In 2018 the Vanguard Group, the behemoth Malvern, Pa.–based registered investment advisor, finally surpassed Fidelity Investments as the leader in 401(k) assets under management (AUM), with a staggering $5.3 trillion under its watch. Vanguard’s success is largely attributed to the popularity of its low-cost index funds, coupled with its full-service 401(k) management desk.
Indeed, according to a book by John Bogle—who created the first indexed mutual fund in 1975 after he established the Vanguard Group and who died In January 2019 at age 89—the success of index funds will likely result in just a handful of money management firms controlling half of all U.S. stocks. In Vanguard’s case, its one-stop shopping has attracted retirement plan sponsors in droves.
- The Vanguard Group is the top investment manager in terms of assets under management, with $5.3 trillion under its banner.
- Vanguard is primarily known for its vast selection of low-cost index funds.
- According to a survey, plan sponsors gave Vanguard top marks in the areas of investment performance, website and online services, fund transaction fees, problem resolution, investment options, and fee transparency.
Vanguard 401(k) Plan Services
Through its Institutional Investor Group, Vanguard offers an array of 401(k) management services, ranging from plan design and analytics to investment management oversight. Plan sponsors are assigned a client relationship manager, who provides day-to-day support on all aspects of plan management. Furthermore, Employment Retirement Income Security Act (ERISA) consultants are readily available to handle regulatory and compliance issues that may arise. Finally, Vanguard’s portfolio review department works closely with plan sponsors to vet and continuously monitor external fund managers.
Vanguard has invested heavily in its back-office systems to provide cutting-edge plan administration and record-keeping services. As a result, clients greatly benefit from more-streamlined procedures that lower their costs and pinpoint areas for potential plan participation improvement.
In a study by marketing consultancy Cogent Reports, plan participants rated Vanguard highest in overall satisfaction.
How Is Vanguard Doing in 401(k) Management Services?
According to a study by marketing consultancy Cogent Reports, plan participants rated Vanguard the highest in overall satisfaction and specifically ranked it first in the following categories:
- Investment Performance
- Website and Online Services
- Fund Transaction Fees
- Problem Resolution
- Breadth of Investment Options
- Fee Transparency
- Enrollment Meetings
When plan sponsors were asked to assess their overall satisfaction with their plan provider, 83% of Vanguard clients expressed the highest contentment with their services. Meanwhile, the average plan provider satisfaction rate was just 62%. The survey also found that Vanguard ranked first in the following areas:
- Accuracy and Timeliness of the Transaction Process
- Plan Administration Support
- Form 550 Filing Support
- Quality of Investment Options
- Fund Expense Ratios
- Quality and Clarity of Fee Disclosure Information
- Transparency of Fees
- Plan Administration Fees
Plan sponsors hold the fiduciary responsibility of ensuring that investment management fees are reasonable, based on the services provided. According to NerdWallet’s survey of Best IRA Accounts for 2018, Vanguard ranked among the highest for value in terms of cost by full-service-plan sponsors.