New fee for Vanguard mutual [and brokerage accounts - July 2023 updates]

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Charles Joseph
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Re: New fee for Vanguard mutual accounts

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Re: New fee for Vanguard mutual accounts

Post by jebmke »

My costs with VG have declined regularly since I started with them years ago - before 1992.
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Re: New fee for Vanguard mutual accounts

Post by Charles Joseph »

jebmke wrote: Mon Sep 05, 2022 2:06 pm My costs with VG have declined regularly since I started with them years ago - before 1992.
You're correct. Me too.
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Re: New fee for Vanguard mutual accounts

Post by Broken Man 1999 »

A few bucks here, a few bucks there, it adds up over time.

I'm happy I changed to an almost pure ETF portfolio.Works for me.

When savings are available with little effort, I'm all in.

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Re: New fee for Vanguard mutual accounts

Post by telemark »

In a taxable account, is the fee a taxable event? Assuming they sell shares, how does that affect the cost basis? Does it apply to funds with zero balances?
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Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by destin »

[Thread merged into here --admin LadyGeek]

What's happening here? I recommended Vanguard to my relatives because people said they offered the stability and simplicity of long term investing without never needing to think about the "gotchas" that other banks and brokerages are known for. Their entire retirement is with Vanguard but they aren't millionaires. They are just working class people.

Now I heard back from my relatives saying they got several letter in the mail talking about fees, fees, and more fees to be charged next month! I'm reading these letters and it looks like they are charging a fee for every mutual fund they own and a fee for every account they have as well as a fee for receiving paper statements. Furthermore, when I logged in their account on their website, the entire Vanguard website completely changed for the worse. There's no way they can use that junk. With the old website, maybe there was a chance but there's no way they can comfortably use this new one without major risk.

What's going on here? I'm looking at hundreds of dollars of fees, nearly forced usage of a horrible website, as well as sudden notification of all these changes that they need to do it now or else.

The only thing I remember receiving before was some small notice about moving the mutual funds to a brokerage account but all that was suppose to be automatically without our intervention.

I staked my reputation on Vanguard. I trusted Vanguard to offer safety and stability for long term investing and now they are demanding all this? What caused this to happen? What's going to happen next? What's going to happen 5, 10, 15, 20 years from now? Are there more gotchas that's going to happen? What is the future of Vanguard?
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by jebmke »

Have you read the multitude of megathreads on this subject? That should answer most of your questions.

Edit: you might also do some searches on the woes of involving yourself in the financial decisions of friends and relatives. You may be experiencing what many of us consider the risk therein — that is, you may get blamed if something goes south. As a result, many of us don’t allow ourselves to get drawn into those discussions.
Last edited by jebmke on Wed Sep 07, 2022 4:31 pm, edited 2 times in total.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by vxdx »

My advice would be to try meditation.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by alex_686 »

Vanguard has 2 lines of business.

There is the Asset Management company. i.e., running the funds. They have been and continue to be strong. Who knows what the future holds but they have a great track records.

The second is the "Advisor" business. a.k.a. the retail client side. i.e., the people who run the mutual fund and brokerage interface. Note, from the regulatory perspective it is "Advisor" even if is the accounts are totally self-managed. This is just the verbiage, don't let it trip you up. In any case the performance here is middling. They have lots of fine competitors in this space. What differences these players is mainly cost - whoever is cheapest wins.

We can debate why but Vanguard seems to be stumbling against their competitors. I suspect it is because they have too many legacy features which stretch their resources too far. Then COVID hit. I don't have that many concerns about it. There are other fine low cost brokers out there. Most of the time performance snaps back. If it lasts for more than a couple of years then the platform will die a slow death.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by nisiprius »

I'm not happy about the new fees. I left Schwab circa 2003 over account fees.*

But, unlike banks,** I don't believe sneaky fees are a part of Vanguard's, or any brokerages' business models.

I don't know what the future holds. I don't think I need to know. I'm a Boglehead, not a Vanguardhead. I haven't had any problems with Vanguard; I'm their customer to lose. I don't think there's any obvious reason to anticipate problems and leave. Vanguard wouldn't be the only company to experience customer-service problems in the wake of the pandemic, so be careful about assuming that the grass is always greener on the other side of the fence.

Nobody should stick with a financial firm that they don't feel good about, though. If Vanguard no longer has your confidence, leave.



*But to be fair I am talking about talking about $120/year, and in year-2003 dollars, equivalent to $200/today. And it was more like "broken promise" than "sneaky fee," because I had been attracted to them by their ads noting that they would waive fees on accounts of $10,000 and up. Within less than three years the boosted the minimum, first to $30,000, then to $100,000, and the second boost got me.

**It apparently is legal for banks to falsify the order of arrival of deposits and withdrawals in a checking account, and arrange them in whatever order maximizes the number of overdrafts and overdraft fees.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by backpacker61 »

destin wrote: Wed Sep 07, 2022 4:22 pm What's going on here? I'm looking at hundreds of dollars of fees, nearly forced usage of a horrible website, as well as sudden notification of all these changes that they need to do it now or else.
"Sudden notification"?

