As a broker, Vanguard is best for people who have been saving for a long time or for retirement. Investors who prefer low-cost investment vehicles and investors who are comfortable investing mostly through index funds and exchange-traded funds (ETFs).
Vanguard recently tested a new all-digital advice service called ‘Digital Advisor’ for younger investors who are finding it hard to save and invest. The broker also has a service called “Personal Advisor Services,” which gives investors access to a Vanguard financial advisor when their financial situations are more complicated. Vanguard is a good choice if you want to build a diversified portfolio based on ETFs that you will rebalance from time to time but not much else. But if you are an active investor or trader, you might not want to use Vanguard because it has few tools and a small number of assets.
List of Contents
Minimum Balance: $0
Cost per stock trade: $0
Cost per options trade: $1 per contract for accounts, free trades for those with Vanguard funds > $1 million
No-transaction-fee mutual funds: 3,200+ NTF mutual funds
Securities: Stocks, ETFs, options, bonds, mutual funds
Customer service: Phone Monday-Friday 8 a.m.-8 p.m. ET, email support
Account fees: $20 account fee for accounts with less than $10,000 in Vanguard funds. Can waive fee if signed up for e-delivery of documents.
Mobile applications: Vanguard offers the “Vanguard“ mobile app on the Apple App Store and Google Play Store
Since John C. Bogle founded Vanguard Brokerage in 1975, it has become synonymous with low-cost investing. Vanguard was founded to serve buy-and-hold investors with a long-term perspective. It was never intended for frequent traders or investors with a short-term horizon. Instead, Vanguard caters to investors who share the firm’s investment philosophy, offering them an intuitive, educational, and low-cost brokerage experience.
The structure of Vanguard is unique in that the company is owned by its funds, which are owned by their shareholders, making it a firm that was truly designed for investors. By removing outside owners and interests, competing loyalties are eliminated. In this review, we’ll examine Vanguard’s position among online brokers in light of its specialized approach and help you determine whether its features and investment philosophy are a good fit for your needs.
- On Monday through Friday, phone support is available from 8 am to 8 pm.
- Prospective customers cannot engage in live chat with a customer service agent on your website, platform, or mobile app because Vanguard does not offer this service.
- Vanguard’s client support center has an easy-to-use task search feature, but it lacks chatbot functionality.
- You will have unrestricted access to financial advisors as a Vanguard Personal Advisor Services client.
- The level of service for which your account size qualifies will determine how long you will have to wait on hold with Vanguard.
You will be able to trade a variety of assets as a Vanguard client, including the following:
- Stocks and ETFs long; limited short sales
- Mutual funds (In addition to the 130 Vanguard funds available.)
- Bonds (Corporate, Municipal, Treasury, and CDs)
- Vanguard Personal Advisory Services and Vanguard Digital Advisor
- Foreign securities transactions
Vanguard joined the zero-commission brokerage movement in January 2020, a significant amount of time after other brokers. This is likely due to Vanguard’s extensive no-commission ETF offerings, which allowed for the execution of a large number of trades without commission. The expenses of Vanguard are as follows:
- Vanguard does not charge commissions for equity, ETF, or OTCBB trades executed online.
- There is no maximum number of shares that can be traded at the base commission rate.
- There is no commission per leg on options trades. The $1 per contract commissions are significantly higher than those of other online brokers.
- A purchase of 50 options contracts costs $50.
- Investors with account balances over $1 million receive 25 free options trades per calendar year, while those with account balances over $5 million receive 100. This free trade allocation is shared with other commission-eligible transactions (25 total across options and transaction fee mutual funds, for example).
- For clients with less than $1 million in Vanguard ETF and mutual fund assets, the transaction fee for a transaction-fee mutual fund is $20 online and $25 by phone with a broker.
- Clients with over $1 million in Vanguard ETF and mutual fund assets are allotted 25 trades at no cost, after which it costs $8 to trade a mutual fund with a transaction fee online or over the phone.
