Do You Think Vanguard Will Join The No Commission Party?

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GoldenPuppy
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Do You Think Vanguard Will Join The No Commission Party?

Post by GoldenPuppy » Thu Oct 10, 2019 2:14 am

Do you think Vanguard will join the no commission party?

I’m thinking of waiting a little longer, since it would be nice to keep all my investments at Vanguard.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by HawkeyePierce » Thu Oct 10, 2019 2:49 am

The vast majority of ETFs are already commission-free at Vanguard and I can't imagine anyone heavily into individual stocks, options or futures would ever trade them at Vanguard anyways.

So my guess is no. They're already commission-free for the types of securities the typical Vanguard customer wants to buy: mutual funds, ETFs, Treasuries, TIPS.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by Sconie » Thu Oct 10, 2019 4:51 am

HawkeyePierce wrote:
Thu Oct 10, 2019 2:49 am
The vast majority of ETFs are already commission-free at Vanguard and I can't imagine anyone heavily into individual stocks, options or futures would ever trade them at Vanguard anyways.

So my guess is no. They're already commission-free for the types of securities the typical Vanguard customer wants to buy: mutual funds, ETFs, Treasuries, TIPS.
My thought as well. Well said HawkeyePierce.
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by UpperNwGuy » Thu Oct 10, 2019 5:35 am

GoldenPuppy wrote:
Thu Oct 10, 2019 2:14 am
Do you think Vanguard will join the no commission party?

I’m thinking of waiting a little longer, since it would be nice to keep all my investments at Vanguard.
Vanguard joined the party a year ago.

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Nate79
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by Nate79 » Thu Oct 10, 2019 6:05 am

No I don't think they will join the party.

student
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by student » Thu Oct 10, 2019 6:49 am

I think Vanguard is a mutual fund company first and brokerage firm second. You can already trade many ETF for free. Its website says "Get commission-free online trading on around 1,800 ETFs from about 100 other companies.") So the question is stocks. My guess is they will not be joining anytime soon.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by 1789 » Thu Oct 10, 2019 10:08 am

No, but they should join the ones which provide live chat customer service.
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by beyou » Thu Oct 10, 2019 9:13 pm

I am already entitled to free trades and dont use them.
Who really goes to Vanguard to trade individual stocks ?

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by bluquark » Thu Oct 10, 2019 9:27 pm

I think they'll join because it makes them look bad at first glance and will turn into a talking-point reason not to use Vanguard. Even though individual stocks and non-Vanguard ETFs aren't part of the Vanguard philosophy, I predict they will cave.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by aristotelian » Thu Oct 10, 2019 9:34 pm

bluquark wrote:
Thu Oct 10, 2019 9:27 pm
I think they'll join because it makes them look bad at first glance and will turn into a talking-point reason not to use Vanguard. Even though individual stocks and non-Vanguard ETFs aren't part of the Vanguard philosophy, I predict they will cave.
They might not want that business. They have been charging more than anyone else for trades and have been just fine. I have a hard time seeing anyone currently at Vanguard leaving in order to go trade stocks.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by JoMoney » Thu Oct 10, 2019 10:00 pm

beyou wrote:
Thu Oct 10, 2019 9:13 pm
I am already entitled to free trades and dont use them.
Who really goes to Vanguard to trade individual stocks ?
:thumbsup

My guess, is Vanguard's AUM will grow even bigger from people at other brokers trading at "no commission" into Vanguard ETF's
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by Lee_WSP » Thu Oct 10, 2019 11:01 pm

If they do, they'd probably cut down the number of ETF options in order for it to make sense for them. They aren't a brokerage service. Their trading platform lacks a lot of things Fidelity's has, and I seriously doubt a lot of Vanguard clients trade anything other than Vanguard ETF's on their anyway.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by Northern Flicker » Thu Oct 10, 2019 11:02 pm

Nate79 wrote:
Thu Oct 10, 2019 6:05 am
No I don't think they will join the party.
They have been offering commission-free trades on Vanguard ETFs for all clients for 12-15 years. Free trades on competitor’s products have been offered for a long time based on minimum account balances.

https://investor.vanguard.com/investing ... sions/etfs

Also many Vanguard ETFs may be “purchased” by investing in a corresponding mutual fund and converting the shares to ETF shares, saving bid-ask spread costs and any premiums to NAV. That cannot be done if the assets are held at a different brokerage.

