Thoughts on article about Vanguard

[bmjohnson35]

It's obvious this opinion article was written by a disgruntle customer (see article below). I have a sizable chunk in their funds.  I haven't experienced the troubles the author mentions, but I don't make many moves of my money.  I also haven't found their push to more managed care anymore than the other investment firm I deal with.  Still, I can't help but wonder what other customers are perceiving or experiencing.

https://seekingalpha.com/article/4478446-is-vtsax-good-investment-etf-investors

[Ron Scott]

I’m with Vanguard. They’re OK.

The author seems to be looking for old school customer service (LOL) and, I think, is critical of market-weighted averaging in building total stock funds. I agree that approach can get out of hand but in general I’m fine with it and planning to stay the course with VTI/VTSAX.

As I understand it, Vanguard is investing in development and marketing of actively managed funds and private equity. I guess they’ve done their research and are hoping to meet need and remain competitive.

The various descriptive and analytic views of your investment on their site take more time to true-up than they used to but if you log into them before the market open—or after midnight—they are almost always in sync.

I did notice one thing new however and will follow up with them on this. It appears you can convert VTSAX to VTI without triggering a taxable event. Some may want to do this as the fee is lower.

From their website:

Can I convert my conventional Vanguard mutual fund shares to Vanguard ETF Shares?

Yes. Most funds that offer ETF Shares will allow you to convert from conventional shares of the same fund to ETF Shares. (Four of our bond ETFs—Total Bond Market, Short-Term Bond, Intermediate-Term Bond, and Long-Term Bond—don't allow for conversions.)

Conversions are allowed from both Investor and Admiral™ Shares and are tax-free if you own your mutual fund and ETF Shares through Vanguard.

Keep in mind that you can't convert ETF Shares back to conventional shares. If you decide in the future to sell your Vanguard ETF Shares and repurchase conventional shares, that transaction could be taxable.

[maizefolk]

The writing definitely sounds like they have an axe to grind (although realistically who wouldn't after having hundreds of thousands of dollars lost in limbo for weeks).

That said, I agree that there are essentially no downsides to holding VTI (or similar ETFs) rather than VTSAX (or similar MFs) and there are some significant upsides in terms of flexibility.

My experience with the vanguard website/brokerage services is constrained to a couple of old (and small) IRA accounts I log into and check one once a year or so. It sounds like the degradation of customer service is kicking in much more for the people who previously got good treatment for having high balances? There certainly have been a lot more frustrated complaints about vanguard customer service from people at bogleheads in the last couple of years.

[zolotiyeruki]

FWIW, I suspect Vanguard is seeing the same sort of staffing crunch that many businesses are facing. I had a very simple question the other day, and was on the phone for 40 minutes before I finally was connected to the right person (who was the third person I spoke to).  I suppose they might also be dealing with a crush of year-end/start-of-year call volume.

[CoffeeR]

FWIW, I suspect Vanguard is seeing the same sort of staffing crunch that many businesses are facing. I had a very simple question the other day, and was on the phone for 40 minutes before I finally was connected to the right person (who was the third person I spoke to).  I suppose they might also be dealing with a crush of year-end/start-of-year call volume.

IMO Vanguard customer service problems predate the pandemic and (external event) staffing issues. Vanguard if one of the areas where FIRE folk (and I'm admittedly broadly generalizing) have blinders on. Vanguard funds are great (highly recommended), but the part of Vanguard that faces the customer has been steadily declining and I would not recommend them to anyone anymore. Whenever someone has an issue they report about, the response seems to be "well I have had no problems", so it must be a one-off kind of thing. These "one-off" incidences appear to me as becoming more and more frequent and serious with Vanguard.

In the mid 00's I recommended Vanguard to my parents and they still have an account there. No problems so far. I closed my account long time ago. These days I send folk to Schwab or Fidelity.

[RedmondStash]

Vanguard funds are great (highly recommended), but the part of Vanguard that faces the customer has been steadily declining and I would not recommend them to anyone anymore. Whenever someone has an issue they report about the response seems to be "well I have had no problems", so it must be a one-off kind of thing. These "one-off" incidences appear to me as becoming more and more frequent and serious with Vanguard.

In the mid 00's I recommended Vanguard to my parents and they still have and account there. No problems so far. I closed my account long time ago. These days I send folk to Schwab or Fidelity.

