Vanguard’s Biggest Tech Crash Ever?

Vanguard’s Biggest Tech Crash Ever?

January 5, 2022

In This Issue:

Vanguard’s Biggest Tech Crash Ever?

Vanguard’s website went AWOL for nearly a week just before New Year’s, potentially blocking thousands of customers from accessing year-end investment reports online. The company attributed the problems to a third-party vendor it works with to print its statements.

Customers of the $8 trillion mutual fund giant weren’t able to view or print certain account statements and other documents needed for end-of-year accounting. Nor could Vanguard deliver the information or even some checks by mail, according to statements from the company. Customers began reporting problems on Dec. 23 and the site was working normally by Dec. 29.

Vanguard’s far from the only big fund firm to experience tech troubles in recent weeks: Fidelity’s website went down due to a problem with its cloud service provider earlier in December.

But that outage lasted six hours. Vanguard’s was nearly six days.

Adviser Investments Chairman Dan Wiener, longtime Vanguard watcher, didn’t hesitate to call the outage the fund giant’s biggest tech snafu ever. Unfortunately, that’s a title for which there is some stiff competition: We’ve previously covered problems with brokerage outages, incorrectly reported yields and allocation errors in 529 portfolios. (Not to mention the recent ropey rollout of Vanguard’s “upgraded” website and app.)

But the Christmas-week outage was particularly outrageous, since it left many clients unable to access their account statements just when they’re needed most. Mutual funds distribute gains during the last few weeks of the year, creating a window where trading can lead to hefty tax bills if it is mistimed. In addition, investors have until Dec. 31 to take their required minimum distributions from their tax-deferred accounts—and this year in particular, many were racing to meet that deadline. RMDs were suspended during the pandemic in 2020, and many retirees had yet to get back on their normal withdrawal schedule. Year-end is also the deadline to take capital losses for tax purposes and make deposits to tax-free retirement accounts. In short, it’s the worst possible time to not know where your accounts stand.

While teams worked to restore service, the company notified clients, waived wire fees and expedited deliveries to help clients avoid potential mail delays. Customers who called the main Vanguard line were met with a prerecorded message from CEO Tim Buckley himself. The issues had no impact on the management of funds or the holdings in client accounts.

That may be enough to help the mollify affected customers. And it may seem churlish of us to harp on Vanguard’s tech troubles—after all, it made its name as the low-fee funds leader, not the high-tech website leader. But when it comes to low fees, the company now has plenty of competition. And when it comes to tech, firms like Fidelity—which reports spending $2.5 billion on tech infrastructure annually as opposed to Vanguard’s $1 billion—are eclipsing their rival. Keeping customers loyal is something even a low-cost leader should spend money on.

Podcast: Taking Stock of a Tumultuous Year—Our Best Podcasts of 2021

The pandemic tsunami was still washing over our economy and society in 2021. But investors found themselves buoyed by a steadily rising stock market. And here at Adviser Investments, we reached a milestone ourselves, releasing the 100th episode of The Adviser You Can Talk To Podcast. Take a listen to some of our best financial insights from this topsy-turvy time: You can get our take on the proposed Biden tax hikes, whether the S&P 500 is all investors need and when to convert to a Roth IRA, or enjoy our discussion on how to invest $100,000 in our special anniversary episode.

Adviser Investments’ Today’s Market Takeaways

In Today’s Market Takeaways, members of our investment team provide timely videos that clearly and concisely explain what we’re seeing in the markets.

Recently, Vice President Steve Johnson discussed what a strange year 2021 really was, while Research Analyst Liz Laprade warned us not to put too much faith in forecasts for 2022.

We hope you find these episodes engaging and accessible. If there are any topics you’d like us to address, please send an email to info@adviserinvestments.com!

About Adviser Investments

Adviser Investments is a full-service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994, and have more than 3,500 clients across the country and over $7 billion in assets under management. Our portfolios encompass actively managed funds, ETFs, socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. Our minimum account size is $350,000. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868.


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