Adventures in asset relocation at Schwab

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dodecahedron
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Adventures in asset relocation at Schwab

Post by dodecahedron » Fri Nov 15, 2019 6:00 pm

Apologies in advance: please forgive the length of this post--as the title says, it is an ¨adventure¨.


For some time, I have been thinking about doing some asset relocation for tax efficiency reasons.

I decided that in my current tax status (i.e., facing the tax hump, tax torpedo, or whatever you want to call it starting in 2020), the incremental cost of holding as much VTIAX (Vanguard Total International) as I hold in my taxable account is higher than ideal.

After some reflection, I decided I would reduce my holdings of VTIAX in my taxable account at Schwab by about 10%. I had two approaches I could pursue: donating some appreciated shares of VTIAX to my DAF and/or tax gain harvesting those appreciated shares. (By the way, I only have one tax lot of VTIAX at Schwab, so everything has the same tax basis.) My plan is to rebuy international shares in my Roth IRA to preserve my overall asset allocation.

I thought about a lot of things in making my decision (including factors that can´t be discussed here, such as possible future changes in tax laws, and other things that CAN be discussed here such as sunset provisions written into existing law.) I do not want to go into my reasoning here.

Suffice it to say that I ultimately decided to split the difference, and tax gain harvest about 5% of my VTIAX holdings at Schwab and donate another 5% of those holdings to my Schwab DAF.

In the past, I had never done any selling of any assets held in taxable at Schwab, so I thought that would be an interesting tire-kicking exercise. I had, on the other hand, many times donated appreciated shares in taxable to my Schwab DAF.

I had some time this afternoon to do both, so I logged into my Schwab account. To do the tax gain harvesting, I need to enter an order to sell shares at Schwab. I had never done that before, but it went reasonably smoothly and I was pretty comfortable with the interface. So then I moved on to my DAF at Schwab, and began the process of donating VTIAX. To my surprise, when I clicked on the menu to donate shares to my DAF the list of possible securities to donate included EVERY mutual fund and DAF that I hold except VTIAX.

So apparently one can´t sell shares AND donate shares of the same security on the same day. That was just weird. Note that I had entered the sell order, I had entered a specific number of shares (and NOT a dollar figure!) so I knew for sure I had plenty of shares left to donate.

Oh well, I will go back on Monday (I guess) and donate the shares.

Another interesting quirk, after I entered the sell order I found it quite challenging to find any record on the Schwab website of my sell order. There was also no confirmation email generated. I began to wonder if I had actually successfully submitted the sell order. Eventually, I finally found a little obscure footnote market (a 1 in a red circle on a page that did not look like it had anything to do with VTIAX) that did go to a record of my sell order. Fortunately, I was offered the option to download a record of that order to an Excel file that is now stored on my computer because I can no longer find any record of the sell order on the Schwab website.

This does not bode well for the future. I am rethinking whether this is a place where I want to consolidate my assets. I do like the DAF and the ease of donating securities to it, but not so thrilled with the sell process. It is fine for now, but when I am older, it may be disconcerting. I will rethink this.

I feel like Vanguard did a better job of allowing to me to records of orders in process that I had recently submitted.

On the other hand, when I did find the link to the record of the order on the Schwab website, it also gave me an option to cancel the order. (This was before market close.) Vanguard would have made it easier to find a record of my order but would not have given me the option to cancel it.

In fact, perhaps the fact that my order is no longer cancellable is the reason I can no longer find any record of my submitted order on the Schwab website. Hmmm....

I feel reasonably confident this will all straighten itself out (and it is not as if any assets are actually showing as missing in action.) As I said, this was an adventure.

Edited to add: the actionable question is: would this have been any better at Fidelity or TD Ameritrade, the two alternative custodians I have been considering.

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dodecahedron
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Re: Adventures in asset relocation at Schwab

Post by dodecahedron » Sat Nov 16, 2019 2:37 pm

Update: I found the obscure circled 1 on the page. It still links to a page showing the VTIAX sell order I entered yesterday and still gives me the option to cancel it (even though it is long past yesterday´s market close). Time stamp on the sell order is 3:10 pm yesterday. According to Schwab, most mutual fund transactions will execute the same day if submitted prior to 4 pm, but ¨some¨ funds have earlier deadlines. Unclear if this is one of them. Oh,well, this is an interesting adventure. I don´t need the proceeds urgently, so I will just wait and see how this plays out.