- The live broker fee at Vanguard is an additional $25 per trade. Clients with over $1,000,000 in their accounts have free access to live brokers.
- As of August 2022, the margin interest rate ranges from 10.75% for $10,000 balances to 9.25% for balances over $100,000.
- Variable income transaction fees can vary. For secondary market transactions, U.S. Treasuries incur no commission fee, whereas CDs, corporate bonds, and municipal bonds incur a $1 per $1,000 face value fee. Commissions on mortgage-backed securities amount to $35 per transaction.
- The $20 annual account service fee for Vanguard fund accounts under $10,000 is waived if account statements are delivered electronically.
- There are no fees for inactivity, account closure or transfer, exercise/assignment, receiving wire transfers, sending checks, paper statements, or trade confirmations.
- The live broker fee at Vanguard is an additional $25 per trade. Clients with over $1,000,000 in their accounts have free access to live brokers.
- There is a $10 fee for both domestic and international wire transfers.
Vanguard’s philosophy is based on long-term investing, so the broker can only take orders that are good for “buy and hold” investors. Market, limit, and stop-limit orders are the only types of orders you can place. Vanguard doesn’t work with conditional orders or trailing stops, and you can’t set up orders to be entered later. Also, multi-order trades for things other than mutual funds are not supported right now.
In comparison to other online brokers, Vanguard’s onboarding procedure is relatively time-consuming. Although you can initiate account creation online, you must wait several days before you can access your account. The design of the platform is antiquated, and navigation could be improved. Nonetheless, the platform can be tailored to your preferences. As a Vanguard user, you will be able to customize the accounts displayed, how you are greeted on the web/app, and the content on your mobile app’s feed. Accounts may also be added to custom groups in order to view performance and additional data.
The Vanguard mobile app is user-friendly, and trading is simple. Although the mobile app supports the same order types as the web platform, it does not support the same asset classes. Options contracts, international stocks without OTC registered symbols, fixed income, and non-Vanguard mutual funds are absent on mobile. In addition, the mobile application does not stream data in real-time. Instead, the mobile trade path utilizes real-time quotes, while other app sections display delayed quotes.
On the Vanguard website, trading is a bit of an antiquated experience. Real-time quotes are used on all trading-related pages, as well as on the security profiles and research pages. However, the website’s market and security information shows delayed quotes. For instance, both the security look-up and portfolio balances and holdings pages show delayed quotes.
It does make sense that real-time quotes are not automatically refreshed, given that it caters to passive investors once more. Instead, as you progress through a trade flow, the quotes are updated. As it may require several clicks to execute a trade, this means that quotes are not always updated prior to placing an order. One advantage is that tax lots can be chosen before an online order is placed.
Vanguard does not support conditional orders, trailing stops, or the simultaneous entry of multiple orders. This procedure is incredibly inefficient if you’re a frequent trader or active investor, underscoring the point that Vanguard is not for traders.
Overall, the trading experience is beneficial to the intended buy-and-hold investor who is gradually building a portfolio. The trading experience falls short as expected for other types of investors who demand a responsive and adaptable platform.
Security, Reliability, and Transparency
- Apple users can log in using biometric (fingerprint or face) identification.
- Vanguard has excess Securities Investor Protection Corporation (SIPC) insurance with a $250 million aggregate limit that is provided by Lloyd’s of London and London Insurers.
- There is a cash cap of $1.75 million per customer and a maximum of $49.5 million for any one customer.
- In the previous four years, there have been no platform outages at Vanguard. There haven’t been any sizable data breaches reported by Vanguard.
Recently, Vanguard has not been subject to any significant regulatory filings. As far as openness is concerned, it has a page dedicated to explaining its pricing structure and fees. You will find information on the costs associated with mutual funds, ETFs, stocks, options contracts, fixed income, and margin trading. You will also be able to quickly locate information regarding fees for client services such as wire transfers.
