Vanguard changing my Admiral shares to Investor Shares

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RetiredInTN2017
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Vanguard changing my Admiral shares to Investor Shares

Post by RetiredInTN2017 » Mon Oct 15, 2018 10:26 am

I went with the Vanguard investment advisor a couple of years ago and he immediately changed many of the funds over to Admiral shares. Lower expense fees. After a year of using the advisor I decided to manage the the investments like i had done the previous 14 years. Now I get a message from VG that they want to my Wellington funds out of Admiral back into Investor shares due to the balance being less than $50K. I replied that I had over $50K in Wellington in my IRA account and if the advisor could get admiral shares below minimum why couldn't the investor. They said sorry that is the rules. Brokerage and IRA are just $30K shy of being $1M total in accounts with VG. Have been with VG since 2001 but I am having thoughts about changing to Fidelity. I Will start taking my RMD in 2019 at the age of 70. Just seems like VG does give a lot of service to small investors like myself.

livesoft
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by livesoft » Mon Oct 15, 2018 10:35 am

Changing to fidelity will not give you Admiral Wellington in that account which seems to be what you want.

Adding $20K to a $30K amount of Wellington will get you back to Admiral Wellington shares if it is important enough to you.
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yohac
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by yohac » Mon Oct 15, 2018 10:37 am

I understand your irritation, but in the scheme of things, moving a million from Vanguard to Fidelity could be a whole lot more irritating. The difference between Investor and Admiral Wellingon on 50K is 40 bucks a year. I don't think having Flagship status would make a difference in this situation.

retiringwhen
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by retiringwhen » Mon Oct 15, 2018 10:40 am

Interesting, so, because you had a PAS advisor, Vanguard was willing to waive the Admiral rules?

First I have ever heard of that. Interesting way to lower the overall cost of holding an advisor at Vanguard. Vanguard charges .3 for the advisor, but give you a .1ish break on the fund ER.

I know back when the Admiral limit was $100K for some funds, I got them even though our balances were below the threshold because we had held the funds for great than 10 years (PRIMECAP and Windsor, if I remember correctly).

drzzzzz
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by drzzzzz » Mon Oct 15, 2018 11:13 am

Petty and foolish on the part of Vanguard - while they have the right to do it, it would be interesting to know whether they change ALL of their customer accounts to investor shares if the account balance drops below the admiral thresholds. It seems like they will be causing lots of waves and only develop ill well from clients.

mhalley
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by mhalley » Mon Oct 15, 2018 11:18 am

Missing the forest for the trees. You were paying MUCH more than the 40 dollars a year, overall you are saving a ton by dumping pas. Gradually add to the Wellington position or do it all at once or don’t do anything. Small potatoes in the scheme of things.

retiringwhen
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by retiringwhen » Mon Oct 15, 2018 11:24 am

drzzzzz wrote:
Mon Oct 15, 2018 11:13 am
Petty and foolish on the part of Vanguard - while they have the right to do it, it would be interesting to know whether they change ALL of their customer accounts to investor shares if the account balance drops below the admiral thresholds. It seems like they will be causing lots of waves and only develop ill well from clients.
Why? The policy is very clear, if the balance falls below a threshold, the account is no longer eligible for Admiral Shares.

Now, I found an interesting statement in the current Wellington Prospectus https://personal.vanguard.com/pub/Pdf/p021.pdf (my bold):
The minimum investment amount required to open and maintain a Fund account for Investor Shares or Admiral Shares is $3,000 or $50,000,
respectively. The minimum investment amount required to add to an existing Fund account is generally $1.

Financial intermediaries, institutional, and Vanguard retail managed clients should contact Vanguard for information on special eligibility rules
that may apply to them regarding Admiral Shares.


If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility. If you are investing through an employer-sponsored retirement or savings plan, your plan administrator or your benefits office can provide you with detailed information on how you can invest through your plan.
This may explain how/why the OP was eligible for the Admiral Shares.

Here is the clear statement on the requirement for retaining Admiral Shares:
Account Minimums for Admiral Shares

To open and maintain an account. $50,000.

