Is Vanguard a Scam?
If you’re thinking about opening an account at Vanguard, you’ll want to know what protections are available and what is not guaranteed.
Is Vanguard Safe?
Vanguard is a U.S.-based investment company. Because of this, it must be registered with a securities regulator. Vanguard is a large company with customers in all 50 states, so it is registered with the Securities and Exchange Commission (SEC), which covers customers in every state.
Vanguard’s SEC registration number is 8-21570 for its brokerage business. Vanguard also has an investment advisory service with its own registration number: 801-49601.
The SEC makes sure that brokerage firms in the U.S. follow all the rules that Congress has passed. The SEC can also work with the FBI to bring criminal charges if needed.
There is also the Financial Industry Regulatory Authority, or FINRA. FINRA provides another layer of oversight and can investigate companies and issue fines if needed.
Vanguard’s FINRA registration number for brokerage services is 7452. For asset management, the number is 106715.
Vanguard Better Business Bureau
The Better Business Bureau (BBB) does not regulate investment firms. Instead, the BBB reports on the performance of businesses in North America. Vanguard has a BBB profile with a grade of B. The top grade is A+ and the lowest is F.
Sometimes, customers file complaints against a company with the BBB. Over 200 complaints were made about Vanguard with the BBB in the last year. Vanguard replied to every complaint.
Common complaints include long phone hold times, delays in withdrawing money from 401(k) accounts, and accounts getting locked.
Of the 53 customer reviews of Vanguard at the BBB, the company has a rating of 1.23 out of 5. Keep in mind, this is only from 53 customers. Vanguard actually has over 50 million customers, more than 18,000 employees, and well over $10.4 trillion in assets under management. Vanguard is a very large company.
SIPC/FDIC Insurance at Vanguard
Vanguard customers have two insurance protections. The first is from the Securities Investor Protection Corporation (SIPC). SIPC protects each “separate capacity” (which is similar to each customer, not each account) for up to $500,000. Half of this amount can cover cash.
The second protection is from Lloyd’s of London. This policy covers each customer up to $49.5 million, but only after the SIPC coverage is used up. There is a total company limit of $250 million for this extra insurance.
Top Rated Brokers
Is Vanguard Safe Judgment
It’s clear that Vanguard is a real company with strong safeguards. Still, remember that investing in securities always comes with risks, especially the risk that prices could go down. Vanguard, like all other brokerages, cannot protect against losses in the market.
Vanguard Review
While Vanguard is clearly a legitimate brokerage firm, it does have some weaknesses. Here’s what we think about the company:
Vanguard Pricing and Minimum Deposit
| Investments | Commissions |
|---|
| Stocks and ETFs | $0 |
| Options | $1 per contract |
| Mutual funds | Vanguard mutual funds - free. All others: $0 or $20 |
| Certificates of deposit (CDs) | Purchase - $5 per $1,000, minimum is $50. Sale - $35 per transaction |
| Commercial paper | $50 per transaction; minimum purchase is $100,000 |
| U.S. Treasury | commission-free |
| Mortgage-backed securities | $50 per transaction; GNMA minimum purchase is $25,000 |
| Investments |
stocks, options, mutual funds, bonds, CDs, foreign securities, insurance,
commercial paper, ETFs
|
| Vanguard minimum deposit to open account | $0; most Vanguard mutual funds have a minimum investment of $3,000 |
| Fees | Vanguard fees |
Investments Choices
Vanguard has both self-directed and managed accounts. The managed accounts come in several types. The main ones are robo and traditional. The robo service trades only Vanguard funds, which is a downside. It also does not offer tax-loss harvesting. Some traditional advisory options do offer this, but require higher minimum balances. These services can include financial planning and coaching.
Self-directed accounts do not offer these services, but let you buy a wider range of investments. These include stocks, bonds, mutual funds, closed-end funds, and options.
Vanguard has mostly stopped offering OTC stock trading. It does not offer foreign stocks, cryptocurrencies, futures, precious metals, or forex.
For account types, Vanguard does well. It offers individual and joint taxable accounts, plus many others, including:
- Custodial accounts
- Self-employed 401k plans
- Personal IRAs
- Small business plans
- 529 plans
- Trusts
Customer Support
Vanguard’s website (which is described next) does not have a chat feature, either with a robot or a real person. The site does have a way to send internal messages. When we checked, there was a notice that said, “A response may take up to 7-10 days.” For quicker help, there are self-help resources at the top links of the site.
You can call Vanguard for help from 8 a.m. to 8 p.m. Eastern time. Some Vanguard customers online have complained about long wait times on the phone, so using the website might be better during busy times. You can’t go to a branch for help because Vanguard does not have any branch locations.
Website
You can use Vanguard’s website to manage both self-directed and advisory accounts. The site is simple to use. Although there have been a few updates, the tools for self-directed investors have not changed much.
You get an order ticket with four types of orders (market, limit, stop, and stop limit) and two time choices (day and GTC). The order ticket shows bid, ask, volume, and last trade in real time. There are links at the top of the ticket to explain the order types and how to trade. There are also buttons for selling short and buying to cover.
