Newbie [How do I move everything to Vanguard in-kind?]

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Toadfly12
Posts: 3
Joined: Tue Oct 09, 2018 1:58 pm

Newbie [How do I move everything to Vanguard in-kind?]

Post by Toadfly12 » Wed Oct 10, 2018 4:16 pm

Hello All,

I am new to the forum, and this seems like a great resource. Thanks for all the great info and links that folks have built!

I am guilty of having got mixed up with a 1% RIA with whom we just recently parted ways... They have our taxable account in an array of blue chip dividend producing equities. The problem was that I was coming from a place of knowing just about zero. After they missed something rather obvious I think, I figured that I was being irresponsible to not educate myself, and so have begun the process- I'm three books in so far ;) Not trying to "beat the market" just seems to make undeniable sense.

In any event I'm certainly not ready to run the show right now, and maybe never, who knows, but I will try to continue gaining knowledge. We considered CP, but even at a discounted rate of .9 %AUM a 550K portfolio will loose about 95.5K in management fees over 10 years (assuming 6% growth and 2,000/month added if I'm figuring correctly) That seems a very high hurdle to try to jump.

So to get things started I am planning on bringing everything over to Vanguard in kind. The .3% fees in the same scenario above would reduce to about 32.5K. So here's my main question... Would this be a reasonable starting place, assuming that for the time being I need some direction and advise? If I should want to change anything down the line I'm hoping to limit exposure to any unnecessary costs/taxes involved with changing funds etc., especially since I will likely already have some penalty associated with diversifying from what our past RIA has got me into!


Thanks in advance for any help! I thought the following info might be too much to start with, but here goes. I know making quick financial decisions isn't usually advised, but on the other hand I am uncomfortable with where things now sit considering what I have learned. Perhaps starting with Vangaurd .3% advisory service would be a step in the right direction at least??

Thanks again

Emergency funds: Yes, 6 mo plus
Debt: none
Tax Filing Status: Married Filing Jointly
Tax Rate: 18% Federal, 5% State
State of Residence: VA
Age: 56
Desired Asset allocation: between 60% stocks / 40% bonds and 70/30
Desired International allocation: 20-25% of stocks

Size of current total portfolio = mid six-figures

Current retirement assets

Taxable
25% cash set aside for investing currently in savings account- plan is to lump sum invest once plan finalized.

1.5% Cash and money market
2% First Trust Preferred (FPE)
29% blue chip dividend stock mix of 19 equitites, eg MRK, PEP, JNJ, MMM

His 401k
100% Vanguard 2025 Target Trust1 (expense ratio = .07)
Company match= 4% and making max catch up

His Roth IRA at Schwabb
2% Eaton Vance Atlanta Cap (EISMX)
1% First Trust Preferred (FPE)

His Rollover IRA at Schwab
15% mix of 10 blue chip dividend stocks, eg VZ, PG, V, BA etc
13% fixed income bonds
1% cash/money market


Her Roth IRA at Schwabb
.8% FT Riverfront Dynamic (RFDI)
.8% Frst Trst Emg Mkt Lcl Cry (FEMB)
.8% Royce PA Mutual Fund (PENNX)
.8% cash/money market

Her Traditional IRA at Schwabb
6.5 % T Rowe Price Cap Appreciation (PRWCX)
.8% cash/ money market

Total of All Accounts = 100%.

Contributions

New annual Contributions
$26,000 his 401k (includes employer 4% matching contributions)

$6,500 his IRA/Roth IRA
$6,500 her IRA/Roth IRA
$24,000 taxable is our goal (for retirement, not short term goals)
Last edited by Toadfly12 on Thu Oct 11, 2018 9:30 am, edited 1 time in total.

mhalley
Posts: 6310
Joined: Tue Nov 20, 2007 6:02 am

Re: Newbie [How do I move everything to Vanguard in-kind?]

Post by mhalley » Wed Oct 10, 2018 5:41 pm

Starting out with vanguard pas and having them manage the money while you do some reading until you get comfortable managing it on your own is certainly reasonable. You can cancel PAS at any time. The question of bringing it over in kind is that if vanguard manages it, they most likely will want to sell everything. If this is a taxable account, this could result in paying some taxes.
Read some books and the wiki, and you can always post your portfolio here for advice.
viewtopic.php?t=6212

Toadfly12
Posts: 3
Joined: Tue Oct 09, 2018 1:58 pm

Re: Newbie [How do I move everything to Vanguard in-kind?]

Post by Toadfly12 » Thu Oct 11, 2018 5:36 am

Thank you for the reply!

b42
Posts: 297
Joined: Thu Apr 11, 2013 7:00 pm

Re: Newbie [How do I move everything to Vanguard in-kind?]