Vanguard has been promoting converting to the brokerage platform for a few years. In my case, converting to the brokerage platform was relatively painless, except it somewhat complicated my tax reporting the year I did the mutual fund account-to-brokerage account conversion.

It's a simple change and an easy way to sidestep the account fees.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by mhalley »

They can avoid the account fee by signing up for e delivery. If eligable, they could convert to a brokerage account. Or transfer a million in. :beer
Otherwise, they can vote with their feet.
https://investor.vanguard.com/client-be ... count-fees
Last edited by mhalley on Wed Sep 07, 2022 4:45 pm, edited 1 time in total.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by nisiprius »

destin wrote: Wed Sep 07, 2022 4:22 pmWhat caused this to happen?
Robinhood.
What is the future of Vanguard?
It will partially recover, and become one of the top ten firms instead of one of the top three firms.

Maybe.
Last edited by nisiprius on Wed Sep 07, 2022 5:58 pm, edited 1 time in total.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by dcabler »

nisiprius wrote: Wed Sep 07, 2022 4:41 pm I'm not happy about the new fees. I left Schwab circa 2003 over account fees.*

But, unlike banks,** I don't believe sneaky fees are a part of Vanguard's, or any brokerages' business models.

I don't know what the future holds. I don't think I need to know. I'm a Boglehead, not a Vanguardhead. I haven't had any problems with Vanguard; I'm their customer to lose. I don't think there's any obvious reason to anticipate problems and leave. Vanguard wouldn't be the only company to experience customer-service problems in the wake of the pandemic, so be careful about assuming that the grass is always greener on the other side of the fence.

Nobody should stick with a financial firm that they don't feel good about, though. If Vanguard no longer has your confidence, leave.



*But to be fair I am talking about talking about $120/year, and in year-2003 dollars, equivalent to $200/today. And it was more like "broken promise" than "sneaky fee," because I had been attracted to them by their ads noting that they would waive fees on accounts of $10,000 and up. Within less than three years the boosted the minimum, first to $30,000, then to $100,000, and the second boost got me.

**It apparently is legal for banks to falsify the order of arrival of deposits and withdrawals in a checking account, and arrange them in whatever order maximizes the number of overdrafts and overdraft fees.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by Broken Man 1999 »

Vanguard will continue to squeeze expenses out of the company, like the costs for mailed statements. Fair game for an easy expense reduction.

I have also helped relatives establish accounts at Vanguard. They won't be hit with any costs from the MF platform because I set them up initially on the brokerage platform.

They won't get hit with fees for mailed statements because they have never had mailed statements, as I set them up originally with online statements. Though, given the account balances of some means they could get mailed statements without charge.

In short, expect Vanguard to continue to trim expenses when they have an opportunity to do so. Long-term Vanguard clients should welcome these type activities.

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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by inverter »

Look for Vanguard to continue to try and cut expenses and automate.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by xenial »

destin, your relatives need to do two things to avoid all fees.

1. Convert their obsolete mutual fund accounts to brokerage accounts, which can continue to hold their existing funds. They might or might not be able to do this entirely online. If a call to Vanguard is needed, long hold times are unfortunately the norm.

2. Sign up for e-delivery of all documents. This can easily be done online. In addition to saving Vanguard money, e-delivery is way more secure than today's US mail.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by retiredjg »

destin wrote: Wed Sep 07, 2022 4:22 pm The only thing I remember receiving before was some small notice about moving the mutual funds to a brokerage account but all that was suppose to be automatically without our intervention.
If they are on the old mutual fund platform, the transition to the newer brokerage platform was never said or intended to be automatic. It has always been a button the user had to press to initiate transition. So that part seems like a misunderstanding on somebody's part.

However, unless they opened their accounts several years ago, they can't be on the old platform anyway. They can easily check - if the fund is titled "Jane Jones IRA brokerage account" it is on the new platform. If it is titled "Jane Jones IRA", it is not on the new brokerage platform. These are the ones that Vanguard wants people to transition.


There are (at least) two fee issues involved right now. I think they are both discussed in the letter. A clear way to cause confusion.

1. If they really are on the old platform, they will be charged $20 a year per "fund account" starting in the next several weeks. If they have Total Stock Market Index in an IRA and in a Roth IRA, that is two "fund accounts". So add up their fund accounts and see what that fee will be.


2. I'm not very sure about this second fee because it does not apply to me. I think, for people who are on the new brokerage platform, they will change $20 a year for people who want paper statements. I don't know if that is $20 per account, or $20 per fund account, or just a flat $20 for everything.

People can avoid this fee by using electronic documents and statements. And it appears there is a waiver of this fee for people holding over $1 million.

Again, I'm very unsure about #2 above. I wish that someone who actually understands both of these new fees would put together a clear and concise summary. There are a lot of people like you dropping in and asking these questions.


