Section 1: Web Site Functionality Rank
Vanguard's website is easier to navigate than most sites, the clean uncluttered presentation and tabbed navigation make it easy to get accustomed to the site's layout. We also noticed that Vanguard is the only broker that spends a lot of time making sure their site is compatible with all of the major browsers. Most online brokerages take a "that's not our problem" approach, but Vanguard provides guides, setting instructions, and a trouble shooting section to help you optimize your browser settings for their site.
Asset allocation and buy and hold concepts are pushed pretty hard at Vanguard. That's great, these are important concepts but to some, particularly new clients, it feels a tad too much like a "pitch". Vanguard is a fund family so it's no surprise that they push their own products but we didn't feel they were obnoxious about it. You may have to close a window now and then or decline an offer but they only push their best products and Vanguard has some of the top performing and least expensive funds and ETFs in the world.
Vanguard is one of the most dependable in the business, you won't have to worry about extended down times or site crashes. We couldn't find a record of any recent problems or complaints related to service interruptions. Pages also load very fast because they don't have a lot of clutter or RAM wasting flash presentations.
Most of the pages don't offer a lot of customization options but there are a few exceptions such as the portfolio tracking and watch list screens. Vanguard is a pretty basic site, what you see is what you get.
There is no trade execution guarantee but that's no surprise since Vanguard specializes in mutual funds and only dabbles in stock and option trading. However, executions aren't a problem, we couldn't find any complaints about delayed transactions or executions at a significantly higher price.
Section 2: Trading Costs and Fees Rank
Intuitive Commission Structure?
No, Vanguard has the most complex commission structure of any of the online brokerages we reviewed.
Minimum to Open an Account
$3,000 minimum to open a new account
Standard Account $100,000 or less
Internet Trades = $25 or $0.025 per share, whichever is greater
Interactive Voice System = $40 or $0.05 per share, whichever is greater
Broker Assisted = $45 + $0.05 per share (ouch)
Voyager Account $100,000 - $499,999
Internet Trades = $20 or $0.020 per share, whichever is greater
Interactive Voice System = $36 or $0.045 per share, whichever is greater
Broker Assisted = $40.50 + $0.045 per share
Voyager Select Account $500,000 - $999,999
Internet Trades = $12 per trade
Interactive Voice System = $36 or $0.045 per share, whichever is greater
Broker Assisted = $45 + $0.045 per share
Flagship Account $1,000,000+
Internet Trades = First 12 trades no commission, subsequent trades $8
Interactive Voice System = $30 or $0.0375 per share, whichever is greater
Broker Assisted = $33.75 + $0.0375 per share
Stock priced less than $1 a share: Commission rate is $20 + 2% of principal for orders placed online and $30 + 3% of principal for orders placed through an associate.
Internet Trades = $30 + $1.50 per contract
Interactive Voice System = Not Available
Broker Assisted = $30 + $2.50 per contract
Complex transactions, such as spreads and straddles, must be placed with Broker assistance.
No-Load No-Fee Funds = $0.00 Free trades, No commissions or transaction fees charged by the Mutual Fund or Vanguard (900 available)
No-Load Funds = $35.00 transaction fee charged by Vanguard (2600 available)
Load and Fee Funds = Fees charged by mutual fund and possibly by Vanguard as well
6 month 1% redemption period added to all funds, maximum fee of $250.
Tip: We thought Vanguard would have a huge selection of No-Load No-Fee funds but the total available is a disappointing 900. Avoid any funds with loads or fees. With the vast selection of no-load no-fee funds offered by many of today's online brokerages, there's no reason to ever pay them!
Treasuries & Bonds
Treasuries at auction = $10 online and $25 with associate assistance for New Issues. $0.75 per $1,000 face amount, $40 min–$75 max for existing Issues.
Corporate Bonds= Free for New Issues. $25 + $2 per bond for existing issues.
Municipal Bonds = $50 for new issues. For existing issues, $1,000–$49,000 ($5 per $1,000) $50 minimum. $50,000 or more ($3 per $1,000) $500 maximum. $35 to sell per transaction.
CDs = Free for new issues. For existing issues, $1,000–$49,000 ($5 per $1,000) $50 minimum. $50,000 or more ($3 per $1,000) $500 maximum. $35 to sell per transaction.
Rates & Fees
Account Balance Margin Account Rate
$0.01 to $19,999.99 Base (currently 6.125%) + 1.25%
$20,000 to $49,999.99 Base (currently 6.125%) + 0.75%
$50,000 to $99,999.99 Base (currently 6.125%) + 0.50%
$100,000 and above Base (currently 6.125%) + 0.25%
Interest Paid on Cash (Sweep): 2.39%
Checkbook Reorders: $9.95
Annual Checking Account Fee: $30
Electronic Statements: Free
Wires: $5 for basic account, free for Voyager, Voyager Select, and Flagship
Annual Membership Fee: $30
Section 3: Customer Service Rank
Vanguard offers great phone support, they take service very seriously. We even found personal responses from Jack Bogle (the founder) posted to the internet by customers because they were so shocked and flattered that he had answered them personally. Even though he's retired now, Jack's philosophy is still applied, reps were very friendly and knowledgeable and wait times were shorter than average.
