“Commission and fee and account agreement updates”

[chang]

Got this email from Vanguard yesterday. Not the most customer friendly changes.

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Notice of updated commission and fee schedules and account agreement for Vanguard Brokerage Services

Dear Vanguard Brokerage Client,

We want to make you aware that we have updated the Vanguard Brokerage Account Agreement and associated commission and fee schedules. These updates include changes to our Digital Interaction Expectations, new Class Action Service Terms, and Vanguard Brokerage's ability to close accounts, including low balance accounts with no activity.

Effective July 1, 2024, the following commission schedule changes will take effect:

• Broker-assisted commission: A $25 broker-assisted commission will be charged for each Vanguard mutual fund1 and Vanguard ETF® (exchange-traded fund) trade placed over the phone and for closing transactions placed by Vanguard Brokerage Services® to cover a margin call or satisfy an outstanding debt owed in your brokerage account.* This broker-assisted commission is consistent with our existing policy on trading stocks and other products.

• Certificate deposit fee: A $100 processing fee (per CUSIP) will be charged for the deposit of physical share certificates into your brokerage account.

• Class action service fee: With the introduction of this new service in which Vanguard Brokerage will facilitate filing claims on behalf of clients in an attempt to recover class action settlement funds, a fee of 20% will be deducted from these recovered funds prior to their deposit into your brokerage account. See the Notice of Amendment to the Vanguard Brokerage Account Agreement ("Account Agreement Amendment") for details on the service.

• Foreign securities and American Depositary Receipts (ADRs) dividends fee: A fee of 1% on the gross dividend amount will be charged when a dividend is paid on a foreign or ADR asset held in U.S. dollars.

• Restricted security legend removal fee: A $250 processing fee may be charged for research and removal of a restriction on a security held in your brokerage account.

• Account closure and transfer fee: A $100 processing fee may be charged for account closure or transfer of account assets to another firm.**

Effective June 1, 2024, the following commission schedule change will take effect:

• The tax filing fee for master limited partnerships (MLPs) held in an IRA will change from $300 to $500 per account.

You can obtain an updated copy of the Vanguard Brokerage Services commission and fee schedules here and read more about these important account agreement updates in the Account Agreement Amendment.

Please note that the updates discussed in this communication apply to all your accounts maintained with Vanguard Brokerage Services.

Thank you for belonging to the Vanguard community of investors.
________________

*Broker-assisted commissions will not be charged for brokerage accounts enrolled in a Vanguard-affiliated advisory service or for clients with $1 million or more in qualifying Vanguard assets.

**The fee will not be assessed for clients who hold at least $5 million in qualifying Vanguard assets.

[1] For Vanguard mutual fund exchanges, the commission will be charged on the "from" side of the transaction based on the total number of trades placed. For some mutual fund transactions, the commission will be deducted as a separate sweep from your settlement fund. It will not apply to some complex Vanguard mutual fund transactions, including those across registration types.

[roi2020]

I received the same email.
Vanguard's funds are overwhelmingly low-cost.
However, it feels as though investors are now being nickled and dimed by Vanguard Brokerage Services.
A $100 account closure and transfer fee is excessive IMHO.
Is it customary for other brokerages to impose fees for ADR and foreign security dividends?

[anovice]

May 2, 2024 7:40:38 GMT roi2020 said:

I received the same email.
Vanguard's funds are overwhelmingly low-cost.
However, it feels as though investors are now being nickled and dimed by Vanguard Brokerage Services.
A $100 account closure and transfer fee is excessive IMHO.
Is it customary for other brokerages to impose fees for ADR and foreign security dividends?

"Vanguard Brokerage may charge $100 processing fee for account closure or the transfer of account assets to another firm. The fee will not be assessed for clients who hold at least $5 million in qualifying Vanguard assets"

Interesting that Vanguard uses the word "may" and not will. Assuming that that will charge the $100 fee, Vanguard exempts the ones that have the money to pay the $100. What happened to the days when Vanguard cared about the small investor? Seems that went out the window the day John Bogle walked out the door.