If you request Admiral Shares when you open a new account but the investment amount does not meet the account minimum for Admiral Shares, your investment will be placed in Investor Shares of the Fund. Financial intermediaries, institutional, and Vanguard retail managed clients should contact Vanguard for information on special eligibility rules that may apply to them regarding Admiral Shares. If you are investing through an intermediary, please contact that firm directly for more information regarding your eligibility

2015
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by 2015 » Mon Oct 15, 2018 7:43 pm

retiringwhen wrote:
Mon Oct 15, 2018 11:24 am
drzzzzz wrote:
Mon Oct 15, 2018 11:13 am
Petty and foolish on the part of Vanguard - while they have the right to do it, it would be interesting to know whether they change ALL of their customer accounts to investor shares if the account balance drops below the admiral thresholds. It seems like they will be causing lots of waves and only develop ill well from clients.
Why? The policy is very clear, if the balance falls below a threshold, the account is no longer eligible for Admiral Shares.
...
This.
A vendor following their clearly laid out terms and conditions is not tantamount to "petty and foolish". If Vanguard watered their lawn someone would post a complaint here.

boglesmind
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by boglesmind » Mon Oct 15, 2018 8:14 pm

mhalley wrote:
Mon Oct 15, 2018 11:18 am
Missing the forest for the trees. You were paying MUCH more than the 40 dollars a year, overall you are saving a ton by dumping pas. Gradually add to the Wellington position or do it all at once or don’t do anything. Small potatoes in the scheme of things.
+ infinity.
With all due respect to OP, this appears to be a case of emotional reaction and is not rational. Bogle and Bogleheads advocate against such behavior.

OP, consider the following: Have you decided on the Fidelity funds you'd transfer to (if you decide to move your funds from Vanguard to Fidelity)? If so, have you compared the expenses ratios? Are there any taxable accounts involved in the transfer? If you can't do in-kind transfer for some reason, you may incur long and/or short term capital gains on transfer to Fidelity and incur more taxes this year. Is all this additional expense and effort warranted when you'd actually be saving thousands of dollars in PAS fees (at 0.3% of around $1M AUM) and paying just a few hundred dollars in fees for investor class shares of Wellington?

Boglesmind

drzzzzz
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by drzzzzz » Mon Oct 15, 2018 8:40 pm

2015 wrote:
Mon Oct 15, 2018 7:43 pm
retiringwhen wrote:
Mon Oct 15, 2018 11:24 am
drzzzzz wrote:
Mon Oct 15, 2018 11:13 am
Petty and foolish on the part of Vanguard - while they have the right to do it, it would be interesting to know whether they change ALL of their customer accounts to investor shares if the account balance drops below the admiral thresholds. It seems like they will be causing lots of waves and only develop ill well from clients.
Why? The policy is very clear, if the balance falls below a threshold, the account is no longer eligible for Admiral Shares.
...
This.
A vendor following their clearly laid out terms and conditions is not tantamount to "petty and foolish". If Vanguard watered their lawn someone would post a complaint here.
Totally disagree, following your policy is fine except when you are already given a benefit that you have come to expect and is now being taken away. If Vanguard follows this consistently, then when the market drops 20 or 50%, all those accounts that were admiral but now don't meet the minimum admiral balance thesholds dues to the market drop should also be changed back to investor share status - will Vanguard do that and risk the rath of clients or just leave them as admiral stakeholders.

2015
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by 2015 » Mon Oct 15, 2018 8:56 pm