News and Education
Although real-time streaming news is unavailable, news from Associated Press and MT Newswires is accessible.
Vanguard has an extensive history of educating investors. Their content focuses on assisting you in setting financial objectives and developing a strategy to achieve them. There are blogs, news articles, social media, commentary, research papers, videos, and webcasts about investment products, retirement, industry news, financial planning, and the economy. In addition to an investing glossary, Vanguard provides life-stage planning tools that are useful for both do-it-yourself investors and novice investors. As stated previously, Vanguard does not provide a paper trading platform.
Vanguard Broker Pros and Cons
✔ Investor education useful for long-term objective planning
✔ Offers greater returns on idle funds than its rivals
✔ Vanguard has integrated a robo-advisor into its platform.
✘ Limited capabilities and features of the platform
✘ Outdated aesthetics and cumbersome user experience
✘ There is no streaming news in real-time.
Vanguard Broker Pros Clarified
- On its website, Vanguard provides an abundance of tools and resources for retirement planning. The majority of investing education content focuses on establishing financial objectives and developing a plan to achieve them. If you choose Vanguard as your broker, you will have access to a variety of market-related articles, videos, and podcasts that will help you make long-term investment decision
- By automatically investing cash balances in brokerage accounts into money market funds with a low expense ratio, Vanguard prioritizes you and your investment outcomes. In addition, Vanguard will pay 0.38 percent interest on idle funds held in the VMFXX Federal Money Market Fund. This interest rate is significantly higher than its rivals.
- Vanguard is committed to increasing the accessibility and affordability of advice. It has recently piloted a new digital-only advice service, Digital Advisor, geared toward younger investors with basic saving and investing objectives. Digital Advisor complements Personal Advisor Services, which provides access to financial advisors and is ideally suited for individuals with more complex financial circumstances.
Vanguard Broker Cons Clarified
- The trading functionality at Vanguard is simple because it was designed with the needs of passive, buy-and-hold investors in mind. From the perspective of a passive investor, the emphasis on balance, holdings, and performance is beneficial. Still, active investors will find that charting tools and other research capabilities are severely constrained or absent altogether.
- The main platform’s dated design could use an updated navigation system and user interface. The current focus on design seems to be primarily on the Digital Advisor product.
- For example, Vanguard does not offer real-time streaming news like most of its rivals do. This is probably due to the fact that the majority of its target audience has a long-term outlook, which renders real-time news less pertinent. However, this once again emphasizes that customers must make the decision to buy and hold or find a different place if they prefer to be more active.
Is Vanguard Broker A Worth Broker to Get?
Individual investors who want to buy and hold their investments will find Vanguard a suitable option, especially if those investments are Vanguard funds.
- The abundance of education and planning resources enables long-term investors to create a simple and effective financial plan.
- You can trade Vanguard’s low-cost funds without paying a commission or transaction fee, and they cover a wide range of investment areas, giving you a wealth of options.
- Active investors are unlikely to meet their needs as few fundamental research and trading tools are available.
Investors who are interested in commission-free ETFs or mutual funds have the option of turning to virtually any other broker that provides those investments, including TD Ameritrade and E-Trade. Active investors may want to look into TD Ameritrade or Interactive Brokers. Both of these brokerage firms cater to investors who actively manage their portfolios, have trading platforms that can be customized, and provide access to a diverse selection of securities.
Vanguard Broker is a low-cost investing platform that caters to both consumers and institutions. It was established in 1975 and is based in Pennsylvania, USA.
Vanguard Broker provides a diverse selection of investment alternatives such as equities, bonds, mutual funds, exchange-traded funds (ETFs), and other assets.
The minimum amount necessary to start a Vanguard Broker account varies based on the investment choice selected. Some mutual funds, for example, may need a $1,000 minimum commitment, but others may require $3,000 or more.
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Source: Investopedia, Bankrate