Vanguard 'nickel-and-dimes Grandma' after 49 years without junk fees

In the fee-laden world of money management, the Vanguard Group has long enjoyed a reputation of shooting straight.

But the company, founded in May of 1975, may be attempting to trade some of its hard-earned goodwill for the most banal of asset management vices: chintzy fees, including one that a longtime Vanguard observer calls “nickel-and-diming Grandma.” These are developments that, when considered next to Jack Bogle’s legacy, feel unusual and unBogle-like.Let me take you through some of these changes, which will affect millions of customers, explain what’s going on, and give you Vanguard’s side of things.

“It seems like the only people paying that $25 fee will be retirees who have been lifelong Vanguard investors but aren’t comfortable with the internet,” says Jeff DeMaso, whose Independent Vanguard Adviser newsletter isn’t part of the Vanguard empire. That’s why DeMaso calls this fee “nickel-and-diming Grandma,” which strikes me as being accurate, funny, and sad.

As does the fact that Vanguard is willing to absorb the costs of people who own at least $1 million of Vanguard funds who trade by phone but not the costs of people who own less than $1 million.Then there’s another cheesy charge: a new 1% fee on dividends received by Vanguard customers who hold foreign securities and American Depositary Receipts.

Obviously, Vanguard has to change with the times — but the changes I’ve discussed here feel incongruous with the company’s legacy.

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