drzzzzz wrote:
Mon Oct 15, 2018 8:40 pm
2015 wrote:
Mon Oct 15, 2018 7:43 pm
retiringwhen wrote:
Mon Oct 15, 2018 11:24 am
drzzzzz wrote:
Mon Oct 15, 2018 11:13 am
Petty and foolish on the part of Vanguard - while they have the right to do it, it would be interesting to know whether they change ALL of their customer accounts to investor shares if the account balance drops below the admiral thresholds. It seems like they will be causing lots of waves and only develop ill well from clients.
Why? The policy is very clear, if the balance falls below a threshold, the account is no longer eligible for Admiral Shares.
...
This.
A vendor following their clearly laid out terms and conditions is not tantamount to "petty and foolish". If Vanguard watered their lawn someone would post a complaint here.
Totally disagree, following your policy is fine except when you are already given a benefit that you have come to expect and is now being taken away. If Vanguard follows this consistently, then when the market drops 20 or 50%, all those accounts that were admiral but now don't meet the minimum admiral balance thesholds dues to the market drop should also be changed back to investor share status - will Vanguard do that and risk the rath of clients or just leave them as admiral stakeholders.
Well this has come up and there have been threads on this before. I recall reading VG has not summarily reverted admiral to investor shareholders due to temporary market drops. Even if it did, I wouldn't personally be upset with Vanguard. I knew what I was getting into when I purchased the fund. If an individual is craving admiral share status simply add more money to the account. Just because something is not what you want to hear does not provide justification for "wrath". It was Brian Tracy who said personal responsibility is the personal, social, and economic crisis of our day. Life is not like Burger King. You can't always have it your way.

software
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by software » Mon Oct 15, 2018 9:09 pm

drzzzzz wrote:
Mon Oct 15, 2018 8:40 pm
2015 wrote:
Mon Oct 15, 2018 7:43 pm
retiringwhen wrote:
Mon Oct 15, 2018 11:24 am
drzzzzz wrote:
Mon Oct 15, 2018 11:13 am
Petty and foolish on the part of Vanguard - while they have the right to do it, it would be interesting to know whether they change ALL of their customer accounts to investor shares if the account balance drops below the admiral thresholds. It seems like they will be causing lots of waves and only develop ill well from clients.
Why? The policy is very clear, if the balance falls below a threshold, the account is no longer eligible for Admiral Shares.
...
This.
A vendor following their clearly laid out terms and conditions is not tantamount to "petty and foolish". If Vanguard watered their lawn someone would post a complaint here.
Totally disagree, following your policy is fine except when you are already given a benefit that you have come to expect and is now being taken away. If Vanguard follows this consistently, then when the market drops 20 or 50%, all those accounts that were admiral but now don't meet the minimum admiral balance thesholds dues to the market drop should also be changed back to investor share status - will Vanguard do that and risk the rath of clients or just leave them as admiral stakeholders.
Vanguard will not switch you to investor shares unless you sell your mutual fund and end up below the limit. Market movements will not trigger the action.

In this case, the OP switched out of PAS and it sounds like that is what triggered the change. It’s likely vanguard gave you admiral status because they were making up the fees with PAS. It seems perfectly reasonable that if you are opting out of that service you no longer would qualify for that benefit. Vanguard needs to pay for fund management somehow.

In both of these cases, you the investor are making a change on your account, triggering this action from vanguard.

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Dale_G
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by Dale_G » Mon Oct 15, 2018 10:43 pm

I tax loss harvested VWLUX (Vanguard's Long Term muni) last week and left $49,680 in the account. I can't add money to the fund for 30 or so days without triggering a wash sale and Vanguard's frequent trading rules also prevent a purchase for 30 days unless by mail or automatic investments.

So what will happen. Almost nothing. After a while, Vanguard will send me a notice to pony up enough money (within the following 30 days) to get to 50K, or the fund will revert to Investor class. Oh woe!

Rules are rules, and unless they are enforced they are useless.

Dale
Volatility is my friend

venkman
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by venkman » Mon Oct 15, 2018 10:54 pm

drzzzzz wrote:
Mon Oct 15, 2018 11:13 am
Petty and foolish on the part of Vanguard - while they have the right to do it, it would be interesting to know whether they change ALL of their customer accounts to investor shares if the account balance drops below the admiral thresholds. It seems like they will be causing lots of waves and only develop ill well from clients.
Vanguard essentially operates at cost. If they give one client a discount, they have to make up for it by overcharging another client.

