Even more surprising, however, are the Advice Select funds, which are actively managed and exclusive. If clients leave the PAS platform, they can continue to hold or redeem these shares and can move them to another platform. After leaving the service, however, no new purchases of these funds are permitted.

“Never did I think that Vanguard would remind me of Wall Street wirehouses, circa 1990. But marketing special, in-house funds that could only be held by their advice clients was, in fact, how those firms operated,” Rekenthaler wrote.

Vanguard spokesperson Laura Bulman clarified: “A client who invests in Vanguard Advice Select Funds and then decides to leave Personal Advisor Services can continue to hold or redeem their shares in the funds.” 

“Our focus on advice is directly aligned with the firm’s mission to give investors the best chance for investment success. We believe advice can help investors achieve better outcomes, whether it is delivered directly by Vanguard or through independent financial advisors using Vanguard’s products and services,” she said.

“While we have made progress, we recognize there is more to do, and are committed to continuing to evolve and improve,” Bulman added.

Since Vanguard has entered the advisory business, it has become one of the largest employers of newly minted CFPs. This move has not gone unnoticed among advisors, many of whom are Vanguard fans.

“I’ve used Vanguard index funds for 20 years,” said Scott Salaske, founder and CEO of FirstMetric, an RIA firm based in Troy, Mich. “They do a great job." But the PAS service is not for everyone.

Salaske said he recently signed a high-net-worth client from Vanguard’s Personal Advisor Services and moved him to Schwab's advisory platform because the client, a long-time Vanguard investor, didn’t like the recommendations or the fact that he kept being assigned different advisors.

“There was no reason for us to pay 30 basis points for his index funds inside PAS," Salaske added.

Advisor Daren Blonski, co-founder and managing principal of Sonoma Wealth Advisors, Sonoma, Calif., said Vanguard hasn’t wandered off course “as much as they are just being forced to evolve. They realized they have to give clients what they want. Why would I pay Vanguard 30 basis points for advice if all I get is index funds? What you’re going to find is investors want alternative investments and actively managed investments and that’s what Vanguard is giving them."