Vanguard's Die-Hard Customers Have a Message for New CEO: 'The Service Is Abysmal' - WSJ
Vanguard won an army of loyal customers by cutting fees to the bone and promoting simple index-tracking investing. Now many of those fans are fed up. New Chief Executive Officer Salim Ramji will be the first outsider to take the helm of the beloved fund manager on Monday, and many clients are hoping he will finally fix a longstanding source of frustration: the customer service. Social media, review websites and online forum Reddit are frequently flooded with Vanguard brokerage customers complaining about issues spanning glitchy trades, incorrect balance information and hard-to-reach customer representatives.
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Vanguard ranked last out of eight major brokerages for customer satisfaction with website performance and mobile apps in a recent survey of 2,700 investors conducted by Investor’s Business Daily, which is published by The Wall Street Journal’s parent company, Dow Jones. The asset manager has acknowledged the problems, which some analysts chalk up to an underinvestment in technology. Former CEO Tim Buckley, who announced his retirement in February, said in 2019 that the firm would spend $1 billion a year to improve its technology. Vanguard rolled out a modernized app in 2021, but customers weren’t impressed and complained of bugs and dumbed-down functionality.
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Many clients have the bulk of their life savings in Vanguard accounts, adding to the stress when issues can’t be resolved quickly. Madeline Moonan, a 77-year-old resident of Stafford, Va., said Vanguard accepted her request to transfer some fund shares from a traditional IRA to a Roth IRA in 2022 but never completed the transfer. Moonan said it took Vanguard six months to correct the issue. She paid $350 to consult with an accountant about tax consequences.
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For investors having web or tech issues, the lack of night or weekend service is a particular point of frustration. Vanguard’s customer-service line is open Monday through Friday from 8 a.m. to 8 p.m. Eastern time. Rivals Fidelity and Charles Schwab both offer 24/7 customer service by phone.
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New fees and rules have also left customers feeling nickel-and-dimed. Account closures or transfers to other brokerages may now cost a $100 processing fee. For clients with less than $1 million in qualifying assets, mutual fund or ETF trades placed over the phone cost $25. Brokerage-account customers were also recently warned that “excessive reliance on phone associates” could lead to additional fees or account termination.
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