Vanguard Nefarious Hidden Fees??

[lizzzi]

I am currently starting a transfer of my trad. IRA from an actively-managed brokerage account at PNC Bank to Vanguard. I have not been unhappy at PNC, but it is clear that over a 20-year horizon, fees and expenses are going to eat me alive. All my other, taxable accounts are with Vanguard, and I want the trad. IRA there, too. Vanguard tells me that the only fee I would pay--the yearly $20 maintenance fee--will be waived because the IRA value is high enough. The  Vanguard rep. I talked to said there would be no other fees. The PNC bank rep. has cautioned me very seriously to be careful about Vanguard's fees--saying with a voice of doom, "There are always fees. Be ve--rr--yy careful." and comments like that. I trust Vanguard, plus I plan to have no more than a three-fund portfolio heavily in equities and just leave it alone except for yearly asset re-allocation. I am out of the workforce, and will not be making contributions to the IRA.  What do other MMMs think--does Vanguard have sneaky fees that I need to beware of?

[rmendpara]

I am currently starting a transfer of my trad. IRA from an actively-managed brokerage account at PNC Bank to Vanguard. I have not been unhappy at PNC, but it is clear that over a 20-year horizon, fees and expenses are going to eat me alive. All my other, taxable accounts are with Vanguard, and I want the trad. IRA there, too. Vanguard tells me that the only fee I would pay--the yearly $20 maintenance fee--will be waived because the IRA value is high enough. The  Vanguard rep. I talked to said there would be no other fees. The PNC bank rep. has cautioned me very seriously to be careful about Vanguard's fees--saying with a voice of doom, "There are always fees. Be ve--rr--yy careful." and comments like that. I trust Vanguard, plus I plan to have no more than a three-fund portfolio heavily in equities and just leave it alone except for yearly asset re-allocation. I am out of the workforce, and will not be making contributions to the IRA.  What do other MMMs think--does Vanguard have sneaky fees that I need to beware of?

Not that I'm aware of. Maybe they're very sneaky?

It's pretty much just the fund fees (taken out automatically from fund assets, but most of Vanguard's funds are lower than average). Perhaps there is an account fee if your balance is too low? Or maybe there's a transfer fee? I would be more worried about recurring fees than one-time fees.

[ArbitraryGuy]

AFAIK, if you sign up for your documents to be delivered electronically, the account $20 account maintenance fee does not apply.  Other than that, you just have your expense ratios.

[TheDude]

haha thats pretty funny. For basic mutual funds and ETFs the fees are pretty much zero. They are just trying to scare you. Vangaurd is not a public company and therefore have no one to answer to except for their investors. Bogle intently did this.

http://en.wikipedia.org/wiki/The_Vanguard_Group

[frugalnacho]

I wonder what incentive a PNC rep would have to scare you away from vanguard? 

[bikebum]

AFAIK, if you sign up for your documents to be delivered electronically, the account $20 account maintenance fee does not apply.  Other than that, you just have your expense ratios.

I use Vanguard and this is my experience too. No hidden fees.

[SDREMNGR]

The only hidden fee that I have experienced is super ridiculous holds on money invested, 1980s level of archaic paperwork on things and requiring notary signatures on various applications that I've been made to submit, and longer than normal settlement periods.  I like it well enough for its low fees, but their customer support also is not as good as at Fidelity.

[JustTrying]

I agree with the others that there appear to be no hidden fees in my experience with vanguard - I even cleaned my vanguard accounts completely out (balance of zero) this past year when we were buying a house, and I never had any fees or complaints from vanguard!

[rusty]

I am sure there are hidden fees, but those fees apply to all mutual funds.  For those funds that are marketed by brokers, there are 12b-1 fees which are how brokers get paid.  There are front loaded A shares, backloaded B shares, and annuitized C shares for investors. 

There are trading costs, advisory fees, distribution fees, etc that are subtracted out before NAV (net asset values) are released each day.  However, with small turnover in index funds I cannot imagine Vanguards would be more that any other mutual funds hidden fees.  I would believe Vanguard's would be less.

I was a licensed broker about 12 years ago when I worked for a "bullish" company.  Things may have changed since then.
R

[lizzzi]

Thank you for the wise counsel, everyone. You're confirming what I thought, and my IRA will definitely be going into Vanguard.

