Vanguard Review 2024

Our Take

As a broker, Vanguard is best suited for long-term or retirement savers, investors who prefer low-cost investment vehicles, and investors who prefer investing in index funds via mutual funds or exchange-traded funds (ETFs). Vanguard's brokerage isn't aimed at active traders and hasn't put much effort into developing the types of tools and resources traders need. Instead, Vanguard continues to develop robo-advisor solutions for investors looking to be even more hands off in the market. Vanguard has an all-digital advice service, Digital Advisor, and a version with access to Vanguard financial advisors, and Personal Advisor Services.

The Vanguard online brokerage platform is heavily tilted towards providing investors with a wide range of ETFs, stocks, and bonds to use to create a well-diversified passive portfolio. Vanguard has continued to deepen its bond offerings, for example, and now has new issues from over 170 banks in 2024. Vanguard has also dabbled in more cash management options with the Vanguard Cash Plus account which offers a high interest rate and the ability to pay bills. If you are looking to create a passive portfolio that you will periodically rebalance—and not much else—then Vanguard is a good fit. If you are an active investor or trader, however, Vanguard's limited tools and asset selection will likely be a non-starter.

Introduction

Since its founding in 1975 by John C. Bogle, Vanguard Brokerage has become synonymous with low-cost investing. From the onset, Vanguard was built to serve buy-and-hold investors with a long-term philosophy. It was not and has never been, designed for frequent traders or short-term investors. Instead, Vanguard serves investors aligned with the firm's approach to investing, providing an intuitive, educational, and low-cost brokerage experience for this group. 

Vanguard’s structure is unique in that the company is owned by its funds, which are owned by its shareholders—making it a firm truly built for investors. By removing outside owners and outside interests, there are no competing loyalties. In this review, we’ll look at where Vanguard ranks among the online brokers given its niche approach, and help you decide whether its features are a good fit for your investing needs.

Pros & Cons

Pros Explained

• Useful investor education for long-term goal planning: Vanguard has a wealth of retirement planning tools and resources on its website. Most of the investing education content is centered around helping you set financial goals and create a roadmap for how to achieve them. If you choose Vanguard as your broker, you will have access to various articles, videos, and podcasts that will inform you on the state of the market and help guide your long-term decisions. 
• Offers higher returns on idle cash than its competitors: Vanguard puts you and your investment outcomes first by sweeping brokerage account cash balances into money market funds with a low expense ratio. Additionally, Vanguard will pay you a return on idle cash utilizing the VMFXX Federal Money Market Fund. This interest rate is much higher than its competitors. 
• An automated robo-advisor is integrated into Vanguard’s platform: Vanguard is committed to making advice more accessible and affordable. It has an all-digital advice service, Digital Advisor, which is designed for younger investors with basic goals of saving and investing. Digital Advisor complements Personal Advisor Services, which features access to financial advisors and is well suited for individuals facing more complex financial situations.

Cons Explained

• Limited platform capabilities and features: Vanguard’s trading platform is basic as it was built for the passive buy-and-hold investor with simple requirements. From a passive investor’s standpoint, the focus on balance, holdings, and performance is useful, but active investors will find charting tools and other research capabilities limited or completely missing. 
• Basic platform design: Vanguard has been refreshing the platform with a new dashboard landing page and updated tools, but it still lags in terms of user experience.  
• Real-time streaming news is not available: Unlike most of its competitors, Vanguard does not offer real-time streaming news. This is likely because most of its target customers have a long-term philosophy, which makes real-time news less relevant. That said, this again emphasizes that clients have to commit to buy-and-hold or go somewhere else if they are inclined to be more active.

Usability

Although Vanguard has invested in improving the user experience across its web and mobile platforms, active investors will still find the overall brokerage platform to be basic relative to top competitors. One area where Vanguard has made the experience more intuitive is in the Opening of new Accounts. Notable enhancements include the ability to link a bank instantly through account aggregation technology, and a video tutorial that provides step-by-step education on opening an account. Certain functions are actually quite customizable. Specifically, as a Vanguard user, you will be able to adjust the accounts displayed, how you are greeted on the web/app, and the content on your feed within the mobile app.

Vanguard's mobile app is easy to use, and trading is straightforward. It supports many of the same types of orders as the web platform, but investors needing to execute more complex trades will need to make them on the web browser. Keep in mind, that one caveat of the mobile app is that it does not stream data in real time. Instead, the mobile trade path utilizes real-time quotes, while delayed quotes are displayed in other areas of the app.