About the new format - not at all easy to read and understand. I hate it. Many people hate it. I've heard mumblings it has to do with setting up a format that works on phones as well as computers. But frankly, I think its cr*p and find that it difficult.
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Re: New fee for Vanguard mutual accounts

Post by dratkinson »

telemark wrote: Wed Sep 07, 2022 12:29 pm In a taxable account, is the fee a taxable event? Assuming they sell shares, how does that affect the cost basis? Does it apply to funds with zero balances?
I could be wrong.
--Seem to recall reading that Vanguard withholds fees from distributions, so the fee appears as a reduction of some item on a 1099DIV. (Believe this is the way ER fees are paid---it's withheld, we never see it, and there's no obvious record on any tax form.)
--Would NOT expect a fee to be charged on a fund that had a zero-balance for the year. Why? Because Vanguard does not create a 1099DIV for it.

But call a CSR and ask. Might want to call second CSR, ask same questions, and compare answers.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by destin »

alex_686 wrote: Wed Sep 07, 2022 4:34 pm We can debate why but Vanguard seems to be stumbling against their competitors. I suspect it is because they have too many legacy features which stretch their resources too far. Then COVID hit. I don't have that many concerns about it. There are other fine low cost brokers out there. Most of the time performance snaps back. If it lasts for more than a couple of years then the platform will die a slow death.
I did not realize how devastating COVID was to Vanguard. While there is a possibility that good times will come back, I have to consider the worse. And in this case, if things get worse, is there a possibility the advising or brokerage side could be sold to another firm? How deeply invested is the Asset Management side in keeping the Advising side 100% theirs?
retiredjg wrote: Wed Sep 07, 2022 5:14 pm About the new format - not at all easy to read and understand. I hate it. Many people hate it. I've heard mumblings it has to do with setting up a format that works on phones as well as computers. But frankly, I think its cr*p and find that it difficult.
Yes, there's no way in good conscience I can recommend switching from reliable paper statements to a website which I can barely understand. It's a major accident waiting to happen for the less technologically inclined.

Statements are important. It's how we proved the cost basis for decades long investments from multiple financial firms.
Broken Man 1999 wrote: Wed Sep 07, 2022 4:47 pm In short, expect Vanguard to continue to trim expenses when they have an opportunity to do so. Long-term Vanguard clients should welcome these type activities.
The big thing I want is a road map. What features will stay? What future charges and fees will happen? I don't want surprises. I want to be a long term client I as I long term client, should I at least have some type of knowledge about which features will stay long term and what features are just for show? What is it's future?

I don't want an analogy to this https://killedbygoogle.com/

Even Bank of America, well known for it's gotcha fees managed to keep their legacy promises and basic services for several decades and on. I expected Vanguard at the very least, to do the same.

Changing financial firms is a major endeavor. We expect to stay for decades at a time.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by neurosphere »

destin wrote: Wed Sep 07, 2022 4:22 pm Now I heard back from my relatives saying they got several letter in the mail talking about fees, fees, and more fees to be charged next month! I'm reading these letters and it looks like they are charging a fee for every mutual fund they own and a fee for every account they have as well as a fee for receiving paper statements.
Can you elaborate? What new fees, and how much per person, is Vanguard proposing to charge? Is the fee mandatory or is there a way to avoid it? Is it possible that, despite these fees, Vanguard is still a reasonable option?
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by Big Dog »

Perhaps its a generational thing, but my kids always sign up for e-delivery. They see no need in paper when they can download a pdf. Heck, my kids (early 30-somethings), don't even have a printer at home.

As an aside, I swithed over to brokerage account several years ago. Easy-peasy.
Last edited by Big Dog on Wed Sep 07, 2022 6:01 pm, edited 1 time in total.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by neurosphere »

destin wrote: Wed Sep 07, 2022 5:47 pm The big thing I want is a road map. What features will stay? What future charges and fees will happen? I don't want surprises. I want to be a long term client I as I long term client, should I at least have some type of knowledge about which features will stay long term and what features are just for show? What is it's future?
I would like this too. But every business I've ever interacted with, every...single...one...has not provided me such assurances of they kind you are requesting.

I just signed up for Hulu for the first time and paid the first monthly fee, and two days later they send me an email saying they are raising their fee!
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Re: New fee for Vanguard mutual accounts

Post by LadyGeek »

I merged destin's thread into the ongoing discussion.

(Thanks to the member who reported the post and provided a link to this thread.)
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by SmileyFace »

destin wrote: Wed Sep 07, 2022 5:47 pm
Statements are important. It's how we proved the cost basis for decades long investments from multiple financial firms.
Statements are important and the saftest way to get them is electronically by downloading PDFs from your banks and brokerages websites. No lost mail and all statements can be backed up. Paper statements can be lost in a fire or other mishap.

I do agree the sudden announcement of new fees (which are not charged by Vanguard's competitors) can be annoying and frustrating to many.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by alex_686 »

destin wrote: Wed Sep 07, 2022 5:47 pm
alex_686 wrote: Wed Sep 07, 2022 4:34 pm We can debate why but Vanguard seems to be stumbling against their competitors. I suspect it is because they have too many legacy features which stretch their resources too far. Then COVID hit. I don't have that many concerns about it. There are other fine low cost brokers out there. Most of the time performance snaps back. If it lasts for more than a couple of years then the platform will die a slow death.
I did not realize how devastating COVID was to Vanguard. While there is a possibility that good times will come back, I have to consider the worse. And in this case, if things get worse, is there a possibility the advising or brokerage side could be sold to another firm? How deeply invested is the Asset Management side in keeping the Advising side 100% theirs?

