.

I don't know why some people have CS problems with VG. Voice verification gets us through quickly. When you step up to more personal financial issues, there's a unique password they make us spell because it's super weird on purpose.

I do agree they no longer offer a personalized advisor free of charge. The fee is .03%, which is $$ x .003. So $1M portfolio would be $3000/year. I guess I don't have a problem with that but we don't use that service.

 

[harllee]

We've been with VG for 35+ years and never had to hold more than 10 minutes and were given a call-back option if holding would be longer. We got the call-back pretty quickly. If we had a general question, that would be taken care of by the initial person we spoke with. If we needed a specialist in bonds or transfers, tax questions (for the most part referred us to a tax accountant) could answer general questions.

I don't know why some people have CS problems with VG. Voice verification gets us through quickly. When you step up to more personal financial issues, there's a unique password they make us spell because it's super weird on purpose.

I do agree they no longer offer a personalized advisor free of charge. The fee is .03%, which is $$ x .003. So $1M portfolio would be $3000/year. I guess I don't have a problem with that but we don't use that service.

When we have called Vanguard over the last few months we have to hold for at least an hour per call to even get a person on the phone, sometimes 2 hours. What number do you have that gets answered in 10 minutes? I would like to have that number. We also send emails but the emails always say we have to call Vanguard.

 

[RetMD21]

Seems like all those costs mentioned are reflected in the expense ratio, I'm not sure anything else matters, regarding cost?

-ERD50

Not exactly, securities lending is a negative cost and the profits are paid directly to the fund. You have to look at the performance of the fund relative to the index. Vanguard and Ishares can sometimes outperform the index based on this revenue.

Here is a Barrons article https://www.barrons.com/articles/etfs-hidden-source-of-returnsecurities-lending-1523054918

 

[bada bing]

I very much admire Jack Bogle. His championing of low costs and indexing was/is monumental. His other innovation - customer ownership - not so much IMO. I've never had the best service at any co-op, the difference between private utilities verses customer "owned" comes to mind. I guess I'm firmly a capitalist at heart and believe in the profit motive driving efficiency and innovation.

I dumped my VG accounts about 10 years ago, after being there 20 years. I still own VG ETF's in my Schwab account. If your needs are simple, I can see discerning no difference between VG and the other two biggies, Schwab and Fidelity. Moving even a bit up the complexity ladder and VG starts to loose out. The issue that did it for me was solo-401k. And then there was consolidating my DF's accounts for DM after dad died. Two VG fumbles. JMO & JME, but Schwab smokes VG service when and if you need it. The thing to think about is maybe you won't have any more complicated issues for a very long time, but most of us do eventually.

 

[Rianne]

When we have called Vanguard over the last few months we have to hold for at least an hour per call to even get a person on the phone, sometimes 2 hours. What number do you have that gets answered in 10 minutes? I would like to have that number. We also send emails but the emails always say we have to call Vanguard.

Seriously? Now, this makes me think the voice-activated security method gets us through almost immediately. When the agent comes on she/he always thanks us for having voice verification. Do you use voice verification? I cannot think of any other reason. 1-2 hours on hold is awful! We have to say "At Vanguard my voice is my password" Then if our voice is off for some reason, we say some other sentence. Then get through promptly.

We use the number on the homepage of the website. I don't know it offhand, but it's the general number.

 

[RetMD21]

Here is another Allan Roth article talking about mutual fund fees. Ric Edelman makes some nonsensical and self serving claims about hidden fees at Vanguard and Roth explains about fees. Many investors, IMO, don't understand that trading fees are not part of the stated expense ratio. https://www.cbsnews.com/news/ric-edelman-again-accuses-vanguard-of-hiding-fees/

 

[harllee]

Seriously? Now, this makes me think the voice-activated security method gets us through almost immediately. When the agent comes on she/he always thanks us for having voice verification. Do you use voice verification? I cannot think of any other reason. 1-2 hours on hold is awful! We have to say "At Vanguard my voice is my password" Then if our voice is off for some reason, we say some other sentence. Then get through promptly.

We use the number on the homepage of the website. I don't know it offhand, but it's the general number.

Yes we use the" voice is my password" after we finally get that far in the call. It usually takes at least an hour to get that far. We have called all different times, early and late, still takes at least an hour on hold. We have used several different numbers, the one on the website, the one Vanguard gave us by email, one for retirement plans etc. This is all in the last month or so. When was the last time you called?

 

[NW-Bound]

And that was exactly how I felt... until I needed a Medallion signature in the process of settling my FIL's estate.

I admit, the odds of needing any of these services is slim, but with no other real advantage to Vanguard at this time, I decided that sways it to an outfit with B&M.

