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2019 Best Online Brokers Awards
Vanguard focuses its considerable energy on helping its high wealth clients plan for retirement and other long-term goals. As such, its trading technology is lacking. Fulfilling their long-term focus, there is little of interest to active traders or derivatives traders. The platform is deliberately bare-bones. The tools available for financial advisors are somewhat more robust, but that is not the focus of this review. Though Vanguard offers a huge array of low-cost mutual funds and ETFs, their online brokerage site for individuals leaves a lot to be desired.
Much is made of Vanguard’s ownership structure, which is unique. The firm is owned by its own funds, and is set up as a not-for-profit entity. In theory, this should mean that investor needs are put first, but it’s hard to ignore the lack of any development effort in spite of their high commissions.
Disclosure: Vanguard chose not to submit the data we requested for our review, or to provide us with a test login. We collected the data that we could on our own, and used a friend’s account for the hands-on review.
Pros
Some large account balances qualify for some discounted and free trades
Approximately 1,800 commission-free ETFs available
Good education resources for long term planning
Cons
Very outdated website and trading tools
Low Vanguard-managed assets balances are charged a service fee
Accounts with less than $50,000 in Vanguard assets face high trading fees
Trading Experience
The site is difficult to navigate and is obviously not a priority for the company. There are no streaming quotes; you’ll have to refresh the screen to get updates. There are no customization options. We could not find any way to set up alerts.
Trading Technology
Vanguard’s order router seeks out price improvement rather than speed, and their statistics put them in the middle of the pack. They do not accept payment for order flow for equity orders.
Usability
The site is clunky and difficult to navigate. After doing some research and finding what you’d like to trade, you have to leave the research page, open a trade ticket, and remember the ticker symbol of the item you want to trade. Options trading is limited to a single leg online; you have to call a live broker to place more complex orders.
Mobile and Emerging Tech
Vanguard offers mobile apps for iOS, Android and Kindle Fire devices. The layout is actually much nicer and easier to use than the website. They added mobile check deposit in the last year. Quotes, however, are delayed.
Range of Offerings
You cannot sell stock short at Vanguard, and options trading is limited to a single leg. They have a large number of ETFs that can be traded commission-free. You can trade fixed income online, though the interface is difficult to use.
News and Research
Vanguard offers a stock screener, and a separate ETF screener. The mutual fund screener is very basic and focuses on finding Vanguard funds even though they carry funds from many more fund families. Options research is limited to looking at options chains, which are significantly less informative than chains on other broker sites. Charting is extremely basic and includes no customization or technical studies.
Portfolio Analysis and Reports
Portfolio balances and holdings reports utilize delayed quotes, which is less than ideal. But since Vanguard is not putting itself out there as a broker for frequent traders, and they focus on the longer term, providing real time account data does not appear to be a priority. There are ways to check out your asset allocation, though, and how your investing strategy is working to meet your goals.
Customer Service and Help
Service is tiered and depends on your account balance. The phones are open 8am-10pm Monday through Friday, and there is no online chat capability.
Education and Security
Education offerings are fairly basic, and are aimed at very long-term investing. They host occasional webinars that focus on the longer term.
Costs
The standard commission schedule is very high, at $7 per equity trade, and $7 plus $1 per contract for options. Margin rates are on the high side.
What You Need to Know
Vanguard’s strength is maintaining a varied array of low-cost ETFs and mutual funds, but you can buy them on any online broker’s site. If you are looking for trading tools and in-depth education, Vanguard’s offerings will not please you. This brokerage seems to actively dissuade investors who want to trade more often than once per solar orbit of Jupiter.
Compare Vanguard
Vanguard is a go-to source for commission-free ETFs. See how they compare against other online brokers we reviewed.
Methodology
Investopedia’s mission is to provide investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of six months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on their platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting over 3,000 data points that we weighed into our star scoring system.
In addition, every broker we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.
Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.