Between Fidelity, Schwab, and Vanguard, I am surprised that Vanguard is the one that most wants to be like Robinhood. Their brokerage account, officially Vanguard Brokerage Services (VBS), recently added a bunch of new fees but also officially declared themselves as having a “digital-first service model”. That’s corporate-speak for “we want to spend less money on customer service”.
This was brought to my attention by this RIABiz article “Vanguard warns its phone-reliant investors of ‘termination’ — without warning or explanation — under new contract, effective July 1”, which includes this Editor’s take:
My guess is that this gobsmacking set of legal clauses in the new Vanguard contract will, in retrospect, be the high point of the seeming absurdity at the grand old Malvern, Pa., fund company.
Indeed, look at this language from the amended Vanguard Brokerage Account Agreement:
You understand that excessive reliance on Our phone associates for tasks that can be accomplished online may negatively impact Your customer service experience, including but not limited to delayed response times, additional fees, and possible Account termination.
VBS reserves the right to resolve Non-Trade Inquiries exclusively on its website or other available channels as opposed to providing such information by phone. Furthermore, at its discretion, consistent with Section 8(c) of this Agreement, VBS reserves the right to close Your Account, or terminate any feature or service at any time, for any reason, and without prior notice, inclusive of not meeting Our Digital Interaction Expectations.
Wow. We’ll ignore you, fine you, or just fire you. This was foreshadowed by this March 2024 post on the Bogleheads forum “What to do?? [Vanguard warning about closing account for calling too frequently”.
This person did make a lot of phone calls to Vanguard. But lets look at the reasons:
- Transition from mutual fund platform to VBS. This was mandated involuntarily by Vanguard themselves!
- Required Minimum Distributions, which I would file under a “complex” topic.
- Transfer of external IRA to Vanguard.
These are all legitimate inquiries, not just checking a balance or even placing a trade (for which you now charge $25 a pop anyway).
Next, let’s add some more context. This member is 80 years old and has been a Vanguard customer since the 1970s! She is a Flagship member, which means that over time she has accumulated over $1 million in assets with Vanguard.
A loyal customer of 50+ years, who is 80+ years old, called you a bunch of times about legitimately complex subjects. So of course, you threaten to close their account?! Vanguard, you are not meeting *My* Don’t Be A Soulless Jerk Corporation Expectations.
Vanguard’s home page loudly touts how we are owners, not just investors.
Yet this just reeks of the same impersonal corporate bean-counting that Vanguard’s competitors used to be accused of. If customer calls more than X times in Y days, let’s fire them. We don’t measure things like loyalty or compassion for those that may not be as able to use digital tools due to age or disability. What a way to treat an “owner” of 50+ years.
This new rule won’t affect me now because I avoid calling Vanguard if at all possible. (You’re welcome, Vanguard!) But I can see a day when I am older and I will need a bit more assistance and understanding. Is this what I have to look forward to? I searched for “Fidelity closed my account because of too many phone calls” and “Schwab closed my account because of too many phone calls” and could not find any similar examples.
What made Vanguard, Vanguard? In my opinion, it was their willingness to forgo profit in order to better serve the everyday individual investor. Some people due to age or disability may need more phone help than others, and there should be some discretion.
We’re supposed to be “owners”, right? Well, if you’re an “owner” when was the last time Vanguard let you decide anything? I would give up some basis points for world-class customer service. They don’t release executive compensation. How much is this new CEO from Blackrock being paid? Those are costs, how about we see them?! Vanguard had to disclose that every person on their Board of Directors makes $300,000 a year for a part-time side gig. That may be the Wall Street norm, but I thought that Vanguard was different. Not a single person on the Berkshire Hathaway Board of Directors makes more than $7,000 a year, and those are mostly just reimbursements for physically traveling to attend Board meetings in person.
Vanguard appears to worship at the Church of Assets Under Management. Perhaps the metric they should be following is customer satisfaction and customer retention rates. As an owner of Vanguard, I’d like to see those numbers too.
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Wow. This policy seems to ignore the elderly, blind, and other unique circumstances that may reasonably warrant more frequent calls. I have a blind family member who needs to call in more often than a sighted person. This individual switched from Vanguard to Fidelity because of the long wait times and the limited/nonexistent call center staffing on weekends. This person had a considerable sum with Vanguard.
At first glance, this policy does seem soulless. However, I work for a large financial services company and there are many customers who call in incessantly. Literally dozens of times per day. I have a feeling the OP from the article was glossing over how often they actually called in to get out on the naughty list. I have a feeling the policy is meant to apply to those types of callers, not those who call in a regular amount of times for legitimate reasons.
True. Even Costco can “fire you” for certain customers who abuse their policies. It is extremely rare, though.
I’m sympathetic to Vanguard criticism but they have done well for me. Based on how I use Vanguard now, I will pay no fees but that could change down the road. If there are issues, Vanguard is one click away from being transferred to my Schwab account.
Another American Institution (think Boeing) on the way out.
I’d guess hiring based on DEI metrics instead of merit is having consequences. Boing is also learning this lesson at considerable expense it seems.
“Hmm, but how can I blame this foolishness on scary minorities? Certainly can’t be from the (9 out of 11 white) folks in leadership positions.”
Boeing’s problems are almost entirely from their late 90s merger with McDonnell Douglas. Previously Boeing was run by engineers and produced crafts of the highest quality. McDD couldn’t produce the same quality and keep the blood suckers at the top well compensated. Instead of dying in sunlight, these crafty vampires invaded Boeing’s leadership in the merger, their cancer destroying a good culture to feed the leaches.
Did you know their first spacecraft failed so hard it took them over two years to try again? Now their first manned flight is riddled with errors, delaying the astronauts’ return to Earth!
Very poor taste. There’s no connection there, but you probably see them everywhere. Time for some self-reflection, jilted employee.
I’m a Vanguard user, Flagship. I concur on the pay transparency, lets have it.
Regarding the core topic here, I view it very negatively. With ~20 year working years left, as well as significant influence on a 10,000 person company 401k fund offering, I’m going to investigate alternatives going forward.
The problem here is tone. The actions themselves are not necessarily that different than other organizations, however they are messaging the changes horribly. The scenario of the 80-year old would have Jack Bogle in fits.
Do better Vanguard.
If I wanted to switch from Vanguard to something else, what would you recommend?
Fidelity.
The user interface is so much better!
Nobody is perfect, but if I do switch it’ll be either Fidelity or Schwab.
This would be funny if it weren’t so sad. Really glad I’m at Fidelity, their phone assistance is excellent.
I’ve been with Vanguard for about 35 years and am at retirement age. There was one year when I had all 3 example scenarios above and had to call Vanguard several times during that year (maybe 5 times?). I really hate talking on the phone and those were the only times I ever called them in the 35 years. But if I were choosing a firm to hold my money I’d think twice and most likely refuse to go with one that threatens account closure because I don’t want to guess on how to handle a complicated scenario.
Tell us what you really feel, Jonathan. 😉
I’ve been a Vanguard “owner” for 40+ years. I still am, but believe me I have researched what it would take to fire them and move everything elsewhere. And it is not hard at all. My finger is poised over the button waiting for the final straw.
I am so close to just closing my Flagship Vanguard account and moving my assets to Fidelity (never thought I’d say that), where I have an old IRA and 401k already. So disappointed in Vanguard. Their phone service is terrible!