This is my sense too. I've called Vanguard a handful of times over the last few years, and gotten inaccurate information more than once. Apparently the hold times are getting longer and longer too -- though for some of the calls I made a few years back, I got decent service in a reasonable amount of time. I admire their business model, but I'm seriously considering taking my business elsewhere.

[bmjohnson35]

I have only needed to contact customer service with Vanguard a few times and my experiences have positive and effective. As companies become more and more automated, customer service has suffered.  On the other hand, online access and online control in so many areas of life has also provided more efficiency and control to the average person.  I miss being able to easily talk to a person, but I wouldn't want to loose the ability to look up and access so much online information available today. 

[Jack0Life]

The writing definitely sounds like they have an axe to grind (although realistically who wouldn't after having hundreds of thousands of dollars lost in limbo for weeks).

That said, I agree that there are essentially no downsides to holding VTI (or similar ETFs) rather than VTSAX (or similar MFs) and there are some significant upsides in terms of flexibility.

My experience with the vanguard website/brokerage services is constrained to a couple of old (and small) IRA accounts I log into and check one once a year or so. It sounds like the degradation of customer service is kicking in much more for the people who previously got good treatment for having high balances? There certainly have been a lot more frustrated complaints about vanguard customer service from people at bogleheads in the last couple of years.

Let me ask if you can do this with ETFs.
With my mutual funds in Vanguard I like to reallocate funds quite often. Sometimes I go from 100% to 60/40 and vice versa.
Vanguard let you exchange these funds without triggering tax consequences.
Let say if I had 100% VTI etfs and I wanted to switch it to some bond etfs, do I need to sell and buy or do they let you exchange too ??

[maizefolk]

Let me ask if you can do this with ETFs.
With my mutual funds in Vanguard I like to reallocate funds quite often. Sometimes I go from 100% to 60/40 and vice versa.
Vanguard let you exchange these funds without triggering tax consequences.
Let say if I had 100% VTI etfs and I wanted to switch it to some bond etfs, do I need to sell and buy or do they let you exchange too ??

My understanding is that exchanging between different mutual funds, like selling and buying different ETFs, is indeed a taxable event so long as it occurs in a taxable account (so not an IRA/401k/403b/457/etc).

In an IRA/401k/403b/457/etc account you can swap between different sets of ETF shares (or different mutual funds) without tax consequences

Here's the Vanguard documentation.

An exchange is actually two transactions, selling one fund and using the proceeds to buy another fund in the same account. Performing an exchange in a taxable account is a taxable event.

https://support.vanguard.com/tutorials/exchange-funds

However, if I'm wrong about that or misunderstanding something, I agree being able to trade between different asset classes in a taxable account without tax consequences would indeed be a major benefit.

[Ron Scott]

Let me ask if you can do this with ETFs.
With my mutual funds in Vanguard I like to reallocate funds quite often. Sometimes I go from 100% to 60/40 and vice versa.
Vanguard let you exchange these funds without triggering tax consequences.
Let say if I had 100% VTI etfs and I wanted to switch it to some bond etfs, do I need to sell and buy or do they let you exchange too ??

My understanding is that exchanging between different mutual funds, like selling and buying different ETFs, is indeed a taxable event so long as it occurs in a taxable account (so not an IRA/401k/403b/457/etc).

In an IRA/401k/403b/457/etc account you can swap between different sets of ETF shares (or different mutual funds) without tax consequences

Here's the Vanguard documentation.

An exchange is actually two transactions, selling one fund and using the proceeds to buy another fund in the same account. Performing an exchange in a taxable account is a taxable event.

https://support.vanguard.com/tutorials/exchange-funds

However, if I'm wrong about that or misunderstanding something, I agree being able to trade between different asset classes in a taxable account without tax consequences would indeed be a major benefit.

If you sell appreciated stocks in a taxable account you have created a taxable event.

The issue discussed above is the ability to “convert“ (not “sell”) holdings in a VTSAX mutual fund to a VTI ETF. The stocks held in VTSAX and VTI are identical and it appears Vanguard has come up with a way to effect a conversion between these funds that the IRS does not consider a sell and buy.

Couple years ago I sold VTSAX and immediately bought VTI inside my IRA and Roth accounts. There’s no taxable events by trading inside those accounts and I was able to lower my fees without changing the assets I owned. But I was told I could not do so in my taxable account without creating a taxable event. It appears this has changed.

I will follow up with Vanguard on this soon.

[maizefolk]

If you sell appreciated stocks in a taxable account you have created a taxable event.

