Vanguard Fee Cuts

[USGrant1962]

Vanguard put out a big announcement that they are further lowering fees on many of their funds. They say they will save investors $350M/year. Press says it will put even more pressure on competitors, which is probably true. From Financial Times:

Vanguard puts pressure on rivals with large round of fee cuts

Money manager claims reductions will save clients $350mn this year

www.ft.com

Here's Vanguard's announcement:

Announcing the largest fee cut in Vanguard history

Effective February 1, 2025, the company has lowered the expense ratios of 168 share classes across 87 funds.

corporate.vanguard.com

While lowering fees is good, I'm kind of willing to pay 0.01% more if they could get their website and customer service act together. Or keep $100M of the $350M per year to improve services.

Thoughts?

 

[Koolau]

I figure Vanguard must have saved a bundle by forcing everyone into their brokerage system. Their threats of $200 fees for each fund not in the brokerage convinced me to do their bidding. Maybe that $200 fee really was their extra cost and since we all (probably) moved into the brokerage, they now have extra funds to offer the lower fees and squeeze the competition.

In any case, I always like lower fees and I don't ask much of Vanguard other than low fees and half decent service. YMMV

 

[frank05]

The last time I interacted with a human at Vanguard was over five years ago when converting my account to a living trust. I rather have a good website/app. They took a huge step backwards when they changed their website several years ago but they are slowly making improvements. Like I just noticed that I can hide my old non-trust account on their website.

 

[Tom52]

I would like to see Vanguard improve their customer service. It was a bit of a nightmare getting my RMD set up for my 401k that Vanguard administers. They refused to answer basic questions and advised I needed to consult a tax professional. (I don't have a tax professional). All I wanted to know was how much they took out in federal taxes based upon my RMD total, so I could sent a W-4P to get the desired amount of additional Federal tax withholding. They refused to tell me. I am so frustrated I am considering moving everything to Fidelity. It is really difficult to get to talk to a human, and then when you finally do, they are often not the department you need to talk to and then get put back on hold. I could at least go to a local B&M Fidelity office and get answers. Sorry, end of my rant.

 

[MarieIG]

Vanguard put out a big announcement that they are further lowering fees on many of their funds. They say they will save investors $350M/year. Press says it will put even more pressure on competitors, which is probably true. From Financial Times:

Vanguard puts pressure on rivals with large round of fee cuts

Money manager claims reductions will save clients $350mn this year

www.ft.com

Here's Vanguard's announcement:

Announcing the largest fee cut in Vanguard history

Effective February 1, 2025, the company has lowered the expense ratios of 168 share classes across 87 funds.

corporate.vanguard.com

While lowering fees is good, I'm kind of willing to pay 0.01% more if they could get their website and customer service act together. Or keep $100M of the $350M per year to improve services.

Thoughts?

Yes, I would prefer an improvement in their CS however, I don't believe that would have been an option even had fees not been lowered.

I am going to have to call VG CS this week regarding another "improvement" in their website and my inability to make a Roth conversion and I am not looking forward to it.

 

[disneysteve]

I’m good with lower fees. The bulk of our portfolio is there. Very easy user-friendly website, decent app, and great customer service any time I’ve ever had to call them. The switch to brokerage accounts was a huge benefit as it opened up the whole world of investing to the accounts rather than being boxed in to just their mutual funds.

 

[imjustawarrior]

We had all of our non-work related stuff at Vanguard for over 20 years. Last year, we moved it to Fidelity. It seems like the best of both worlds to me. Low cost excellent Vanguard ETFs and Fidelity excellent customer service. Maybe this is how Vanguard saves money to lower fees. People go to other brokerages.

I do miss the excellent Vanguard MMF and being able to do all of my DW's IRA/Roth stuff online; otherwise, Fidelity if far superior.

 

[swakyaby]

I hold the majority of my investments with Vanguard and really don’t make much demands of them. Just a set it and forget it type of investor. Opening and closing mutual funds have been easy, both through customer service and via their website. Wait times to reach customer service are significantly longer than Fidelity, however, but they do offer to call me back instead of having me wait on hold. I was pleased to see that 3 of my mutual funds benefitted from Vanguard’s new lower expense announcement.

 

[TheWizard]

...I am going to have to call VG CS this week regarding another "improvement" in their website and my inability to make a Roth conversion and I am not looking forward to it.

I did an online Roth conversion at Vanguard back in December, no problem.
It was an in-kind conversion, moving shares of three ETFs from my tIRA to my Roth IRA.

Only small issue was: I assumed the transfer would happen immediately but no, it happened at the 4 PM closing prices which fortunately wasn't much different from the prices four hours earlier.

When I do my next conversion late this year, I'll do it at 3:45 PM to have tighter control over the total dollar amount...

 

[target2019]

Details matter.

" After the cuts, Vanguard’s actively managed bond funds will have an average expense ratio of 0.10 per cent, and its index bond funds will charge an average of 0.05 per cent. The industry average for active taxable bond funds is 0.44 per cent, while taxable index bond funds average 0.08 per cent, according to Morningstar."

