Has Vanguard Lost its way?

[Luvtoride]

Another interesting article by John Rekenthaler of Morningstar. A good analysis of how the company was built and how they are changing in order to remain competitive in an industry that has tried to emulate Vanguard.

https://www.morningstar.com/articles/1071801/has-vanguard-lost-its-way

The article mentions the decline in Customer Service at Vanguard, which has been mentioned frequently here. The most striking difference from the old Vanguard is the addition of Personal Advisor Service (PAS) and the offering of Advice Select funds. Although still relatively cost efficient, there is no mention of performance of these in-house funds available only to PAS clients.

My company's 401k plan is managed through Vanguard and besides the low costs, the performance of the funds offered have been average while customer service has declined.

 

[target2019]

This is a good summary paragraph:

"At long last, that formula has run its course. The trouble is, Vanguard has attracted too many imitators. No longer does Vanguard walk alone. These days, BlackRock (BLK), State Street (STT), Fidelity, and Schwab (SCHW), among others, offer comparably priced index-fund lineups. To be sure, Vanguard remains the industry’s leader, attracting about 40% of this year’s net index-fund sales, but it faces fierce competition--leading to pressure on its funds’ expense ratios. As with the rest of the industry, Vanguard has been forced to cut its index funds’ costs, repeatedly."

Their moat is declining. They'll still be part of the game, but without the Bogle influence.

They still have our older accounts, but Schwab has 40.3%, while Vanguard has 41.0%.

 

[Lsbcal]

Vanguard service response has deteriorated in my experience. However, it is not a big issue for me as I do most of my stuff online. Phone wait times are sometimes too long.

I am guessing that this will be addressed as they automate some more, Covid issues fade, and they hire more staff. They have upgraded their site.

 

[RetiredHappy]

We tried to set up our accounts with Vanguard and were on hold for around 24 hours, cumuatively, and dealt with agents who didn't know what they were doing over a 2-week period, and we gave up. Made an appointment with the local Fidelity office and they did everything for us - set up our trust and IRA accounts, and facilitated transfers of accounts out of our previous investment firm. We have an assigned CPA/FA whom we have met several times to discuss our investment strategy - all free. We also got a nice bonus for transferring the $ into Fidelity.

 

[JoeWras]

Vanguard service response has deteriorated in my experience. However, it is not a big issue for me as I do most of my stuff online. Phone wait times are sometimes too long.

I am guessing that this will be addressed as they automate some more, Covid issues fade, and they hire more staff. They have upgraded their site.

What bothers me is their automation is behind and frequently just plain sucks. bogleheads has a multi-page discussion on 2FA and the security holes that exist.

Personally, I ran into quite a fright yesterday. I was attempting to donate some funds to my Vanguard Charitable DAF. The current method is to do it all from the Vanguard side.

It took me some time to analyze my specID shares in order to donate the highest gain. (Aside: Fidelity has a button to automatically do this -- just sayin'). This was a big donation so I had to get it right. It took some thinking and double checking. Once I got that input, it gave me a screen asking me how to invest it on the Charitable side. I spent another 2 minutes pondering that. All was well. I then pressed submit and a big red font warning comes up saying basically "Something went wrong and the transaction didn't go through. Please call us at ...."

Grumble, grumble, grumble. I figured it must have timed out. It felt like a time out. It just wasn't handled graciously, like a world class organization would handle it.

So I tried it again, knowing all my numbers, and it flew through just fine. No need to call.

No biggie, just another subpar web experience from Vanguard. I'm used to it.

 

[Gumby]

In my experience with a variety of places, not just Vanguard, complication leads to mistakes and always takes longer to accomplish. The simpler and more standard you can set up your financial affairs, the easier you will be able to do more things by computer alone. And, if you have to deal with customer service, the easier it will be for them to understand and do what you want. If you want something special and out of the ordinary, you may have a rough time of it. So keep it simple.

To analogize, don't be the guy who goes into the restaurant and wants dish A, only substitute side C for side B and prepare it in X manner instead of Y manner, and put Z in a separate dish on the side. Just pick something off the menu or don't.

 

[Lsbcal]

Vanguard should endeavor to be first in class. We should not have to modify our investing to suit the service and software. If they have to increase ERs somewhat I would vote yes.

 

[Gumby]

Vanguard should endeavor to be first in class. We should not have to modify our investing to suit the service and software. If they have to increase ERs somewhat I would vote yes.

Well, that's the problem with a lot of things. You may choose two of quick, good or cheap, but not all three.

 

[RetiredHappy]

Well, that's the problem with a lot of things. You may choose two of quick, good or cheap, but not all three.

Vanguard is not the only game in town. We tried to be their customers, they failed and we moved on.