Trade Experience

Vanguard recently redesigned its main menu and support center, all while improving the website's mutual fund purchase flow. Despite these improvements, the trading experience on the Vanguard website remains basic when compared to key competitors. All pages that involve trading utilize real-time quotes, as do the security profile and research pages. However, market and security information on the website displays delayed quotes. For example, the portfolio balances and holdings and security look-up pages both display delayed quotes. 

Again, given that Vanguard caters to passive investors, it makes sense that real-time quotes are not auto-refreshed. Instead, the quotes are updated as you move through a trade flow. This means that quotes are not necessarily updated before submitting an order, as it can take several clicks to place a trade. One positive is that tax lots can be selected before placing a trade.

Vanguard does not enable conditional orders or trailing stops, nor will it allow you to enter multiple orders simultaneously. If you’re an active investor or frequent trader, this process is highly inefficient, further hammering home that Vanguard is not for traders. 

Overall, the trading experience works for the target buy-and-hold investor slowly putting together a portfolio. For other types of investors expecting a responsive and customizable platform, the trading experience falls predictably short.

Mobile Trade Experience

Even after a redesign meant to keep Vanguard in tune with the needs of its mobile clients, the app remains light in terms of common industry features. Similarly to Vanguard's website, quotes for stocks and ETFs on the app show a delayed price until you get to order entry. The mobile app allows you to customize your "My Feed" which displays account information, news, blogs, transaction history, and performance, among other information.

Range of Offerings

As a Vanguard client, you will be able to trade a decent range of assets, including the following:

• Stocks and ETFs long; limited short sales
• Mutual funds (In addition to the 266 Vanguard funds available)
• Bonds (Corporate, Municipal, Treasury, and CDs)
• Vanguard Personal Advisory Services and Vanguard Digital Advisor
• Foreign securities transactions

Order Types

Vanguard’s ethos is centered on a long-term investing philosophy, so the broker’s range of order types are limited to those best suited for buy and hold investors. The only order types you can place are market, limit, stop, and stop-limit orders. Vanguard does not support conditional orders or trailing stops, and they do not allow you to stage orders for later entry.

Trading Technology

Vanguard's order routing technology is basic, just like its trading platform. It does not have a smart order routing technology, you cannot backtest or automate a trading strategy, and you will not be able to route your own orders. Although its approach to routing is basic, Vanguard will score some points with investors because it does not accept payment for order flow on equity and ETF orders. 

Vanguard reports a price improvement of $1.70 per 100 shares. According to the broker, it conducts a regular and rigorous review of quality that looks at each and every client order. More than 99% of marketable orders for Vanguard ETFs have been executed at the midpoint, which is considered the best price.

Vanguard does not offer a trade simulator. Again, this is not surprising considering it was built to discourage trading and instead encourage long-term, low-cost investing.

Costs

Vanguard joined the zero-commission brokerage movement in 2020, well after other brokers. This is likely due to the fact that many Vanguard trades were already being executed without commission due to its extensive no-commission ETF offerings.

Vanguard's costs are as follows:

• Vanguard charges no commissions for online equity, ETF, or Vanguard mutual fund trades. There is no limit on the number of shares that can be traded at the base commission. 
• There is no per-leg commission on options trades. Per-contract commissions are $1, which is significantly higher than other online brokers. 
• Investors with account balances over $1 million get an allotment of 25 free options trades per calendar year and those with $5 million or more get 100 per year. This allotment of free trades 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, it costs $20 to trade a transaction-fee mutual fund online and an additional $25 broker-assisted fee if you trade by phone instead of online. There is also a early redemption fee of $50 for all sales executed within 60 calendar days of the trade date of your most recent purchase of the same fund.
• Clients with more than $1 million in Vanguard ETF and mutual fund assets are allotted 25 of $0 trades, and then it costs $8 to trade a transaction-fee mutual fund online and by phone.
• Vanguard's live broker fee is an additional $25 per trade. Clients with more than $1,000,000 in their accounts can access live brokers for free.
• Margin interest rates range from 13.00% for loan balances of $19,999 and under to 11.00% for loan balances between $250,000 and $499,999; for loan balances of $500,000 or more, investors will need to contact Vanguard to get an accurate margin interest rate.
• Fixed income transaction fees vary. U.S. Treasuries are commission free, while CDs, corporate bonds, and municipal bonds incur a $1 per $1000 in face value fee for secondary market transactions. Mortgage-backed securities have a $35 per trade commission.
• There is a $25 annual account service fee for accounts with under $1,000,000 in Vanguard funds that is waived if you select e-delivery for account statements.
• There may be a $100 fee for each account closure and full transfer of accounts to another firm.
• For accounts with less than $1 million in qualifying Vanguard assets, there is a $10 fee for outgoing wires domestically as well as internationally.
  