...

Changing financial firms is a major endeavor. We expect to stay for decades at a time.
There is a deep ongoing philosophical debate on who, if anybody, owns Vanguard. Vanguard likes to market that they are owned by the shareholders but the actual legal and economic rights seem to amount to nothing. Thanks to its unique structure I am not sure how a sale of a division would actually work.

If anything were to be sold it would not be asset management division. It is one of the top 3 asset managers with unique economic advantages due to its size and position. The Advisors division is just a average size thing with nothing unique about it.

Having worked in operations I can tell you that they are cost center, not a profit center. Everybody tries to run them at the highest capacity with the least amount of cost. I am kind of speculating on what is happening with Vanguard, relying on antidotal evidence. COVID did a number on most call centers and back-room offices. Even robust systems struggled when everybody had to go home and work remotely. You don't need to lose a high percentage of people in a department to lose the institutional memory. Once broken it can be hard to recover.

I am just getting a sense about Vanguard. Or maybe Bogleheads just like to complain about Vanguard.

In any case, I would not recommend that you view this as a decades long relationship. It is like swearing that you will shop at the Dollar Store for the next 30 years, never to set foot in a Wal-Mart or Target. I have been at my current broker for 15 years and the one before that 10. Switching to a new broker is easy and cheap. FYI, it is one of the reasons why I support ETFs. They are portable.

Asset Managers are something different if you are in taxable. Switching means triggering capital gains. Luckly all of the big fund families tend to run to very high standards.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by jeffyscott »

backpacker61 wrote: Wed Sep 07, 2022 4:41 pm
destin wrote: Wed Sep 07, 2022 4:22 pm What's going on here? I'm looking at hundreds of dollars of fees, nearly forced usage of a horrible website, as well as sudden notification of all these changes that they need to do it now or else.
"Sudden notification"?

Vanguard has been promoting converting to the brokerage platform for a few years. In my case, converting to the brokerage platform was relatively painless, except it somewhat complicated my tax reporting the year I did the mutual fund account-to-brokerage account conversion.

It's a simple change and an easy way to sidestep the account fees.
They gave only 6 weeks notice of the new fees.
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Re: New fee for Vanguard mutual accounts

Post by Lionel Hutz »

The way I see it is, if I don't like a coach's game plan he's been touting for months that's one thing, but I can't call foul one hour before kickoff when I see the lineup he posted.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by jebmke »

SmileyFace wrote: Wed Sep 07, 2022 6:14 pm
destin wrote: Wed Sep 07, 2022 5:47 pm
Statements are important. It's how we proved the cost basis for decades long investments from multiple financial firms.
Statements are important and the saftest way to get them is electronically by downloading PDFs from your banks and brokerages websites. No lost mail and all statements can be backed up. Paper statements can be lost in a fire or other mishap.

I do agree the sudden announcement of new fees (which are not charged by Vanguard's competitors) can be annoying and frustrating to many.
And the PDFs appear to be identical to paper statements. I would guess that the company that produces the paper statements for VG also renders the PDFs.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by jebmke »

alex_686 wrote: Wed Sep 07, 2022 6:20 pm
destin wrote: Wed Sep 07, 2022 5:47 pm
alex_686 wrote: Wed Sep 07, 2022 4:34 pm We can debate why but Vanguard seems to be stumbling against their competitors. I suspect it is because they have too many legacy features which stretch their resources too far. Then COVID hit. I don't have that many concerns about it. There are other fine low cost brokers out there. Most of the time performance snaps back. If it lasts for more than a couple of years then the platform will die a slow death.
I did not realize how devastating COVID was to Vanguard. While there is a possibility that good times will come back, I have to consider the worse. And in this case, if things get worse, is there a possibility the advising or brokerage side could be sold to another firm? How deeply invested is the Asset Management side in keeping the Advising side 100% theirs?

...

Changing financial firms is a major endeavor. We expect to stay for decades at a time.
There is a deep ongoing philosophical debate on who, if anybody, owns Vanguard. Vanguard likes to market that they are owned by the shareholders but the actual legal and economic rights seem to amount to nothing. Thanks to its unique structure I am not sure how a sale of a division would actually work.

If anything were to be sold it would not be asset management division. It is one of the top 3 asset managers with unique economic advantages due to its size and position. The Advisors division is just a average size thing with nothing unique about it.

Having worked in operations I can tell you that they are cost center, not a profit center. Everybody tries to run them at the highest capacity with the least amount of cost. I am kind of speculating on what is happening with Vanguard, relying on antidotal evidence. COVID did a number on most call centers and back-room offices. Even robust systems struggled when everybody had to go home and work remotely. You don't need to lose a high percentage of people in a department to lose the institutional memory. Once broken it can be hard to recover.

