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Vanguard: Avoid $20 Fee With $1M in Assets, E-Delivery

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Vanguard Group brokerage clients may soon have to pay a $20 annual account service fee after the investment giant raises the asset threshold for exemption to $1 million from $10,000 on Sept. 5. Account holders can avoid the fee, though, by opting to receive their Vanguard paperwork electronically.

According to the company’s website, Vanguard Brokerage Services will charge brokerage clients the $20 account service fee beginning Sept. 5, unless:

  • Clients have at least $1 million in qualifying Vanguard assets.
  • Clients have chosen electronic delivery of statements, confirmations, prospectuses and other important material.
  • Brokerage accounts enroll in an advisory program serviced by a Vanguard affiliate.
  • Clients have an organization or trust account registered under an employee identification number.

Until now, brokerage clients with at least $10,000 in assets were exempt from the fee.

“As Vanguard continues to modernize our clients’ digital experience, we are redesigning an already-existing account service fee. Our goal is to encourage a segment of clients to take advantage of a more modern investment platform and spur greater digital engagement,” a Vanguard spokeswoman told ThinkAdvisor via email this week.

Clients with a brokerage account with assets under $1 million can have the fee waived by electing e-delivery, she said. 

In addition, clients using Vanguard’s legacy mutual fund-only accounts who have less than $1 million in qualifying assets will face a $20 charge per mutual fund, which they can avoid by transitioning to a Vanguard brokerage account.

While different exemptions for Vanguard brokerage clients and those with accounts on the firm’s legacy platform may apply, “it’s important to note that the change in fee criteria is designed to spur more clients to embrace a modern investment platform, and inspire overall greater client digital engagement,” the spokeswoman said.

Daniel Wiener, editor of the monthly newsletter “The Independent Adviser for Vanguard Investors,” recently discussed the change via an email with his subscribers. Defining qualifying assets for the $1 million minimum can be complicated, but most Vanguard accounts and securities are covered, Wiener said.

“Basically, the old threshold of $10,000 in Vanguard assets is going away. One out: Agreeing to electronic delivery of reports, statements, proxies ‘and other important account updates’ will get the fee waived for you,” he wrote.

Until this change, investors using Vanguard’s legacy fund-only, non-brokerage system have been spared the $20 fee for each fund they own if they met the old $10,000 threshold, he noted.

The move to shift clients from the legacy system to the brokerage platform “has been underway for years but which even some diehard Vanguard shareholders have resisted,” Wiener wrote. “The fee rules are extensive and complex, but the bottom line remains the bottom line. Give us more of your money, or go strictly paperless, or you’ll pay.”

Fidelity Investments and Charles Schwab do not charge a comparable fee, according to their websites and company spokespeople.

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