Are you tired of hearing how great Vanguard is? Do you wonder why so many people praise this investment giant? Well, you’re not alone. Despite its popularity and reputation for low-cost index funds, Vanguard sucks in many ways. In this post, we’ll explore why Vanguard sucks, how it became a self-owned company, and what specific issues customers face when dealing with Vanguard.
Background: Vanguard’s Rise and Ownership
Vanguard was founded in 1975 by John C. Bogle, who pioneered index fund investing as a way to provide low-cost, diversified, and long-term benefits to ordinary investors. Since then, Vanguard has grown to become one of the largest investment companies in the world, with over $7 trillion in assets under management (AUM) as of 2021. Vanguard’s success is partly due to its unique structure as a mutual company, which means it’s owned by its funds and its investors, not by outside shareholders seeking profits. This ownership model allows Vanguard to pass on the savings to its customers, who pay some of the lowest fees in the industry for index funds, ETFs, and other investment products.
However, Vanguard’s ownership also limits its accountability and transparency, as the investors who own Vanguard’s funds may not have a direct say in how the company operates or how the funds are managed. Moreover, Vanguard’s size and influence also raise concerns about its impact on the market, as some critics argue that Vanguard’s dominance in index funds could lead to a lack of competition and a concentration of power in a few hands.
Complaints: Why Vanguard Sucks
Now, let’s dive into the different complaints people have when dealing with Vanguard. While some of these issues may not affect everyone or may depend on personal preferences, they are still worth considering before you invest your money with Vanguard.
- Poor customer service: Many customers report long wait times, unresponsive representatives, and confusing policies when trying to reach Vanguard’s customer support.
- Limited investment options: While Vanguard is known for its index funds, it may not offer enough variety or customization for some investors who want to diversify their portfolios or pursue specific strategies.
- Lack of innovation: Vanguard has been criticized for being slow to adapt to new technologies, products, or trends, and for relying too much on its legacy offerings and brand recognition.
- Complex fees and pricing: While Vanguard’s fees are generally lower than its competitors, it can still be difficult to understand how much you’re paying and why especially for some of its more sophisticated products or services.
- Subpar website and apps: Vanguard’s online platforms have received mixed reviews for their user-friendliness, functionality, and security, with some users reporting glitches, errors, or limited features.
- Inconsistent performance: While Vanguard’s index funds are designed to track the market and provide stable returns, they are not immune to market fluctuations, and some customers may be disappointed by the results of their investments, especially compared to actively managed funds or other alternatives.
- Conflicts of interest: Vanguard’s self-owned model means that it may prioritize its own interests over those of its investors or the broader market, and may not always disclose or manage potential conflicts of interest effectively.
- Lack of personalization: Vanguard’s focus on passive investing and low fees means that it may not provide as much personalized advice, guidance, or support as some investors would like, especially if they have complex or unique financial situations.
- Boring or unattractive branding: While this may seem like a minor issue, some customers have criticized Vanguard’s plain or outdated branding as unappealing or unprofessional, especially compared to newer or more innovative fintech companies
- Inflexible policies: Vanguard has been criticized for its rigid rules and procedures, which may limit investors’ options or flexibility when it comes to withdrawals, transfers, or other transactions.
These are some of the most common complaints people have when dealing with Vanguard. While some of these issues may not be deal-breakers for everyone, they are worth considering when evaluating Vanguard’s offerings and customer service.
On the other hand…
However, to be fair, Vanguard also has some strengths and advantages that make it a popular choice for many investors. Here are three good things about Vanguard:
- Low costs: As mentioned earlier, Vanguard’s fees are some of the lowest in the industry, which means you can save money on expenses and potentially earn higher returns over the long term.
- Passive investing: While some investors prefer active management or alternative strategies, passive investing has been shown to outperform active management over time, especially for the average investor who may not have the time, expertise, or resources to beat the market consistently.
- Diversification: Vanguard’s index funds and ETFs provide exposure to a wide range of asset classes and sectors, which means you can build a diversified portfolio with just a few funds, reducing your risk and maximizing your returns.
Of course, these benefits may not outweigh the drawbacks for everyone, and you should always do your own research and due diligence before investing with any company, including Vanguard.
Conclusion: Should You Invest with Vanguard?
In summary, Vanguard sucks in some ways, but not in all ways. While it has its share of issues and criticisms, it also has its strengths and advantages, which make it a popular choice for many investors. Ultimately, the decision to invest with Vanguard or not depends on your own goals, preferences, and risk tolerance, as well as your willingness to deal with its shortcomings and take advantage of its benefits.
So, if you’re looking for a low-cost, passive, and diversified investment approach, Vanguard may be worth considering, despite its flaws. But if you prioritize customer service, innovation, customization, or other factors, you may want to explore other options and compare them to Vanguard’s offerings.
Remember, investing is a personal and long-term decision, and there’s no one-size-fits-all solution or perfect company. The best you can do is educate yourself, ask questions, and make informed choices based on your own needs and values. Good luck!
PS I am writing this after a very bad day with Vanguard and investing in general so take it with a grain of salt. Please share your own experience in the comments
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