All of the above has been in place a long time.
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by retired@50 » Thu Oct 10, 2019 11:24 pm

HawkeyePierce wrote:
Thu Oct 10, 2019 2:49 am
The vast majority of ETFs are already commission-free at Vanguard and I can't imagine anyone heavily into individual stocks, options or futures would ever trade them at Vanguard anyways.

So my guess is no. They're already commission-free for the types of securities the typical Vanguard customer wants to buy: mutual funds, ETFs, Treasuries, TIPS.
+1.
The curious thing is that as your assets rise at Vanguard, they begin to reduce the cost on stock trades, then they eliminate them.
$500,000 - $1,000,000 in assets and stock trades are $2
$1,000,000 - $5,000,000 and you get 25 free trades per year.
Of course by the time someone has this much in assets, they realize that frequent trading of stocks isn't wise, so the trades go unused.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by usagi » Fri Oct 11, 2019 12:34 am

My personal view is Vanguard has a deep corporate culture that precludes them from reactionary decision making: Vanguard sees themselves as a thought leader and setter not a follower.

I have experience with them in the form of delivering consultancy and contractor services and my view is: there is only the Vanguard way. Any attempts to institute change are met with cultural resistance. In other words, the troops think they can (and they do) outlast the tenure of the leadership trying to implement change. Fiefdoms abound.

In the end, I think their endemic culture will preclude them from allowing the competition to lead them.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by Nate79 » Fri Oct 11, 2019 6:00 am

Northern Flicker wrote:
Thu Oct 10, 2019 11:02 pm
Nate79 wrote:
Thu Oct 10, 2019 6:05 am
No I don't think they will join the party.
They have been offering commission-free trades on Vanguard ETFs for all clients for 12-15 years. Free trades on competitor’s products have been offered for a long time based on minimum account balances.

https://investor.vanguard.com/investing ... sions/etfs
LOL. We are talking about the current party of free trades for all stocks and ETFs, not their own products. What you describe has been available at all other brokerages for decades.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by Northern Flicker » Fri Oct 11, 2019 1:53 pm

You misread the Vanguard link content because it is zero commission for ETFs from other companies, not just their own, as long as you trade online.
Get commission-free online trading on around 1,800 ETFs from about 100 other companies.
They do charge to buy and sell individual stocks, which is irrelevant if you are investing competently. Other brokerages now charging zero commission on individual stocks is a big yawn. Wake me up when they let you invest in an ETF without paying a bid-ask spread or premium to NAV (like you can do at Vanguard).

PS ETFs have not been around for decades
Index fund investor since 1987.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by GoldenPuppy » Fri Oct 11, 2019 8:18 pm

I'm going to give it a few weeks to a month. If Vanguard doesn't join the festivities, I'll diversify.

I'd even settle for some free trades per year. Seems like a fair compromise.

Otherwise, mutual funds stay at Vanguard. Individual stocks go to Fidelity. Cash hangs tight at Schwab. Fun, small-time trading over at TD Ameritrade.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by afan » Sat Oct 12, 2019 10:09 am

Vanguard probably makes little money on stock trading as it us. Not a major activity for most of its investors, commissions on stocks already go to $2 on moderate sized accounts and zero for somewhat larger accounts. There is just not that much revenue at stake. Even marketing to those who plan to trade actively could bring in hot money clients who will bolt for the next broker bonus and not generate long term business for Vanguard.

I could see them matching zero just to counter claims by other companies to be cheaper than V. It would be good if they made stock sales commissions zero for PAS customers who bring in portfolios of individual stocks and need to sell to move to funds and etfs.

So, probably will match the zero commission trend but it will have little effect for most V customers.
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by Cheez-It Guy » Sat Oct 12, 2019 10:28 am

GoldenPuppy wrote:
Fri Oct 11, 2019 8:18 pm
Otherwise, mutual funds stay at Vanguard. Individual stocks go to Fidelity. Cash hangs tight at Schwab. Fun, small-time trading over at TD Ameritrade.
Why would you choose to keep cash at Schwab? They pay among the lowest on cash balances.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by VaR » Sat Oct 12, 2019 3:53 pm

In what way is eliminating commissions on stock trades beneficial to Vanguard's owners (the mutual funds, and through them, the fund shareholders)?

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by Nate79 » Sat Oct 12, 2019 4:03 pm

VaR wrote:
Sat Oct 12, 2019 3:53 pm
In what way is eliminating commissions on stock trades beneficial to Vanguard's owners (the mutual funds, and through them, the fund shareholders)?
Why do you think this matters? Clearly Vanguard doesn't think it does because they made 1800 ETFs trade free earlier in the year.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by whodidntante » Sat Oct 12, 2019 4:07 pm

I want them to raise commissions to $100 per share and use the money to reduce my expense ratios by .01%.

