This is the latest in a new series of columns about portfolio strategies, planning and asset management.
Vanguard Group's aim to steer brokerage customers toward online engagement rather than phone contact became clearer recently when the firm warned that, come Monday, too many calls could lead to account termination.
This change, taken with recently announced fee additions at Vanguard Brokerage Services, has raised questions from some critics who wonder if the giant asset manager is straying from its foundational low-cost, customer-centric orientation.
Cost savings for Vanguard do factor into the changes, according to two experts.
Vanguard's new brokerage account agreement says the company expects clients to primarily use digital channels for interactions and communications regarding their accounts, including e-delivery, the Vanguard website and mobile app, instant chat and a secure message center.
Vanguard specifically says it expects customers to use the website, mobile app or automated answering system for activities like checking balances, placing trades and requesting quotes. The changes are effective Monday.
"You understand that excessive reliance on our phone associates for tasks that can be accomplished online may negatively impact your customer service experience, including but not limited to delayed response times, additional fees, and possible account termination," the amended agreement says.
Vanguard adds that it "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."
The Independent Vanguard Adviser editor Jeff DeMaso has raised concerns about Vanguard's digital-first policies and notes they come after years of complaints about the popular fund company's customer service.
How Many Calls Are Too Many?
In a recent email to me, DeMaso said that "Vanguard has threatened to terminate clients without defining what criteria they are using and without providing satisfactory non-phone communication channels. If you need an answer from Vanguard 'now,' you have no choice but to pick up the phone!"
Vanguard is pushing people not to call because of costs, he said. "Vanguard grew so fast that they weren't able to keep up" from a customer service standpoint and it seems they're playing catch-up, DeMaso added.
The newsletter founder also addressed Vanguard's digital expectations in a post in early June, asking, "How are we supposed to contact Vanguard? Even more troubling, does Vanguard even want us to contact them at all?" DeMaso, touching on each digital channel's features, questioned whether they allow for efficient, effective and secure communication with Vanguard.
The secure message center, for instance, doesn't appear to have a "send message" button, according to DeMaso. One IVA reader sent Vanguard a message by clicking "Upload Documents," which allows customers to send a message without attaching a document; the reader received a response seven days later, he wrote.
"To put it bluntly, 7-10 days is an unacceptable response time — particularly when Vanguard says this is a preferred method of communication. It may be secure, but it's far from efficient and effective," DeMaso told his readers.
Among other criticisms, he described the online chat feature as difficult to find.
"Vanguard's two big competitors — Fidelity and Charles Schwab — are far more accessible. Both make instant chat features easily accessible on their websites and provide phone numbers you can call 24/7," he wrote.
Compounding Service Complaints?
"I suppose one way to correct your customer service woes is to make it harder for customers to reach you!" DeMaso said. He previously wrote that Vanguard's digital-first customer service policy, together with a new $25 fee to trade over the phone, puts seniors uncomfortable with the internet in second place.
That new fee and others, including a potential $100 charge to close an account or transfer funds for customers with under $5 million in assets, also become effective July 1.