I am just getting a sense about Vanguard. Or maybe Bogleheads just like to complain about Vanguard.

In any case, I would not recommend that you view this as a decades long relationship. It is like swearing that you will shop at the Dollar Store for the next 30 years, never to set foot in a Wal-Mart or Target. I have been at my current broker for 15 years and the one before that 10. Switching to a new broker is easy and cheap. FYI, it is one of the reasons why I support ETFs. They are portable.

Asset Managers are something different if you are in taxable. Switching means triggering capital gains. Luckly all of the big fund families tend to run to very high standards.
People like to complain, period. It is human nature.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by bling »

destin wrote: Wed Sep 07, 2022 5:47 pm Changing financial firms is a major endeavor. We expect to stay for decades at a time.
in the past decade i've opened up 3-4 brokerage accounts and countless credit cards. it's really not a big deal and is the only way to experience yourself what you're missing between all the various offerings from all companies.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by SmileyFace »

jeffyscott wrote: Wed Sep 07, 2022 9:27 pm
backpacker61 wrote: Wed Sep 07, 2022 4:41 pm
destin wrote: Wed Sep 07, 2022 4:22 pm What's going on here? I'm looking at hundreds of dollars of fees, nearly forced usage of a horrible website, as well as sudden notification of all these changes that they need to do it now or else.
"Sudden notification"?

Vanguard has been promoting converting to the brokerage platform for a few years. In my case, converting to the brokerage platform was relatively painless, except it somewhat complicated my tax reporting the year I did the mutual fund account-to-brokerage account conversion.

It's a simple change and an easy way to sidestep the account fees.
They gave only 6 weeks notice of the new fees.
For those of us going online we were being prodded for years about the fund platform BUT for people that were getting paper statements and not going online it was very sudden. I went through all the paper statements and mailings my elderly father had been saving for years from Vanguard. The first notice he got of the fact he had to change platforms or start paying hefty fees were the letters he just recieved a couple of weeks ago telling him he would be incurring fees in 6 weeks if he didn't act. That is pretty sudden.
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telemark
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Re: New fee for Vanguard mutual accounts

Post by telemark »

Lionel Hutz wrote: Wed Sep 07, 2022 9:48 pm The way I see it is, if I don't like a coach's game plan he's been touting for months that's one thing, but I can't call foul one hour before kickoff when I see the lineup he posted.
Except that we are investors and customers, not team members who are expected to follow orders and play the game, and Vanguard is not a coach. Nice try, though.
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Re: New fee for Vanguard mutual accounts

Post by starboi »

Lionel Hutz wrote: Wed Sep 07, 2022 9:48 pm The way I see it is, if I don't like a coach's game plan he's been touting for months that's one thing, but I can't call foul one hour before kickoff when I see the lineup he posted.
The owner can fire the coach after the game though.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by jeffyscott »

SmileyFace wrote: Thu Sep 08, 2022 8:33 am
jeffyscott wrote: Wed Sep 07, 2022 9:27 pm
backpacker61 wrote: Wed Sep 07, 2022 4:41 pm
destin wrote: Wed Sep 07, 2022 4:22 pm What's going on here? I'm looking at hundreds of dollars of fees, nearly forced usage of a horrible website, as well as sudden notification of all these changes that they need to do it now or else.
"Sudden notification"?

Vanguard has been promoting converting to the brokerage platform for a few years. In my case, converting to the brokerage platform was relatively painless, except it somewhat complicated my tax reporting the year I did the mutual fund account-to-brokerage account conversion.

It's a simple change and an easy way to sidestep the account fees.
They gave only 6 weeks notice of the new fees.
For those of us going online we were being prodded for years about the fund platform BUT for people that were getting paper statements and not going online it was very sudden. I went through all the paper statements and mailings my elderly father had been saving for years from Vanguard. The first notice he got of the fact he had to change platforms or start paying hefty fees were the letters he just recieved a couple of weeks ago telling him he would be incurring fees in 6 weeks if he didn't act. That is pretty sudden.
Prodded and expecting things to change, yes, but never was there any indication that one of the prods was going to be new fees. This came out of the blue, even for those of us that spend too much time on here. Vanguard only ever talked about making things less convenient.

It was of course far more sudden and unexpected for anyone who only got whatever information Vanguard sent in the mail, if they have never even bothered to send a piece of paper promoting/prodding them to change to a brokerage account.

The timing of this sudden decision by Vanguard, and the fact that they also added fees (for paper statements) to brokerage accounts makes me wonder if maybe starboi was on to something:
starboi wrote: Mon Aug 08, 2022 4:39 pmI guess this is how they are gonna fund the losses from the Target Date capital gains lawsuit.
The notification should have been at least 6 months ahead, not 6 weeks and with an insert in at least 2 quarterly statements explaining it all, prior to the implementation.
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Re: New fee for Vanguard mutual accounts

Post by Lionel Hutz »

telemark wrote: Thu Sep 08, 2022 9:49 am
Lionel Hutz wrote: Wed Sep 07, 2022 9:48 pm The way I see it is, if I don't like a coach's game plan he's been touting for months that's one thing, but I can't call foul one hour before kickoff when I see the lineup he posted.
Except that we are investors and customers, not team members who are expected to follow orders and play the game, and Vanguard is not a coach. Nice try, though.
Except a player has the opportunity to adapt their playing style, training, skillset, etc to match the coach's clear game plan. Or transfer to another team that's a better fit. Or if you view it from a GM's perspective, fire the coach and hire one who will do what you want.