NancyABQ
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Re: Adventures in asset relocation at Schwab

Post by NancyABQ » Sat Nov 16, 2019 3:21 pm

I'm not sure why it was hard for you to find the "Open Trades" on the Schwab website. They have a whole section devoted to them. If you hover on the "Trade" tab at the very top (second from the left) it will bring down a big menu with a section (top of third column) called "Trade Status". It has open orders, filled orders, pending orders, etc.

As for why the order didn't seem to go through and still seemed to be cancellable, just make sure you are accounting for time zones? Are you in the Eastern time zone? 4pm Eastern is time the market closes normally, so if you put your order in after that (but before 4pm in your time zone), then it wouldn't happen until the end of the next trading day.

Also in the order confirmation page (as you clicked through to actually enter the order) it should have told you there which day it would happen (either the 15th or next Monday).

I think it's probably a good idea for everybody who is new to Schwab (or any brokerage house) to maybe test out a small trade of selling, at some point, so they are familiar with the interface. Once you've done it a few times it won't be so daunting. :)

And yes, for a mutual fund you don't get the trade email until after the trade actually happens. I don't get an email confirmation just for putting in the order. I am not sure if there is a setting to change this.

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dodecahedron
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Re: Adventures in asset relocation at Schwab

Post by dodecahedron » Sat Nov 16, 2019 3:59 pm

NancyABQ wrote:
Sat Nov 16, 2019 3:21 pm
I'm not sure why it was hard for you to find the "Open Trades" on the Schwab website. They have a whole section devoted to them. If you hover on the "Trade" tab at the very top (second from the left) it will bring down a big menu with a section (top of third column) called "Trade Status". It has open orders, filled orders, pending orders, etc. Thanks, this is helpful. The menus are so cluttered and complicated with such long lists that it was not obvious I could find a record of the order submission here. With your directions, I did find it--the same page that I had earlier found linked with a tiny circled 1.Your approach is an easier way to find the info!

As for why the order didn't seem to go through and still seemed to be cancellable, just make sure you are accounting for time zones? Are you in the Eastern time zone? 4pm Eastern is time the market closes normally, so if you put your order in after that (but before 4pm in your time zone), then it wouldn't happen until the end of the next trading day. Yes, I am in the Eastern zone, and the timestamp on the order is 3:10 Eastern Time yesterday.

Also in the order confirmation page (as you clicked through to actually enter the order) it should have told you there which day it would happen (either the 15th or next Monday). I do not remember that the confirmation page stated which day the trade would execute, but I do remember that it did say that I would not see the completed trade until ¨tomorrow.¨ I took the reference to tomorrow to mean that it would execute same day (Friday) and post today (Saturday.)

I think it's probably a good idea for everybody who is new to Schwab (or any brokerage house) to maybe test out a small trade of selling, at some point, so they are familiar with the interface. Once you've done it a few times it won't be so daunting. :)

And yes, for a mutual fund you don't get the trade email until after the trade actually happens. I don't get an email confirmation just for putting in the order. I am not sure if there is a setting to change this.
I agree that it is a good idea to test out a small trade, and I guess I could consider this one to be my test. Fortunately, this is not a time-critical thing (e.g., one where a delay would affect tax years.) Just kind of disconcerting.

I will say that I had previous traded within my Roth IRA at Schwab and I remember that order went through very smoothly and seamlessly as a same day trade, exchanging shares of one Schwab mutual fund for shares of another Schwab mutual fund.

However, those mutual funds were Schwab funds. This is a Vanguard fund (that I had transferred in kind from Vanguard to Schwab a couple years ago.) This is my first time trying to submit an order relating to a Vanguard fund in my Schwab account. It is possible that Schwab has an earlier submission deadline for orders of external funds, but I did not see that indicated anywhere on the page, but there so much clutter overall that I could easily have missed it.

This is my first time selling Vanguard shares within my Schwab account. (I got an email a while back telling me that I am now in a special status where such transactions are no cost for me.)

And the other odd undocumented thing is that even though my submitted order only sold a small number of my VTIAX holdings, I am still unable to see my remaining shares of VTIAX in the list of securities I can donate to my DAF.

So it appears it is not possible to sell shares and donate shares of the same security on the same day, at least in the order I was trying to do it. It might have worked if I had donated some shares of VTIAX and then submitted a sell order for some of the remaining shares.

Anyway, thanks for your helpful explanations. I will update as this plays out. I will note that Schwab website is apparently undergoing some significant maintenance this weekend.

student
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Re: Adventures in asset relocation at Schwab

Post by student » Sat Nov 16, 2019 4:06 pm

I guess different company operates it slightly differently, you will be comfortable soon enough.

