SEC Sanctions Vanguard and Empower Over Conflicts of Interest
The U.S. Securities and Exchange Commission (SEC) has announced enforcement actions against two of the country’s largest financial services firms, Vanguard Advisers Inc. and Empower Advisory Group LLC, for failing to adequately disclose conflicts of interest to their clients. Both firms settled the charges without admitting or denying the findings.
These cases highlight a recurring problem in the investment advisory industry: financial professionals may be motivated by hidden compensation structures that place their own interests ahead of their clients.
Vanguard’s Personal Advisor Services Program
According to the SEC, from August 2020 through December 2023, Vanguard’s financial advisers were incentivized to enroll and retain clients in its Personal Advisor Services (PAS) program, a fee-based managed account platform. Adviser performance ratings—and ultimately their bonuses and salary increases—depended in part on how many clients they brought into the PAS program.
The SEC noted that Vanguard’s disclosures were misleading and contradictory. While the company’s regulatory filings acknowledged some bonus eligibility, its marketing materials and client brochures told investors that advisers received “no additional compensation” or “no outside incentives.”
For these violations, Vanguard Advisers was censured and ordered to pay a $19.5 million penalty. As of March 2025, Vanguard Advisers reported managing more than $300 billion in assets.
Empower’s Retirement Plan Business
The SEC also sanctioned Empower Advisory Group LLC and its affiliated broker-dealer, Empower Financial Services Inc.(CRD #13109), for similar disclosure failures. Between July 2019 and December 2022, Empower tied its retirement plan advisers’ bonuses and raises to how much client money was directed into the company’s managed account service.
Rather than clearly telling retirement plan participants whether advisers were acting as registered representatives or investment adviser representatives, Empower disclosed that advisers were “dually licensed” and left it up to participants to determine in what capacity they were acting.
The SEC determined that Empower’s disclosures were inadequate and misleading. Advisers told clients they were salaried and working in the clients’ best interest, without disclosing their financial incentives to promote fee-based services. Empower also lacked sufficient compliance policies to manage these conflicts.
For these violations, Empower was censured and ordered to pay $5.99 million in disgorgement, prejudgment interest, and penalties. The firm is one of the nation’s largest retirement plan recordkeepers, serving more than 18 million individuals across 82,000 retirement plans.
What Investors Should Know
These cases illustrate a critical issue for investors: even at large, well-known firms, conflicts of interest may not always be fully disclosed. When advisers are compensated based on steering clients into particular investment programs, their recommendations may not align with what is best for the client.
The SEC’s findings against Vanguard and Empower underscore the importance of carefully reviewing disclosure documents such as Form ADV and asking direct questions about how your adviser is paid. Investors should be cautious of assurances that advisers are “salaried” or “non-commissioned,” as these claims may not tell the full story.
Recovering Investment Losses
If you have suffered losses because your financial adviser recommended an unsuitable or conflicted investment program, you may have legal options. Brokerage firms and registered investment advisers are required to disclose material conflicts of interest and to act in their clients’ best interest. Failure to do so may be grounds for a claim through FINRA arbitration.
The securities attorneys at The White Law Group represent investors nationwide in claims against financial professionals and brokerage firms. We have recovered millions of dollars for investors through FINRA arbitration.
Frequently Asked Questions – Vanguard and Empower
What was the SEC fine against Vanguard Advisers?
The SEC fined Vanguard Advisers $19.5 million for failing to disclose conflicts of interest related to its Personal Advisor Services program. Advisers were incentivized through bonuses and raises to enroll clients in the fee-based service.
Why did the SEC sanction Empower Advisory Group?
The SEC found that Empower Advisory and its broker-dealer affiliate failed to disclose financial incentives tied to enrolling retirement plan participants in managed account services. The firm agreed to pay nearly $5.99 million in penalties and disgorgement.
What conflicts of interest were involved?
Both Vanguard and Empower created compensation structures that rewarded advisers for steering clients into their managed account programs. These incentives were not clearly or adequately disclosed to investors, creating a conflict between the firms’ financial interests and clients’ best interests.
Can investors sue Vanguard or Empower over these conflicts of interest?
Investors may have the right to file claims if they suffered losses due to unsuitable recommendations or inadequate disclosures. These claims are often pursued through FINRA arbitration, rather than class actions.
How can The White Law Group help?
Our attorneys focus on representing investors in claims against brokerage firms and investment advisers. If you believe you were misled by Vanguard, Empower, or another firm, you may be able to recover your losses through arbitration.
Free Consultation
If you believe you were misled by Vanguard, Empower, or another financial institution, contact The White Law Group at (888) 637-5510 for a free consultation. You may also visit our website for more information on our nationwide securities fraud practice.
Last modified: September 3, 2025
