Jump to content
Sign in to follow this  
tony

Vanguard Struggles With Customer Service

Recommended Posts

I hate paywalls! here is the article
Louise Robbins bought shares in an exchange-traded fund last Friday afternoon as markets fell, knowing that she had enough money in her Vanguard Group settlement fund to pay for the trade.
Tuesday morning, the 60-year-old Boston book editor received an erroneous email saying her settlement account didn’t have sufficient funds to pay for the transaction. A Vanguard spokesman confirmed that other retail clients received similar messages and the problem would be resolved without customers having to take any action.
The recent settlement fund snafu is part of a larger perception problem facing the $5.1 trillion money manager: customers say Vanguard’s size and record inflows are increasingly putting strains on an enterprise known for its devoted customer following and low costs.
Vanguard is one of the biggest beneficiaries of an investor shift over the last decade to cheaper, passively managed investment products that track the performance of indexes. It pulled in a record $369.3 billion in new investor money in 2017, or the equivalent of more than $1 billion a day. It has long had a nearly pristine reputation among customers attracted to the firm’s principles of low-cost, long-term investing.
Vanguard doesn’t operate physical branches, meaning more than 20 million customers interact with the company online or by phone. Over the past year some of these customers have complained via Twitter , investment discussion forums and interviews with The Wall Street Journal of technical problems, administrative foibles and service across Vanguard’s brokerage and retirement businesses.
Flagging FeelingSentiment expressed about Vanguard on Twitter has been less favorable recentlythan opinions about rivals.Average sentiment score*Source: Social Market Analytics, Inc.*Recorded over a 20-day period, adjusted for volume of tweets sent. Higher scores reflectmore positive sentiment.
 
Some of these complaints were aired on bogleheads.org, a popular online investing website named after Vanguard founder John C. Bogle. The full scope of the customer service issues at Vanguard isn’t known.
Over the past year, sentiment expressed about Vanguard on Twitter has been less favorable than opinions about rival brokerage firms such as Charles Schwab Corp. and Fidelity Investments, according to Social Market Analytics, Inc., a company that uses information on social media to analyze how companies are perceived.
Issues flagged by Vanguard customers include incorrect cost basis information—what investors paid for shares in a fund—shown on their accounts, and problems with required minimum distributions for retirees, incorrect account balances displayed online, long customer service wait times and login troubles. Some of the problems identified by customers have the potential to trigger tax consequences for investors.
A company spokesman said “these are periodic systems issues unrelated to our growth.” He added that “Vanguard is increasingly focused on investing in the people and technology to serve our clients more effectively and efficiently, protect investor assets, and enhance fund performance.”
New Chief Executive Mortimer J. “Tim” Buckley, who took on the top job earlier this year, said in an interview at the time that Vanguard has invested to improve its customer service. His predecessor F. William McNabb III said in November that Vanguard had added 1,200 customer-service employees to a 5,000-person team. The firm’s processing backlog and wait times had improved, Mr. McNabb said at the time.
Vanguard isn’t the only investing firm to experience technical problems of late. Earlier this year, it was one of several brokerage and mutual-fund firms that suffered outages and slowdowns as market turmoil sent individual investors scrambling to access their accounts.
Jack C. Bogle, Vanguard’s founder and retired CEO, in a 2014 file po. Customers have complained on bogleheads.org, a popular investing site named after Mr. Bogle. PO: SHANNON STAPLETON/REUTERS Few firms, however, can claim the same level of customer devotion as Vanguard. It started the first index fund for individual investors 42 years ago and is owned solely by its funds’ shareholders. Some customers, however, say that the recent technical challenges are a sign that the company is straining to manage its rapid growth.“It’s kind of a shame that Mr. Bogle’s creation, which is extraordinary, has been somewhat sullied by their performance administratively,” said former Vanguard client Barry Bergsman.The retired Los Angeles media and marketing executive said he experienced problems last year when he decided to move his Vanguard accounts to a more “hands-on” wealth management firm. Mr. Bergsman said he instructed Vanguard to transfer some fund positions to a custodian that would complete the account transition and instead those positions were liquidated, leaving him with a “substantial” tax bill.He said Vanguard didn’t quickly resolve the issue and he lost patience, ultimately paying the tax bill.Some Vanguard clients who have 403 (b) retirement plans have complained about administrative problems after Vanguard outsourced some of its record-keeping duties to the Newport Group in 2017. A spokeswoman for Newport Group declined to comment. A 403(b) plan is typically offered to teachers, clergy and some medical workers.Chris Herbert, who manages four accounts at Vanguard including his wife’s 403(b) retirement plan, noticed last year that the value of his wife’s 403(b) account appeared to be $120,000 less than it was supposed to be. Four of the eight funds in the account were missing in both online and print statements.Mr. Herbert, who is retired and lives in Tempe, Ariz., said he corresponded with customer-service representatives by phone and online for several weeks before the problem was resolved.“I don’t want to leave Vanguard, but problems like these lead you to ask if this is going to continue to occur,” he said.Earlier this week, a new technical problem surfaced at Vanguard that had not occurred before: some customers who made new investments received e-mails erroneously informing them that there were insufficient funds in their relevant settlement accounts.Christian Vogler and his wife, who live outside of Washington, D.C., received the incorrect email Tuesday morning after buying shares in the Vanguard Real Estate Index Fund for a Roth IRA Monday afternoon.The couple, who are in their 40s, have been Vanguard customers for about four years, and had faced one other technical issue, previously.“Is this going to keep a behemoth like Vanguard from serving its clients as it should?” Mr. Herbert added.
Write to Sarah Krouse at sarah.krouse@wsj.com
 

 

Share this post


Link to post
Share on other sites

Responding to Vanguard's 403b problem with school districts: This is a typical media sensation that is both real and a distraction from the original problem. The problem listed in this article is unfortunate and accurate, but it is also a distraction. Vanguard has been trying to enter the public k12 403(b) market for decades and they just refused to deal with the rigid district demands and restrictions, and the cost Vanguard would have to pay to be listed on a plan. Sure, Vanguard could be listed in my districts 403(b) RIGHT NOW, but they told me they would have to pay a fee to the 403(b) TPA, TSA Consultants. Vanguard refuses to pay. That's not their value system.