This has slight effect on Vanguard-based portfolio funds. Time to measure.

Does this make you want to jump into active funds?

 

[RetiredAt55.5]

Big picture, these fee cuts generate some positive press for Vanguard.

On top of replacing the CEO last year, is this an attempt to stem the exodus of unhappy customers?

 

[Koolau]

The last time I interacted with a human at Vanguard was over five years ago when converting my account to a living trust. I rather have a good website/app. They took a huge step backwards when they changed their website several years ago but they are slowly making improvements. Like I just noticed that I can hide my old non-trust account on their website.

"Hide" non-trust account? I don't understand what that means nor why you would do that if I may ask.

 

[jebmke]

"Hide" non-trust account? I don't understand what that means nor why you would do that if I may ask.

I think it means you can hide zero balance accounts so they don't clutter up the screen. VG will delete these upon request. Not sure if self-delete is available. Never tried.

 

[Koolau]

I think it means you can hide zero balance accounts so they don't clutter up the screen. VG will delete these upon request. Not sure if self-delete is available. Never tried.

Ah, thanks. Makes sense. Heh, heh, I don't have any of those so it didn't occur.

 

[jebmke]

Ah, thanks. Makes sense. Heh, heh, I don't have any of those so it didn't occur.

there were a lot of zero balance accounts lurking when legacy accounts were transitioned to brokerage. In some cases, they seem to go away on their own (or it could be my rep just cleaning up behind me). In other cases I have had to call him and ask him to nuke the account (or just hide it). Same thing happened when I consolidate my Rollover IRA to my Traditional IRA.

 

[jazz4cash]

The app is an embarradsmemt IMO. They could fix it but I think they are so hellbent on saving every penny maybe they don’t believe an investment in technology will reduce overhead or attract more deposits.

 

[Koolau]

The app is an embarradsmemt IMO. They could fix it but I think they are so hellbent on saving every penny maybe they don’t believe an investment in technology will reduce overhead or attract more deposits.

I suppose they lean toward people like me. I rarely even look at my accounts and don't churn and don't often change my AA. So anything fancy or any comparison tools, etc. are wasted on me. I want low fund costs and decent service if I run into a problem. I definitely get low fund costs and I've had mostly decent service when I had questions. YMMV

 

[disneysteve]

The app is an embarradsmemt IMO. They could fix it but I think they are so hellbent on saving every penny maybe they don’t believe an investment in technology will reduce overhead or attract more deposits.

I look at our accounts often enough and use the app for that sometimes, but I would never use the app to conduct business. I only use the desktop for that, so I haven't really noticed any inadequacies of the app. The website is great, though. So much easier to navigate than Schwab is or Ameritrade was.

 

[jebmke]

The app is an embarradsmemt IMO. They could fix it but I think they are so hellbent on saving every penny maybe they don’t believe an investment in technology will reduce overhead or attract more deposits.

I tried it once on my iPad. Went back to the web site on my desktop. Unclear if they have dedicated any resources to the app environment other than create something basic.

 

[RetMD21]

I think the website is great. I haven't had any customer service issues myself but it seems like more investment there could improve satisfaction.

 

[Graybeard]

The Total Stock Market Index MF and the Total International Stock market MF are not listed so there is no benefit to me. Even if they lowered the ER by 1 or 2 bp, I would prefer they get a phone system that acts on what I say not 1 word that they key in on. I seldom call but did today and it was a PITA getting to a person.

To get you to the right place, in a few words what do you want to do?

Question about trading in VUSXX

You want the trade desk?

No matter how I word something I can't do it in one or 2 words.

 

[Koolau]

The Total Stock Market Index MF and the Total International Stock market MF are not listed so there is no benefit to me. Even if they lowered the ER by 1 or 2 bp, I would prefer they get a phone system that acts on what I say not 1 word that they key in on. I seldom call but did today and it was a PITA getting to a person.

To get you to the right place, in a few words what do you want to do?

Question about trading in VUSXX

You want the trade desk?

No matter how I word something I can't do it in one or 2 words.

Certainly not something unique to Vanguard. Most phone info-systems are an exercise in futility. I think they try to get you to go to a web site and not bother their humans (who cost a lot more money).

 

[audreyh1]

Interesting. Fidelity had undercut Vanguard for years with their 0.025% bond index fund ERs. I think Vanguard was 0.030% at the time. But when ERs get this low I don’t think it makes any difference to me.

 

[yakers]

Love VG funds, most of portfolio is in various VG funds but moved the VG funds to Schwab for various reasons including anticipating they will assist DW if/when necessary.
VG funds can be held anywhere.

 

[Diogenes]

Lower fees are always welcome, but for the fifteen hundred quintillion dollars that I have there (slight exaggeration...), it would be nice to have a human answer the phone with less than 45 minutes of waiting time.