Does Vanguard waste your money?

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Does Vanguard waste your money?

Postby clearwater » Sat Dec 08, 2012 8:55 pm

I'm currently at Charles Schwab. I've had no reason to be unhappy there -- the service has been excellent. 90% of my investments are Vanguard ETFs (lazy portfolio model), 10% are "other" -- about 5% GLD ETF, and < 5% some individual securities ("play money").

A few months ago I worked with an advisor at Vanguard to figure out all the right forms to move to Vanguard. They are sitting here on my desk. Inertia being what it is, I never got around to it, and since I wasn't motivated enough to actually leave Schwab, nothing changed.

Today I got in the US Mail a "Happy New Year" card from Charles Schwab's local office, signed by a "financial consultant" I've never met, never spoke to, and really had no reason to ever contact. It's the kind of thing that has maybe finally pushed me to moving to Vanguard.

So my question is: Has Vanguard ever done something so silly that you immediately realized "what a way to waste MY MONEY as an investor?"
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Re: Does Vanguard waste your money?

Postby nisiprius » Sat Dec 08, 2012 9:04 pm

Ahh, don't sweat the small stuff. No business is perfectly efficient, and no two people are going to agree on what's waste and what's a touch of class.

How much did it cost Vanguard to set up a coffee truck in a couple of locations on a couple of days in Philadelphia, Boston, and New York, selling coffee for $0.28 a cup and calling it the "At Cost Café," in order to make some marketing point about their low expenses? Was that a waste? Was it brilliant, cost-effective marketing? Or is just a touch of class?

OK, here's some waste for you: for the time being, I continue to insist on mailed paper statements, because my account is big enough that the account maintenance fee is waived without my signing up for e-statements. I continue to feel that mailed paper statements are a very important tool for ensuring that my heirs will not overlook any of my assets someday. OK. The way they print those statements is grossly wasteful of paper, and postage. TIPS bonds are listed on about eight lines, wasting an entire line of print for one little data item. In some cases, an entire page is used up by a listing for just two TIPS. That's one obvious way Vanguard wastes my money.

But it's small stuff.
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Re: Does Vanguard waste your money?

Postby NAVigator » Sat Dec 08, 2012 9:23 pm

I received a holiday greeting from Vanguard yesterday which was in the form of a link to a 29-second video. It was a nice touch. Spread across the many thousands of customers, the cost was negligible. I don't think that Vanguard wastes money and I don't waste Vanguard's resources since I request online documents. The only paper I get is the annual statement which is sufficient to provide information to my beneficiaries.

Jerry
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Re: Does Vanguard waste your money?

Postby thebogledude » Sat Dec 08, 2012 10:52 pm

It's understandable that they have to spend for marketing/advertising, having said that, it's nice to know that they are charging at-cost.
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Re: Does Vanguard waste your money?

Postby Fclevz » Sat Dec 08, 2012 11:34 pm

It's funny how the little things can annoy you. Until recently, I had accounts at both Schwab and Vanguard, but recently went the opposite way from what you are contemplating. I consolidated everything at Schwab. And while I prefer Schwab customer service slightly, neither is really significantly worse or better in the grand scheme of things. But, Schwab has a bank and having all my money together was appealing to me.

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Re: Does Vanguard waste your money?

Postby blevine » Sun Dec 09, 2012 8:50 am

Re-write of online account access website.
Looks no better or worse to me, just different.
Why pay their IT staff to redesign what worked well, unless
there was some compelling new features to reduce customer service staff
or improved features demanded by clients ?

Anyone see improvements in the new site ?
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Re: Does Vanguard waste your money?

Postby ClevrChico » Sun Dec 09, 2012 9:00 am

I'm really liking the new site. My impression is more information with less clicking.
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Re: Does Vanguard waste your money?

