Vanguard's New Contract Penalizes Phone-Reliant Investors

Vanguard has amended its brokerage contracts, and new language warns investors that they can increase fees and even terminate clients that call them too frequently.

RIA Biz, a financial industry publication, reported in an article on June 19th that Vanguard's new contracts, effective July 1, 2024, will impact both retail investors and Financial Advisors. According to the publication, the contracts will expressly warn that heavy reliance on telephone calls to service teams may result in an increase in fees and/or termination at any point. Vanguard currently manages $9 trillion for individual investors and financial firms, such as registered investment advisors.

Specifically, clause 4 of the contract update states that ignoring these new policies “may negatively impact your customer service experience, including but not limited to delayed response times, additional fees, and possible account termination … Furthermore, at it’s discretion … [Vanguard] 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.”

Clause 5 of the new brokerage contract states "[Vanguard] reserves the right to resolve non-trade inquiries exclusively on its website, or other available channels, as opposed to... by phone." Investors are encouraged to use email, chatbots, FAQs, and online human chats. The changes in the brokerage contract come as CEO Tim Buckley retires.

There is a saying that says "you get what you pay for." Vanguard charges very little for its funds and base services with the expectation that investors and advisors will help themselves. New contract provisions declare that if investors and advisors "excessively rely" on call-center staff, they will be penalized. As a fiduciary financial planning and advisory firm, PTM Wealth Management, provides financial planning, investment management, estate planning, and insurance and long-term care planning for one low, transparent fee based on the assets that we manage for our clients.

Our fee rates are published on our website here. Our clients are welcome to call our firm and talk to our team as much or as little as they wish. We have your back for everything from financial planning in Ambler, PA to wealth management in Doylestown.