How This Broker Makes Money From You and for You

As fee compression for equity and option trades sweep the brokerage industry, online brokers must find ways to build a profitable business model. The fees and commissions listed below are a few of the ways Vanguard may make money from and for you.

• Interest paid on cash: Vanguard pays a strong rate, currently almost 5%, and automatically sweeps uninvested cash into a money market fund. All the interest earned on your idle cash is paid to you. Only a small expense ratio is charged which is better than what some other brokers do. Many other brokers pocket the spread between what they earn on idle customer cash versus what they pass on—this is not the case with Vanguard.
• Payment for order flow (PFOF): There are plenty of brokers that use payment for order flow as an additional revenue stream, but Vanguard is not one of them. Essentially, brokers that participate in payment for order flow are being compensated for directing your equity and options orders to specific trading exchanges. Vanguard does not engage in PFOF.
• Stock loan programs: Vanguard uses the stocks held within its funds to participate in the stock loan program. The modest returns from lending securities within funds are realized within the fund, and thereby passed on to investors. Because of this established within-fund lending program, there is not a separate stock loan program outside of the funds on an individual investor portfolio level.
• Price improvement: Vanguard’s order routing attains a net price improvement of $1.70 per 100 shares, which benefits you the investor.
• Margin interest: While using margin might not be part of the typical Vanguard investing philosophy, they do offer margin and make money on the interest collected for borrowing the funds to investors.
• Expense ratios: Vanguard earns money from the expense ratios of its own mutual funds and EFTs. Expense ratios are the fees paid by investors for investing in the fund. Vanguard's expense ratios are known to be very low, but with so much funds invested they add up to be a source of income for Vanguard.

Account and Research Amenities

Although Vanguard is a large broker, they have limited research and account amenities one would expect from a large broker. Vanguard was built for the target buy-and-hold client, and has dispensed with almost everything non-essential in the process.

Stock Screener 

Vanguard has a stock screener, but it is limited in functionality. Stocks cannot be screened for technical indicators, and screens cannot be turned into watchlists. Vanguard does have a stock comparison tool that allows investors to compare two stocks across a variety of metrics.

ETF and Mutual Fund Screener 

Vanguard offers an ETF specific screening tool as well as a mutual fund screening tool, enabling you to compare the characteristics of ETFs and mutual funds side by side. 

Options Screener 

Vanguard does not offer an options specific screening tool. 

Fixed Income Screeners 

Vanguard offers a fixed income screening tool that has a list of all CDs and bonds available for retail investors. As a Vanguard client, you can build a bond ladder but cannot use it to execute simultaneous buy orders.

Charting

Vanguard’s charting functionality was built by FactSet. Although charts are customizable, there is no technical analysis available and the capability is limited.

Tools and Calculators 

With Vanguard, you can strengthen your financial toolbox with plenty of do-it-yourself resources. The majority of this broker's tools are centered around retirement planning. For instance, Vanguard has a retirement planning worksheet, retirement income calculator, required minimum distribution estimator, and a “when to retire” tool. It also has an investor questionnaire to guide you through creating a diversified portfolio, and aligning your risk tolerance with your retirement goals. 

Since college planning is a common goal, Vanguard offers an education savings calculator, college cost estimator, 529 plan tax deduction calculator, as well as a 529 plan comparison tool. 

Trading idea generator 

Vanguard does not have a trade idea generator. 

News 

Although real-time streaming news is not available, news articles and analysis are posted on the website.

Third-party research

Vanguard offers daily market reports as well as third-party research provided by Argus and Market Grader. They are free for registered clients. 

Cash Management

Idle cash at Vanguard is automatically swept into money market funds with a low expense ratio. Vanguard also has its new Cash Plus account that acts as a high-yield savings account with FDIC insurance and the ability to pay bills. You can also sweep the cash from your Cash Plus account into money market funds if the 3.90% APY isn't enough.

Fractional Dividend Reinvestment Plan (DRIP)

As a Vanguard user, you will not be able to specify a dividend reinvestment at the time you purchase a dividend paying stock. Instead, once the security is purchased and settled, you can then make the decision to reinvest or receive cash. Additionally, Vanguard does offer you the option to make the decision at the account level, which drives selections for all new purchases, or you can make the selection on a security by security basis. DRIP purchase are also done with fractional shares when a full share cannot be purchased.