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ResearchMed
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Re: Adventures in asset relocation at Schwab

Post by ResearchMed » Sat Nov 16, 2019 4:50 pm

Each company has such different website setups and procedures, no question. It can feel very clunky for a while at a new site until one has done "enough" to get familiar. And even then, if there is some new "topic/issue", it can be annoying to find "it".

However, Schwab has - or at least we've found this in the past - phenomenal customer service, by phone or even by online "chat".
There were occasional times when we'd just start a chat and ask the "chat rep" to "do X for us", such as withdrawing some amount from an IRA and withhold a specific dollar amount for taxes. They were careful to repeat in the chat window what they understood I was asking, and then... it was done.

Perhaps you could ask them if you can process - er, if they can process for you - the DAF without waiting?

RM
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dodecahedron
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Re: Adventures in asset relocation at Schwab

Post by dodecahedron » Tue Nov 19, 2019 12:49 am

Thanks to everyone for input. The order I entered on Friday at 3pm to sell Vanguard mutual fund shares executed today. So did an order I entered today to exchange Schwab mutual fund shares. So I guess there is just a lag for Vanguard mutual funds.
student wrote:
Sat Nov 16, 2019 4:06 pm
I guess different company operates it slightly differently, you will be comfortable soon enough.
Yes, I am starting to get used to the interface.

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dodecahedron
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Re: Adventures in asset relocation at Schwab

Post by dodecahedron » Tue Nov 19, 2019 12:53 am

ResearchMed wrote:
Sat Nov 16, 2019 4:50 pm
Each company has such different website setups and procedures, no question. It can feel very clunky for a while at a new site until one has done "enough" to get familiar. And even then, if there is some new "topic/issue", it can be annoying to find "it".

However, Schwab has - or at least we've found this in the past - phenomenal customer service, by phone or even by online "chat".
There were occasional times when we'd just start a chat and ask the "chat rep" to "do X for us", such as withdrawing some amount from an IRA and withhold a specific dollar amount for taxes. They were careful to repeat in the chat window what they understood I was asking, and then... it was done.

Perhaps you could ask them if you can process - er, if they can process for you - the DAF without waiting?

RM
You are definitely right about getting used to new interface. I will say that I do appreciate being able to transact Vanguard Admiral mutual fund shares at Schwab without paying any transaction fees, so I don´t want to be unduly demanding.

I have the strong feeling that I could have done the DAF transaction the same day as I ordered the sell order if only I had entered the transactions in the opposite order. In others, donate shares first, then enter a sell order. I may try that tomorrow. Will report tomorrow.

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Re: Adventures in asset relocation at Schwab

Post by littlebird » Tue Nov 19, 2019 1:05 am

dodecahedron wrote:
Tue Nov 19, 2019 12:49 am
Thanks to everyone for input. The order I entered on Friday at 3pm to sell Vanguard mutual fund shares executed today. So did an order I entered today to exchange Schwab mutual fund shares. So I guess there is just a lag for Vanguard mutual funds.
student wrote:
Sat Nov 16, 2019 4:06 pm
I guess different company operates it slightly differently, you will be comfortable soon enough.
Yes, I am starting to get used to the interface.
Vanguard shares must be sold no later than one hour before close of market at Schwab to receive that day’s closing price. Later than that and they trade the next day.

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ResearchMed
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Re: Adventures in asset relocation at Schwab

Post by ResearchMed » Tue Nov 19, 2019 4:32 am

littlebird wrote:
Tue Nov 19, 2019 1:05 am
dodecahedron wrote:
Tue Nov 19, 2019 12:49 am
Thanks to everyone for input. The order I entered on Friday at 3pm to sell Vanguard mutual fund shares executed today. So did an order I entered today to exchange Schwab mutual fund shares. So I guess there is just a lag for Vanguard mutual funds.
student wrote:
Sat Nov 16, 2019 4:06 pm
I guess different company operates it slightly differently, you will be comfortable soon enough.
Yes, I am starting to get used to the interface.
Vanguard shares must be sold no later than one hour before close of market at Schwab to receive that day’s closing price. Later than that and they trade the next day.
dodecahedron: I certainly didn't know about the 3pm deadline, although I knew there could be some differences from the general 4pm deadline at "some places" (not particularly useful, eh?).

However, if you are going to keep a Schwab account, I'd strongly recommend that you get used to their customer service, either phone or chat. It is amazing, and especially compared to "certain other similar firms" (ahem!).
If, for example, you had just opened a chat window while working away on something else (depending upon issue, chat can be easier than phone, but not always), they probably would have spotted the problem quickly, and you wouldn't have worried, or spent time posting on BH.
:wink:

I continue to be surprised, and it's just about the only place I use "chat".
(I DO print a copy, "just in case".)

RM
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