T. Rowe Price has been around since 1937 and specializes in actively managed mutual funds and other wealth management services. The target T. Rowe Price client is likely quite similar to Vanguard’s clients. They are seeking to outsource most of the investment management process to professionals. Their clients are less interested in actively managing stock and options accounts on their own.
Vanguard was a pioneer in the world of indexed mutual funds and ETFs. It remains a popular choice for individual investors looking for low-cost funds. Founded in 1975 by John Bogle, Vanguard deserves credit for being the first firm to offer an indexed mutual fund. Index funds rely on passive management to keep costs low and match index returns.
In our 2019 Best Online Brokers Awards, Vanguard received an award for Best for ETFs.
- Account Minimum: $2,500 ($1,000 for IRAs)
- Fees: $19.95 per trade for accounts who have executed less than 30 trades, $9.95 for more active accounts
- Best for: Those looking for full-service wealth management
- Account Minimum: $0
- Fees: $0/stock and ETF trade, $0 plus $1 per contract for options
It is technically possible to trade stocks and options with T. Rowe Price. However, trading functionality through the broker’s website is as basic as it can get. Research and charting are also rudimentary. This should not be a problem for investors who are interested in T. Rowe Price because of its funds.
Vanguard's trading platform is missing most advanced functionality. An investor can use simplified charts and watchlists, but there are few other tools beyond the functions required for order entry. Traders looking for advanced charts or flexible technology will not find it through Vanguard’s web-based or mobile trading platforms.
T. Rowe Price
- Access to their family of mutual funds
- Familiar and easy to navigate website
- No advanced order routing functionality
- Clean and straightforward
- Charting capabilities are fairly limited
- No technical analysis
Mobile and Emerging Tech
Both Vanguard and T. Rowe Price have mobile apps that can be used to make trades, check balances, and make deposits. Neither application will meet the needs of active investors. Advanced charts, screeners, or other features are almost entirely missing.
T. Rowe Price
- Available on iOS or Android
- The mobile app is available for iOS, Android, and Kindle Fire devices
News and Research
Vanguard does a bit better than one would expect in the research department. After all, the company focuses on marketing its own funds and ETFs. Investors can find company fundamentals, financial statements, and an ETF screener. The mutual fund screener is very basic.
T. Rowe Price offers a similar set of research features along with better news feeds and general market commentary. None of T. Rowe Price’s or Vanguard’s research or insight tools are unique. Superior tools are easy to find elsewhere online. However, T. Rowe Price has a small edge over Vanguard in this category.
T. Rowe Price
- Above-average research and commentary
- Asset screeners
- Alerts and watchlists
- Mutual fund screeners
- ETF analyzers
The typical Vanguard client appears to be an investor focused on long-term passive investing. Their focus is on retirement or other financial goals set far in the future. With that in mind, Vanguard's limited educational offerings make more sense. Investors can learn a lot about retirement planning, mutual funds, and ETFs. More in-depth topics, such as technical and fundamental analysis, are not covered.
Like Vanguard, T. Rowe Price has some educational content for clients. Their advice is also oriented toward helping investors think about planning for future financial goals like retirement. The information from T. Rowe Price is not in-depth. The idea is that investors will seek professional advice from the firm rather than make decisions themselves. It is unlikely that investors evaluating Vanguard or T. Rowe Price are looking for education. Both brokers act as advisors for their clients.
T. Rowe Price
- T. Rowe Price Insights (R)
- Limited introductory resources
- Focused on mutual funds and ETFs
- In-depth index investing
Vanguard is not the low-cost leader for trading stocks. However, it is free to trade Vanguard’s low-cost funds. The firm charges $7.00 per trade for stocks and options. There is an additional $1.00 charge for each option contract involved in the trade. The fee for trading non-Vanguard funds is $20. The focus for Vanguard's clients is the firm's mutual funds and ETFs, which offer very low fees. Active stock or options traders will likely find the other commissions relatively high.
You can trade stocks and options through a T. Rowe Price account, but the costs are unusually high. Stock or options trades are $19.95, and options are an additional $1.00 per contract. The fees for trading mutual funds from other firms vary depending on the fund, but many can be traded for free. There is an account minimum of $2,500 and an annual fee of $20 for accounts with balances below $10,000.
Both Vanguard and T. Rowe Price are primarily focused on marketing their investment funds. Fund charges, such as expense ratios and transaction fees, are likely to be more relevant than the commissions for individual stock trades. In that respect, Vanguard’s funds are usually much less expensive than T. Rowe Price's products. Much of the reason for the difference in cost is that Vanguard specializes in passive index funds. T. Rowe Price concentrates on active management designed to outperform stock indexes or other benchmarks.
An example may help to clarify the difference. As of September 2019, the T. Rowe Price Blue Chip Growth Fund (TRBCX) had an average return of 16.50% over the last ten years with an expense ratio of 0.7%. The Vanguard Mega Cap Growth ETF (MGK) averaged 14.97% per year during the same period with an expense ratio of 0.07%. The higher returns for the T. Rowe Price fund seem to justify the extra expense in this case. However, we all know that past returns are not necessarily indicative of future results. It may be unrealistic to expect investors to be able to tell which fund is going to outperform in advance.
T. Rowe Price
- Stock trade fees: $19.95 per trade
- Account minimum: $2,500
- Stock trade fees: $7
- Account minimum: $0
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