This is why I'm happy to pay whatever fees VG charges--I know they're just covering what it costs to have me as a client; and they aren't ever going to charge me extra to pay for loss leader offers that bring in new clients for themselves.

viz
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by viz » Mon Oct 15, 2018 11:17 pm

venkman wrote:
Mon Oct 15, 2018 10:54 pm
drzzzzz wrote:
Mon Oct 15, 2018 11:13 am
Petty and foolish on the part of Vanguard - while they have the right to do it, it would be interesting to know whether they change ALL of their customer accounts to investor shares if the account balance drops below the admiral thresholds. It seems like they will be causing lots of waves and only develop ill well from clients.
Vanguard essentially operates at cost. If they give one client a discount, they have to make up for it by overcharging another client.

This is why I'm happy to pay whatever fees VG charges--I know they're just covering what it costs to have me as a client; and they aren't ever going to charge me extra to pay for loss leader offers that bring in new clients for themselves.
Just out of curiosity, if vanguard doesn't charge money in some form to cover up for loss leaders then how do they stay in business aka where does the money to cover up the losses come from? Or they have no loss leaders? Thanks

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Dale_G
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by Dale_G » Mon Oct 15, 2018 11:26 pm

No loss leaders that we know of. I hope they don't start offering zero e.r. funds with $1 minimum investments. Those would surely be a loss leaders.

There is no question that investors with multi-million accounts do subsidize those (often beginners) with much smaller accounts. I can live with that.

Dale
Last edited by Dale_G on Mon Oct 15, 2018 11:34 pm, edited 1 time in total.
Volatility is my friend

NYCwriter
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by NYCwriter » Mon Oct 15, 2018 11:32 pm

I can understand feeling miffed. It feels like they're punishing you, and you've been a longtime customer with a large balance. But that's not the case.You're saving money not using the advisor services, which likely more than offsets the extra amount.

Moving to Fidelity creates an additional set of issues, and even more transaction fees for your holdings. So you'd be punishing yourself, not Vanguard.

I have a 30k fund that doesn't meet the 50k minimum for lower er. I wish they'd reduce those fees or the minimum, but it's still a pretty low er In comparison to the rest.

2015
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by 2015 » Tue Oct 16, 2018 8:26 am

software wrote:
Mon Oct 15, 2018 9:09 pm
drzzzzz wrote:
Mon Oct 15, 2018 8:40 pm
2015 wrote:
Mon Oct 15, 2018 7:43 pm
retiringwhen wrote:
Mon Oct 15, 2018 11:24 am
drzzzzz wrote:
Mon Oct 15, 2018 11:13 am
...
Vanguard will not switch you to investor shares unless you sell your mutual fund and end up below the limit. Market movements will not trigger the action.
...
Thank you, I was trying to find this. VG has never switched me to investor shares so I have no direct experience. However, I knew I'd read what you stated somewhere, probably here.

euroswiss
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by euroswiss » Tue Oct 16, 2018 4:48 pm

NYCwriter wrote:
Mon Oct 15, 2018 11:32 pm

Moving to Fidelity creates an additional set of issues, and even more transaction fees for your holdings. So you'd be punishing yourself, not Vanguard.

Well,
that may be true, although I'm guessing that this transfer would be quite smooth. In addition, you'd likely get offered a few thousand dollars incentive by Fidelity to make the transfer. So, not necessarily a bad deal.
That said, I agree: Vanguard did nothing wrong here.

retiredjg
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by retiredjg » Tue Oct 16, 2018 5:01 pm

Wellington Investor shares are .25%. Wellington Admiral shares are .17% plus .3% for PAS (in other words....0.47%).

You are saving money! Or you could add some to the balance and get the lower ER.

pyld76
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by pyld76 » Tue Oct 16, 2018 8:53 pm

Two ways to look at this:

1. You probably got the admiral shares by virtue of being PAS. As that isn’t the case, you don’t get to keep it.

2. Vanguard is missing the forest for the trees. Call them and register your displeasure and flat out ask them if they can make an accommodation for a million dollar customer. If they don’t, ship your money out to Fido or whomever.

I don’t think #2 would work at VG.

venkman
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by venkman » Tue Oct 16, 2018 10:11 pm

viz wrote:
Mon Oct 15, 2018 11:17 pm
venkman wrote:
Mon Oct 15, 2018 10:54 pm
Vanguard essentially operates at cost. If they give one client a discount, they have to make up for it by overcharging another client.

