Why vanguard's expenses are so cheap, lousy customer service/hidden fees

[Olav23]

I am glad that the reviews are mixed, and that I am not the only one with 'issues'.

I really have to wonder if we are all having mixed experiences due to our account sizes. My guess is the Admirals and Voyagers speak to a different "class" of customer service representative than the great unwashed...

 

[justin]

I've never had a problem with them... Although I transact business online almost exclusively. Under $250k in assets with them. They did IRA's successfully. Rolled DW's 401k into a rollover IRA with them - no problems. No where near the headaches I had at Edward Jones...

Voyager and Flagship do get their own set of customer service reps. Flagship even has a particular CSR assigned to you.

 

[Alex]

How you can blame Vanguard for this is beyond me. You read the prospectus, right? No ? what? when you bought the fund you just clicked the " I accept" button??

I hope you've at least learned something for your $450.00 (hint - next time read the &%$&^# prospectus!!)

PS - Good luck going forward!!

 

[Texas Proud]

Olav...

But your problem was not caused by a customer rep... it was an online issue and I don't think that making a trade we have different screens... You were not happy with them not giving you back your money, but that is not 'bad' customer service...

Now others have said they had problems with them and with what some has told them... that is too bad... but did you follow through with a complaint to a supervisor. Mostly the people are low paid people with not much knowledge... and they can't do a lot out of the ordinary...

I had a friend who had a small account and had some problems getting her 403 moved to them... but most of it was with AIG and her HR dept not signing things right or using the correct forms... then she mailed the form in and the next day a Vanguard rep in town called her and said 'send it to me'... well, it took some time to track it down so he could finish the transfer.. took over three month, but only a small part was Vanguard..

EVERY company has bad reps.. it is just the way it is.. you can not police them all.. to me it is how they respond when you elevate it to the next ore even the next one after that that will tell you about the company...

 

[lswswein]

If you use customer service a lot may I recommend Fidelity? They have great customer service and have a index funds with ER less than Vanguard's in some cases. I have both fidelity and vanguard accounts but I have never called vanguard's custimer serive till now. Vanguard is more oriented towards people who pay attention the details and also Vanguard sticks to the rules are rules policy - They don't bend the rules to be nice.

-h

 

[chinaco]

I had a problem with Vanguard once about 10 years ago. Fund trade got lost. I could not get the Customer Service Rep to fix it. I called them multiple times and moved my way up to the supervisor. After several calls, I called corporate headquarters and complained. Come to find out VG had outsourced the call center (for Variable Annuities). Long-story short, they fixed it.


I have had no problems since. The CR reps are always courteous and helpful.

The cost savings at VG far outweigh the infrequent problem.

 

[perinova]

Vanguard is more oriented towards people who pay attention the details and also Vanguard sticks to the rules are rules policy - They don't bend the rules to be nice.

-h

true.
Also there is way on Fidelity online to cancel a trade which hadn't occur. That is what he was trying to do on the phone. Vanguard needs to do a little bit better here. Overall there is a consensus that Fidelity online experience and customer service is better. They could be loosing some customers to Fidelity since Fidelity seems to have lowered some expense ratios.
Specially good companies with otherwise good products may loose customers in instances like this one. Customer service can make a BIG difference. This whole thread is just the proof of it.

For example my son got a gift last Xmas that didn't work right thought that this company was not any good until just a phone call and they sent a replacement. No questions asked. I was ready to badmouth that company. Instead I now feel pretty good about the whole thing.

 

[chinaco]

Also there is way on Fidelity online to cancel a trade which hadn't occur.

It seems to me that the differences are in the policies instituted (by mutual fund companies) and how they may interprest certain SEC regulations and their fundamental beliefs and goals. If you read VGs liturature, they tell you to go elsewhere if you trade frequently. On the regualtory side... I know from experience that if you two different people will interpret regulatory rules (that are fuzzy) differently. Look at GAAP accounting and FASB. Think about how HR works in most large corporations. Nowadays they tend (try) to operate fairly consistently with everyone for fear of being sued. While some of VG practices may not seem convenient... I believe they are trustworthy and take a conservative point of view on how they process transactions.

I believe Vanguard is very conservative (look at Bogle) with these type of issues to be even handed cusotmers so there is no doubt that they are adhering to the laws and regulations. Plus they are a Mutual company. Look at the scandal a few years ago where certain firms were allowing hedge funds to do late trades.

Fidelity on the other hand... Is probably instituting policies that they feel are legal and give them a competitive advantage in the area of customer satisfaction. From their perspective, they probably do not want to lose any customer (naturally). If they are operating in a grey area with regard to canceling trades on mutual funds... I do not know. If fidelity was really interested in your best interest as a customer, they would lowerer their fees and loads on all funds. Let's face it, canceling trades does not impact Fidelity, rather it potentially impacts the long-time share holders of shares in those funds. Most long-terms share holders are not canceling trades.


All in all, I will stick with VG. I have been with them for about 15 years and am satified. I have had some fidelity funds. In fact we hold one now (in a 401k) mainly because of limited options available. I believe their fees are high and because of that, I believe it puts me at a disadvantage. The proof is in the long-term performance and total return of the investments.

To sum it up VG and Fidelity are in the same industry, but they have fundamentally different attitudes and base beliefs... not to mention their missions. VG is about giving customers/indirect owners the lowest cost ,fair deal with a no BS approach. Fidelity is a bit more flash and about making boat load of money for shareholders. Nothing wrong with making money... but as a customer, I would like things tilted my way. I look at it like this. over the last 15 years If I had invested with Fidelity instead of VG, I would probably be lighter in the asset dept because of the compounded 1%-1.25% difference in the maint fees. As far as front-end loads go forget it. There are very few funds that I will pay a load to enter. I have done it, but it is very rare.