Your response proved my point. Vanguard has been clear about their intentions to kill the legacy platform for years, basically since they launched VBA. No, we did not know the exact timing and nature of their aims to kill it, i.e. we didn't know they'd implement this fee structure in late 2022 or turn off auto RMD services, etc. But I'm confused by the pure shock that a squeeze occurred.

Now I appreciate that I'm in the other camp: transition to VBA was a no brainer, I've literally never looked at an online PDF statement much less ever wanted paper statements, and so on. But if I may, I'm concerned the population of people resistant to the minute details are missing the bigger picture. You'll continually be frustrated and disappointed with Vanguard if you resist their changes.

And I'm not even saying everyone should convert to VBA or go paperless; everyone has their own needs and preferences as a client and investor. Just don't expect Vanguard to meet your needs anymore. So either accept that reality and pay the fee, convert to VBA if it's not too onerous, or leave and find a broker who is a better fit.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by BigJohn »

jeffyscott wrote: Thu Sep 08, 2022 10:16 am
SmileyFace wrote: Thu Sep 08, 2022 8:33 am
jeffyscott wrote: Wed Sep 07, 2022 9:27 pm
backpacker61 wrote: Wed Sep 07, 2022 4:41 pm
destin wrote: Wed Sep 07, 2022 4:22 pm What's going on here? I'm looking at hundreds of dollars of fees, nearly forced usage of a horrible website, as well as sudden notification of all these changes that they need to do it now or else.
"Sudden notification"?

Vanguard has been promoting converting to the brokerage platform for a few years. In my case, converting to the brokerage platform was relatively painless, except it somewhat complicated my tax reporting the year I did the mutual fund account-to-brokerage account conversion.

It's a simple change and an easy way to sidestep the account fees.
They gave only 6 weeks notice of the new fees.
For those of us going online we were being prodded for years about the fund platform BUT for people that were getting paper statements and not going online it was very sudden. I went through all the paper statements and mailings my elderly father had been saving for years from Vanguard. The first notice he got of the fact he had to change platforms or start paying hefty fees were the letters he just recieved a couple of weeks ago telling him he would be incurring fees in 6 weeks if he didn't act. That is pretty sudden.
Prodded and expecting things to change, yes, but never was there any indication that one of the prods was going to be new fees. This came out of the blue, even for those of us that spend too much time on here. Vanguard only ever talked about making things less convenient.

It was of course far more sudden and unexpected for anyone who only got whatever information Vanguard sent in the mail, if they have never even bothered to send a piece of paper promoting/prodding them to change to a brokerage account.

The timing of this sudden decision by Vanguard, and the fact that they also added fees (for paper statements) to brokerage accounts makes me wonder if maybe starboi was on to something:
starboi wrote: Mon Aug 08, 2022 4:39 pmI guess this is how they are gonna fund the losses from the Target Date capital gains lawsuit.
The notification should have been at least 6 months ahead, not 6 weeks and with an insert in at least 2 quarterly statements explaining it all, prior to the implementation.
While I fully agree that more advanced notice would have been appropriate, are added fees really a surprise? That’s been speculated as a possible step in several of these kinds of posts in the past. It’s easy and not uncommon in the industry and is just another type of inconvenience.

The handwriting has been in the wall for several years that VG was going to up the pressure to force this transition. I’m frankly surprised they’ve waited this long to stop asking nicely and play hard ball. No one should be surprised when more inconveniences are forthcoming.
"The greatest enemy of a good plan is the dream of a perfect plan" - Carl Von Clausewitz
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Re: New fee for Vanguard mutual accounts

Post by telemark »

Lionel Hutz wrote: Thu Sep 08, 2022 10:45 am
telemark wrote: Thu Sep 08, 2022 9:49 am
Lionel Hutz wrote: Wed Sep 07, 2022 9:48 pm The way I see it is, if I don't like a coach's game plan he's been touting for months that's one thing, but I can't call foul one hour before kickoff when I see the lineup he posted.
Except that we are investors and customers, not team members who are expected to follow orders and play the game, and Vanguard is not a coach. Nice try, though.
Except a player has the opportunity to adapt their playing style, training, skillset, etc to match the coach's clear game plan. Or transfer to another team that's a better fit. Or if you view it from a GM's perspective, fire the coach and hire one who will do what you want.