Postby rustymutt » Sun Dec 09, 2012 9:36 am

NAVigator wrote:I received a holiday greeting from Vanguard yesterday which was in the form of a link to a 29-second video. It was a nice touch. Spread across the many thousands of customers, the cost was negligible. I don't think that Vanguard wastes money and I don't waste Vanguard's resources since I request online documents. The only paper I get is the annual statement which is sufficient to provide information to my beneficiaries.

Jerry



I really rather doubt, that the e-card they sent, which I also received, cost Vanguard anything to send out.
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Re: Does Vanguard waste your money?

Postby Jerilynn » Sun Dec 09, 2012 2:55 pm

clearwater wrote:I'm currently at Charles Schwab.

Today I got in the US Mail a "Happy New Year" card from Charles Schwab's local office, signed by a "financial consultant" I've never met, never spoke to, and really had no reason to ever contact. It's the kind of thing that has maybe finally pushed me to moving to Vanguard.



This is peanuts compared to all the money Schwab wastes on TV advertising.
Cordially, Jeri . . . 100% all natural asset allocation. (no supernatural methods used)
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Re: Does Vanguard waste your money?

Postby dratkinson » Sun Dec 09, 2012 3:55 pm

I like monthly eStatements and an annual paper statement of total accounting and tax reporting.

Have not (and the CSRs, too) been able to turn off the paper In the Vanguard mailings. (Old PC and new Vanguard website don't like each other. I also believe fixing old website was unnecessary, but not privy to decision process.)

Bottom line. The last time I checked, my ER was 13bp, so not much, and therefore not much in which to hide waste.
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Re: Does Vanguard waste your money?

Postby peppers » Sun Dec 09, 2012 7:33 pm

In any organization, there will always be some expenditures, that an outside party, would say are questionable.
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Re: Does Vanguard waste your money?

Postby KyleAAA » Sun Dec 09, 2012 7:36 pm

blevine wrote:Re-write of online account access website.
Looks no better or worse to me, just different.
Why pay their IT staff to redesign what worked well, unless
there was some compelling new features to reduce customer service staff
or improved features demanded by clients ?

Anyone see improvements in the new site ?


The motivation was likely to make it cheaper and easier to maintain behind the scenes. It wasn't a mere user interface redesign.
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Re: Does Vanguard waste your money?

Postby FrugalInvestor » Sun Dec 09, 2012 8:04 pm

NAVigator wrote:I received a holiday greeting from Vanguard yesterday which was in the form of a link to a 29-second video. It was a nice touch. Spread across the many thousands of customers, the cost was negligible. I don't think that Vanguard wastes money and I don't waste Vanguard's resources since I request online documents. The only paper I get is the annual statement which is sufficient to provide information to my beneficiaries.

Jerry


I also received my holiday greeting video from Vanguard. My impression was that it was the most bland and PC greeting I've ever seen - a complete waste which had exactly the opposite effect as intended. Anything they spent on it was a waste as far as I'm concerned.

Beyond that I think Vanguard does a generally good job of stewarding resources. There are always things that can be nitpicked (as I have above) but for a very large company I think they do a good job.
"Some men worship rank, some worship heroes, some worship power, some worship God, and over these ideals they dispute and cannot unite, but they all worship money. - Mark Twain
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Re: Does Vanguard waste your money?

Postby HongKonger » Mon Dec 10, 2012 8:57 am

rustymutt wrote:
NAVigator wrote:I received a holiday greeting from Vanguard yesterday which was in the form of a link to a 29-second video. It was a nice touch. Spread across the many thousands of customers, the cost was negligible. I don't think that Vanguard wastes money and I don't waste Vanguard's resources since I request online documents. The only paper I get is the annual statement which is sufficient to provide information to my beneficiaries.

Jerry



I really rather doubt, that the e-card they sent, which I also received, cost Vanguard anything to send out.


You obviously don't work in marketing. You think e-marketing and database management software is free!
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Re: Does Vanguard waste your money?

