The head of one of the largest East Coast investment advisers -- who oversees more than $1 billion in client funds, while struggling with competition from Vanguard’s low-cost index funds and other national players -- sent me a warning note (and asked me not to use his name, claiming to fear a client reaction):

“If I have a custody account at Vanguard, I have no idea what their financial strength is," the adviser wrote, following my recent report on Vanguard Group’s slimmed-down description of its unusual fund-owned structure in its latest SEC filings. "They publish nothing about their income statement or balance sheet.”

Does it matter? With $5 trillion in assets, and given its published fees, Vanguard revenues topped $5 billion last year. The company spent at least one-third of that on pay and benefits for its 17,600-member staff, the rest on marketing, executive compensation, offices and other unreported categories, some of which could be cut back under pressure. Sounds like a comfortable margin, no?

But assets and asset-derived fees can drop quickly with markets. Like other fund firms, Vanguard had to temporarily bail out its main money market fund and inject money to protect investors when markets crashed in 2008. One of its less-well-backed rivals, the Reserve Fund, held mortgage paper that went bad so fast that it had to stop guaranteeing its own dollar-a-share par value. The move spooked cash markets so badly that it sparked a big jump in uninsured commercial borrowing rates.

That crisis of financial confidence resolved when the U.S. Treasury and the Fed bailed out the big banks, GM, AIG and Fannie Mae. “But what would happen if Vanguard had a large problem?” the adviser went on. Not being public (or a bank), he said, Vanguard would face challenges raising more cash if it had to go to financial markets. "And, thinking back to 2008, to 2009, banks were not anxious to lend.”

Without ready capital-raising, “their ability to weather a financial storm is unknown.” By contrast, at such rivals as BlackRock or Charles Schwab, “you can at least see the financials” and judge whether the company looks solvent for the long term. And, as public companies, those firms “could make money market funds whole if need be by selling Schwab stock or bonds to bridge a short-term gap until markets settled.”

By comparison, “Vanguard is a bit of a black hole. I don’t think that the ‘mutual’ form of organization is a plus at all for ‘owners,’ and in a bad market could clearly be a negative.” He concluded: “I guess we have to rely on financial regulators to oversee, which makes me nervous.”

I ran that by the company and a crew of Vanguard-watchers. “Vanguard is financially strong, demonstrated clearly by the strong and steady cash flows experienced over the past two decades, including the 2008-09 financial crisis,” said spokeswoman Emily M. Farrell. “This business is not highly capital intensive, and we practice diligent expense management to keep such operating costs to a reasonable minimum. Additionally, we have no exposure to the kinds of investment-banking businesses and proprietary trading losses that hit Wall Street" 10 years ago.

And, she added, “Vanguard’s mutual funds, like all registered investment companies, are subject to extensive federal regulations." In the "highly unlikely event that Vanguard experienced financial difficulties, our mutual fund assets are completely segregated and secured at a third-party bank, and would remain available to shareholders to redeem.” Vanguard’s emphasis.

“The notion that they have no access to financial markets is probably overstating things,” agreed Daniel Wiener, head of Adviser Investments, a Newton, Mass. firm that invests client funds in Vanguard and other funds (corrected). If banks stop lending to companies such as Vanguard, we’ll probably be facing bigger problems than a few cents on money-market dollars.

“Vanguard could [tell] shareholders to kick in,” to bail out a temporarily weak fund, Wiener added. “Standard language in their annual reports, Notes to Financial Statements, Part B: ‘Upon the request of Vanguard, the fund may invest up to 0.40 percent of its net assets as capital in Vanguard.’” He notes that Vanguard’s Wellington Fund and Total Stock Market Index, for example, each list about 0.01 percent of next assets -- $5.4 million for Wellington, $37.2 million for Total Stock -- tied up in capital contributions to the parent company. The language allows the company to shift 40 times more, for example, in a crisis.

Still, “too many people are investing their money with no idea” about their fund custodians, or what’s on (or not on) their balance sheets, said Robert Costello, boss at Costello Asset Management, Huntingdon Valley. Vanguard has “done a good service, lowering fees, but they have a dark grey area when it comes to financial disclosure.”

But isn’t the risk that will cost investors pretty remote? I asked. “Yes,” until a lot of desperate savers “chase yield,” piling into short-term investments and then demanding their money back at a moment of deep market weakness, risking an old-fashioned financial panic or exposing weak reserves, Costello said.

He recalled the case of Advanta, a home-grown Philadelphia firm, once one of the largest U.S. credit card issuers and a major mortgage and small-business lender. For decades, Advanta sold uninsured deposits yielding interest rates far above what banks paid. In 2009 it went bankrupt, freezing investments by note-holders who had counted on promised interest payments. Smaller Philly firms with similar appeal -- American Business Financial Services, for example -- in previous years left investors with losses. “They advertised in your newspaper,” Costello added. “It can happen. People forget.”

Of course, Vanguard isn’t Advanta. And it would be wrong to think this is special to Vanguard, says Barry Ritholtz, chairman of Ritholtz Wealth Management, which invests client money in Vanguard funds. “Return is a function of risk,” he said. Money market funds stumbled in 2008 because some of their investments quickly lost value, not because of the company that set them up. "It doesn’t matter if you’re Vanguard or Union Bank of Switzerland. That’s Economics 101. This is what investing is about.”

A tax lawyer who didn’t want his name used said Vanguard disclosure falls short of its rivals, but quickly added, “Practically, I don’t think it imposes much risk on the shareholders.”

Still, Vanguard is projecting somewhat darker days ahead for mainstream investments. Five years ago, the company projected U.S. equities would rise about 8 percent a year for the next 10 years. As of this winter, the 10-year projection is down to about 5 percent, Vanguard chief information officer Greg Davis told the InsideETFs investor conference last week.