Charts on Vanguard’s website are basic. You can’t make a graph fill the whole screen, and it only shows up to ten years of price data. There are just a few technical studies and no drawing tools. Still, you can choose from four chart styles and compare the graph to other securities.
There is no trade bar or browser-based trading platform on Vanguard’s website, which is a big downside. There is a watchlist, and you can set up alerts for a security.
Mobile App
While Vanguard’s website is simple, the mobile app is even more limited. There are no charts for stocks, and there are no stock profiles. There are profiles for Vanguard funds, but those have charts with no tools.
You can’t place orders for stocks or ETFs on the app because Vanguard hasn’t added an order ticket for those. Instead, you get a page that says, “Sorry, we haven’t gotten to this yet.”
The watchlist and alerts that are on the website are not available on the mobile app. There are also no advanced features on the app, like mobile check deposit, video news, or social features.
Other Software
Vanguard does not have any other software. There is no desktop platform, smartwatch app, iMessage, or Amazon Echo support.
Pricing
Vanguard doesn’t charge much in fees. Self-directed accounts have no fees or minimums if you choose e-delivery of documents. You also get commission-free trading for stocks and ETFs.
Options trades in small accounts have a $1 fee per contract. Some bond trades also have fees. Mutual funds that have transaction fees cost either $20 or $8, depending on how much you invest in Vanguard funds.
Advisory accounts don’t charge trading fees, but they do have account minimums and yearly fees. The robo-advisor costs up to 0.20% per year, with the first 90 days free and a $3,000 minimum deposit.
Traditional advisory accounts have different fees and minimums, depending on the package. The most common service needs $50,000 to start and costs 0.30%. The wealth management service has a high $5 million minimum but costs just 0.05% for accounts over $25 million.
Margin Borrowing
Self-directed accounts at Vanguard can use cash or margin. But the platform does not show margin details like maintenance requirements or how many shares are available for short selling.
The margin rates at Vanguard are tiered and tend to be expensive:
|
Debit Balance
|
Vanguard Margin Rates
|
|
under $19,999
|
12.75%
|
|
$20,000 – $49,999
|
12.25%
|
|
$50,000 – $99,999
|
11.75%
|
|
$100,000–$249,999
|
11.25%
|
|
$250,000–$499,999
|
10.75%
|
|
$500,000–$999,999
|
9.5%
|
|
above $1,000,000
|
call
|
Investment Education
Vanguard has many educational resources. On the website, click on Investor Resources & Education at the top menu to find:
- News & perspectives
- Taxes
- Tools & calculators
- Market summary
- Retirement
- Education savings
- Emergency fund
- Short-term goals
- How to invest
- Choosing investments
- Online trading
- Managing your portfolio
The downside is that some articles are quite short, but these resources are a good place to start.
Vanguard’s YouTube channel also has many videos about different topics, such as:
- Balancing multiple savings goals
- When should you change your retirement savings plan?
- Buying a house? Watch out for hidden costs.
Security Research
If you need help picking investments, Vanguard has screeners for stocks, mutual funds, bonds, and ETFs. In our test of the bond search tool, there were only nine advanced and five basic search filters. Other screeners are better, but none are especially easy to use.
Security profiles on Vanguard’s website have limited information, and the mobile app has even less. Vanguard provides free stock reports from two analysts and more trade recommendations from others.
Miscellaneous Services
Cash Management Features: Vanguard ended its VanguardAdvantage banking service, so there are no cash management tools now.
DRIP Availability: You can have dividends from stocks, mutual funds, and ETFs reinvested automatically.
Extended Hours Trading: Vanguard only has after-hours trading, not pre-market trading.
Recurring Mutual Fund Purchases: You can set up automatic purchases of Vanguard mutual funds.
Initial Public Offerings: Not available at Vanguard.
Fractional Shares: Vanguard only allows trading in whole shares for stocks and ETFs.
Individual Retirement Accounts: Vanguard has Roth, Traditional, SEP, and SIMPLE IRAs. Business accounts have fees in some cases.
Recommendations
Mutual Funds: Vanguard’s fund screener found 6,838 mutual funds. We recommend Firstrade, which has 16,577 funds and a better screener.
Retirement Savers and Long-Term Investors: We like Vanguard’s advisory accounts, especially the ones managed by people. The robo account can’t be used for business IRAs or some other account types. For self-directed investing, Vanguard has lifecycle mutual funds from many fund families.
Beginning Investors: An advisory account at Vanguard (robo or human) is a smart way to start. Charles Schwab, though, offers a robo-advisor for free.
ETF and Stock Trading: Because Vanguard doesn’t have strong software, it’s not great for active equity traders. We suggest Charles Schwab instead, for better tools and a stronger desktop platform.
Small Accounts: Vanguard is mostly designed for larger accounts. Even though there are $0 commissions for some trades, larger accounts get more benefits. The $3,000 minimum for robo-investing is also high. We suggest Robinhood instead, since it has no minimum and allows fractional-share trading with as little as $1.
Vanguard Review Final Judgement
Vanguard is clearly a legitimate brokerage firm, but it doesn’t offer much for active traders.
Updated on 6/20/2025.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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