Between Fidelity, Schwab, and Vanguard, I am surprised that Vanguard is the one that most wants to be like Robinhood. Their brokerage account, officially Vanguard Brokerage Services (VBS), recently added a bunch of new fees but also officially declared themselves as having a “digital-first service model”. That’s corporate-speak for “we want to spend less money on customer service”.
This was brought to my attention by this RIABiz article “Vanguard warns its phone-reliant investors of ‘termination’ — without warning or explanation — under new contract, effective July 1”, which includes this Editor’s take:
My guess is that this gobsmacking set of legal clauses in the new Vanguard contract will, in retrospect, be the high point of the seeming absurdity at the grand old Malvern, Pa., fund company.
Indeed, look at this language from the amended Vanguard Brokerage Account Agreement:
You understand that excessive reliance on Our phone associates for tasks that can be accomplished online may negatively impact Your customer service experience, including but not limited to delayed response times, additional fees, and possible Account termination.
VBS reserves the right to resolve Non-Trade Inquiries exclusively on its website or other available channels as opposed to providing such information by phone. Furthermore, at its discretion, consistent with Section 8(c) of this Agreement, VBS reserves the right to close Your Account, or terminate any feature or service at any time, for any reason, and without prior notice, inclusive of not meeting Our Digital Interaction Expectations.
Wow. We’ll ignore you, fine you, or just fire you. This was foreshadowed by this March 2024 post on the Bogleheads forum “What to do?? [Vanguard warning about closing account for calling too frequently”.
This person did make a lot of phone calls to Vanguard. But lets look at the reasons:
- Transition from mutual fund platform to VBS. This was mandated involuntarily by Vanguard themselves!
- Required Minimum Distributions, which I would file under a “complex” topic.
- Transfer of external IRA to Vanguard.
These are all legitimate inquiries, not just checking a balance or even placing a trade (for which you now charge $25 a pop anyway).
Next, let’s add some more context. This member is 80 years old and has been a Vanguard customer since the 1970s! She is a Flagship member, which means that over time she has accumulated over $1 million in assets with Vanguard.
A loyal customer of 50+ years, who is 80+ years old, called you a bunch of times about legitimately complex subjects. So of course, you threaten to close their account?! Vanguard, you are not meeting *My* Don’t Be A Soulless Jerk Corporation Expectations.
Vanguard’s home page loudly touts how we are owners, not just investors.
Yet this just reeks of the same impersonal corporate bean-counting that Vanguard’s competitors used to be accused of. If customer calls more than X times in Y days, let’s fire them. We don’t measure things like loyalty or compassion for those that may not be as able to use digital tools due to age or disability. What a way to treat an “owner” of 50+ years.
This new rule won’t affect me now because I avoid calling Vanguard if at all possible. (You’re welcome, Vanguard!) But I can see a day when I am older and I will need a bit more assistance and understanding. Is this what I have to look forward to? I searched for “Fidelity closed my account because of too many phone calls” and “Schwab closed my account because of too many phone calls” and could not find any similar examples.
What made Vanguard, Vanguard? In my opinion, it was their willingness to forgo profit in order to better serve the everyday individual investor. Some people due to age or disability may need more phone help than others, and there should be some discretion.
We’re supposed to be “owners”, right? Well, if you’re an “owner” when was the last time Vanguard let you decide anything? I would give up some basis points for world-class customer service. They don’t release executive compensation. How much is this new CEO from Blackrock being paid? Those are costs, how about we see them?! Vanguard had to disclose that every person on their Board of Directors makes $300,000 a year for a part-time side gig. That may be the Wall Street norm, but I thought that Vanguard was different. Not a single person on the Berkshire Hathaway Board of Directors makes more than $7,000 a year, and those are mostly just reimbursements for physically traveling to attend Board meetings in person.
Vanguard appears to worship at the Church of Assets Under Management. Perhaps the metric they should be following is customer satisfaction and customer retention rates. As an owner of Vanguard, I’d like to see those numbers too.