I just love how Vanguard Group is one of the world’s most substantial asset management companies. What I didn’t know was that it’s also the largest provider of mutual funds. During this Vanguard review, I’ll show you how it offers the best range of US / EU/ Hong Kong / Japan Equities, Mutual Funds, Options, ETFs, and Bonds. In addition I’ll give your the pros and cons of using their brokerage services, financial planning, trust services, asset management, educational account services, and variable and fixed annuities.
But first, let’s look at how Vanguard was founded in 1975 by John C. Bogle, with its headquarters stationed in Malvern, Pennsylvania. I like how John is known to have offered the very first index fund available to individual investors, enabling the world of low-cost investing for this target market. Also impressive in this appraisal of Vanguard is how the ownership lies in funds that manage it. That means it is owned by none other than its clientele.
The vision for Vanguard started back in 1951 as John C. Bogle conducted a study for his undergraduate thesis at Princeton University. From this, he deduced that mutual funds would not earn more money compared to investing in broad stock market indexes, due to the deduction for management fees alone. Having discovered this, John set out to structure a mutual fund company that is “client owned”, without any outside owners collecting profit.
My love for history went wild when I researched an 18th century British vessel, with the name “HMS Vanguard”, meaning “in the forefront”. I’m very sure this influenced the name chosen for Vanguard.
As of today, Vanguard’s Chairman and CEO are F. William McNabb III and Mortimer J. Buckley, respectively.
Advantages of Using Vanguard
- Client-Owned. Compared to its competitors, Vanguard is owned by their clients, not by shareholders, so this allows them to offer low-cost investments for individuals.
- No Inactivity Fee. Unlike Saxobank’s US$100 per 6 months fee, Vanguard does not charge any inactivity fees.
- Highly trusted broker. Accumulating experience and reputation since 1975. Solid customer confidence should be your major takeaway from this assessment of Vanguard.
- No Commission Fee on Selected Funds. Vanguard does not charge a commission for its own mutual funds and over 3,000 other non-Vanguard funds. Vanguard has a select group of products wherein you can trade ETF and Mutual Funds for free.
- No Withdrawal Fee. You can withdraw to your bank account at no cost through ACH.
- Account Activation. Opening an account with Vanguard is very user-friendly and fully digital.
- Two-Step Login. The company’s web and mobile platforms have a two-step login, making it more secure for investors to access their accounts.
- Price Alerts. Vanguard offers real-time price alerts through email so that its clients never miss out on a good deal, something Degiro unfortunately lacks.
- Customer Service. Vanguard has been reported to have above average customer service as they offer phone support and relevant answers in a speedy amount of time.
Disadvantages of Using Vanguard
- US-residents only. Compared to Saxobank’s multi-country regulation, Vanguard is only regulated within the USA. No international customers.
- Supervisor scandal where US$ 2 million was stolen from dead customers accounts. Given the size of Vanguard, it may be excusable that occasionally some bad actors infiltrate the non-tech work force.
- Basic Research Tools. Those who rely heavily on research tools might as well look into Fidelity’s solid instruments since Vanguard only offers the basics.
- High Fees for Non-Free Mutual Funds. Though some of their mutual funds (including Vanguard funds) are free, those that don’t fall under this selected list come with a high fee of US$20.
- No Meet Ups. Unlike CharlesSchwab and other leading companies, Vanguard does not offer in-person meet ups. I always feel this one is a major disadvantage, since having a conversation with a representative adds assurance when investing life savings with a broker.
- No Credit/Debit Card. Credit/Debit cards and electronic wallets are not available. There is also a US$10 wire transfer fee for withdrawals not made through ACH.
- No Desktop Platform. Vanguard is only available through web and mobile platforms, the former leaving much to be desired in terms of search function and ease of use. Those who prefer a desktop trading platform can count on TD Ameritrade’s Thinkorswim counterpart, known to be one of the best in the market.
- Limited Customer Service. Vanguards customer support may give relevant answers but they lack in accessibility, as they do not offer a live chat or a 24/7 support.
