Review of Vanguard brokerage account. Investment fees and commissions, cons and pros, minimum requirements and promotion offers for opening a new online broker account.

Rating: 

• Stocks & ETFs: $0
• Options: $1 per contract
• Mutual Funds: $20
• Minimum to open: $0

Overview of Vanguard

Although Vanguard is one of the largest broker-dealers in the world measured by client assets (over $8 trillion at last count), it doesn’t always shine in key categories. Be sure to review the following breakdown before opening an account.

Bulls Point Out...

Extensive portfolio management: Hands-off investors will find strong resources here.

Considerable history: This is the company that helped pioneer index investing.

Large selection of account types: Taxable and tax-advantaged accounts are both available.

Bears Point Out...

Customer service: Problems continue to come up.

Limited selection of tradable products: Vanguard has closed off most OTC trading.

Weak software: This broker is not built for frequent trading.

Investment System

At Vanguard, you can open a brokerage account in either a self-directed or managed format. The managed side comes in several packages, including a robo service.

The automated program offers the smallest list of tradable products. These are a limited lineup of Vanguard ETFs. More Vanguard ETFs are available in a traditional advisory package. Bonds, mutual funds, and stocks are also available in the more conventional setup.

Vanguard’s advisory program includes many services, including:

• Estate planning
• Wealth management
• Retirement planning
• Real-time goal tracking
• Ongoing portfolio advice
• Personalized financial plan
• Investment coaching
• Real human advisor

Vanguard understands that not everyone needs or wants these services, which is why it also offers self-directed accounts. Available asset classes include:

• Equities
• Options
• Funds (mutual, exchange-traded, and closed-end)
• Bonds and other fixed-income securities

Unfortunately, Vanguard’s over-the-counter stock service has been scaled back, with only certain Y-shares still available.

There is a wide variety of tax structures that Vanguard accounts can be opened under. On the taxable side, there are individual and joint accounts, organizational accounts, and business accounts.

On the tax-advantaged side, there are 529 savings plans, custodial accounts, and retirement accounts, including self-employed 401k plans and business IRAs.

Customer Service

Vanguard’s customer service has slipped quite a bit in recent years, with more complaints piling up. Phone wait times can be long, and although Vanguard offers a callback service, some customers report that the callback never comes.

The customer support number is 877-662-7447. It is available Monday through Friday from 8:00 a.m. to 8:00 p.m. Eastern time. Some departments, such as the one for nonprofit organizations, have shorter hours and different phone numbers.

The website is another way to reach support. There is an online chat tool that starts with automation and can shift to a human representative when needed. This is a positive change, and during our test it took only a few minutes to reach a live rep.

Vanguard’s site also includes a secure internal messaging tool. It can be used to send documents electronically to the broker. The icon for this feature is a small envelope in the upper-right corner of the dashboard.

There are also plenty of self-help resources on the site. Look for the “Support” and “Profile & account settings” links in the upper-right corner.

Fees and Minimums

Like most other U.S. brokerage firms, Vanguard has cut its stock commission for self-directed accounts all the way to $0, at least for online trades. Using a live representative can bring a $25 broker-assisted charge.

Many mutual funds at Vanguard also trade with no transaction fee, and naturally Vanguard funds do as well. Some fund families still carry a $20 online commission. Large accounts can reduce or eliminate some of these charges.

Option trades have a $1 fee per contract, and once again, larger accounts may receive waivers on some trades. Bonds can range from $0 to $35 per trade.

Vanguard is one of the few brokers in the industry that still charges an annual account fee. But it can be avoided in several ways. One of the easiest is signing up for e-delivery of account documents. The annual fee is $25.

Retirement accounts have a variety of fees that depend on the account type. For example, a 403(b) plan costs $5 per month, per participant.

For obvious reasons, managed accounts come with an extra fee that self-directed accounts do not. The advisory charge depends on the package selected. The robo service, known as Digital Advisor, starts at 0.20% annually and requires at least $100 in each eligible brokerage account to enroll.

Traditional advisory accounts come with a range of fees and minimums. A wealth management package requires $5 million and has the following fee schedule:

Margin

Vanguard offers both cash and margin trading. Once an account receives margin privileges, it cannot be downgraded back to cash status on the website. A phone call or online chat will likely be needed.

