I'm Leaving Vanguard: Here's Why

Hi all,

I’m sad to say I’m moving away from Vanguard as a brokerage. Their customer service has become absolutely garbage over the last few years.

It takes forever to get a live person on the phone and when you do, you can’t be sure that they are competent. It’s easier to get someone on the phone at Walmart or even the IRS these days. Their automated phone-menu is atrocious. Ever since Jack Bogle (founder of Vanguard and father of the index fund) passed, Vanguard’s customer service has become a dumpster fire. 

I am pulling all of my assets slowly out of Vanguard, so I can move them over to Schwab or Fidelity. Fidelity is currently the best of these three brokers, in my opinion.

To be clear, I still like Vanguard’s index funds and ETFs, and I will continue to purchase them for the foreseeable future. However, their customer service department is now so bad that I refuse to continue to use them as a broker.

How the mighty have fallen. There was a time in my life I was a huge fan of Vanguard - around 2015. In 2019, they still had half a brain. In 2024, sadly, few viable neurons remain.

Vanguard is now the Walmart of brokerages. When I say that, I’m referring to their poor customer service. Unexpectedly, Walmart has become much better over the years.

Earlier this week, I went to exchange my index funds for their ETF equivalents in my taxable account with the intent of completing an ACATS transfer out of Vanguard. Vanguard allows you to convert your shares of VTSAX and VFIAX (my only two holdings at Vanguard) tax-free to their ETF equivalents, VTI and VOO, respectively.

I took note of how to complete this when I called Vanguard earlier in the week. When I made my second call to double check the instructions, the Vanguard agent on the phone told me to exchange the shares, which means selling one security and buying another. 

These were entirely different instructions than what I was given in the week earlier, and I’m fairly certain would have resulted in a “sale” of Vanguard shares. Due to the amount I of VTSAX and VFIAX I hold, this would have resulted in a $100,000+ tax bill. I asked her if she was wrong, would Vanguard foot my tax bill? She didn’t have much of a response.

This is just one example of how Vanguard has become dangerously incompetent. They are hiring people that have no idea what they are talking about when dealing with your life savings. Had this been my parents, they would have a very big bill to pay - likely enough to purchase a brand new Lamborghini Huracan. 

Long hold times, incorrect information (don’t attribute to malice what you can to incompetence, as they say), and carelessness is how I would describe Vanguard today.

I am happy to be leaving Vanguard. If all you have is a 401(k) or Roth IRA at Vanguard, that’s probably fine, but I’m moving my taxable brokerage account out of Vanguard as quickly as possible. For funsies, here’s an actual conversation I had with Vanguard.

Me: Calls Vanguard. 30 minute hold time.

Vanguard agent: How can I help you?

Me: If I do a complete transfer of shares out of vanguard, fractional shares will be sold off and transferred as cash. Will the oldest shares or newest shares be sold off?

Vanguard agent: Let me ask the transfer of assets team. Another 30 minute hold time.

Vanguard agent: In this situation, your fractional shares will be sold off. (Thank you Captain Obvious; I literally just told you that in the question I asked.)

Me: That wasn’t the question I asked. I asked which shares from which lot will be sold off.

Vanguard: You’ll need to call your transferring brokerage for that.

Me: So I need to call my transferring brokerage for fractional shares that Vanguard is going to sell? 

Vanguard: Yes.

I called Schwab, which is receiving my shares, and they said we have no idea, since Vanguard holds the shares. Schwab said we don’t even receive cost basis information until weeks after the shares have been transferred over. So now, I have to waste another hour of my life to get my question answered.

It’s almost as if Vanguard hires the most incompetent people they can find as customer service representatives.