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Vanguard under attack

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  • ajm184
    replied
    I get though disagree with the idea that 'Vanguard' is under attack because other brokerages are a. not allowing use of Vanguard or b. charging for 'admin' expenses associated with Vanguard.

    If this is the 'response'; it is far too little and too late.  For the Fidelity, I sorta get it, a number of their index fund offerings compete directly with 'Vanguard' offerings and their response will hopefully buy them additional time to provide additional offerings and gather sufficient assets compete more broadly.  Merrill and Morgan have in my opinion are rightly closing off Vanguard because it is a threat to their entire business model on the retail financial advisory side.

    A small example, 25 odd years ago the vast majority of the folks on this sites NW would have been held at one of Merrill, Morgan, etc. because between the choice and cost, the options were 'limited'.  Each 1% aggregate change of folks using low cost index funds as core retirement investments is both a hit to the bottom line now, and a change in approach/mindset that is significantly more difficult to overcome with the commission/AUM model used by Merrill/Morgan later.

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  • djohnflatfeecfp
    replied
    Thanks for sharing a summary.  I would love to see the article, but dropped my WSJ subscription some time ago.

     

    In case you have never listened to it, here is a great Freakonomics podcast which gives some insight into Bogle and Vanguard's history and philosophy.  Definitely worth the listen, in my opinion.

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  • docnews
    started a topic Vanguard under attack

    Vanguard under attack

    Wall Street to Vanguard: We’re Not Your Doormat https://www.wsj.com/articles/wall-street-to-vanguard-were-not-your-doormat-anymore-1517157915

    If you can't get beyond the paywall, the summary is that Fidelty is going to charge employers (somewhat hidden from employees) 0.05% for Vanguard funds in a 401k. This is on top of TD Ameritrade dropping Vanguard from the no commission list (affecting those investing via HSA Bank). Morgan Stanley and Merrill Lynch bans their financial advisors from using Vanguard funds.

    I don't blame these companies but I think those who think investing through other companies other than Vanguard is safe are eventually going to get hosed. The only reason they have low cost index funds is to compete with Vanguard.

    "One reason Vanguard has been able to offer such low fees for so long is the structure of its business: It is owned by its fund shareholders." This structure is key and is why I'm glad my 401k and Roths are with Vanguard. I just wish they'd offer a stripped down HSA meant for investing (who needs that costly HSA debit card really?).
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