 

[Gumby]

Vanguard is not the only game in town. We tried to be their customers, they failed and we moved on.

I have funds with several different fund companies. In my view, the perils of complication are universal, and not just in investing. For example, if you ever had to deal with court clerks, you would know that your best chance of success is to make your request as standard as possible. Things that are out of the ordinary have a much greater chance of being screwed up.

 

[FLSUnFIRE]

And I had issues with Fidelity when I opened my HSA. "yes, we know the website blows up when you hit that button but we'll leave the button there so it blows up and you have to call"



I think the average Vanguard shareholder is very happy.. the few frustrated are more vocal... not to say they are perfect but I'm still a fan. As a boring buy and hold investor, it's rare I do anything weird and have had no issues. The transition of their systems has been a but goofy but, (perfect analogy?) turning a ship ain't easy or fast so I'll give them a break. I worry more about them becoming "wise" like TMF did and losing their way over time.



At some point I will try to consolidate my brokerage accounts with them.. not a big deal but slightly annoying to have a Roth account, a tIRA account and two brokerage accounts (one pre-transition and one with my transferred mutual funds). I am debating converting my VTSAX to ETF as well.

 

[MichaelB]

After reading the link in the OP it’s not clear that Vanguard has a real issue. There’s a reference to one study, the rest of the article is anecdotal and speculative, and seems to be be more concerned with Vanguard’s business model. It references expenses and revenue but provides no numbers. I think the case suggested by the article's title was not well made.

It is true that Vanguard is expanding into other investment products and services, but low cost passive investment options are still its mainstay.

Vanguard’s brokerage service may be a bit clunky, but that’s not their core business, and many of the complaints are really about what Vanguard is not, which is a user friendly low cost brokerage and trading platform.

 

[mystang52]

When I first moved all of my retirement funds to Vanguard, my personal account rep was invaluable to me. I would have periodic telephone meetings with him over the years and he was very helpful. Then he either left, or was promoted. His replacement was .........eh.
A few months ago I looked at my account and saw I had yet a new advisor, with her picture. Wow she looked young. I never got an email or call from her, and now I see I have a "team."
At this point I have a set-and-forget allocation, but in a couple of years I have to deal with RMD, and thought I'd use Vanguard's counsel when that happens. I also had a comfort level knowing DW had someone to call for general advice whenever I die. My affection for Vanguard has taken a dip.

 

[Montecfo]

It's interesting to me that Vanguard does not participate in the annual review of brokerages at Barron's and Kiplinger. I have always viewed that as a bad sign.

It's a very competitive space and there are better options in my view.

 

[rodi]

Hubby has some IRA money at Vanguard but I moved all my accounts from them after my dad passed. My sister and I inherited his IRA. They lost the certified death certificate... so another was sent. They lost it again. So a third was sent. They actually received that one. This effectively froze the account to any trading between 10/2007 and 3/2008. The market was crashing so stressful.

Then a few months later I started looking at having the 529's that my dad had set up and seeded for my sons transferred to me as the owner. (The boys were beneficiaries but I was the successor). The 529 people could see that my dad had died, could see that death certificates had been submitted... but they needed their own certified copy of the death certificate. So all in - 4 death certificates were required to transfer my dad's accounts upon his death - and months were lost.

That said - when DH was opening his IRA and rolling over his older IRAs and 529's - they were great.

 

[RetMD21]

I've been happy with Vanguard. My current Flagship representative has been very helpful. I had a problem when I switched my mutual fund accounts to brokerage. Initially they reported it as a 100% distribution and sent me a 1099R but they fixed it. I don't trade much and they give more free e trades than I need. RetiredHappy had a horrendous experience trying to bring accounts to Vanguard which was disappointing. I used a half dozen brokers over the years but have moved everything to Vanguard for simplicity.

 

[target2019]

This article puts Vanguard in the investment advisory category of BlackRock and StateStreet.
https://en.wikipedia.org/wiki/The_Vanguard_Group

Along with BlackRock and State Street, Vanguard is considered one of the Big Three index fund managers that dominate corporate America.

 

[DayDreaming]

I've seen various complaints here about Vanguard's customer service. I think I've only ever had to call their customer service once in the 15 years or so that I've been with Vanguard and they helped me without any problems. I guess my investment life is pretty simple and I do everything I need through their website. I'm wondering what sort of things people need to use Vanguard's customer service for?

 

[JoeWras]

I've seen various complaints here about Vanguard's customer service. I think I've only ever had to call their customer service once in the 15 years or so that I've been with Vanguard and they helped me without any problems. I guess my investment life is pretty simple and I do everything I need through their website. I'm wondering what sort of things people need to use Vanguard's customer service for?