- Limited Educational Tools. Vanguard does not offer a demo account or trading platform tutorials – basic tools that Fidelity is complete in.
Trustworthiness of Broker
One of the first things that come to mind when choosing a broker is researching just how reliable they actually are. A major factor to take into consideration is how long the company has been around, and in the case of Vanguard, it has been there since 1975, having withstood the ups and downs of the economy for almost half a century now – I just love how that is 35 more years of experience compared to their millennial-popular competitor, Robinhood.
Vanguard is regulated in the United States by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). When I think that my broker is regulated by the world’s most powerful nation, it sure puts some hesitations at ease.
Be aware that Vanguard is part of the Securities Investor Protection Corporation (SIPC). Because of this stocks and options are protected up to US$ 500,000 and cash is protected up to US$250,000.
In this analysis of Vanguard I want to highlight that the broker has both a banking license and is also listed on the stock exchange. Remember that a broker with a banking license means that they retain a stable liquidity standing in cases of major dips in the market. This also gives better access to interbank loans during financial crashes. Being listed on the stock exchange indicates less counterparty risk, because information must be disclosed, making them more transparent to diligent customers.
A big downer for trust is that entry-level investors cannot meet with a representative.
Trading Products Available
Here is a list of trading products available through The Vanguard Group:
- US Equities
- EU Equities
- Japan Equities
- Hong Kong Equities
- Mutual Funds
Vanguard’s trading fees are tiered according to your account balance. The higher your investment balance, the bigger your discounts. Generally, Vanguard’s fees are at average level compared to other brokers like Fidelity, and are excellent for long-term investment, but I would not recommend for day traders.
Vanguard does not charge an inactivity fee, but their account fee is $20USD per annum. Its borrowing fee is at approximately only 6%, which is at par with TD Ameritrade.
Through this assessement of Vanguard I want to highlight how easy opening an account is. Mostly because it’s done entirely online. You do need to prepare passport details. I don’t however like the slow approval. This is due to the obligatory initial deposit, taking an average of one week to process. There is no minimum balance for a select list of products, while others require a minimum of 1-3k USD, depending on which mutual fund. You may deposit and withdraw into your Vanguard account through bank transfer.
- Support: 8/10. Vanguard’s customer service is highly regarded by their clients as efficient and reliable, compared to some competitors such as Robinhood, and Etoro, which were both reviewed to have very poor troubleshooting. Their team is available through phone and email support, but they are unfortunately lacking live chat and 24/7 service.
- Research: 6/10. Vanguard’s research tools leaves much to be desired especially when compared to what TD Ameritrade has to offer with their extensive amount of instruments. They do, however, offer the basic necessities such as data on asset fundamentals and trading ideas.
- Web: 7/10. Vanguard’s clients have reported their website platform to be way behind on improvements. It is average in terms of structure and features but it delivers in terms of security and reports.
- App: 7/10. Vanguard offers a mobile trading platform that actually seems more efficient than its web counterpart. You’ll have to try it for yourself. Available for both iOS and Android, well designed and user friendly. Superior in comparison to Saxobank’s SaxoTraderGo, which reportedly crashes regularly, and lacks security measures.
Vanguard currently enjoys over 26.25 million visitors to its website per month. With a focus solely on the US market, 96% of its reach is naturally from the USA, with one digit from Canada and United Kingdom. Vanguard’s statistics fall short by a shy 160k visitors in comparison to E-Trade’s 26.41M monthly traffic.
Comparison to Other Brokers
- A great alternative to Vanguard is fellow US based stockbroker, Fidelity. Both companies started off as mutual fund firms and are equally regarded as two of the top ranking brokers in the USA. Fidelity also has better options for active traders and has fewer fees.
- Another great alternative to Vanguard would be Firstrade, a US discount stockbroker. Firstrade provides the same types of investments but has far lower broker fees. They even offer promotions and have great customer service.
You can immediately rate Vanguard !
Tell me what you actually enjoy most about Vanguard: