switching to vanguard from a financial advisor

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
nsj13
Posts: 14
Joined: Mon Jan 20, 2014 12:51 pm

switching to vanguard from a financial advisor

Post by nsj13 »

Hi all,

Some of my family is looking to leave their financial advisor. They currently use an advisor who uses DFA funds through Ameritrade. I'd like to switch them to the vanguard personal advisor service (they need help...) but I'm concerned that they will have to sell all of their DFA funds and therefore deal with significant capital gains. Is there any way to keep the DFA funds with vanguard (I assume not)? If not, are there any other services people know of similar to Vanguard where they would be able to keep their DFA holdings? I assume Betterment and other similar services will have similar issues.

Thanks for your help!
tombonneau
Posts: 94
Joined: Tue May 23, 2017 4:24 pm

Re: switching to vanguard from a financial advisor

Post by tombonneau »

When I recently transferred my IRA from NWM to Vanguard, the Vanguard rep told me they would transfer over like funds to like funds. I'd imagine they do the same with a taxable brokerage account. (Assuming that is what you are referring to since you are worried about cap gains.)

If you want to switch to new funds, there is no way to avoid a cap gains situation one way or the other I wouldn't think.

Note that if you exchange/sell non-VG funds with VG you'll pay a fee on each one. When I brought over my IRA first I liquidated it all to MM funds so I could re-invest cleanly with VG. If you pay no backload fee on those funds I would consider doing that before moving them all over.

But I don't know that VG will work with the DFA funds as don't you need a FA to handle those? So yeah, might have to bite the CG bullet? Good luck! :)

P.S. I'd just call VG if you haven't already and explain the situation and see what they say about DFA funds. Contrary to the group think that seems to permeate here and elsewhere, I've had no issues with VG support and found most people very helpful.
Avo
Posts: 1099
Joined: Wed Jun 11, 2008 2:21 am
Location: California

Re: switching to vanguard from a financial advisor

Post by Avo »

I believe Vanguard will take them "in kind", and allow you to sell them (partially or completely, with a fee for each sale, as mentioned), but not to buy them or add to them.
Topic Author
nsj13
Posts: 14
Joined: Mon Jan 20, 2014 12:51 pm

Re: switching to vanguard from a financial advisor

Post by nsj13 »

thanks, yeah I'm referring to the funds in the taxable account. It would be best if they could just keep the money in those DFA funds, but I agree, I think they would just have to bite the bullet and pay the taxes on capital gains.
livesoft
Posts: 74494
Joined: Thu Mar 01, 2007 8:00 pm

Re: switching to vanguard from a financial advisor

Post by livesoft »

Vanguard won't force one to sell their assets, but they also won't include them in their advice service that one pays for.
Wiki This signature message sponsored by sscritic: Learn to fish.
User avatar
Dale_G
Posts: 3386
Joined: Tue Feb 20, 2007 5:43 pm
Location: Central Florida - on the grown up side of 83

Re: switching to vanguard from a financial advisor

Post by Dale_G »

To reinforce the point: livesoft is correct. Your relatives can transfer the DFA funds "in kind" to Vanguard and keep them. They just can't buy any more. The easy solution, keep the DFA funds and no tax ramifications. Use new money to buy Vanguard funds or ETFs.

Dale
Volatility is my friend
Topic Author
nsj13
Posts: 14
Joined: Mon Jan 20, 2014 12:51 pm

Re: switching to vanguard from a financial advisor

Post by nsj13 »

perfect, that's what they will do. Thanks everyone!
Post Reply