What to know about Vanguard | Jobs Vox


Another view

At $6.5 trillion, Vanguard is by far the world’s largest fund manager. BlackRock BLK is generally larger, thanks to its institutional accounts, but Vanguard dominates mutual fund and exchange-traded fund trading. In that field the company has a 17% global market share, no competitor has even reached 10%. At home, Vanguard’s leadership remains strong, as the firm manages 27% of US fund assets.

Such an effect requires investigation. Twelve months ago, “Has the Vanguard lost its way?” In , I wondered if the company was going in the wrong direction. That article raised three concerns: 1) Vanguard’s declining customer service; 2) Vanguard’s aggressive marketing of the Personal Counseling Services program; and 3) announcing that he is running a private equity fund. Today I will update those ideas.

customer service

It was last year’s article that generated the most e-mails in the history of this column. Almost all of them came from Vanguard investors who were unhappy with the company’s customer service. Some of the criticisms were more demanding.Services. example. “Vanguard doesn’t seem equipped to see their clients through the entire investment life cycle. In the later stages of life, the needs of customers are greater. Self-service links and automated phone lines won’t do the job.

But most arose from investors who were happy with the current arrangement, not its performance. Because of hidden phone numbers, long wait times and processing requests (such as adding a second name to an account) are not processed. From their allegations, Vanguard’s assistance is similar to what one would receive from a resale ticket agency.

Of course, that choice was skewed. Angry customers are more likely to respond to an article with a questionable title than content. But these comments support the first evidence. I wrote my post after hearing similar stories elsewhere, including from several friends. Another testament to Vanguard’s customer service struggles is this dire survey result.

In preparing this article, I contacted all respondents who emailed me last year asking if they had changed their views. They didn’t have it. The survey data was also consistent. JD Power’s spring 2022 survey found that Vanguard customers are more likely than Fidelity or Schwab S.H.W. A fall survey from the same company was even more disappointing, ranking Vanguard dead last among financial services firms for digital satisfaction.

Personal consulting services

In its defense, the Personal Advisors Services program addresses a real need. Like its competitors, many of whom have created similar programs, Vanguard realized several years ago that the industry could no longer serve the middle ground. Some investors don’t want to invest the roughly 1 percent of assets annually on their own or pay for full-service advice. They want a hybrid solution.

PAS was launched in 2015 for such appetite. Requiring a minimum balance of $50,000, the program creates and manages fund portfolios using a mix of online tools and phone advisors. The annual fee starts at 0.30% of assets, decreasing to 0.05% for portfolios over $25 million.

That combination of pricing and service seems acceptable. A million dollar account pays $3,000 a year and a $30 million portfolio pays $15,000. (In addition to the program fee, the investor pays the fund’s expense ratio—so does full-service advice.) True, the program’s funds come only from Vanguard itself, but that’s mostly because they’re generic and general. Always cheap, that disadvantage is mostly in theory, rather than practice.

My concern was that Vanguard was over-promoting the program. The company has built its reputation on trusting its customers. While rivals used shareholder reports to justify their investments, Vanguard remained silent, allowing its customers to make unfettered decisions. Therefore, the practice of soliciting the company’s shareholders to purchase the additional PAS program does not fit the story.

But maybe I’m being overly sensitive. The PAS program seems well designed; I have not received any complaints about the funds he has chosen or the services he provides. Therefore, I present part of my previous criticism. That said, I’d be happy if readers could tell me now that Vanguard isn’t trying to piss them off.

Private equity

The third and final challenge was not directly related to Vanguard 2020’s announcement that it would sell private equity funds. From Elizabeth Warren to Warren Buffett, private equity investing has attracted brickbats, but my view is more sane. While private equity is certainly risky, it’s safer when it’s run by a company that has a lot to lose. After all, Vanguard paid its name on the line. I expect the private equity funds to perform relatively well.

Rather, it is the notion of difference that bothers me. At least for the foreseeable future, private equity funds will not be available to Vanguard’s daily investors. The company recently launched three actively managed funds. They are for the use of PAS investors only. It is understood that Vanguard will lower the fund’s expense ratio for its larger clients, as it did with its institutional and Admiral shares. But creating additional product lines is another matter.

Maybe this approach is one I can get used too. In Jack Bogle’s day, the Vanguard was Democratic. (Interestingly, the same can’t be said of the leader’s management style.) The company prides itself on handling all customer calls through three rings, giving its retail customers value and choice previously only available to institutions.


Now, that same price and choice is widely available to all investors, from many companies in addition to Vanguard. So Vanguard has to reinvent itself. The question is not whether the organization should change. Its competitors have copied much of what makes Vanguard unique, so it has no choice but to do so. The question is rather whether such changes are acceptable.

Mostly, I believe they were on the side of some unresolved customer service issues. Vanguard reserves the right to reduce its services in an effort to reduce costs and maintain the lowest possible value for money. In doing so, however, it must meet at least the basic service requirements.


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