Are Vanguard Financial Advisors Fiduciaries?

Are Vanguard Financial Advisors Fiduciaries?

I recently opened my Vanguard brokerage account and came across their personal advisor services. Usually, I stay as far away as possible from commission-driven financial advisors, however, fiduciary advisors are held to a much higher standard. I wondered: are vanguard financial advisors fiduciaries? As usual, I did some research online and here is what I found.

Are vanguard financial advisors fiduciaries? Vanguard financial advisors act as “fiduciary advisors” as defined under Section 408(g)(11) of ERISA and Section 4975(f)(8)(J) of the Internal Revenue Code and, therefore, Vanguard advisors must act prudently and only with clients’ interests in mind when providing clients recommendations about the investment of their assets.

This whole topic is a tad complicated to let’s break it down into sections. We’ll look at what Vanguard personal advisor services actually is, what the difference between a fiduciary and a financial advisor is and how you can go about finding out whether an advisor is a fiduciary.

What is the difference between a fiduciary and a financial advisor?

The biggest difference between financial and fiduciary advisors is the ethical standard they are held to when advising clients. While financial advisors have to propose investments that are suitable for a specific client a fiduciary advisor is legally required to put their client’s interest above his or his company’s.

In other words, fiduciary advisors are not allowed to recommend investments that might be suitable to your situation but not ideal. A financial advisor may propose investments that could be considered suitable but also earns him a commission.

In order to avoid this conflict of interests fiduciary advisors typically do not work on a commission basis but on a fixed fee.

How does Vanguard personal advisor services work?

Essentially, Vanguard personal adivsor services is an option to have your portfolio managed by a Vanguard advisor. You can partner with an advisor for a low annual fee and they will put together a portfolio based on your investment goals.

This is what their current fee structure looks like:

0.30%On assets up to $5 million
0.20%On assets above $5 million and up to $10 million
0.10%On assets above $10 million and up to $25 million
0.05%On assets above $25 million

(With their extremely low fees one often wonders: how does Vanguard make money?)

Since Vanguard personal avisor services act as fiduciary advisors they are legally required to put your interest as a client first. However, keep in mind that this obligation will only extend to investments they are actually qualified to advise on, namely: Vanguard products.

You might find it difficult discussing other investment options or tax and legal questions with your personal Vanguard advisor. Generally, fiduciary advisors will be careful not to over-extend their area of expertise when giving advice as they can be held legally accountable for their recommendations.

How do you find out if Vanguard financial advisors are fiduciaries?

Say you had not found this awesome article and needed to find out if Vanguard financial advisors are fiduciaries. How would you go about that?

Well, there are certain signs that could tip you off in one or the other direction. Here’s an overview of the main differences between financial and fiduciary advisors:

Financial AdvisorFiduciary Advisor
RegistrationNone, Certified Financial Planner (CFP), FINRA Series 7 license SEC or state securities regulators, trade associations
Series 7 licenseYesNo
Series 63 or 66 licenseYesNo

The first thing to check is whether Vanguard is registered with the SEC in the Investment Adviser Public Disclosure sections of their website.

SEC - Vanguard advisors registration

Once we have successfully navigated to the SEC’s (surprisingly) slick site we can for Vanguard’s advisor services in the search results:

SEC search results

In this section we will find a lot of information about Vanguard’s registration. The main document we want to look out for here to check their fiduciary status is the ADV Part 2. If Vanguard is a fiduciary advisor we should find the document linked here.

And what do you know! There it is:

SEC Vanguard Registration Documents

Reading the entire 18 page legal mumbo-jumbo would certain ruin my weekend. But luckily there is a search function. And a quick search for the term “fiduciary” yields promising results:

Are Vanguard Financial Advisors Fiduciaries?

And there we have it: Vanguard is pledging to act as a fiduciary advisor as defined under Section 408(g)(11) of ERISA and Section 4975(f)(8)(J) of the Internal Revenue Code.

What is the fiduciary rule?

Allow me a quick side note on the fiduciary-rule you might have heard of.

This rule was initiated by the Department of Labor under the Obama administration and would have – if enacted – required all financial and retirement advisors to act as fiduciaries. However, this rule was practically killed in 2018 when it was put on hold and eventually dropped by the Trump administration.

As a result the situation remains the same as before: it is essentially up to financial advisors whether they pledge to act as fiduciary advisors.

Does Vanguard have good financial advisors?

Now that we have seen that Vanguard advisors act as fiduciary advisors I have a little more trust that they won’t sell me some suitable fund which mostly pays them a high commission. Nonetheless, simply being a fiduciary advisor does not mean that the advice is really good for you.

Vanguard’s financial advisors are surely good in their own field: being knowledgeable about their own investment options, navigating you through all the fund options, and helping to clarify your retirement goals. But even fiduciary advisors have their limitations.


I always recommend doing your own research and educating yourself about finances. Nobody – but yourself – will take as much care of your assets as you. Even though fiduciary advisors are legally required to put your interest first, they are still human, they still make mistakes.

In general – when taking advice from someone – I always look at the person’s own achievements and values. Do they reflect what I want for myself? Do they align with my beliefs?

So, if your goal is to become financially free and independant and retire early, ask yourself: has your “fiduciary adivsor” achieved this? Or is he at least on his way to achieving the goals you are striving for?

If the answer is no, I’d run.

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