[yogibearbull]

Vanguard became unfriendly to small investors a long time ago. It's the nickel-and-dime fee champion now. Unfortunately, some were just drinking its PR coolaid of "low-cost" and being "owned by shareholders" BS. Of course, VG must have polled its shareholders for their opinions ahead? (Rhetorical, because as a VG "shareholder", I know the answer)

[Capital]

I received the same email.
Other than my core MM account, I only own VTI and a CD position maturing in 10/2024 in my brokerage account.
I will not be buying CDs at Vanguard in the future. I only plan to hold VTI and have reserve cash there in the future.
It's entirely possible I will sell all the VTI and transfer the remaining cash to Fidelity or Schwab (would be a new account)
I'm just not happy there.

[bizman]

May 2, 2024 6:04:18 GMT chang said:

Got this email from Vanguard yesterday. Not the most customer friendly changes.

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• Certificate deposit fee: A $100 processing fee (per CUSIP) will be charged for the deposit of physical share certificates into your brokerage account.

I assume this means CDs held as normal in book entry/street name format will not face this processing fee?  Otherwise, all that business would go away.

EDITED TO ADD:  Sorry, I read this wrong.  I thought it said Certificate of Deposit fee.  Duh!  Nothing to see here, move along.

[yogibearbull]

Robert Berger at X/Twitter.
youtu.be/QLBZoqTtQZ4

[roi2020]

May 2, 2024 14:13:23 GMT yogibearbull said:

Robert Berger at X/Twitter.
youtu.be/QLBZoqTtQZ4

Good analysis by Robert Berger.

Paraphrasing here:

Flagship client used to mean something. Today it doesn't mean as much.
And now you add fees and all of this is happening and I ask you what new services or features or great website user experience or mobile app user experience have they added? Not much at all.
Every announcement coming out of Vanguard is either removing features or services making them less desirable or adding fees.
I don't know. Someone in PR at Vanguard needs to tell manangement hey how about some good news please.
Why don't we talk about what we're going to do for our customers rather than what we're going to charge them and what we're going to take away?
Having your accounts at Vanguard is becoming less and less appealing by the day.

[sgra]

Harry Sit has good advice on how to transfer your Vanguard account to another firm and how to avoid mistakes that you might regret. thefinancebuff.com/steps-before-transfer-from-vanguard.html 

Personally, I am leaning toward moving out of Vanguard.

[marg]

I hope Fidelity will not follow suit...

[retiredat48]

Never understood why Vanguard does ANY Advertising?? Who cares if assets don't grow and grow and grow...other than managers paid salaries. Word of mouth was enough. They seem to have to compete with Fido. Put this advertising money into better service...and lowering fees.

R48

[bizman]

The current cluelessness and lack of responsiveness of Vanguard to customers coupled with the crazy developments over the last year at OpenAI have caused me to think that well-intentioned, non-profit type structures are actually harmful, and that for all its flaws, a normal, for-profit structure is better for all.

It seems that while for-profit entities have their imperfections, they are the worst structure except for all the others.

[yogibearbull]

Exploiting nonprofit structures is nothing new.
Nonprofits are allowed to operate some for-profit activities at arms-length.

So, the well-known OpenAI is the for-profit arm of the little-known OpenAI Foundation.

Nothing beats Howard Hughes who operated the for-profit defense contractor Hughes Aircraft under the control of the nonprofit Howard Hughes Medical Institute (in Hughes time, it made small donations for medical research). HHMI changed completely after Howard Hughes.

A recent abuse of 501c3 DAFs was when Elon Musk stuffed $5+ billion into his DAF. The DAF is for retail customers, so billions? Musk also operates foundations that are more costly to run.