The issue discussed above is the ability to “convert“ (not “sell”) holdings in a VTSAX mutual fund to a VTI ETF. The stocks held in VTSAX and VTI are identical and it appears Vanguard has come up with a way to effect a conversion between these funds that the IRS does not consider a sell and buy.

I think we're reading different things into what is discussed above. @Jack0Life is talking about converting between holdings in a stock mutual fund and a bond mutual fund (or the equivalent for ETFs).

Let me ask if you can do this with ETFs.
With my mutual funds in Vanguard I like to reallocate funds quite often. Sometimes I go from 100% to 60/40 and vice versa.
Vanguard let you exchange these funds without triggering tax consequences.
Let say if I had 100% VTI etfs and I wanted to switch it to some bond etfs, do I need to sell and buy or do they let you exchange too ??

Swapping between different share classes with the same investment mix (e.g. MF:VTSAX vs ETF:VTI) is a different thing which can indeed be conducted without tax consequences.

[DeniseNJ]

I've had a miserable year with Vanguard.  Dh's 403b deposits take forever to post, like 5 days, whereas with Invesco they posted the next day.  They are not eager to look for postings that are weeks late either. The initial 403b deposit took weeks.   Most recently I had 50K transferred from Invesco 403b to Vanguard 403b.  It was withdrawn 3 weeks ago and is nowhere to be found. Apparently Vanguard is still waiting for the check.  Are they really waiting for a paper check to come via USPS?  Why is this not done electronically?  I can transfer money the same day to pay any bill.  I can be charged the same day for anything I buy.  Even mail arrives in 2 or 3 days. But Vanguard is waiting for a paper check from Invesco for 3 weeks.  And who has my 50K in the meantime and keeping the float?  Plus the money cam out when the market dropped on Dec 20th and who knows when it will be deposited.  Very annoying.  Also, now these events will take place in different years.  Not sure what tax implications are, if any.

[Virtus3]

There is definitely more chatter about people being unhappy with Vanguard. I made the switch from Vanguard to Fidelity and have been really happy with the choice. I didn't have any specific issues with Vanguard but had some really great interactions with Fidelity who managed my previous 401k that prompted the switch; though I probably wouldn't have moved anything if not for the Vanguard chatter.

[Jack0Life]

Let me ask if you can do this with ETFs.
With my mutual funds in Vanguard I like to reallocate funds quite often. Sometimes I go from 100% to 60/40 and vice versa.
Vanguard let you exchange these funds without triggering tax consequences.
Let say if I had 100% VTI etfs and I wanted to switch it to some bond etfs, do I need to sell and buy or do they let you exchange too ??

My understanding is that exchanging between different mutual funds, like selling and buying different ETFs, is indeed a taxable event so long as it occurs in a taxable account (so not an IRA/401k/403b/457/etc).

In an IRA/401k/403b/457/etc account you can swap between different sets of ETF shares (or different mutual funds) without tax consequences

Here's the Vanguard documentation.

An exchange is actually two transactions, selling one fund and using the proceeds to buy another fund in the same account. Performing an exchange in a taxable account is a taxable event.

https://support.vanguard.com/tutorials/exchange-funds

However, if I'm wrong about that or misunderstanding something, I agree being able to trade between different asset classes in a taxable account without tax consequences would indeed be a major benefit.

OK. Thanks.
If this is the case, I should switch all my mutual funds to ETFs in my Vanguard IRA.
A lot of time I like to exchange funds and with mutual funds, it won't take effect until end of day closing. Plus ETFs are a little cheaper.

[DeniseNJ]

OMG. I just got an email from Vanguard saying they haven't received the check from Invesco so I should call them and have them cancel and issue a new check!  I replied, Um, I think that's your job.

I filled out a lengthy form with so much info and gave to Vanguard so that they could transfer the 50K balance from old 403b to Vanguard 403b.  Letter from Invesco says they withdrew and issued a check on Dec 20th.  It's Jan 11 with no money in sight.  Apparently, instead of an electronic transfer, there is a paper check floating around some US post office somewhere. So now Vanguard wants me to follow this paper trail.  I wrote back that they have the info and they have to do this, and while they're at it to request an electronic transfer.  What a pain.

[jinga nation]

OMG. I just got an email from Vanguard saying they haven't received the check from Invesco so I should call them and have them cancel and issue a new check!  I replied, Um, I think that's your job.

