Even though I have always recommended Vanguard’s products there certainly are some issues with using Vanguard as a broker. But is Vanguard really as bad as some people say?
In this article, I’ve selected some key points that seem to be common complaints about Vanguard and examined them in a bit more detail, most notably their customer service and investment platform.
Why Vanguard is bad. There are some issues when it comes to their customer service and the way the investment platform is set up. Customer service seems to be slow to respond sometimes and is not available 24/7. The investment platform and Vanguard app also feel rather archaic compared to some other brokers out there. Overall, however, Vanguard is still a very solid choice for most long-term investors.
Before we delve right into the rightful criticism, let me just highlight some key points why I think Vanguard is not actually that bad.
Why Vanguard is good
The first thing that is important to understand is that there is a difference between Vanguard’s products and Vanguard as a broker.
Even if you dislike the way Vanguard has set up its investment process you would still be able to invest in Vanguard products through other brokers and platforms, such as M1 Finance.
And for good reason: Vanguard offers some of the best index funds available on the market today. Not only are their funds inexpensive with low fees, but they are also high-quality investment products. For instance, VTSAX contains a total of 3,600 securities which is way more and most other total stock market funds.
In addition, Vanguard’s index funds are probably the most tax-efficient ones out there, meaning they’ll provide a better return for you.
But enough about the good! Let’s have a look at some of the bad stuff you may have to deal with when using Vanguard’s brokerage services.
Why Vanguard (brokerage) is bad
When I first started investing in Vanguard funds it seemed natural to pick them as my broker as well. Fees would probably be lower and my money would be safe with the most trusted investment management company in the United States.
Well, it turns out that investing with Vanguard directly can sometimes be a bad idea. Here’s why.
It’s no secret. Vanguard is a long-established pre-internet company. And it shows:
Logging in, using their platform, placing trades or transferring funds can be a very arduous process from time to time. While it’s true that as a long-term investor you’re probably not going to use Vanguard to day-trade stocks, I would still appreciate a cleaner and more intuitive user experience.
In short, Vanguard’s platform is just not fun to use.
It may come as a surprise to you, but yes, Vanguard actually has an app as well.
Although it probably is in fact more of a website in app form. As one user points out: It’s like they tried to cram their webpage into an Android app and didn’t bother to fix any of the bugs.
Especially the Android app is just clumsy to use, has tons of bugs and just feels like a burden to your phone.
Perhaps there is some good in that: you will only check your investment account when you actually want to invest. This way you’ll be less susceptible to the price action of the market. Just looking for the silver lining here…
All the above points are reflected in the app’s abysmal rating: 2.7.
Let me preface this section by saying that I have never personally had to use Vanguard’s customer support, which is in itself a good thing. However, I have encountered several customer reviews online which do not speak too highly of it.
Overall, feedback on Vanguard’s customer service varies a lot.
Some customers are absolutely satisfied with the service they received while others seem to have had some pretty nasty experiences, such as this guy who apparently tried to withdraw some money from his investment account in an emergency situation but never received his check.
Vanguard’s customer service seems to be more a less a mixed bag. You never quite know what you are going to get. If you go to Vanguard’s headquarters on Google Maps and check the reviews there you’ll find an average rating of 3.3. And most of the negative reviews are related to customer service.
Vanguard offers retails investors an excellent range of products. However, their brokerage service leaves much to be desired.
The online investment platform feels like it’s from another century. Moving funds between accounts and investing in funds through Vanguard’s site is not intuitive. Also the app is more of a desktop website crammed into a phone format than anything else. To sum it up: technology is not Vanguard’s strong suit.
Customer service reviews are mixed. When investing your life saving or retirement money you’ll probably want a quick and easy way to access those funds and an above par customer service to deal with any potential problems.
So, what conclusion do we draw from this?
Here’s my suggestion: why not keep using Vanguard’s excellent index funds such as VTI, VXUS, and BND, but invest in them through an innovative no-commission broker like M1 Finance.
This way you’ll get the best of both worlds. High-quality financial products on the back-end and top-notch user experience on the front-end.