[bizman]

May 3, 2024 20:44:46 GMT yogibearbull said:

Exploiting nonprofit structures is nothing new.
Nonprofits are allowed to operate some for-profit activities at arms-length.

So, the well-known OpenAI is the for-profit arm of the little-known OpenAI Foundation.

Nothing beats Howard Hughes who operated the for-profit defense contractor Hughes Aircraft under the control of the nonprofit Howard Hughes Medical Institute (in Hughes time, it made small donations for medical research). HHMI changed completely after Howard Hughes.

A recent abuse of 501c3 DAFs was when Elon Musk stuffed $5+ billion into his DAF. The DAF is for retail customers, so billions? Musk also operates foundations that are more costly to run.

Perhaps governance of non-profits can be improved to the point they get rid of the problems seen at Vanguard and OpenAI.  But my main point is that the term "non-profit" is not a magic silver bullet.  The details really matter.

It seems that Novo Nordisk has done pretty well with a hybrid non-profit structure as well.  Maybe it is the wave of the future, but an awful lot of thought and consideration of best practices needs to be done to make such an organization appropriately responsive to the right incentives and the needs of all stakeholders, I would think.  

OpenAI's situation was something of a clown show with the machinations on the non-profit board, in my opinion at least.  Good intentions need to be backed up with the right people, rules and incentives.  Perhaps with time the bugs will get ironed out.  They have a lot of ironing to do.

[marg]

At Wellsfargo advisor, once you reach 72 yo. no fee to close your IRA.

[retiredat48]

I'll preach a little.

Look, no question Vanguard has slipped in customer service (long wait times) and miscl fees added. But I personaly have not been impacted as I am a DIY investor on-line. And the fee part is just having investors pay for the added part they want. Sure we could bury all these costs into one overall cost (done in the past) but Vangd fees/costs are way below others.

But here is the big picture. The faults are nuisance items. The big deal is my disappointment in Fidelity. Over the years my money was 40/60, 60% in Fido...now the reverse, 60/40...the majority in Vangd. You see, Fido has been very less innovative and costly. They created the first set of sector funds; not much in last 30 years.

Vangd created the index funds and got a patent on same, keeping them low cost and efficient. Vang'd developed its own set of ETFs...a huge success versus none for Fidelity. Fido let blackrock get all the business. Fido has not reduced expense ratios much even though funds now have asset sizes in the billions. No wonder current CEO Abigail Johnson (daughter of founded Ned) was a BILLIONAIRE when a teenager. Lastly, AFAIK still true: every Vangd actively managed fund has bettered in performance its index fund counterpart, since inception.

So big picture...I favor Vanguard. And if you want to pay higher costs for the Fido handholding, do so.  But it is shown these costs are a detriment to overall performance.

R48

[roi2020]

"Vanguard wants investors to pay more, and at the same time, they’re giving us less.
Just as we were learning that fees were on the rise,Vanguard’s technology was frustrating shareholders yet again.
On May 1 — the same day the new fee schedule was released — several IVA readers told me they could not access their holdings data at Vanguard. Oops!"

Refer to the section titled "Please, Don't Call Us" for related info.
www.independentvanguardadviser.com/digital-first-puts-seniors-second/?ref=the-independent-vanguard-adviser-newsletter

[marg]

Certificate deposit fee: A $100 processing fee (per CUSIP) will be charged for the deposit of physical share certificates into your brokerage account.

May I know exactly what this mean? Is it a brokered CD. and a callable and non-callable CD? Thank you.

[Capital]

May 10, 2024 16:39:01 GMT marg said:

Certificate deposit fee: A $100 processing fee (per CUSIP) will be charged for the deposit of physical share certificates into your brokerage account.

May I know exactly what this mean? Is it a brokered CD. and a callable and non-callable CD? Thank you.

marg, I think that this refers to stock. If you own a stock in certificate form and decide to deposit it into your brokerage account then Vanguard will charge you $100 for the processing necessary to have it deposited into your brokerage account.