Vanguard

Is Vanguard safe?

Yes, for keeping your investments safe, though it scores below its two big rivals. Securities in a Vanguard brokerage account are held in custody and segregated, with SIPC cover and extra insurance, and Vanguard funds keep their assets with outside custodian banks. We score Vanguard 81/100, against 87 for Fidelity and Charles Schwab.

Two things cost it points. Vanguard's structure leaves the company with little capital of its own and no published group accounts. And its conduct record has worsened: in 2025 it paid $106 million to the SEC over the tax hit from its target-date funds, and its advice arm paid $19.5 million over undisclosed adviser incentives.

How is my money protected at Vanguard?

In the US, your brokerage account is with Vanguard Brokerage Services, a division of Vanguard Marketing Corporation (VMC). Under the account agreement, VBS holds your securities in custody; foreign shares are held through JPMorgan in an account for VBS customers only. If VMC failed and assets were missing, SIPC would cover up to $500,000 per customer, including $250,000 of cash. VBS also carries "additional coverage through an insurer". Unlike Fidelity, Schwab and Interactive Brokers, the agreement gives no limit for that policy, so you cannot tell how far it reaches.

Vanguard's funds add a layer most brokers lack. A Vanguard fund's holdings belong to the fund and are kept at custodian banks, not on Vanguard's balance sheet. A failure of The Vanguard Group would not put those assets within reach of its creditors.

Cash depends on where it sits:

Where the cash sits	Protection
Settlement fund (default, a money market fund)	SIPC if the broker fails; not FDIC-insuredDeposit insuranceA government-backed scheme that repays bank customers up to a set limit if their bank fails, such as the FDIC in the US or the FSCS in the UK.More in the glossary
Vanguard Cash Deposit or Cash Plus Account	Swept to program banks; FDIC-eligible
UK cash (Vanguard Investor)	Held in trust at an authorised bank; FSCS

In the UK, accounts are with Vanguard Asset Management, Limited (FCA 527839). Funds are registered in a nominee account and cash is held in trust, and the FSCS can pay up to £85,000 per person if assets go missing.

Why does Vanguard's structure lower the score?

Vanguard is owned by its funds, and the funds by their investors. The company provides services at cost, so it does not build up profits. By our estimate from the funds' own filings, their capital contributions to The Vanguard Group came to only about $250 million at the end of 2025, which is small for a firm of its size. Vanguard Marketing Corporation files an audited statement of financial condition each year, audited by PwC, but the group publishes no consolidated accounts and has no credit rating that we found.

This is not a sign of distress. Client assets do not depend on Vanguard's capital, and the at-cost model is why fees are low. But our rubric reserves the top band for large, profitable, publicly audited firms, and Vanguard is none of those in the usual sense.

What fines has Vanguard paid?

The big case concerns target-date retirement funds. In late 2020 Vanguard lowered the minimum investment for its institutional target-date funds. Many retirement plans switched, the retail Investor funds had to sell holdings, and investors holding them in taxable accounts got unusually large capital gains distributions and tax bills. The SEC found Vanguard's prospectuses had not warned of this. In January 2025 Vanguard paid $106.41 million into an SEC fund for harmed investors, part of a $166.7 million settlement that included state regulators. Vanguard neither admitted nor denied the findings. The SEC proposed a plan to distribute the money in June 2026.

Other recent cases:

• 2025, Vanguard Advisers: $19.5 million to the SEC because its adviser service told clients advisers got no extra incentives, while its brochure said some could earn a bonus.
• 2026, FINRA: $950,000 because VMC sent customers wrong cost-basis figures on statements and 1099s, after a vendor and system issues. Vanguard had already paid customers about $1.9 million.
• 2023, FINRA: $800,000 for overstating the projected yield of nine money market funds on brokerage statements between November 2019 and September 2020.

BrokerCheck lists 52 regulatory events for VMC, most of them the individual state orders in the target-date case.

How to keep your Vanguard account safe

• Add a passkeyPasskeyA way to sign in without a password. Your device holds a key tied to one website or app and unlocks it with your fingerprint, face or PIN.More in the glossary or a physical security key. Text and phone codes are required anyway, but they can be intercepted; keys and passkeys resist phishing.
• Enrol in Vanguard Voice ID if you phone Vanguard often.
• Keep large cash balances in a setup you understand: the settlement fund is a money market fund, not a bank deposit.
• If you hold target-date funds in a taxable account, check the capital gains distributions in your tax documents each year.

How we scored it

Regulation (93) and investor protection (86) are Vanguard's strongest factors, with investor protection held back by the unpublished limits of its excess insurance. Account security scores 84. Conduct (62) is the weakest, because the target-date case cost ordinary investors real tax money, and financial strength (75) reflects the small capital base and the absence of group accounts.