Vanguard Brokerage Account Review

Vanguard is well known for its funds, especially exchange-traded funds (ETFs).

Vanguard is one of the largest fund companies in the world, and its ETFs frequently appear in the portfolios of both investment advisors and robo-advisor platforms.

Less well known is that Vanguard is also a major brokerage firm.

You can invest not only in their proprietary mutual funds and ETFs, but also in those of other fund companies, as well as individual securities like stocks and bonds.

While you invest in those other assets, you’ll also have full access to Vanguard’s popular fund lineup.

About Vanguard

The legendary John Bogle created it and launched the first index fund available to retail investors the following year, in 1976.

Vanguard has over $10 trillion in assets under management, is the largest provider of mutual funds in the world, and the second largest provider of ETFs.

One factor that makes Vanguard unique, however, is that its investors own it.

This gives Vanguard full responsibility to its investors, rather than shareholders, as with publicly traded companies.

How The Vanguard Brokerage Account Works

As you might expect, the Vanguard trading platform works particularly well with funds. Many of the tools available on the trading platform are specific to funds.

For example, Vanguard offers its Mutual Fund and ETF Screener tool, which enables you to set criteria for the funds you want to invest in.

This makes it much easier for investors to sift through the thousands of funds now available.

You can choose the parameters for the funds you want to invest in, such as specific industry sectors, certain fund families, and even expense ratios.

The platform also offers portfolio analysis. It displays your current asset allocation and your target allocation, showing how close you are to matching your investment goals.

The Vanguard Tax Center allows you to continuously track the tax consequences of your investments.

This includes taxable dividends and capital gains distributions. You can track them year-to-date and annually. You’ll also have access to tax planning and education to help minimize the tax impact of your investing activities.

Vanguard also specializes in target-date funds, which are funds comprised of other funds.

They create portfolios that automatically adjust based on your age and projected retirement date.

For example, if you’re in your 20s, your portfolio will be most heavily invested in stocks.

But as you move toward your 60s, it will automatically shift more heavily into bonds.

Vanguard classifies clients by account size, as follows:

• Voyager clients, $50,000 to $500,000
• Voyager Select clients, $500,000 to $1 million
• Flagship clients, $1 million to $5 million
• Flagship Select clients, over $5 million

Personal Advisor Services

With a minimum account balance of $50,000, you will also have access to a financial advisor.

The advisor will help you with major financial decisions, such as saving and investing for specific goals or preparing for retirement.

The advisor can also act as an emotional circuit breaker during periods of market volatility.

Vanguard Brokerage Fees

• Annual broker service fee: $20. However, Vanguard offers several ways to waive this fee.
• Stocks: Fees are based on the size of your portfolio:
• ETFs: Vanguard offers commission-free trades on 1,800 non-Vanguard ETFs, plus more than 75 Vanguard ETFs.
• Mutual funds: No commissions on over 140 Vanguard mutual funds, as well as more than 3,000 non-Vanguard mutual funds.
• Options: Similar to the pricing structure on stocks, commissions on options are based on the size of your portfolio:

Fixed income investment fee schedules depend on the type of security.

For example, US Treasury securities are commission-free, regardless of your account size.

The same applies to newly issued US government agency securities, corporate bonds, and certificates of deposit.

However, fees do apply if you are purchasing existing issues of all securities except US Treasury securities:

Vanguard Personal Advisor Services Robo-Advisor

Like most major investment platforms today, Vanguard offers its very own robo-advisor, the Vanguard Personal Advisor.

This lets you invest some, or even all, of your money in a fully managed portfolio. In fact, it’s the largest robo-advisor in the industry – and by a very wide margin – with more than $115 billion in assets under management.

Vanguard Personal Advisor Services stands out because it invests in both ETFs and mutual funds.

The vast majority of robo-advisors invest strictly in ETFs. This matters because ETFs are passive funds based on index investing, while mutual funds can be passively or actively managed.

That means some mutual funds attempt to outperform the market, not just track it.

Naturally, the portfolio uses Vanguard funds. But this is hardly a limitation, since nearly every other robo-advisor uses Vanguard funds.

Vanguard Personal Advisor requires a minimum investment of $50,000 and charges an annual management fee of 0.30% of your account value on balances up to $5 million. However, the fee structure is tiered, and the fees decrease as your balance increases.

FEE	MANAGED ASSETS
0.30%	On assets up to $5 million
0.20%	On assets above $5 million and up to $10 million
0.10%	On assets above $10 million and up to $25 million
0.05%	On assets above $25 million

Vanguard Personal Advisor Services is available for both taxable and retirement accounts.

Vanguard Brokerage Account Features and Benefits

There is no minimum investment required to open a Vanguard brokerage account. With commission-free trades on stocks, ETFs, and some mutual funds, you can get started with a relatively small amount of money.

However, it is important to note that some Vanguard funds may have minimum purchase requirements.

For example, you can begin investing in target retirement funds for as little as $1,000. Many Vanguard index funds and mutual funds require a $3,000 minimum investment.

Available accounts: Individual and joint taxable accounts; traditional, Roth, rollover, SEP and SIMPLE IRAs: Solo 401(k) plans; trusts, nonprofits, custodial accounts, and 529 college savings plans.

Available investments: Individual stocks, bonds, options, mutual funds, ETF’s, annuities, and certificates of deposit. Funds offered include both Vanguard and non-Vanguard funds.

Cash account: Vanguard provides a money market mutual fund that seeks to maintain a $1 share price. You can use it to transfer funds to and from an external bank account and to accumulate cash for future investment purchases. You can choose either a taxable or tax-exempt money market mutual fund.

The Vanguard Mobile App: The app offers the same functionality as the online trading platform. You can use it to check your account balance, investment performance, transaction history, returns, and cost basis. You can also trade on the app and choose your target asset allocations. You can also deposit checks on your phone. The mobile app is available on iOS devices in the App Store and on Android devices in Google Play.

Customer service: Available by phone and live chat, Monday through Friday, 8:00 am to 8:00 pm, Eastern Time. However, email support is available 24/7.

Should You Invest Through Vanguard Brokerage?

Vanguard is best known for its wide range of low-cost mutual funds and ETFs and it is an excellent choice if you’re a fund investor. They offer 1,875 ETFs and more than 3,140 mutual funds, all commission-free.

Overall, the service seems to target buy-and-hold investors who want commission-free trades and access to a wide range of funds.

However, despite being one of the world’s largest financial institutions, Vanguard Brokerage isn’t necessarily right for every type of investor.

While you can trade individual stocks, bonds, ETFs, and other securities at Vanguard, their system lacks some of the advanced stock-screening tools found at other brokerage firms.

Small investors and active traders may be better served by brokers like Ally Invest and Firstrade, which cater to frequent traders.

Finally, Vanguard does offer personalized investment services through Vanguard Personal Advisor Services, which combines personal financial advice from a human advisor with automated recommendations based on the investor’s risk tolerance and investment objectives.

If you’d like more information, or you’d like to open a brokerage account, visit the Vanguard Brokerage website.