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Cheez-It Guy
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by Cheez-It Guy » Sat Oct 12, 2019 4:07 pm

Perhaps their master plan is to drive all competitors to unsustainable business practices, weather the next major financial downturn, and then soak up all the business from the brokers that fail when interest rates go back to zero.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by stlutz » Sat Oct 12, 2019 4:11 pm

The next thing to come with the 0 commission thing is more consolidation in the industry. I think VG will be a part of that. I see them basically getting out of the brokerage business and just partnering with somebody else for those services.

Many VG funds are already commission free at E*Trade. It would be pretty straightforward for E*Trade to make them all commission free in exchange for Vanguard using them for VPAS accounts.

VG really doesn't have their heart in their brokerage and things like accurate recordkeeping. I don't see them making the investment to be competitive and as a holder of their funds I don't want them to when so many other companies do an excellent job at it.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by Northern Flicker » Sat Oct 12, 2019 4:15 pm

VaR was referring to trades on individual stocks, not ETFs. If Vanguard raised their commission on individual stocks it would benefit Vanguard investors by discouraging active trading in individual stocks.
Index fund investor since 1987.

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Cheez-It Guy
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by Cheez-It Guy » Sat Oct 12, 2019 4:16 pm

^^That would be sad.
Last edited by Cheez-It Guy on Sat Oct 12, 2019 4:56 pm, edited 1 time in total.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by nisiprius » Sat Oct 12, 2019 4:17 pm

"Are you now, or have you ever been, a member of the Commission Party?"
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by cheesepep » Sat Oct 12, 2019 9:14 pm

The point is that vanguard is first and foremost a place not to trade stocks but for people who do trade stocks in their vanguard account, may it be just three times a year, it is an added cost. A cost that is not free compared to the offerings of other similar companies such as Schwab and fidelity who offer competing products and services such as ETFs and so happen to also have commission free trading.

I personally will never buy ETFs (at least not often) because I hate being taxed on my entire portfolio which is completely bizarre no matter how low the fees are these days. I much prefer the Schwab Netflix option which is similar to Costco in the sense you become a member. Pay a one time fee and a monthly fee afterwards. That monthly fee doesn’t change depending on your account balance. Much more of my way of thinking.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by southerndoc » Sat Oct 12, 2019 9:36 pm

I would think that most people who use Vanguard are more Bogleheaded. If they do purchase individual stocks, I'm pretty sure they are more likely to be in them for the long haul as compared to other brokerages. I could be wrong, but that's my opinion.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by cheesepep » Sat Oct 12, 2019 9:37 pm

Also, say you do have over a million dollars at vanguard and trade stocks five times a year. Assuming each trade is $5 and you switch over to Schwab which is offering a $2500 bonus and free trades, it could earn or save you $2500 plus $25. Good? Depends on you. Sometimes switching brokerages can be beneficial even if not for trading individual stocks.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by FIREchief » Sat Oct 12, 2019 9:41 pm

HawkeyePierce wrote:
Thu Oct 10, 2019 2:49 am
They're already commission-free for the types of securities the typical Vanguard customer wants to buy: mutual funds, ETFs, Treasuries, TIPS.
TIPS are treasuries. Just sayin.... 8-)
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by RickBoglehead » Sat Oct 12, 2019 10:11 pm

GoldenPuppy wrote:
Fri Oct 11, 2019 8:18 pm
I'm going to give it a few weeks to a month. If Vanguard doesn't join the festivities, I'll diversify.

I'd even settle for some free trades per year. Seems like a fair compromise.

Otherwise, mutual funds stay at Vanguard. Individual stocks go to Fidelity. Cash hangs tight at Schwab. Fun, small-time trading over at TD Ameritrade.
Having funds at 4 houses is exactly the type of customer Vanguard does not want.
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by HEDGEFUNDIE » Sat Oct 12, 2019 10:17 pm

RickBoglehead wrote:
Sat Oct 12, 2019 10:11 pm
GoldenPuppy wrote:
Fri Oct 11, 2019 8:18 pm
I'm going to give it a few weeks to a month. If Vanguard doesn't join the festivities, I'll diversify.

I'd even settle for some free trades per year. Seems like a fair compromise.