[rmendpara]

Thank you for the wise counsel, everyone. You're confirming what I thought, and my IRA will definitely be going into Vanguard.

There are some minimum balance requirements, different classes of shares (different expense ratio depending on the minimum balances held... investor shares/admiral shares/etc), and certain funds have purchase/sale restrictions or fees (rare though).

If you plan to be broadly invested, and not in something very specific or exotic (e.g. Thailand small cap stocks), you should find Vanguard to be a very pleasant experience.

I have a current 401k through Fidelity, and they also have solid options as well. If I had to pick one, I would choose Vanguard.

[Roots&Wings]

I have retirement and non-retirement investment accounts with Vanguard (I consolidated accounts from Fidelity, ShareBuilder, and individual mutual funds to Vanguard several years ago). 

The only time I have had a problem with Vanguard fees was when I was told (incorrectly) by a Vanguard phone representative that there would be no fee for an automatic monthly recurring fund purchase.  Apparently Vanguard does in fact have a $3 fee for automatic 'DCA' (dollar-cost-averaging) purchases of non-Vanguard funds (POAGX in this case).  I was refunded the $3 fee based on the incorrect information, so their customer service addressed the error satisfactorily.

Also, a stock that I held in my Vanguard brokerage account charged a fee (apparently a foreign stock fee that the company - Toyota - charged, not a Vanguard fee).  The TM stock fee was not readily apparent in my Vanguard account summary, and was automatically deducted from my Money Market account balance when I transferred funds to make another purchase (resulting in insufficient funds to make the purchase!).  So...the stock fee transparency in that case could have been improved in my opinion, but as an investor, you are responsible for knowing what fees any stocks or mutual funds might charge.

Overall, I have been happy with Vanguard and plan to continue there.

[danny9m]

No only are there no or low fees at Vanguard, you will be part owner of the company.  Vanguard is owned by the shareholders.  Jack Bogel specifically set it up this way.
After years of trying numerous approaches to money management, Peter Lynch do it yourself with Charles Schwab, Jim Creamer and finally the Vanguard Appproach.  When I moved all my money with them I discovered the savings are even greater than I imagined.  Need an ETF, there is no fee to by a Vanguard ETF.  Need or want to buy some stocks, for me I don't think I ever paid a fee.  I'm not exactly sure why that is but it could have to do with how much money I have there.  Need a good mutul fund that has low expenses they have them.

Not only are the fees low, their investing approach is probably the best for most people including me.  Who, I'll refer you to the Bogelheads blog, they explain it much better than I can.  To sum it up it is very hard to beat the market over the long term. 

As part of my investment journey I tried investing with the investment star manager of the moment with usually the same result.  What is the investing star of the moment, you can find this person usulally on the cover of Forune or articles about them in business publications.  CGM's manager was on the cover of Fortune, I invested heavily in that fund and the fund blows up.  Same thing with Dodge and Cox, boom.  They were investing in GM right before it went bust.  Oakmark's Bill Nugen was a star at one time, the guys keep  touting Washington Mutual for years right up to it went bust.  It was his largest holding.  Jim Creamer, I purchased his Action Alerts Plus, this is where he manages a portfolio and sends out E-Mails about his trades.  To his credit he has his record against the S&P 500 on his site and guess what, the S&P wins.

The one approach that worked for me was the Peter Lynch approach.  I picked the stocks in the 90s, I had value line and used Standard and Poors.  I hit it big on a few stocks in the 90's although I later came to realization a lot of folks were hitting it big then, although I was hit it bigger than most and I did get out with a lot in my pocket.  I don't recommend this because it is a really a full time job, and even at that, you are probably better long term in the S&P 500 index.

Some good books on this are out there.  Any of Jack Bogels books and a Random Walk down Wall Street.  Stocks for the long run is another good one by Jeremy Siegel. 

 

[hodedofome]

For investors, you are gonna have to try really hard to get lower fees than Vanguard. For individual traders, Interactive Brokers is typically the cheapest in the industry. I love that Vanguard is pretty much a not for profit organization, that should tell you everything you need to know.

