I know I haven’t finished my 401k rollover series yet, but whenever a family friend asks where they should put their old retirement plan assets, I always say Vanguard. They certainly aren’t the only good company out there, but they do have a lot of things going for them:
- They are not a for-profit company, so their interests are better aligned with the common investor. For example, this way there are no shareholders who might want to raise mutual fund fees in order to increase profits.
- They don’t pay advisors to sell their funds through load commissions or 12b-1 fees.
- They offer a wide selection of low cost mutual funds that track many different asset classes.
- I also put my money where my mouth is, as I have all of my IRAs there. I am always pleased at the high level of customer service that I get from them.
- In the end, I feel they offer the best chance at superior performance and low-stress ownership over the long haul.
According to this Wall Street Journal article, Few Firms Earn Loyalty of the Wealthy, I am far from alone. Some excerpts:
Affluent investors say they’re increasingly dissatisfied with their mutual funds’ long-term performance and inconsistent returns. In fact, only 11 of 38 top fund families manage to create meaningful customer loyalty, according to a report released by Cogent Research LLC. The Cambridge, Mass., market researcher surveyed 4,000 mutual-fund investors with at least $100,000 in investable assets.
The study showed Vanguard Group with a wide lead in investor loyalty.
The average score was minus-12. The high was Vanguard’s plus-44. Second place went to Dodge & Cox with a plus-29. Schwab came in with 26 points, and T. Rowe Price had 21.
By Jonathan Ping | Investing | 7/26/07, 12:16am