Last year, they tried something different when they hired Newport Group to try and make Vanguard available to more of our k12 colleagues. It backfired and now all of the attention is on Vanguard, as it should be. 

(I am still not clear on exactly what Newport fees are. If I remember correctly, they were about as high as a 12b(1) fee (.25%) which I gladly paid back in the 90s to invest in my first no-load mutual fund in my districts 403b, but I digress).

However, let's never lose sight of the real problem that created this mess, the 403(b) world with k12 school districts and the insurance annuity monopoly. The insurance industry, their brokers, and agents must be laughing all the way to the bank with this continued sensation with Vanguard. 

2 cents,

Steve

Share this post


Link to post
Share on other sites

I agree Steve. I am sure some are enjoying the negative attention Vanguard is getting after usually getting nothing but good attention and tons of new money. I am sure they will use the info in this article to bring folks over to their side.I would not move my money out of Vanguard . They are still in my book the best of the best. They have been good to me and we should not lose site of their mission statement in support of every investor large or small. You are right in saying that Vanguard is an innocent player in the 403b mess.

By the way congratulations on becoming a high income earner and a member of the 1%. You deserve it and its proof that what you preach here is truth. Have a great Easter!!

Tony

P.S. I will say though the article did get me to go online and check my balances!!  Good reason to have Vanguard , at a minimum , send monthly or at least quarterly statments in mail rather than electronically, which they are pushing for everything to reduce costs.

Share this post


Link to post
Share on other sites

Yesterday on the way to an appointment I had the  radio on and Clark Howard was saying that his love for vanguard was being seriously tested. Clark has always been a fan of vanguard. Unfortunately I could not listen to much of his comments as I had a timed appointment and I was running late.

Did anyone catch what his concerns where?

 

Tony

Share this post


Link to post
Share on other sites

Oh god, here we go. He needed more clicks on his radio show or website is my guess. My love for Clark Howard is now "seriously tested." 

And then there was a recall on my Tesla, and the media made it sound like Western Civilization was coming to an end. Coincidently, I had my car in the shop the other day for a routine check-up and they did not have the part. It was not a big deal anyway.  Did I feel like my love for the Tesla is now seriously tested because of THAT! 

Geeze. Vanguard is going to be fine. If it isn't then we choose another company, but nobody has come up with one yet that compares with Vanguard. I am not moving my funds to Fidelity Spartan funds for a long time, if ever. 

Share this post


Link to post
Share on other sites

Funny. Your comments puts everything in proper  perspective!!  Yup Vanguard will survive without Clark Howard.

Share this post


Link to post
Share on other sites

I think it’s a fact that Vanguard is having some problems with their service due to the huge amount of recent incoming money. And the Newport Group 403b arrangement has not run smoothly, especially for asset transfers to Vanguard.

 

However, I suspect we get a very inaccurate overall picture from the press. Vanguard clients who do not have problems with their accounts do not start threads on 403bwise or boglehead forums. Those of us with no problems, like myself, are mute. Vanguard is vacuuming in billions from the actively managed financial firms. The news that it is having some problems makes a great story! But this story is not balanced because we don’t now the overall picture on Vanguard service.

Just like I have faith that the stock market long-term trend is upward, I also have faith that Vanguard will get their service problems under control, including those at Newport Group.

Share this post


Link to post
Share on other sites

I have never had a problem with Vanguard customer service that I can  remember unless I have forgotten something . I am sure they are overwhelmed with the influx of cash and new customers. Its good problem to have and they will adjust. 

 

 

Share this post


Link to post
Share on other sites

I did have a pretty big problem with Vanguard service about 15 years ago, at which time I wanted my VA compensation check deposited directly into one of the Roth accounts. It took six months to get it working! Yeah, I could have raised a shit storm here or on Bogleheads.

I might have mentioned it here, but I don't take that stuff personally because I knew it was going to happen. I also realized that if one wants top of the line personal service, HECK go to Goldman Sachs or any of the full retail firms. Yeah, you will get EXCELLENT service but at a huge price, but beware of the financial advice will be mixed with sales and commissioned products. In the end, you get excellent service but the bottom line is that these firms are rip-offs in so many other ways. 

I knew that this might happen with Vanguard because I did not want to pay for services  I don't need. Also, both the VA and Vanguard were upgrading their systems at the time of my request. It got worked out eventually and I was fine (remember this is back in the dark ages when digital transfers were just starting). 

Share this post


Link to post
Share on other sites

Steve

I just re -read your post again about your love for Clark Howard being tested and it still cracks me up! 

Share this post


Link to post
Share on other sites

 

From bogle heads forum.

I was listening to the Clark Howard podcast this week and he gave Vanguard his Clarkrageous award due to "long wait times for phone service". 

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×