New Vanguard Account Fees Will Increase Costs for Some of Its Most Loyal Customers

September 21, 2022

After decades of supporting two investment platforms—its brokerage and its legacy one just for in-house mutual funds—Vanguard is putting pressure on retail investors to leave the legacy one and join the brokerage. Any investor with less than $1 million in the mutual-fund-only platform will pay $20 annually per fund that they own. Prior to this shift, fees were only applied to investors with less than $10,000.

Technologically, it’s expensive for Vanguard to maintain two separate platforms, and it’s still in the midst of a fee war with competitors like BlackRock, Schwab, State Street and Fidelity. Moreover, those investors who stay with the legacy system and continue to pay for it could prove lucrative, or, at least, cover the costs of maintaining the platform with their extra fees. “If people are willing to pay the fee, [Vanguard] will take every dollar they can get because they need to find ways to bring in more money,” Wiener says. “They’ve been cutting and cutting and cutting expenses. I don’t think they really can afford to cut anymore.”

Barron's article

Vanguard mutual fund fees and minimums