Financial services giant Vanguard is known for their low fees and passive investing proponency. Their upcoming 401(k) will be no different, with an extremely low fee of 15 basis points, an account minimum of $3,000. But there’s a catch: clients will only be invested in Vanguard funds.
We’ve written before about how providers offering their own software solutions can come with conflicts of interest.
Financial Planning brought this up, stating, “Some industry experts argue boxing clients into-fund-specific portfolios, specifically beginner investors, is a disservice and is rooted in closed-architecture asset management practices.”
Roi Tavor, CEO of financial platform Nummo, argued in Financial Planning, “‘Is Vanguard entering into the robo advisor industry to get into the advice game? That, I do not believe at all.'”
However, Financial Planning also pointed out that many, many online advisers already use Vanguard’s funds.
However, Vanguard spokesperson Charles Kurtz argued, “‘Personal Adviser Services leads with Vanguard index funds because we offer a best-in-class line-up…'”
Not only that, but the Greg Iacurci of InvestmentNews highlights that the cost of Vanguard’s 401(k) “…undercuts the cost of pretty much every 401(k) robo-adviser on the market, as well as that of many target-date funds.”
What do you think about Vanguard’s new offering? Is Vanguard’s 401(k) another step in the direction of low fees? Will other providers follow suit?
