Vanguard Broker Review



The Vanguard Group are a large investment management company based in Pennsylvania, currently managing in excess of $1.6 Trillion dollars of assets.

Vanguard Brokers is the discount brokerage arm of Vanguard Group, they offer full access to all the major markets with the exception of Forex.

When we’ve reviewed the brokerage arms of large institutional fund managers before we’ve been disappointed by their poor platforms, expensive fees and slow execution times. Question is, are Vanguard any different? Read our review to find out.

Fees & Commissions

  • Stocks and ETFs: $7 for the first 25 trades, $20 for subsequent trades for account with less than $50,000
  • $7 for account with $50,000–$500,000
  • $2 for account with $500,000–$ 1 million
  • Options: $30 plus $1.50 per contract
  • $8 + $1.50 per contract for accounts with over $1 million
  • Mutual funds: Standard: $35; Voyager® and Voyager Select®: $20; Flagship®, $8
  • Certificates of deposit (CDs): Purchase: $5 per $1,000, Minimum: $50. Sale: $35 per transaction
  • U.S. Treasury: $0.75 per $1,000 face amount, $40 min–$75 max
  • Mortgage-backed securities: $50 per transaction; GNMA minimum purchase: $25,000
  • Investment products: stocks, options, mutual funds, bonds, CDs, foreign securities, insurance, commercial paper, ETFs
  • Minimum to open account: $3,000

Website & Sign-up

The Vanguard website is bizarre, it has the look of a large institutional investor like you’d expect but its layout is just odd. I could find no mention of personal investment or brokerage services on their homepage and took a guess it would be listed under other sites.

There I found another link to personal investors and finally found what I was looking for. I struggled for a few more minutes trying to find a sign-up button and finally began the sign-up process.

After struggling to even find the sign-up forms I was quite surprised to see how easy it was to actually sign-up. The whole process can be completed online in a matter of minutes and you can digitally sign the forms.

It’s then just a matter of funding your account and you’re ready to trade.

Trading Platform & Tools

The Vanguard trading platform is not all that great; in fact I doubt it was great in 2001 when it looks to have been designed, no wonder they don’t display their brokerage services on the homepage. This Quasimodo platform is best kept in the cupboard under the stairs.

It’s not going too far to say this platform is archaic, you can’t modify tickets once they’re open, you have to cancel and then resubmit them. You get charts but they’re not updated in real time and there’s no way of saving your indicators. So that MACD and RSI will have to be re-drawn every time.

Most brokers of this type at least offer access to Morningstar data, but I’m guessing that Vanguard funds don’t perform that well in Morningstar’s ratings because even that is missing.

In short what you’ve got here is a platform that’s barely adequate, trading with this platform would drive me mad and to be honest I was glad to be rid of it at the end of the trail period.

Pros

  • Low cost Vanguard mutual funds
  • Free Vanguard ETFs
  • Dollar-cost-averaging transactions for mutual funds ($3 per transaction; minimum purchase $100; minimum two transactions)
  • Free dividend reinvestment
  • No ACAT fee

Cons

  • Extremely high trading costs
  • $20 annual maintenance fee for regular accounts with less than $50,000
  • $10 monthly Low Balance Fee for accounts with $2,500 or less
  • Very bad customer service
  • Poor trading and research tools
  • $3,000 minimum to open account

Summary

I was very disappointed with Vanguard, they just seem to be going through the motions and I can’t believe even the most ardent of Vanguard customers are satisfied with this level of service.

Their platform is woefully inadequate for even the most basic of traders, there’s no training or support to speak of and they’re not the cheapest of brokers, in fact I’d go as far as to say they’re amongst the most expensive.

If you’re an intermediate level trader and want the comfort of dealing with a large institutional investor I’d recommend TD Ameritrade, who have a wonderful platform, leagues ahead of Vanguards as well as cheaper pricing.

Beginners are better off choosing either TradeKing or Zecco who have excellent training and trading platforms specifically tailored towards rookies. They’re also considerably cheaper.

So who should use Vanguard Brokerage services? Err no one.




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