Your response proved my point. Vanguard has been clear about their intentions to kill the legacy platform for years, basically since they launched VBA. No, we did not know the exact timing and nature of their aims to kill it, i.e. we didn't know they'd implement this fee structure in late 2022 or turn off auto RMD services, etc. But I'm confused by the pure shock that a squeeze occurred.
Again, we are not team players, and calling out a bad metaphor in no way proves your point. And where cost basis is concerned, this is an opportunity to improve my skills that I had frankly hoped to avoid.
Now I appreciate that I'm in the other camp: transition to VBA was a no brainer, I've literally never looked at an online PDF statement much less ever wanted paper statements, and so on.
If you have a taxable account, you should definitely be keeping your own records for cost basis. Speaking as someone who didn't.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by jeffyscott »

BigJohn wrote: Thu Sep 08, 2022 11:06 amWhile I fully agree that more advanced notice would have been appropriate, are added fees really a surprise?
Let me try putting it this way: it was a surprise to me that they decided to implement new fees with such short notice.
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Re: New fee for Vanguard mutual accounts

Post by SmileyFace »

Lionel Hutz wrote: Thu Sep 08, 2022 10:45 am Vanguard has been clear about their intentions to kill the legacy platform for years, basically since they launched VBA. No, we did not know the exact timing and nature of their aims to kill it, i.e. we didn't know they'd implement this fee structure in late 2022 or turn off auto RMD services, etc. But I'm confused by the pure shock that a squeeze occured.
This is not true at all to folks that were receiving paper statements instead of online access and emails. Not a single letter prompting a change until "we will start charging you soon if you don't act". I believe the folks that are the most shocked are those that had no idea this was coming. And for someone with 2 accounts - each holding 4 funds - it's $80 in fees if you don't quickly move off the platform and another $20 if you don't quickly go paperless. For someone with $40,000 across their investments - that's a hefty fee. And those on paper statements are more likely to call than to attempt online conversion - with wait times often in hours it adds insult to injury.
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Re: New fee for Vanguard mutual accounts

Post by exodusNH »

SmileyFace wrote: Thu Sep 08, 2022 12:12 pm
Lionel Hutz wrote: Thu Sep 08, 2022 10:45 am Vanguard has been clear about their intentions to kill the legacy platform for years, basically since they launched VBA. No, we did not know the exact timing and nature of their aims to kill it, i.e. we didn't know they'd implement this fee structure in late 2022 or turn off auto RMD services, etc. But I'm confused by the pure shock that a squeeze occured.
This is not true at all to folks that were receiving paper statements instead of online access and emails. Not a single letter prompting a change until "we will start charging you soon if you don't act". I believe the folks that are the most shocked are those that had no idea this was coming. And for someone with 2 accounts - each holding 4 funds - it's $80 in fees if you don't quickly move off the platform and another $20 if you don't quickly go paperless. For someone with $40,000 across their investments - that's a hefty fee. And those on paper statements are more likely to call than to attempt online conversion - with wait times often in hours it adds insult to injury.
It's so incompetent that it has to be intentional.

Just like when LogMeIn gave everyone 30 days to leave or pay. So many people had built their processes around it that most, while cursing at the company, begrudgingly paid. It resulted in a substantial increase in revenue.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by patrick »

bling wrote: Thu Sep 08, 2022 7:56 am
destin wrote: Wed Sep 07, 2022 5:47 pm Changing financial firms is a major endeavor. We expect to stay for decades at a time.
in the past decade i've opened up 3-4 brokerage accounts and countless credit cards. it's really not a big deal and is the only way to experience yourself what you're missing between all the various offerings from all companies.
I have opened plenty of new accounts too, for the purpose of getting sign up bonuses and in the case of deposit accounts also higher interest. I did not discover any important experiences that I had been missing.

Indeed it often seems that the newer institutions lack features I am used to. For example, some deposit accounts do not allow setting up recurring ACH transfers. Furthermore, some deposit and brokerage accounts can only be used via mobile app.

Which raises an interesting question: What response would we see if Vanguard made a similar push to app-only access by charging $20 for their web interface?
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Re: New fee for Vanguard mutual accounts

Post by jebmke »

patrick wrote: Thu Sep 08, 2022 1:03 pm What response would we see if Vanguard made a similar push to app-only access by charging $20 for their web interface?
I would either stay or move.
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Re: New fee for Vanguard mutual accounts

Post by Doom&Gloom »

jebmke wrote: Thu Sep 08, 2022 1:59 pm
patrick wrote: Thu Sep 08, 2022 1:03 pm What response would we see if Vanguard made a similar push to app-only access by charging $20 for their web interface?
I would either stay or move.
I'd be right behind you!
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by destin »

alex_686 wrote: Wed Sep 07, 2022 6:20 pm Vanguard likes to market that they are owned by the shareholders but the actual legal and economic rights seem to amount to nothing.

Having worked in operations I can tell you that they are cost center, not a profit center.
So another way to put it is that every interaction we have with Vanguard Advising is an expense. And thus every single phone call, every single email, every single website visit is also an expense - including the expense of remodeling the website. And if the Asset Management sees it as an expense that needs to be reduced (since they are paying for this), then everything is a potential target.
patrick wrote: Thu Sep 08, 2022 1:03 pm Which raises an interesting question: What response would we see if Vanguard made a similar push to app-only access by charging $20 for their web interface?
Which makes something like this a realistic possibility. And accounting wise, it could be done as a per website visit as well in the name of reducing the expenses.