I filled out a lengthy form with so much info and gave to Vanguard so that they could transfer the 50K balance from old 403b to Vanguard 403b.  Letter from Invesco says they withdrew and issued a check on Dec 20th.  It's Jan 11 with no money in sight.  Apparently, instead of an electronic transfer, there is a paper check floating around some US post office somewhere. So now Vanguard wants me to follow this paper trail.  I wrote back that they have the info and they have to do this, and while they're at it to request an electronic transfer.  What a pain.

I'm flabbergasted that in this day and age, paper checks are being issued to transfer the funds, especially in a pandemic with known postal issues. Electronic transfer should be the default.
Last year I closed final accounts of mine at American Funds and did a rollover to Vanguard; funds were transferred electronically IIRC, took 3-5 business days.

[Virtus3]

OMG. I just got an email from Vanguard saying they haven't received the check from Invesco so I should call them and have them cancel and issue a new check!  I replied, Um, I think that's your job.

I filled out a lengthy form with so much info and gave to Vanguard so that they could transfer the 50K balance from old 403b to Vanguard 403b.  Letter from Invesco says they withdrew and issued a check on Dec 20th.  It's Jan 11 with no money in sight.  Apparently, instead of an electronic transfer, there is a paper check floating around some US post office somewhere. So now Vanguard wants me to follow this paper trail.  I wrote back that they have the info and they have to do this, and while they're at it to request an electronic transfer.  What a pain.

I'm flabbergasted that in this day and age, paper checks are being issued to transfer the funds, especially in a pandemic with known postal issues. Electronic transfer should be the default.
Last year I closed final accounts of mine at American Funds and did a rollover to Vanguard; funds were transferred electronically IIRC, took 3-5 business days.

Yeah; I don't understand why they do it. I've recently transferred a 401k and HSA account and they both were done via paper check.

[SESW Tech]

I've been going the approach of buying Vanguard funds, but holding them at other brokers.  I love Vanguard and their mission, and this probably is good for them as well.  That well Wells Fargo is dealing with the customer service (and not collecting any fees), but Vanguard still gets the AUM.  Not really sure why Wells gives me extra benefits as a "valued customer" when all I'm doing is housing VTSAX and VT in their brokerage... but no arguments :)

[maizefolk]

OMG. I just got an email from Vanguard saying they haven't received the check from Invesco so I should call them and have them cancel and issue a new check!  I replied, Um, I think that's your job.

I filled out a lengthy form with so much info and gave to Vanguard so that they could transfer the 50K balance from old 403b to Vanguard 403b.  Letter from Invesco says they withdrew and issued a check on Dec 20th.  It's Jan 11 with no money in sight.  Apparently, instead of an electronic transfer, there is a paper check floating around some US post office somewhere. So now Vanguard wants me to follow this paper trail.  I wrote back that they have the info and they have to do this, and while they're at it to request an electronic transfer.  What a pain.

I'm flabbergasted that in this day and age, paper checks are being issued to transfer the funds, especially in a pandemic with known postal issues. Electronic transfer should be the default.
Last year I closed final accounts of mine at American Funds and did a rollover to Vanguard; funds were transferred electronically IIRC, took 3-5 business days.

Yeah; I don't understand why they do it. I've recently transferred a 401k and HSA account and they both were done via paper check.

My guess is that the method used for fund transfer is dictated by the place you're moving money from rather than the place you're moving money too and there's just not a lot of pressure for a company that has already lost your business to make the process of moving your money fast and easy.

[DeniseNJ]

OMG. I just got an email from Vanguard saying they haven't received the check from Invesco so I should call them and have them cancel and issue a new check!  I replied, Um, I think that's your job.

I filled out a lengthy form with so much info and gave to Vanguard so that they could transfer the 50K balance from old 403b to Vanguard 403b.  Letter from Invesco says they withdrew and issued a check on Dec 20th.  It's Jan 11 with no money in sight.  Apparently, instead of an electronic transfer, there is a paper check floating around some US post office somewhere. So now Vanguard wants me to follow this paper trail.  I wrote back that they have the info and they have to do this, and while they're at it to request an electronic transfer.  What a pain.

I'm flabbergasted that in this day and age, paper checks are being issued to transfer the funds, especially in a pandemic with known postal issues. Electronic transfer should be the default.
Last year I closed final accounts of mine at American Funds and did a rollover to Vanguard; funds were transferred electronically IIRC, took 3-5 business days.