This is why I'm happy to pay whatever fees VG charges--I know they're just covering what it costs to have me as a client; and they aren't ever going to charge me extra to pay for loss leader offers that bring in new clients for themselves.
Just out of curiosity, if vanguard doesn't charge money in some form to cover up for loss leaders then how do they stay in business aka where does the money to cover up the losses come from? Or they have no loss leaders? Thanks
They don't have loss leaders (as far as I know). They have minimum investment requirements, and higher ER's for lower amounts invested (i.e. Investor share class). They also have a $20 annual fee if your account balance is below $10k (though they'll waive that if you agree to get all your documents electronically). A few funds have purchase and/or redemption fees that get paid to the fund itself, to cover the cost of buying/selling shares. VG is pretty good about assigning actual expenses to each investor.

criticalmass
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by criticalmass » Tue Oct 16, 2018 10:25 pm

drzzzzz wrote:
Mon Oct 15, 2018 8:40 pm
2015 wrote:
Mon Oct 15, 2018 7:43 pm
retiringwhen wrote:
Mon Oct 15, 2018 11:24 am
drzzzzz wrote:
Mon Oct 15, 2018 11:13 am
Petty and foolish on the part of Vanguard - while they have the right to do it, it would be interesting to know whether they change ALL of their customer accounts to investor shares if the account balance drops below the admiral thresholds. It seems like they will be causing lots of waves and only develop ill well from clients.
Why? The policy is very clear, if the balance falls below a threshold, the account is no longer eligible for Admiral Shares.
...
This.
A vendor following their clearly laid out terms and conditions is not tantamount to "petty and foolish". If Vanguard watered their lawn someone would post a complaint here.
Totally disagree, following your policy is fine except when you are already given a benefit that you have come to expect and is now being taken away. If Vanguard follows this consistently, then when the market drops 20 or 50%, all those accounts that were admiral but now don't meet the minimum admiral balance thesholds dues to the market drop should also be changed back to investor share status - will Vanguard do that and risk the rath of clients or just leave them as admiral stakeholders.
Each Vanguard Admiral fund has a minimum. This is often $10k for index funds and $50k for some managed funds, with certain money market funds higher still.

To get the Admiral fund with its expense ratios, you need to meet the minimum balance. They typically won’t drop your Admiral status for market drops so need to worry.

This is how Vanguard keeps fees as low as it can for everyone. The minimums and policies are clearly spelled out. If you want Admiral funds, just follow the minimum balances. If it doesn’t convert to Admiral fast enough, send them an email to let them know you meet the Admiral requirement.

Nate79
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by Nate79 » Tue Oct 16, 2018 11:49 pm

These are the rules, and have always been the rules. Not sure what is the issue except OP didn't understand the terms of their contract.

NYCwriter
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by NYCwriter » Wed Oct 17, 2018 2:34 am

euroswiss wrote:
Tue Oct 16, 2018 4:48 pm
NYCwriter wrote:
Mon Oct 15, 2018 11:32 pm

Moving to Fidelity creates an additional set of issues, and even more transaction fees for your holdings. So you'd be punishing yourself, not Vanguard.

Well,
that may be true, although I'm guessing that this transfer would be quite smooth. In addition, you'd likely get offered a few thousand dollars incentive by Fidelity to make the transfer. So, not necessarily a bad deal.
That said, I agree: Vanguard did nothing wrong here.
Good point. Fidelity gave me hundreds for moving individuals equities from TD, plus free transactions for two years. This was nice, because I could reduce long holdings at no cost and add them to my core Vanguard funds :)

I suppose if one was already retired or close to retirement and getting a hefty bonus to transfer, it might be worth it. But I'd always check the fine print. Many of Fidelity's transfer bonuses have expired, and they've had customer complaints regarding their free transaction promise.

Jags4186
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by Jags4186 » Wed Oct 17, 2018 3:41 am

You’re not happy. Move to Fidelity. Competition is good.

indexonlyplease
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Re: Vanguard changing my Admiral shares to Investor Shares

Post by indexonlyplease » Wed Oct 17, 2018 5:03 am

Maybe you should of stayed with PASS. Going into RMD could be worth the money and not making mistakes.

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