T. Rowe Price vs. Vanguard 2019

T. Rowe Price has been around since 1937 and specializes in actively managed mutual funds and other wealth management services. The target T. Rowe Price client is likely quite similar to Vanguard’s in that they are seeking to outsource most of the investment management process to professionals rather than actively managing a stock and options account on their own.

A pioneer in the world of indexed mutual funds and ETFs, Vanguard is a popular choice for individual investors looking for low-cost funds. Founded in 1975 by John Bogle, Vanguard deserves the credit for being the first firm to offer an indexed mutual fund that relies on passive management to keep costs low and match index returns.

In our 2019 Best Online Brokers Awards, Vanguard received an award for Best for ETFs.

It is technically possible to trade stocks and options with T. Rowe Price, but trading functionality through the broker’s website is as basic as it can get. This shouldn’t be a problem for investors who are interested in the broker because of its funds.

The trading platform from Vanguard is web-based and is missing most advanced functionality. An investor can use simplified charts and watchlists, but there are few other tools beyond the functions required for order entry. Traders looking for advanced charts or flexible technology will not find it through Vanguard’s web-based or mobile trading platforms.

T. Rowe Price

• Access to their family of mutual funds
• Familiar and easy to navigate site 
• Solid security with fingerprint authentication on mobile

Vanguard

• Clean and straightforward
• Charting capabilities are fairly limited
• No technical analysis

Both Vanguard and T. Rowe Price have mobile apps that can be used to make trades, check balances and make deposits. Neither application will meet the needs of active investors and advanced charts, screeners, or other features are almost entirely missing.

T. Rowe Price

• Available on iOS or Android

Vanguard

• Mobile app is less intuitive

Vanguard does a bit better than would otherwise be expected in the research department for a company focused on marketing its own funds and ETFs. Investors can find company fundamentals, financial statements, and the mutual fund and ETF screener is full-featured.

T. Rowe Price offers a similar set of research features along with better news feeds and general market commentary. None of T. Rowe Price’s or Vanguard’s research or insight tools are unique and superior tools are easy to find elsewhere online, however, for some investors, this might give T. Rowe Price a small edge over Vanguard.

T. Rowe Price

• U.S. markets summary
• Asset screeners
• Mutual funds research
• Alerts and watchlists

Vanguard

• Mutual fund screeners
• ETF analyzers

The typical Vanguard client appears to be an investor focused on long-term passive investing with retirement or other financial goals set far in the future. With that in mind, the limited educational offerings make more sense. Investors can learn a lot about retirement planning, mutual funds and ETFs, but deeper topics like technical or fundamental analysis are absent. 

Like Vanguard, T. Rowe Price has some educational content for clients, but it is oriented towards helping investors think about planning for future financial goals like retirement. The information is not in-depth and acts in more of a marketing function than true education. It is unlikely that investors evaluating Vanguard or T. Rowe Price are looking for a lot of education since both brokers act in the role of advisor for their clients.

T. Rowe Price

• T. Rowe Price Insights (R) 
• Limited introductory resources

Vanguard

• Focused on mutual funds and ETFs
• In-depth index investing

Vanguard is not the low-cost leader for trading stocks. However, it is free to trade Vanguard’s funds. The firm charges $7.00 per trade for stocks and options and an additional $1.00 for each option contract involved in the trade. Non-Vanguard funds can be traded for $20. The focus for Vanguard’s clients is the firm's mutual funds and ETFs, for which they have a cost advantage. Active stock or options traders will likely find the other commissions relatively high.

You can trade stocks and options through a T. Rowe Price account, but the costs are unusually high. Stock trades are $19.95 and options are an additional $1.00 per contract. The fee for trading non-T. Rowe Price mutual funds vary depending on the fund, but many can be traded for free. There is an account minimum of $2,500 and an annual fee of $30 for account holders.

Both Vanguard and T. Rowe Price are primarily focused on marketing their investment funds, so the costs charged by the funds (expense ratio, transaction fees, etc.) are likely to be more relevant than the commission charged for individual stock trades. In that respect, Vanguard’s funds are much less expensive than T. Rowe Price’s products on average. Much of the reason for the difference in cost is that Vanguard specializes in passive, indexed funds versus T. Rowe Price’s concentration on active management designed to outperform stock indexes or other benchmarks.

For example, at the time of this writing a T. Rowe Price blue-chip fund, started in 1993 had earned an average return of 13.02% over the last ten years but charged an expense ratio of 0.7%. A similar fund at Vanguard that tracks the S&P 500 index earned an average return of 10.16% but only charged an expense ratio of 0.04%. The greater average cost at T. Rowe Price may seem worth the extra return, but it would require an investor being able to tell which fund was going to outperform or continue to outperform in advance, which may not be realistic.

T. Rowe Price

• Stock trade fees: $19.95 per trade
• Account minimum: $2,500

Vanguard

• Stock trade fees: $7
• Account minimum: $0