SRI/ESG Research Amenities (H4)

Environmental, social, and governance (ESG) investing has gone mainstream thanks to better information and an increased interest from investors seeking to make an impact through their investment decisions. Vanguard has a dedicated area on its website for socially responsible investing (SRI) and ESG investing. Most of its funds are indexed and follow an exclusionary strategy that omits companies that don’t meet certain ESG criteria. Vanguard currently has nine funds in this space. Some are active, but most are index funds.

Portfolio Analysis

Portfolio reports and analyses are updated in real time on the Vanguard website. It is customizable and you will have the ability to aggregate holdings from outside accounts. Realized and unrealized capital gains and losses are reported in real-time, as well as margin, buying power, and account balances. You can also view your unrealized long-term and short-term capital gains. Vanguard does have a sector allocation analysis tool that flags when you are over-exposed to a given sector, and this tool takes in additional data from other financial accounts you sync to Vanguard.

Although there are capital gains reports, you will not be able to calculate the tax impact of a future trade. They do generate tax forms like online brokers commonly do. You are able to calculate the internal rate of return as well as the time-weighted rate of return. The re-skinned Portfolio Watch tool allows users to test any portfolio rebalancing changes they are considering.

Vanguard predictably lacks the capability to add notes to a trade or maintain a trading journal.

Education

Vanguard has a long history of providing education to investors. The focus of their content is on helping you set financial goals and creating a plan of action on how to reach them. You will find educational resources such as blogs, news articles, social media, commentary, research papers, and videos, as well as webcasts on investment products, retirement, industry news, financial planning, and the economy. In addition to an investing glossary, Vanguard also offers life stage planning tools, which are both useful for do-it-yourself and beginner investors. As previously mentioned, Vanguard does not offer a paper trading platform.

Customer Service

• Phone support is available from 8 am–8 pm, Monday through Friday.
• Vanguard does not offer live chat with a customer support representative for prospective clients on your website, platform, or mobile app.
• Vanguard does not have chatbot capability, but it has a client support center with well organized topic categories.
• As a Vanguard Personal Advisor Services client, you will have unlimited access to financial advisors.
• Vanguard has service levels based on account size that allow you to unlock greater customer support with easier access to the best financial professionals at the company.

Security and Reliability

• Apple users can log in with biometric (face or fingerprint) recognition.  
• Vanguard accounts are protected by SIPC which offers up to $500,000 of insurance for securities and $250,000 of coverage for cash should the broker fail.
• Vanguard carries an excess of SIPC policy as is common that provides greater levels of coverage in the millions, but the exact amount is not shared.
• Vanguard did not have any platform outages.
• Vanguard has not reported any significant data breaches.

Transparency

Vanguard has not faced any major regulatory filings as of late. As far as transparency is concerned, it has a dedicated webpage to provide clarity on its pricing structure and fees. You will be able to find information on the costs of mutual funds, ETFs, stocks, options contracts, fixed income as well as trading on margin. You will also be able to easily find information on costs as it pertains to client services such as wire transfers.

Available Account Types

Vanguard offers all the common account types as well as specific accounts for college savings, small business retirement accounts, and more.

Vanguard's account lineup includes:

• Individual and joint brokerage accounts
• Corporate investment accounts
• 529 savings plans
• Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts
• Trusts
• Traditional individual retirement accounts (IRAs)
• Roth IRAs
• Spousal IRAs
• Simplified employee pension (SEP) IRAs
• Savings Incentive Match Plan for Employees (SIMPLE) IRAs
• Small plan 401(k)
• Individual 401(k)

The Bottom Line

Vanguard dominates the passive investing market for good reason. The whole ethos of the company is built around low-cost, buy-and-hold as the solution for the average investor. If you are a Vanguard customer, you likely use the broker to purchase Vanguard funds—and you probably hold Vanguard funds even if you aren't a Vanguard customer. Committing to Vanguard as your online broker essentially means committing to passive investing. If you do this, you reap the most benefits from Vanguard's basic—but very affordable—offering. 

Vanguard's competitive advantage is maintaining an array of low-cost ETFs and mutual funds. If you are a buy-and-hold investor, then Vanguard's services, platform, and mobile app will appeal to you despite the limitations. The platforms are not as user friendly or up to date as Vanguard’s competitors, but they can help you create a low-cost and diversified portfolio for the long term. If you are looking for robust trading tools for active investing, Vanguard is quite clearly telling you to look elsewhere.

Compare Vanguard to Similar Online Brokers

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