Postby bottlecap » Mon Dec 10, 2012 11:03 am

Advertising works and good will with your customers is important. That's why companies do them and, assuming they are done right, neither is a "waste" of money.

JT
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Re: Does Vanguard waste your money?

Postby Jerilynn » Mon Dec 10, 2012 12:25 pm

bottlecap wrote:Advertising works and good will with your customers is important. That's why companies do them and, assuming they are done right, neither is a "waste" of money.

JT


Are you saying that Vanguard wastes money by not advertising on TV since it 'works', or that Schwab is wasting money by using TV ads?

Maybe 'wasting money' is the wrong term. Let's replace it with 'getting the most from your advertising budget'.
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Re: Does Vanguard waste your money?

Postby fareastwarriors » Mon Dec 10, 2012 3:57 pm

Is Vanguard becoming too big? Doesn't it have more than 1 trillion dollars under management?
How big is too big? I see plenty of their ads online as banner ads/in Hulu a few times/text ads.
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Re: Does Vanguard waste your money?

Postby Taylor Larimore » Mon Dec 10, 2012 4:13 pm

Does Vanguard waste your money?


If Vanguard, the lowest-cost mutual fund company,* is "wasting" money, Schwab and every other mutual fund company are probably "wasting" more.

* http://mutualfunds.about.com/od/noloadv ... milies.htm

Best wishes.
Taylor
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Re: Does Vanguard waste your money?

Postby NAVigator » Mon Dec 10, 2012 4:35 pm

fareastwarriors wrote:Is Vanguard becoming too big? Doesn't it have more than 1 trillion dollars under management?
How big is too big? I see plenty of their ads online as banner ads/in Hulu a few times/text ads.

In the case of Vanguard, too big would be if they didn't have room to squeeze my investments into their coffers. :wink:

You see their ads because you visit their site. It is targeted advertising. Other people may never see a Vanguard ad, but instead see tons of ads from other providers. It does seem like they are preaching to the choir since people who visit the website get the ads.

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Re: Does Vanguard waste your money?

Postby Default User BR » Mon Dec 10, 2012 7:11 pm

NAVigator wrote:You see their ads because you visit their site. It is targeted advertising. Other people may never see a Vanguard ad, but instead see tons of ads from other providers. It does seem like they are preaching to the choir since people who visit the website get the ads.

But people can come to the website for many reasons, including links from other pages or search engines.


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Re: Does Vanguard waste your money?

Postby Alan S. » Mon Dec 10, 2012 11:36 pm

I couldn't prove it, but my guess would be Vanguard's account platform wastes a ton of money compared to the single brokerage account platforms used by Schwab and FIdelity. For many customers that means twice as many accounts at Vanguard with assets transferring between them and paper copy statements, tax reporting forms etc. This appears to have resulted from the traditional mutual fund business not wanting to be absorbed into VBS. Perhaps it is just inertia, but with the emphasis on cost management the conversion must have been carefully studied.

Is it the cost of conversion to a single account platform that is a deterrent, or is there some economy in the existing platform that I am missing???
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Re: Does Vanguard waste your money?

Postby Epsilon Delta » Tue Dec 11, 2012 12:36 am

Alan S. wrote:I couldn't prove it, but my guess would be Vanguard's account platform wastes a ton of money compared to the single brokerage account platforms used by Schwab and FIdelity. For many customers that means twice as many accounts at Vanguard with assets transferring between them and paper copy statements, tax reporting forms etc. This appears to have resulted from the traditional mutual fund business not wanting to be absorbed into VBS. Perhaps it is just inertia, but with the emphasis on cost management the conversion must have been carefully studied.

Is it the cost of conversion to a single account platform that is a deterrent, or is there some economy in the existing platform that I am missing???