Vanguard does not offer live chat. They do offer email support and one of the industry's best FAQs sections. Vanguard can get away with being a little weak in the online support category. If you have a question or issue, pick up the phone, wait times are short and the service is great.
Advanced Support (Options, Funds, Bonds, etc.)
Vanguard does have specialists but you have to go through the regular phone reps to get to them. There are some exceptions if you qualify for special programs but the minimum to qualify is $500,000+ in assets.
Their specialists were very knowledgeable, helpful and friendly, but we were disappointed that the minimum to qualify for some of the best service perks, such as free one-on-one portfolio and strategy review, was $500,000+. Vanguard will jump a few spots in the Customer Service Rank next year if they start offering some of their service perks to lower tier Voyager clients ($100,000-$500,000).
Section 4: Research Tools & Investing Information Rank
Vanguard doesn't have nearly the array of independent research and variety of analysis tools that their competitors have. When you use their tools you get the feeling that their primary focus is the Vanguard fund family, everything else takes a back seat.
They do excel in one area, Vanguard is the best hand holder in the business. They really go out of their way to educate novice investors and help them make investment selections. They do tend to steer most people into Vanguard funds, but since they are one of the top performing, least expensive, and best managed fund families on the planet, this isn't necessarily a bad thing.
Level II Quotes & Streaming Data
Streaming real-time quotes but no Level II quotes.
This is a strange thing to include in research and analysis tools but it's a big part of trading at Vanguard. They push the importance of asset allocation, diversification, expense management, and buy-and-hold, it's a theme throughout the site and when you talk to representatives.
Some people may feel this approach comes across as a sales pitch, but Vanguard's dedication to this philosophy has won over many investors. You will find many diehard Vanguard investors on forums, blogs and other internet chats who swear by Vanguard's approach to investing because it made them wealthy. We didn't penalize them any points for this in our review because we agree that these are important components of any long-term strategy and don't see the harm in their attempt to educate new clients. You'll notice that their strongest research and analysis tools, such as the Portfolio Analysis tools, are designed to help you stay on track in these categories.
Stock & Fund Screeners
Vanguard's stock and fund screeners pale in comparison to those offered by competitors and by independent research sites. They need more criteria, the current versions can only provide a lengthy list of potential funds. You'll still have a lot of investigative work to do after using the screener but unfortunately they don't provide additional tools capable of helping you finish narrowing down your list to the best fund.
Portfolio Analysis Tool
This is a great tool. A couple of competitors that hire portfolio analysis from independent research sites have comparable tools, but Vanguard's was the best internally developed portfolio analysis tool that we saw during any of our reviews.
You can use the Portfolio Analyzer to evaluate risk, risk vs return, asset allocation, diversification, and measure the impact of taxes and transaction costs to your portfolio.
Section 5: Perks Rank
Reserved for clients with > $1,000,000 in assets. Not many will qualify but this is a generous package of perks for those lucky clients that meet the criteria. The most exciting is the opportunity to invest in a select group of closed Vanguard funds.
Voyager Select Services
Clients with between $500,000 and $1,000,000 in assets qualify for the Voyager Select program. There aren't a lot of perks with this program but it does at least offer substantial brokerage discounts on stocks and mutual funds. Voyager Select clients receive a 52% reduction to transaction fees, their $12 flat fee per trade is on par with other high end competitors. If they ever reduce the total asset qualification for this program, Vanguard will be a much more competitive discount broker.
Voyager Select clients will also receive complimentary financial advice from a certified financial planner and a complete financial plan valued at $1,000 if they choose to participate. Participants will receive free annual checkups after their initial session.
Clients with between $100,000 and $500,000 in assets qualify for the Voyager Select program. There aren't a lot of perks with this program but it does offer a 20% discount on stock and mutual fund trades. Unfortunately a 20% reduction doesn't get you in a price range that is competitive with other online brokerage prices, you will still pay $20 per trade or $.02 per share, whichever is greater.
Voyager Select clients will also receive reduced rates on financial advice from a certified financial planner.
Vanguard offers more perks to existing long-term and high net worth customers than to new customers. For example, if you've been in a Vanguard fund for 10+ years and have a balance > $50,000 you can qualify for Admiral Shares which are extremely low expense-ratio shares.
This is a very generous perk that we haven't encountered anywhere else, Vanguard is basically eating some of your portfolio expenses (increasing your returns) as a reward for your loyalty. This is an interesting approach and it seems to work, many Vanguard clients are so loyal they can seem cultish. Sticking with Vanguard for a long time pays... literally!
Section 6: Product Offerings
IRAs, Roth IRAs and personal 401Ks
529, Custodial, and Coverdell ESA Accounts
Trust, Limited Partnership, Partnership, Investment Club, LLC, Sole Proprietorship, Corporate (profit & nonprofit), Pension Plans for Small Businesses
Section 7: Security
Yes. SIPC protects securities in your account up to $500,000.
Firewall Secured and Fraud Protection
Yes. All of the major sites have dependable security. They can't afford to make mistakes, they wouldn't survive a year if they gained a reputation for mishandling money or for lax security.