I was like you, never really need to call. Until recently. I'll give you an example. I needed to roll over a conduit IRA into my Fidelity Netbenefits 401k. I found nothing on the web to allow this.

I called them. They dropped a pointer to a form in my message box and I finished it online with no further action from a call required. But I still had to make the call to get the form. Perhaps it is out there. I couldn't find it.

 

[MRG]

Hubby has some IRA money at Vanguard but I moved all my accounts from them after my dad passed. My sister and I inherited his IRA. They lost the certified death certificate... so another was sent. They lost it again. So a third was sent. They actually received that one. This effectively froze the account to any trading between 10/2007 and 3/2008. The market was crashing so stressful.

Then a few months later I started looking at having the 529's that my dad had set up and seeded for my sons transferred to me as the owner. (The boys were beneficiaries but I was the successor). The 529 people could see that my dad had died, could see that death certificates had been submitted... but they needed their own certified copy of the death certificate. So all in - 4 death certificates were required to transfer my dad's accounts upon his death - and months were lost.

That said - when DH was opening his IRA and rolling over his older IRAs and 529's - they were great.

How horrible.

I believe Vanguard allows death certificates to be uploaded today, someone else posted this in the last couple years.

Death claims are a PIA regardless of your provider. I've been in areas where they're processed and it's unlike the rest of the processes, however they reuse the many of them. I guess the providers don't have enough volume to justify separate hardware and staff.

 

[Lsbcal]

I've seen various complaints here about Vanguard's customer service. I think I've only ever had to call their customer service once in the 15 years or so that I've been with Vanguard and they helped me without any problems. I guess my investment life is pretty simple and I do everything I need through their website. I'm wondering what sort of things people need to use Vanguard's customer service for?

About a month ago I needed so help to deal with a IRA to Roth conversion. I cannot remember the details now but there was some confusion with RMD's and that. It took quite awhile to get someone who could answer my question. It appears they have a lot of trouble servicing clients at this time of year with end of year issues.

Usually I do everything myself online.

 

[sengsational]

No biggie, just another subpar web experience from Vanguard. I'm used to it.

It seems that subpar web experiences are pretty common these days. I did my Roth Conversion on Fidelity's site a couple of days ago. I put my numbers in, it spun, and I got a red message that it didn't work, try again later. Ok. So later I tried and it gave the same error message. I figured I'd try another day. But before the day was out, Fidelity called and left a message... said something about my needing to address a "short"? Ha! Both of the conversions went through! I called back and they said they'd reverse the duplicate. As for Vanguard's web site, I trade there, and it's fine.

It seems like all these financial institutions are trying to change things to just "modernize" or "beautify" their web site. That usually breaks things and makes it hard for users to figure out how to do something they used to know how to do. Just because Microsoft has been doing that for 20 years and annoying everyone doesn't mean it's good for users . I'd rather they didn't tinker with this stuff. Just leave it alone!

 

[JoeWras]

It seems that subpar web experiences are pretty common these days. I did my Roth Conversion on Fidelity's site a couple of days ago. I put my numbers in, it spun, and I got a red message that it didn't work, try again later. Ok. So later I tried and it gave the same error message. I figured I'd try another day. But before the day was out, Fidelity called and left a message... said something about my needing to address a "short"? Ha! Both of the conversions went through! I called back and they said they'd reverse the duplicate. As for Vanguard's web site, I trade there, and it's fine.

OUCH!

I was also afraid that my work on VG would result in a duplicate. Thankfully it doesn't appear to have. Better to error out than do something behind the scenes. Score +1 for Vanguard on error handling, even if it was clumsy.

 

[Chuckanut]

How horrible.

I believe Vanguard allows death certificates to be uploaded today, someone else posted this in the last couple years.

Death claims are a PIA regardless of your provider. I've been in areas where they're processed and it's unlike the rest of the processes, however they reuse the many of them. I guess the providers don't have enough volume to justify separate hardware and staff.

The reality is that if death claims were easy, the fraudsters would probably have drained the accounts of many of us here. Think of the difficulties as a effort tax one one's success.

 

[PatrickA5]

I dumped VG a couple of years ago when they got rid of their CMA account and I couldn't add a secondary beneficiary to a joint account.

For the most part, I'd been pleased with VG the previous 20 years. I had a great Flagship advisor until he went elsewhere. He was replaced with a person that had just graduated college and previous financial experience was being the treasurer of her college rowing club (per Linkedin). She would call every once in a while, although very nice, I always felt like I was the one doing the training.

Moved everything to Fidelity and have been happy. I have a dedicated, local, free financial advisor that doesn't try to sell me anything, but is available if I have questions.