I forget the details, but the other successor trustee was out of state, and there was another process in the settlement (this might have been my when my MIL passed a few years later) that was made simpler because he could just go to a local Fidelity office to co-sign on something.

-ERD50

This mention of Medallion signature reminded me of this incidence with Vanguard.

Some years ago, I opened an account with Vanguard, mainly to buy some Wellesley and Wellington shares after learning about these MFs from this forum. I did it all online, and funded the account with a transfer of cash from my checking account at Bank of America.

A month later, I decided to put more money into the Vanguard account. No can do. The message from the Web page told me I had to call, which I did. The Vanguard rep told me I needed a Medallion signature guarantee from Bank of America. Never heard of this Medallion guarantee before. I protested that this was to transfer money in, and this was the same account where the original money came from. No matter, I still had to get that signature guarantee.

I then found out that not all BoA branches have a manager with a Medallion stamp. It caused me a bit of work, but I had to do it else I could not even get my money back out from Vanguard.

To this day, I still don't understand why Vanguard demanded me to do that. I have not bothered to put in more money since.

 

[Rianne]

Yes we use the" voice is my password" after we finally get that far in the call. It usually takes at least an hour to get that far. We have called all different times, early and late, still takes at least an hour on hold. We have used several different numbers, the one on the website, the one Vanguard gave us by email, one for retirement plans etc. This is all in the last month or so. When was the last time you called?

Lately, we've been calling approx. twice a week and some days multiple times because VG changed the format which changed our portfolio balance depending on who signs in to the account. Super frustrating, but it's our fault because we filled out the form incorrectly and had to get a notary and 2 witnesses, twice!

Before the format change, DH/me could see both Roth balances and the total of our portfolio. After the format change, the new format only showed the Roth balance of whoever signed in to the account. That threw off the balance we're used to seeing when signing in individually.

Plus, we sold our bond funds a while back with a small loss and started laddering T-bills and CDs. We did not know how to do that and needed guidance. That took a few calls to walk us through the process until we felt comfortable doing it on our own.

We also changed our beneficiaries on the Roth and T-IRA accounts to all children rather than adults who are financially fine. We wanted to make sure we correctly deleted and added so no confusion.

That is a lot of calling and hand holding! Honestly, no issues, and patient, non judgy assistance. We felt stupid a few times but the agents understood and walked us through it.

 

[Dtail]

Never had an account at Vanguard or Schwab, but am happy with the Fidelity service and website. Vanguard ER fees on funds use to be ower than Fidelity, but really anymore. I do find the website logical and easy to move about. The B and M aspect is an extra plus, which is rarely needed.

 

[Badger]

" Quote:
Originally Posted by ERD50 View Post
And that was exactly how I felt... until I needed a Medallion signature in the process of settling my FIL's estate.

I admit, the odds of needing any of these services is slim, but with no other real advantage to Vanguard at this time, I decided that sways it to an outfit with B&M.

I forget the details, but the other successor trustee was out of state, and there was another process in the settlement (this might have been my when my MIL passed a few years later) that was made simpler because he could just go to a local Fidelity office to co-sign on something.

-ERD50"


The 2 times that I needed a Medallion signature (I don't remember why or for what reason) I went to my nearby local Credit Union and obtained them for free. No big deal.
Don't most banks and CU offer this service?

Cheers!

 

[ERD50]

" Quote:
Originally Posted by ERD50 View Post
And that was exactly how I felt... until I needed a Medallion signature in the process of settling my FIL's estate.

I admit, the odds of needing any of these services is slim, but with no other real advantage to Vanguard at this time, I decided that sways it to an outfit with B&M.

I forget the details, but the other successor trustee was out of state, and there was another process in the settlement (this might have been my when my MIL passed a few years later) that was made simpler because he could just go to a local Fidelity office to co-sign on something.

-ERD50"


The 2 times that I needed a Medallion signature (I don't remember why or for what reason) I went to my nearby local Credit Union and obtained them for free. No big deal.
Don't most banks and CU offer this service?

Cheers!

I don't think it is always so easy. Unlike a notary, who just verifies you have shown ID to 'prove' you are who you are, the person providing the Medallion signature is actually on the hook for the amount of the transfer. It ups the game. I think a 3rd party would be reluctant, what's in it for them?

But maybe that might not have been too hard, I don't know - but there were other papers involved (paper stock certificates) that would have had to have been mailed and insured if we went with Vanguard, but the local B&M Fidelity took them in person.

Probably never a concern for almost all of us, but as I said, with no obvious advantages to Vanguard, why *not* go to a place with a B&M presence, just in case?

-ERD50