Everything is an expense and for some "If I don't use a website, why should I pay for it, it's an expense". So which expenses is a valid expense? What is Vanguard's guidelines on this?

And yes, I expected better from Vanguard because of their marketing that they are owned by shareholders. As shareholders, I expect a road map.
alex_686 wrote: Wed Sep 07, 2022 6:20 pm In any case, I would not recommend that you view this as a decades long relationship. It is like swearing that you will shop at the Dollar Store for the next 30 years, never to set foot in a Wal-Mart or Target. I have been at my current broker for 15 years and the one before that 10. Switching to a new broker is easy and cheap. FYI, it is one of the reasons why I support ETFs. They are portable.

Asset Managers are something different if you are in taxable. Switching means triggering capital gains. Luckly all of the big fund families tend to run to very high standards.
I disagree with this assessment. The power of attorneys, the notifications of the future beneficiaries as well as the heirs, the learning of the new systems, the transferring of cost basis from legacy investments - it's not that simple. And if you or I can do it, it is a luxury. There are many who are incapacitated or unable to perform these actions on their own. Some who have no legal preparedness. For many of them, they are stuck. It's also the future of many of us as well.

As an added request, does anyone have a copy of the new prospectus with the updated fee structure for mutual funds? Everything I found still mentions a $10,000 minimum balance. I need the new one that mentions these fee changes.
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Re: New fee for Vanguard mutual accounts

Post by LadyGeek »

:!: Heads up. We just got contacted by a reporter. This is going main-stream in the media. If you want to be interviewed, please see: Reporter writing story on Vanguard's new brokerage/statement fees
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by ee_guy »

destin wrote: Thu Sep 08, 2022 2:37 pm
alex_686 wrote: Wed Sep 07, 2022 6:20 pm Vanguard likes to market that they are owned by the shareholders but the actual legal and economic rights seem to amount to nothing.

Having worked in operations I can tell you that they are cost center, not a profit center.
So another way to put it is that every interaction we have with Vanguard Advising is an expense. And thus every single phone call, every single email, every single website visit is also an expense - including the expense of remodeling the website. And if the Asset Management sees it as an expense that needs to be reduced (since they are paying for this), then everything is a potential target.
Excellent point. For those of RMD age and requesting a check for QCD, that is an expense. Why should those younger than RMD age pay for the expense? Will we see a charge for sending out a QCD check? The real question is what should be included as a normal expense in the cost of doing business?
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Re: New fee for Vanguard mutual accounts

Post by jeffyscott »

Lionel Hutz wrote: Thu Sep 08, 2022 10:45 am And for someone with 2 accounts - each holding 4 funds - it's $80 in fees if you don't quickly move off the platform and another $20 if you don't quickly go paperless.
Actually that'd be $160. Each of the two MF only accounts, with 4 mutual funds, would be charged $80.

I don't think the $20 paper fee applies to the MF only accounts, though. That fee applies to brokerage accounts, $20 waived if paperless or over $1 million.
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Re: Is Vanguard turning into a "gotcha" firm? What is it's future?

Post by alex_686 »

destin wrote: Thu Sep 08, 2022 2:37 pm So another way to put it is that every interaction we have with Vanguard Advising is an expense. And thus every single phone call, every single email, every single website visit is also an expense - including the expense of remodeling the website. And if the Asset Management sees it as an expense that needs to be reduced (since they are paying for this), then everything is a potential target.
Now Asset Management should not be paying for the brokerage division. That should be self-funding

But to your point of operations being a expense - yes and no.

The teller at the bank is a expense. They are doing routine work with little value add. Or are they? Maybe their are the first point of contact with customers, represent the value and culture of the bank, set the tone, and can be alert to new possibilities.

On the other hand, processing RMDs in the back office is pure drone work. It does not matter if the brokerage is a fancy full service or bottom bargain basement. The work is required for any firm that has a IRA, the work is exactly the same. There is no value add here. Every firm is doing the exact same thing. So you squeeze all of the extra costs out. You have cost cutting plans where they map out exactly how many pencils and paperclips are going to be order for the entire year. Woe to those who take too many from the filling cabinet.

.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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Re: New fee for Vanguard mutual accounts

Post by ee_guy »

A family member received today in the mail, the semiannual report for Vanguard 500 Index fund. In the summary prospectus:

"Account Service Fee Per Year (for certain fund account balances below $10,000) $20
Here is the online copy https://www.vanguard.com/pub/Pdf/p040.pdf

A well thought plan for implementing the fees would be to update all the prospectus and give adequate time for those not reading BH. A well thought out plan would include exceptions in addition to having $1M. This appears to be another example announcing a major shift and potentially walking it back or taking tremendous criticism. The target fund fiasco comes to mind. For Vanguard employees, it was the elimination of retirement benefits.
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