Yeah; I don't understand why they do it. I've recently transferred a 401k and HSA account and they both were done via paper check.

My guess is that the method used for fund transfer is dictated by the place you're moving money from rather than the place you're moving money too and there's just not a lot of pressure for a company that has already lost your business to make the process of moving your money fast and easy.

Invesco said that they have to send a check if it's to another institution or some such nonsense.  Just got off the phone with Vanguard.  They searched for the check and couldn't find it, then they searched for the amount and did find it.  Apparently something was not filled out correctly so the deposit went to a holding account until someone could research where the money goes.  Well in over 2 wks no one did that research so I wonder if anyone was going to if I hadn't called.  It's Dh's so I have to call when he's home, even though they only ask for address and birthdate, which anyone could give.  Well now they put a note on the account to apply the money.  I wonder what a 3 week float on 50K is.  They may do this often for all I now and it adds up.

[PathtoFIRE]

I'm not a fan of the changes to the Vanguard app either in the last few years. We have our aftertax account and our backdoor Roths with them. When I decided to close my solo 401k and cash balance plans last year, I chose Fidelity to roll those into in part because of the customer service issues that I had heard regarding Vanguard vs Fidelity.

However, that process with Fidelity was not without several hitches, including a very extended settlement period for one check that almost botched my plans to finish everything by EOY 2021. AND regarding paper checks, Fidelity issued one to itself in order to rollover money in my rollover IRA into my workplace Fidelity 401k. And while I did work with several helpful people at Fidelity during this process, one person was just flat wrong about something which in part contributed to the almost tax-painful delay in that final rollover.

[BussoV6]

OMG. I just got an email from Vanguard saying they haven't received the check from Invesco so I should call them and have them cancel and issue a new check!  I replied, Um, I think that's your job.

I filled out a lengthy form with so much info and gave to Vanguard so that they could transfer the 50K balance from old 403b to Vanguard 403b.  Letter from Invesco says they withdrew and issued a check on Dec 20th.  It's Jan 11 with no money in sight.  Apparently, instead of an electronic transfer, there is a paper check floating around some US post office somewhere. So now Vanguard wants me to follow this paper trail.  I wrote back that they have the info and they have to do this, and while they're at it to request an electronic transfer.  What a pain.

I'm flabbergasted that in this day and age, paper checks are being issued to transfer the funds, especially in a pandemic with known postal issues. Electronic transfer should be the default.
Last year I closed final accounts of mine at American Funds and did a rollover to Vanguard; funds were transferred electronically IIRC, took 3-5 business days.

Yeah; I don't understand why they do it. I've recently transferred a 401k and HSA account and they both were done via paper check.

My guess is that the method used for fund transfer is dictated by the place you're moving money from rather than the place you're moving money too and there's just not a lot of pressure for a company that has already lost your business to make the process of moving your money fast and easy.

Invesco said that they have to send a check if it's to another institution or some such nonsense.  Just got off the phone with Vanguard.  They searched for the check and couldn't find it, then they searched for the amount and did find it.  Apparently something was not filled out correctly so the deposit went to a holding account until someone could research where the money goes.  Well in over 2 wks no one did that research so I wonder if anyone was going to if I hadn't called.  It's Dh's so I have to call when he's home, even though they only ask for address and birthdate, which anyone could give.  Well now they put a note on the account to apply the money.  I wonder what a 3 week float on 50K is.  They may do this often for all I now and it adds up.

My goodness!  I'm amazed that paper cheques are still used in USA.

[maizefolk]

My goodness!  I'm amazed that paper cheques are still used in USA.

Not just paper checks. Even a regular digital transfer between bank accounts  in the USA typically takes 2-3 days to go through.

From talking to people in other parts of the world I gather digital transfers can be and are way faster than that.*

*In the UK I know it's typically a matter of minutes not days.

[DeniseNJ]

My goodness!  I'm amazed that paper cheques are still used in USA.

Not just paper checks. Even a regular digital transfer between bank accounts  in the USA typically takes 2-3 days to go through.

From talking to people in other parts of the world I gather digital transfers can be and are way faster than that.*

*In the UK I know it's typically a matter of minutes not days.

If I can Zelle you money in seconds, I don't see how I should be waiting a month or even a day to transfer money.  Maybe the laws of how they issue retirement funds have not caught up with the technology.

Since the withdrawal from one 403b happened in one year and the deposit into the other happened this year, is that going to be a tax headache?