Otherwise, mutual funds stay at Vanguard. Individual stocks go to Fidelity. Cash hangs tight at Schwab. Fun, small-time trading over at TD Ameritrade.
Having funds at 4 houses is exactly the type of customer Vanguard does not want.
The feeling is mutual.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by MotoTrojan » Sat Oct 12, 2019 11:45 pm

1789 wrote:
Thu Oct 10, 2019 10:08 am
No, but they should join the ones which provide live chat customer service.
This is my sole reason for considering moving my taxable to Fido, where I do my primary banking. I also will be starting a new IRA at some point (moved my VG to M1).

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by sperry8 » Sun Oct 13, 2019 12:03 am

I'll bet VG does move slightly. Guessing they at least move Voyager Select to $0 (from $2) for ~10 trades. That should suffice for most Bogleheads. Anyone trading more than 1x per mo on individual stocks isn't likely a VG customer anyway.

https://investor.vanguard.com/investing ... ons/stocks
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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by smectym » Sun Oct 13, 2019 12:28 am

In practical terms, ultra-low/free commissions on stock trades are significant only for frequent traders—and by “frequent” I’m not referring to 5 trades a month. So offering free, unlimited stock trades is going to attract the day-traders, guys who might place 20 trades or more a day. For such investors, the elimination of commissions is a godsend: it means they can play their systems, run their options strategies, scan intra-day stock charts and trade on them—all without incurring any transaction costs.

That’s the type of client that woukd definitely not be interested in a firm that still charges even a nominal stock commission today. And as others have correctly pointed out, Vanguard probably isn’t interested in catering to that client demographic; that weighs in the scales against Vanguard completely abolishing commissions on equity trades, since even a low commission would deter such traders.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by lazyday » Sun Oct 13, 2019 5:19 am

FIREchief wrote:
Sat Oct 12, 2019 9:41 pm
TIPS are treasuries. Just sayin.... 8-)
Unfortunately, in common usage “Treasuries” usually does not include TIPS.

To be more clear, I like to say “nominal Treasuries” to exclude TIPS, or “Treasuries and TIPS” to include both.

Kind of like “mutual fund” usually excludes ETFs. I say “traditional mutual fund” to be a little more clear.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by fobet » Sun Oct 13, 2019 11:58 am

Although Vanguard already offers a commission free trades on ETFs, the real question is, why is this such a big deal? IB and the likes thinks an uses this as a marketing strategy that think we are dumb like that.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by pyld76 » Sun Oct 13, 2019 12:02 pm

RickBoglehead wrote:
Sat Oct 12, 2019 10:11 pm
Having funds at 4 houses is exactly the type of customer Vanguard does not want.
Do you have any source for that?

In the absence of a concrete assertion from VG to that effect, let me respond with my own opinion: VG probably doesn’t care. I say “probably” because I’m working from imperfect information, to wit: no idea what the actual data indicates about the sources or drivers of “sticky” revenue to VG and a working assumption (also potentially wrong, given VG’s famous lack of transparency around incentive compensation) that VG’s ultimate driver is to increase AUM or other sources of revenue.

I am likely a prime example: I own VG product on which they get paid (ETFs) at Fido. I have kept a sizable cash position at VG because right now, I have a need for a money market fund as a part of my portfolio and VG’s are demonstrably superior to Fido. Are you suggesting that because I don’t use VG as a one-stop shop that they’d prefer I pull up all roots, swap my ETFs for their ishares equivalent (at ostensibly no difference in ER) and yank my cash? It’s all anecdotal, but I’d feel good about taking the other side of that bet.

Judging by the poor execution and customer service relative to other brokerages, I don’t think VG has a love for active traders. And while I believe they design products which, by virtue of their mutual structure, as less likely to screw the investor than anyone else. I also believe that this quaint notion that VG doesn’t “want” a certain “type” of customer is foolish beyond this: they’ll measure how much it costs to service you, and if you are generating more in revenue than it costs to carry you as a client then they want you there. They don’t care if you are with 10 other custodians as long as you buy VG product and cover the cost to carry you.

So, if VG decides to match everyone else, it’s because they know something about revenue retention that we don’t. But it wouldn’t surprise me at all if they didn’t match—but it’s not due to any desire to be rid of folks who have VG accounts as one-among-many. VG’s “altruism” is around product/service design and pricing, not around shaping the outside behaviors of current and prospective customers. In the latter regard, they are likely just like everyone else.

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Re: Do You Think Vanguard Will Join The No Commission Party?

Post by TropikThunder » Sun Oct 13, 2019 12:32 pm

cheesepep wrote:
Sat Oct 12, 2019 9:14 pm
I personally will never buy ETFs (at least not often) because I hate being taxed on my entire portfolio which is completely bizarre no matter how low the fees are these days.
What are you taking about?

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