By Staff Writer
The US Securities and Exchange Commission (SEC) has fined Vanguard’s advisory division $19.5 million, saying the firm failed to properly disclose conflicts of interest tied to its managed accounts.
Vanguard runs a fee-based advisory service called Personal Advisor Services (PAS). The service manages client portfolios for a minimum of $50,000. Regulators say that between August 2020 and December 2023, Vanguard advisors were financially incentivized to keep clients enrolled in PAS. These incentives included bonuses, pay increases, even promotions.
The problem wasn’t necessarily the incentives themselves, but the way Vanguard described them. Some of its documents admitted that advisors could receive discretionary bonuses, but others including official disclosure forms told clients that advisors were salaried employees without product-based compensation. Vanguard’s own website also described its advisors as having “no financial incentives to recommend certain products,” which the SEC called misleading.
To resolve the charges, Vanguard agreed to a cease-and-desist order, a censure and the $19.5 million fine. The firm neither admitted nor denied the findings, but a spokesperson said Vanguard remains committed to supporting “everyday investors and retirement savers” and was pleased to put the matter behind it.
