Because I’m a Vanguard Australia customer, they sent me this email the other day.
“Hi William, We wrote to you recently with an update on the changes we are making to improve our
digital experience for investors. The new Vanguard Online is now available, with added features
and enhanced functionality. As a result, the former version of Vanguard Online is now closed.
To continue accessing your account blah blah blah,
you will need to register for the new Vanguard Online”. Anyway, I was a
little bit excited. Their old platform was very featureLESS, so it felt like a welcome change.
I followed their instructions and was met with this screen.
Basically, they tell you that if you hold any Vanguard managed funds,
you have to register for the new Vanguard Online if you want to access your investment holdings.
Well obviously, you want to access your own funds, right?
After logging in, you’re met with this SMS security code screen every time. Not such
a big deal I suppose, but many companies allow you to skip this step by clicking
on “Trust this device” or similar. But as I said, it’s not such a big deal.
After punching in the security code, you arrive at your dashboard.
It looks fine. All the usually suspects including a quote from Jack Bogle,
“Time is your friend. Impulse your enemy.” – good quote. Clicking on the menu, we can see
that you can access your portfolio, products, statements, and so on. Clicking on Products,
you’re met with a search screen. No matter what code or word I type in, nothing comes back.
As far as I can tell, this is the way you purchase new funds or ETFs, but nothing
comes back. I assume this is just some teething troubles and will be sorted out quickly. But yeah,
if I can’t buy any of Vanguard’s products, then obviously I won’t use their online platform.
Second problem. Their fees. First of all, there are no establishment fees,
contribution fees, withdrawal fees, or exit fees. That’s all great. There are no brokerage fees if
you’re buying or selling Vanguard Australia listed ETFs. That’s awesome! That in itself
is enough of a reason to race out now and sign up to Vanguard. No brokerage fees. Are
you kidding me? But hang on, don’t go just yet! Hear me out. If you’re buying shares,
or non-Vanguard ETFs, then the brokerage increases to $19.95 or 0.15%, whichever is greater.
Not exactly cheap. Currently, I use SelfWealth which offers $9.50 flat-fee trades. If you sign
up using the invitation link in the description below, we’ll each receive five free trades.
But the biggest problem with Vanguard’s fee structure, is their management fee.
0.20% per annum capped at $600 per account. That means you’d reach the cap when you have
$300,000 or more invested. This fee means that if you owned say VAS, Australia’s most popular ETF,
which has a management fee of 0.10%, sure, you’d get free trades, but you’d essentially be paying
0.30% in fees for total investments under $300,000. It’s just not worth it in my opinion.
But the biggest reason I won’t be using Vanguard’s new online platform is a
question tucked away in the FAQs: “Do I receive a Holder Identification Number?”. Answer: “No,
JPMorgan has been appointed as the sub-custodian to hold any listed securities in your Vanguard
Personal Investor Account on your behalf. JPMorgan holds legal ownership of these listed
securities subject to Vanguard’s direction, and you (the investor) retain beneficial ownership.”
So basically, you don’t really own your ETFs or shares. If JPMorgan went bust,
however unlikely that is, you do not legally own your ETFs.
That to me is enough of a reason not to bother with this new platform. Personally, I’m going
to stick with SelfWealth. Click on my invitation link below, and we’ll both receive five free trades.