I for one am glad the Vanguard is a mutual fund company and not a brokerage. When I've dealt with other "mutual fund" companies they have revealed that they are really brokerages by such things as 50 pages of conditions, 20 of which apply only to options, and trying to make my account a margin account rather than a cash account. Vanguards mutual fund business model is admirably straight forward and they should not make it "simpler" by making it more complex.
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Re: Does Vanguard waste your money?

Postby dgm » Tue Dec 11, 2012 12:47 am

they were recently wasting money in online advertising implementing a technology called 'retargeting' in a very inefficient manner.

if any of you are vanguard customers and feel like for a period, all you saw were vanguard ads, this is the retargeting taking place. it should be hitting prospective customers and not current customers.

i emailed them about it and suggested a fix--got a note saying it was sent to the appropriate department and as far as i can tell they seem to have fixed it.
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Re: Does Vanguard waste your money?

Postby OldOne » Tue Dec 11, 2012 10:22 pm

If you think they're wasting your money, get out.
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Re: Does Vanguard waste your money?

Postby Alan S. » Thu Dec 13, 2012 6:04 pm

What is the definition of "wasting money". I think the most common concept of that is any expenditures made that the customer would not approve were he to be in control. Therefore, whenever you don't have total control, there is always waste and the question then becomes how much or what %.

Think of your tax dollars. You think Vanguard might do a better job with your investment dollars than the US does with your tax dollars?

Of course, when either Vanguard or the govt spend money, you really can't tell how much is wasted when it is spent, and in most cases any benefit of the spending cannot be accurately measured for a considerable time period, if ever. A good example is the recent change of tracking indexes. There will be an up front cost for a long term benefit, and the long term benefit can itself be superceded from altogether different options down the road.....similar to basic spending decisions for any business.
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Re: Does Vanguard waste your money?

Postby mike127 » Mon Dec 24, 2012 2:20 pm

Respectfully, I tend to think it's the wrong question for a fund investor to ask whether a fund company's marketing is a "waste" of money. At the end of the day, what I care about are fees and returns: how much are they charging me, and am I getting the return that I expect. (For most Bogleheads, the latter comes down to choice of index, tracking error, spreads, etc.). Every company has to make something out of the fees to pay employees, cover overhead, etc. From my standpoint it doesn't make my difference whether they spend that money on a research library or beer pong as long as I'm getting what I expect out of the deal.

In other words, if two TSM funds in a perfect world have the same ER, same return, follow the same index, etc., the fact that Company A spends the ER differently than Company B doesn't bother me, as long as I don't ethically disagree with it, it's not illegal, etc.

That said, I do think there's value in thinking about marketing, since how a company presents itself through marketing reflects how it perceives its role in the marketplace. I tend to agree with what a few people have already said -- that one person's waste of money is another person's touch of class. But Vanguard is clearly seeking to position itself as the "absolute low cost" fund company, while Schwab is trying to be the low-cost version of a full-service brokerage. Just different niches, which might work or not work. But I don't think an investor should object to either strategy just because each costs money.
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Re: Does Vanguard waste your money?

Postby scubadiver » Fri Dec 28, 2012 11:03 am

My wife and I pay a weighted average 0.08% expense ratio on our Vanguard investments. There's not really a whole lot of room for waste.
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Re: Does Vanguard waste your money?

Postby NYBoglehead » Fri Dec 28, 2012 11:12 am

scubadiver wrote:My wife and I pay a weighted average 0.08% expense ratio on our Vanguard investments. There's not really a whole lot of room for waste.


+1

So long as they keep their ERs low I couldn't possibly care less what they spend the money on. Never mind the TV ads the others run on, have you ever seen the buildings that JP Morgan, Goldman Sachs and Citigroup own/occupy? And all the mahogany desks inside? I'm sure Vanguard has spent a dollar or two unwisely, but think we should put things in perspective before beating them up over it.
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Re: Does Vanguard waste your money?

Postby Random Musings » Fri Dec 28, 2012 3:55 pm

I believe Vanguard does an exceptional job with respect to managing money and keeping overhead costs low.

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