Post by b42 » Thu Oct 11, 2018 7:04 am

Welcome to the forums!

If you check out mhalley's link and reformat your first post, you will get more responses. If we have a better idea of your current situation and holdings, better recommendations can be given.

typical.investor
Posts: 403
Joined: Mon Jun 11, 2018 3:17 am

Re: Newbie [How do I move everything to Vanguard in-kind?]

Post by typical.investor » Thu Oct 11, 2018 7:10 am

Toadfly12 wrote:
Wed Oct 10, 2018 4:16 pm
Hello All,

I am new to the forum, and this seems like a great resource. Thanks for all the great info and links that folks have built!

I am guilty of having got mixed up with a 1% RIA with whom we just recently parted ways... They have our taxable account in an array of blue chip dividend producing equities. The problem was that I was coming from a place of knowing just about zero. After they missed something rather obvious I think, I figured that I was being irresponsible to not educate myself, and so have begun the process- I'm three books in so far ;) Not trying to "beat the market" just seems to make undeniable sense.

In any event I'm certainly not ready to run the show right now, and maybe never, who knows, but I will try to continue gaining knowledge. We considered CP, but even at a discounted rate of .9 %AUM a 550K portfolio will loose about 95.5K in management fees over 10 years (assuming 6% growth and 2,000/month added if I'm figuring correctly) That seems a very high hurdle to try to jump.

So to get things started I am planning on bringing everything over to Vanguard in kind. The .3% fees in the same scenario above would reduce to about 32.5K. So here's my main question... Would this be a reasonable starting place, assuming that for the time being I need some direction and advise? If I should want to change anything down the line I'm hoping to limit exposure to any unnecessary costs/taxes involved with changing funds etc., especially since I will likely already have some penalty associated with diversifying from what our past RIA has got me into!


Thanks in advance for any help!
I'm not 100% convinced PAS is the best for you. Or maybe it is. Do they look at tax implications before issuing their advice? You need to know that.

Anyway, what's your tax situation? How much are you getting taxed on the dividends and how much do you have in capital gains which you'd have to pay taxed on if sold.

If you are holding dividend stocks in taxable, aren't you getting bit a little? If that's not an issue, I'd might prefer to hold the dividend stocks because growth stocks have done so well (until yesterday) that it's be a shame to sell value stocks to buy growth at this point in time. I suspect you haven't liked the RIA's selection and have been comparing it to growth, but value stocks do underperform for long stretches and that is to be expected.

Transferring in-kind is easy actually. When you open an account, you can specify where and how you want assets transferred from and just select in-kind.

Jack FFR1846
Posts: 8088
Joined: Tue Dec 31, 2013 7:05 am

Re: Newbie [How do I move everything to Vanguard in-kind?]

Post by Jack FFR1846 » Thu Oct 11, 2018 7:21 am

If you have a lot of different stocks, you may want to consider either selling where you are currently or transferring them to a low cost broker like Schwab or with enough to get free trades to Fidelity or Merrill Edge. Vanguard charges $19.95 to sell each stock, which is, of course expensive in these days of Schwab $4.95 fee to sell. You don't say how many different stocks you have, but if a FA picked the stocks to keep you as scared as possible to prevent you from thinking you could possibly manage your portfolio, I could see you easily having 20 different stocks, in which case, Vanguard is going to charge you about $400 where Schwab will charge about $100 and with free trades at Fidelity or ME, $0.
Bogle: Smart Beta is stupid

Toadfly12
Posts: 3
Joined: Tue Oct 09, 2018 1:58 pm

Re: Newbie [How do I move everything to Vanguard in-kind?]

Post by Toadfly12 » Thu Oct 11, 2018 9:45 am

Thanks for the replies! I did edit the original post as suggested. Initially I thought that would be too much info.

I called Vangaurd, and the rep said they do not have a $19.95 or any fee to sell individual stocks. Hopefully this is not incorrect.

Many of the equity purchases are not even a year old, so I would imagine waiting until I can claim any gains as capital rather than ordinary income would be called for.

It is not the type of mix the RIA used that bothered me, but more that they tried to beat the market by stock picking instead of indexing. They also screwed up by telling me that I couldn't contribute to my Roth last year since I was maxing out my 401K... then I read that unless your AGI is above 189K that's not correct. :oops:

The main question for the time being is if going to Vangaurd .3% advisory sounds like an ok plan. I want to have a plan I can stick with and not worry about... I believe I made an error and hope to correct it with as little damage as possible while getting more in line with a passive/indexed approach.

Thanks!!!

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