Wise to Invest with Vanguard Brokerage Services?

Even with clever marketing and an attempt to turn their name into a verb, does Vanguard have what it takes to be a successful online broker? As a long standing player in the investment biz, Vanguard should have been poised to do well online. Here is what we found out.

Application Process

The details of the application process are clearly set out online. You have the option of applying for more than one type of account, and if you already have a Vanguard account information is easily transferred. Fill out your application carefully though, since there are reports of great difficulty changing information if you make a mistake in the process.

If you need help filling out your application, make sure to do so between 8:00 am – 8:00 pm, Eastern time since there is no customer service overnight. Although online chat hours are not listed, one imagines that they are restricted to the same time slot.

Pricing Structure

Vanguard has a moderately tiered system, but unlike some such brokerages, it isn’t too complicated to follow. Here are the fees:

  • Stocks and ETFs for accounts with less than $50,000 balance: for the first 25 trades $7, subsequent trades $20
  • Stocks and ETFs for accounts with $50K-$500K: $7
  • Stocks and ETFs for accounts with $500k-$1M: $2
  • Stocks and ETFs for accounts with $1M+: First 25 trades free, $2 for subsequent trades
  • Options: $30 + $1.50 per contract
  • Options for accounts over $1M: $8 + $1.50 per contract
  • Vanguard Mutual Funds: Free
  • Other Mutual Funds: $8, $20 or $35 depending upon account balance

As always, the more you invest, the less you pay.

Tools

One area where Vanguard comes up short is their tools. There is no way to modify an order; it must be resubmitted. Chart tools aren’t as sophisticated as what its competition offers and you can’t save indicators. There are no good research tools and the website is difficult to navigate. Additionally, there is no mobile app – a perk which is quickly becoming the industry standard.

The Word Online

Customer reviews for Vanguard are all over the map. In general, those investors who are small scale, are willing to invest in Vanguard based mutual funds and don’t plan to move their money around a lot do well and are happy. Those investors who are more active, want to do a lot of trading or can’t maintain high balances are less than satisfied. Base your expectations upon the type of trader you plan to be.

The Pros and Cons

Vanguard has some good things going for it: free Vanguard ETFs, free DRIPs, low costs and good performance on home based funds. Some claim the customer service is good.

In the negative column are the potentially high commissions, annual maintenance fees, low balance fees and limited customer service hours. Additionally, some complain about the customer service. Vanguard requires $3,000 to open an account, which is higher then usual.

To Sum It Up

Vanguard appears to be a mixed bag, especially when it comes to customer service. While limited investors who are interested in long term savings are likely to do well, others are likely to be unhappy with the suite of tools, fees and platform provided. If your style of investing meshes with what Vanguard offers well, then it should be just fine, otherwise, look elsewhere.

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