(PUB) Vanguard Advisor

from our personal bank account,” he says, “further compounding its numer- ous errors.” As he told me, “I wanted them to take ownership. But all I got was what I call ‘Vanguard speak.’” John didn’t authorize me to ask Vanguard about this, but then again, Vanguard never discusses individual client issues. In the end, John decided not to pur- sue legal action but has lost a good deal of faith in the company he says he used to recommend to his family, friends and partners. I asked him what lessons he would share with other Vanguard inves- tors after this experience. “Be vigilant,” he says. “Don’t assume Vanguard will do what you expect them to do. You control your destiny.” Also, be ready to be surprised. “The wildest things beyond your imagination can and will occur,” he says. What bothers John most, he says, was the sense that this was an “ordinary day for Vanguard.” So, Bill McNabb, if you’re listening, maybe it’s time to give John a phone call and perhaps send him a nice bottle of wine for his troubles. I’ll report back if there’s a coda to this tale, but as I constantly remind you, it’s your money and you’re the only one who really cares about it, so stay alert, stay vigilant, and trust—but verify. n

money from Vanguard to his bank when he needs to replenish the account. So there’s not even any precedent for a transaction in that direction. Second, John’s local bank account was immediately overdrawn because he didn’t have $29,000 in the account, so the bank began to charge him fees. And third, it’s not clear why Vanguard didn’t try to take money from John’s other Vanguard accounts since, as he says, he has substantial sums with Vanguard and is a Flagship client, which, by definition, means he has more than $1 million invested there. John says this wouldn’t have made him any happier, but at least he wouldn’t have been dunned by his local bank. John’s a lawyer. John’s firm has a profit-sharing account at Vanguard with, he says, more than $60 million invested in it. John’s obviously a larger-than- average shareholder in Vanguard. He’s livid at Vanguard’s response, which was to fix it with his bank to reverse the fees and to basically tell him it was human error and they’re sorry. Not once, he says, did anyone with any authority call or write him to both apologize and explain how sucking money out of his personal bank account could have happened. “I was in disbelief and apo- plectic. Vanguard actually stole money >

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DAN’S DO-IT-NOW ACTION RECOMMENDATIONS 4 Compounding has been called the eighth wonder of the world. All investors should understand its power. (See page 12) 4 Yields are at zero and inflation isn’t, yet money market funds like Tax-Exempt Money Market still have a place in your portfolio. Boost your yield? (See page 1) 4 Capital Opportunity remains one of my all-time favorite Vanguard funds, but its character has changed over time. What’s right and what’s changed? (See page 14)

Daniel P. Wiener is America’s leading expert on the Vanguard family of funds. He is founder of the Fund Family Shareholder Association and chairman and chief executive officer of Adviser Investments, LLC, a Newton, Massachusetts, investment advisory firm (800-492-6868). As

Jeffrey D. DeMaso, Editor/Director of Research, works directly with Dan Wiener researching and writing the multiple-award winning Independent Adviser for Vanguard Investors newsletter. He also leads the analyst team for Adviser Investments, LLC, helping to oversee $2.7 billion in assets. Jeff graduated magna cum laude from Tufts University with a B.A. in economics, holds the Chartered Financial Analyst designation and is a member of the CFA Institute and the Boston Security Analysts Society.

editor of The Independent Adviser for Vanguard Investors , he is a five-time recipient of the Newsletter Publishers Foundation’s Editorial Excellence Award. He also edits the annual Independent Guide to the Vanguard Funds. Mr. Wiener is often quoted in the nation’s leading financial publications.

16 • Fund Family Shareholder Association

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