[Grande]

I was setting up a Individual 401k for my wife last month. When I looked at Vanguard there was a $20 annual fee per fund held within the account (I think it was per fund not per account). That is waived when the balance reaches $50,000. I ended up going with Schwab as there were no such fees. And Schwab's Total Market Fund (SWTSX) expense ratio was 0.09% vs 0.17% at Vanguard (VTSMX) . I should point out that the Vanguard expense ratio is 0.05% for the Admiral shares(VTSAX) and that requires $10K minimum investment

[matchewed]

I was setting up a Individual 401k for my wife last month. When I looked at Vanguard there was a $20 annual fee per fund held within the account (I think it was per fund not per account). That is waived when the balance reaches $50,000. I ended up going with Schwab as there were no such fees. And Schwab's Total Market Fund (SWTSX) expense ratio was 0.09% vs 0.17% at Vanguard (VTSMX) . I should point out that the Vanguard expense ratio is 0.05% for the Admiral shares(VTSAX) and that requires $10K minimum investment

That $20 annual fee is waived by going with electronic paperwork.

[Will]

I was setting up a Individual 401k for my wife last month. When I looked at Vanguard there was a $20 annual fee per fund held within the account (I think it was per fund not per account). That is waived when the balance reaches $50,000. I ended up going with Schwab as there were no such fees. And Schwab's Total Market Fund (SWTSX) expense ratio was 0.09% vs 0.17% at Vanguard (VTSMX) . I should point out that the Vanguard expense ratio is 0.05% for the Admiral shares(VTSAX) and that requires $10K minimum investment

That $20 annual fee is waived by going with electronic paperwork.

So ultimately Schwab costs more with the higher fees (assuming the wife ends up with over $10k invested).

[matchewed]

I was setting up a Individual 401k for my wife last month. When I looked at Vanguard there was a $20 annual fee per fund held within the account (I think it was per fund not per account). That is waived when the balance reaches $50,000. I ended up going with Schwab as there were no such fees. And Schwab's Total Market Fund (SWTSX) expense ratio was 0.09% vs 0.17% at Vanguard (VTSMX) . I should point out that the Vanguard expense ratio is 0.05% for the Admiral shares(VTSAX) and that requires $10K minimum investment

That $20 annual fee is waived by going with electronic paperwork.

So ultimately Schwab costs more with the higher fees (assuming the wife ends up with over $10k invested).

Oh and some evidence on that vanguard waiving fees thingy.

[Will]

I was setting up a Individual 401k for my wife last month. When I looked at Vanguard there was a $20 annual fee per fund held within the account (I think it was per fund not per account). That is waived when the balance reaches $50,000. I ended up going with Schwab as there were no such fees. And Schwab's Total Market Fund (SWTSX) expense ratio was 0.09% vs 0.17% at Vanguard (VTSMX) . I should point out that the Vanguard expense ratio is 0.05% for the Admiral shares(VTSAX) and that requires $10K minimum investment

That $20 annual fee is waived by going with electronic paperwork.

So ultimately Schwab costs more with the higher fees (assuming the wife ends up with over $10k invested).

Oh and some evidence on that vanguard waiving fees thingy.

Now wait a minute! It says:

For Individual 401(k)/Individual Roth 401(k) plans:

Vanguard charges $20 per year for each Vanguard fund in an Individual 401(k) account.

It appears that the fee is not waived for 401(k) accounts.

[matchewed]

Ah yes you're right. I should read much more carefully before shooting off my "mouth".

[Grande]

[/quote]
It appears that the fee is not waived for 401(k) accounts.

Ah yes you're right. I should read much more carefully before shooting off my "mouth".

Yup. There is a difference in that $20 fee with the Small Business retirement plans. But you are correct that Vanguard has less expenses but not necessarily for account with small balances. Only when the balance gets close to $50K (in my example) assuming one moves to the less expense Admiral shares.

[lizzzi]

I've gone ahead and sent my paperwork to Vanguard to start transferring the trad. IRA. I am pretty much a Boglehead, and just plan to have VTSAX and VBTLX, probably 80/20 stock fund/bond fund. The $20 annual fee will be waived because I get electronic paperwork, and expense ratios are 0.05 %. So that's it…let's hope it grows nicely. It isn't money I plan to use anytime soon--if I needed it more, I probably would have a 60/40 mix.

[lizzzi]

VBTLX expense ratio is 0.08 % Sorry--was writing faster than I was thinking.