My apologies in advance for the lengthy post!
My wife and I (newlyweds at the time) started our investing with Vanguard almost thirty years ago after hearing Jack Bogle speak and having an opportunity to meet and chat with him. We have been with Vanguard ever since and find ourselves reluctantly exploring moving our investments away from Vanguard to another provider after becoming less and less satisfied with Vanguard (the firm, not the funds).
For example, they have steadily eroded away the Flagship benefits starting with ending the availability of free/discounted tax software, dropping the annual financial plan by a CFP, discontinuing Vanguard Advantage (just months after we switched all of our banking to the Advantage account to simplify our now retired life), switching away from a dedicated Flagship representative to a "call center" type operation and finally greeting me at log-in with an annoying pop-up soliciting me to sign up for PAS only to put an obnoxious PAS banner ad at the top of the initial screen. The website has been unreliable and yesterday it took three tries and twenty minutes to finally execute a single, simple transfer of some funds from our money market to our checking account (which would have been entirely unnecessary when we had the Vanguard Advantage account).
So over the past six months, we have explored other brokerages (Fidelity, Schwab, Merrill Edge, TD Ameritrade and eTrade) looking for the ability to continue to hold Vanguard funds (mutual funds preferred), no-cost or low cost trades of those funds, a no-cost cash management account with decent interest rates, strong customer service, and a robust website for reviewing portfolio activity and smooth trouble-free execution of transactions. We are now considering moving our portfolio from Vanguard to eTrade. After doing significant online research and speaking with a local eTrade representative, here is what I understand about eTrade:
- The Vanguard mutual funds in our portfolio (VTSAX and VBTLX) and the money market fund (VMFXX) have no transaction fees or commissions at eTrade (unlike all of the others we considered). That means we can transfer those over to eTrade in kind with no time out of the market and we can buy or sell them at no cost. If that is the case, I don't see any advantage to holding those funds at Vanguard rather than eTrade. At other brokerages, we would either pay a substantial transaction fee to buy or sell a Vanguard mutual fund OR we'd have to convert each mutual fund to the equivalent ETF at Vanguard, then transfer, then possibly pay a commission to buy or sell (at Fidelity at least). We prefer to keep VTSAX and VBTLX rather than convert to VTI and BND.
- eTrade offers a no-cost cash management account with free online billpay, free unlimited check writing, and free ATM transactions with unlimited ATM fee refunds. While the linked sweep account has a low interest rate (.01%-.035%) they also offer a savings account with higher interest rates (1.7% currently) as well as Vanguard money market accounts (no commission, no transaction fee) where cash can be held and moved into the sweep account as needed for CMA transactions.
- eTrade has three trading platforms (two web and one PC) and two mobile apps which are highly rated and include robust research and investment strategy tools, back testing, etc. With our portfolio size, those are all available at no-cost.
- eTrade offers a nice account opening bonus and unlike some other brokerages, will consider the total amount transferred over (combining my IRA, my wife's IRA and our joint taxable account) to calculate the account bonus (which is $2,500 for a transfer of $1 million or more). Others offer no cash bonus or will only offer one bonus per account holder (so a bonus for me for my IRA, a bonus for my wife for her IRA and nothing for the joint account meaning about half the bonus offered by eTrade).
- eTrade has been highly rated for customer service. I sent website inquiries to all of the brokerages we considered. A representative at eTrade answered all of my questions within an hour of my email and provided a direct phone and email for any additional questions I might have. Others either never responded, provided incomplete information or directed me to call the 800 number with questions. We made appointments to meet with representatives at local offices. The eTrade representative was the most helpful and seemed most interested in earning our business (even suggesting we only transfer over $1 million initially to get their maximum bonus then moving the rest in twelve months when we would qualify for additional bonus money).
(The Merrill representative "forgot" about our appointment which we learned after we had already waited fifteen minutes past our appointment time! The same person who greeted us when we arrived came out to say "sorry, he went to lunch but I just reached him and he said he'd be back in about thirty minutes, can you come back?" My reply: "Sorry, no. If this is how you seek to earn the business of a prospective million dollar plus client, I can't imagine the service we'd get if we actually invested with you.")
In summary, I don't see any downside to holding our investments (entirely in VTSAX, VBTLX and VMFXX) at eTrade rather than Vanguard. But, having been with VG exclusively for almost thirty years, we want to be sure this is a wise move before we commit.
Can those who have experience with eTrade chime in with the good, bad or otherwise? Thoughts from others about the advisability of such a move are also appreciated!