The Vanguard Group Inc. website was malfunctioning for approximately six days last week, potentially blocking thousands of customers from accessing year-end investment reports online and highlighting the need for companies to invest in robust customer service teams capable of dealing with high demand when technology fails.
Customers of the $8 trillion mutual fund giant weren't able to download PDFs of certain statements, confirmations and tax forms needed for end-of-year accounting, and the company couldn't print and deliver some checks by mail, Vanguard representative Charles Kurtz said in an emailed statement.
The snafu allegedly was caused by a service interruption at a third-party technology vendor, which was not named in the email.
While teams worked to restore service, the company notified clients, waived wire fees and expedited delivery fees to help clients avoid potential mail delays, according to the statement. The issues had no impact on the management of funds or the holdings in client accounts.
Still, disgruntled customers took to social media sites, like Twitter Inc. and the website Bogleheads.org, to complain about the company's website functionality and a significant dearth in customer service representatives available to handle inquiries that spilled over to help hotlines.
Investors scrambled to access their accounts online, while long wait times stymied their chances of talking to representatives over the phone, according to the social media posts. Multiple users claimed to have waited on hold for more than two hours.
“I’ve been a Vanguard client for 25+ years. On hold for an hour and 40+ minutes. Worst customer service experience EVER. Why would anyone trust their money to this infrastructure?” investor Rob Kaufmann tweeted.
The issue was so widespread even Vanguard President and CEO Tim Buckley reportedly took action by making a prerecorded welcome message that greeted customers calling in for help, according to reports.
While the fund company has made significant strides in expanding its customer service teams, hiring the right teams can be a challenge, said William Trout, director of wealth management at the consulting firm Javelin.
“Vanguard has a mixed track record when it comes to customer service,” Trout said, noting that training and retaining new hires can be expensive. “But there just has to be a backup plan when people can't get the information they need online.”
It’s not the first time online investment firms have experienced website issues and it likely won't be the last. In July, Fidelity Investments Inc. and Charles Schwab & Co. were hit by widespread problems that left their websites either temporarily inaccessible or performing more slowly than usual as a result of visitor bottlenecks.
Vanguard customers also complained that they couldn’t execute trades online or reach client representatives by phone.
A similar hiccup occurred in February 2017, prompting the company to reimburse some clients. This time around, Vanguard should have anticipated an uptick in volume with users inquiring about end-of-year tax reports, Trout said.
“It’s a big headache that will further dent the brand and fuel the perception that Vanguard is not keeping up with technology,” he said. “There couldn't have been a worse Christmas present for investors.”
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