As for the cost of borrowing, Vanguard has rates that are competitive, but not outstanding. They range from 9% to 12.25%, depending on the debit balance.

Vanguard’s software does not show margin details for specific securities, so day trading, shorting, and other advanced strategies are not ideal here.

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Website

Vanguard has refreshed its website recently, although it is still not especially easy to navigate. We suggest using the search bar in the upper-right corner. The links at the top help somewhat, although the layout still is not very intuitive.





Entering a stock symbol or company name in the search field generates a list of choices. Clicking the correct result brings up a brief overview of the stock with trade buttons. The stock’s profile itself does not have a trade button, although there is a column of links on the right-hand side. One of those links opens the order ticket.

Although the trade ticket is fairly basic, there are separate choices for sell short and buy to cover. Order types include stop and stop limit, which are the most advanced tools on the ticket. Real-time security data appears to the right of the ticket, and the information can be refreshed, which is helpful. Balance details, including total buying power, appear just below the quote box.

Charts on Vanguard’s site begin in a very simple format; there is a small chart on the profile with no tools. Clicking the chart tab opens a somewhat better chart with up to 50 years of price history. There are a few tools and 4 plot styles.

There are not many other features worth mentioning here. Vanguard’s site does not have a trade bar or a true browser platform.

Mobile App

Although Vanguard’s website is weak, its mobile app has improved quite a bit. Stock profiles are now available, including key statistics like market cap and average volume. Some large stocks also show analyst recommendations. Most importantly, the app now lets clients buy and sell investments, review open orders, and move money through the settlement fund.





Charts on the app are still pretty limited. They remain basic, with no meaningful tool set, and the mobile experience is not especially strong for active traders. Vanguard also now supports mobile check deposit through the app.

Supplementary Services

Extended Hours: Besides the regular session, Vanguard also offers a limited after-hours session. There is no pre-market trading.

Initial Public Offerings: Not available.

Individual Retirement Accounts: Vanguard has several IRAs. Small businesses can open SEP and SIMPLE plans. A qualified retirement plan (QRP) can be rolled over. Some business IRAs will have fees for holding Vanguard mutual funds, although these can be waived in the same ways the company waives its annual account fee.

Fractional-share Trading: Vanguard ETFs can be traded in whole dollars, with purchases starting as low as $1.

DRIP Service: Free of charge.

Recurring Mutual Fund Purchases: Vanguard allows automatic purchases of Vanguard mutual funds.

Recommendations

Mutual Fund Investors: With Vanguard’s mutual fund screener, we counted 6,969 mutual funds. This is a decent lineup, although only about half carry no transaction fees. Firstrade has many more no-transaction-fee funds across the board.

Long-Term Investors and Retirement Savers: Although Vanguard does have some account fees, these can be avoided in several ways. With lifecycle mutual funds, advisory services, and many tax-deferred account choices, Vanguard can be a decent pick. But Charles Schwab is better.

Beginners: We can definitely recommend a managed account with Vanguard for new investors.

Active Stock and ETF Trading: With only basic software, Vanguard is not a good broker for frequent stock trading. Webull is.

Small Accounts: Even after changes to its pricing, Vanguard still makes more sense for larger accounts. Firstrade is a better fit for small traders.

Vanguard Review Judgment

Despite its size, Vanguard comes up short in many areas. Although its biggest strength appears to be portfolio management, the absence of branch locations makes even that category less compelling.

Vanguard Commissions

Investments	Price
Stocks and ETFs	$0
Options	$1 per contract
Mutual funds	$20
U.S. Treasury	Free for new and existing issues.
U.S. government agency securities, corporate bonds, and CDs	New issues free. Standard and Voyager $2 per $1,000 face amount ($250 maximum). Voyager Select, Flagship, and Flagship Select $1 per $1,000 face amount ($250 maximum)
Mortgage-backed securities & commercial papers	$50 per transaction.
UITs	Selling UITs $35 per transaction.

Vanguard IRA & Account Fees

Fee	Amount
IRA Setup Fee	$0
Annual IRA Fee	$25, $0 with conditions*
IRA Termination Fee	$0
Full Account Transfer Out	$100
Partial Account Transfer Out	$0
Outgoing Wire Fees (Domestic)	$10
Outgoing Wire Fees (International)	$10
All Vanguard fees »