"Vanguard converting mutual fund accounts to brokerage?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
TimeRunner
Posts: 1644
Joined: Sat Dec 29, 2012 9:23 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by TimeRunner »

rkhusky wrote:
InertiaMan wrote:I bumped into this issue today when trying to convert my traditional IRA at VG to a Roth. Opened an empty Roth, clicked through to do the transfer from IRA to Roth . . . and got an error saying something like "transfers not permitted across platforms."
Interesting. When I opened a new account, which was required to be a brokerage account, I funded it by transferring from my non-upgraded taxable account.
Perhaps they've taken care of it. My TIRA VBA has a "Convert to Roth" link that opens a screen where one can say how much $, to what account (in this case it would go to the existing Roth VBA), and some choices about tax reporting. Looks very simple and easy. (I cancelled out.)
One cannot enlighten the unconscious.
jaj2276
Posts: 531
Joined: Sat Apr 16, 2011 5:13 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by jaj2276 »

heartwood wrote:
jaj2276 wrote:Adding my experience. I logged in over the weekend and was asked to convert so I did. My accounts were as follows:

-- Individual MF-only account
-- Traditional IRA w/ no balance (used for backdoor Roths)
-- Roth IRA
-- Joint Brokerage Account

All accounts were converted with no issues. The Joint Brokerage Account didn't seem to convert in to anything different (i.e., it still has the same account number) but I have a confirm saying that the conversion was complete.
Did the old joint brokerage account have Advantage checking?
It did not. It had a sweep account but that was it. This account held assets (ETFs and one single stock) that I transferred over from Smith Barney a few years ago.
User avatar
sperry8
Posts: 2288
Joined: Sat Mar 29, 2008 9:25 pm
Location: Miami FL

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by sperry8 »

Funny, I am not upgrading anyway - but my upgrade buttons which were on the website are now gone. Making me even happier I didn't do anything. Who knows what lurks behind door #1.
BH contests: 2020 #253 of 664 | 19 #233 of 645 | 18 #150 of 493 | 17 #516 of 647 | 16 #121 of 610 | 15 #18 of 552 | 14 #225 of 503 | 13 #383 of 433 | 12 #366 of 410 | 11 #113 of 369 | 10 #53 of 282
scotthal
Posts: 185
Joined: Wed Nov 06, 2013 9:20 pm
Location: Portland, Oregon

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by scotthal »

I'd strongly advise holding off on the "upgrade" - it appears that Vanguard Brokerage has ignored my per holding "sweep" elections and reinvested all of the year end dividends & capital gains. My taxable mutual funds are all set for average cost, so getting the money back out is going to bump my tax bill by damn near 50%. Am not pleased, & awaiting an explanation from my flagship representative.
Growtch, grinch; paranoid contrarian
User avatar
Doc
Posts: 9887
Joined: Sat Feb 24, 2007 1:10 pm
Location: Two left turns from Larry

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by Doc »

scotthal wrote:I'd strongly advise holding off on the "upgrade" - it appears that Vanguard Brokerage has ignored my per holding "sweep" elections and reinvested all of the year end dividends & capital gains. My taxable mutual funds are all set for average cost, so getting the money back out is going to bump my tax bill by damn near 50%. Am not pleased, & awaiting an explanation from my flagship representative.
Doc wrote:The tax accounting for the conversion went without a hitch except for a few nuances like loss of cost basis or reinvestment choices which is easy to fix in a few minutes if you are know to look for it which you now do.
Not :shock:

Sith happens. Caveat emptor.

Just change/review your "defaults" immediately after the transition and correct if needed. Don't reject the conversion simply because of this "hitch".
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
scotthal
Posts: 185
Joined: Wed Nov 06, 2013 9:20 pm
Location: Portland, Oregon

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by scotthal »

Doc wrote:
scotthal wrote:I'd strongly advise holding off on the "upgrade" - it appears that Vanguard Brokerage has ignored my per holding "sweep" elections and reinvested all of the year end dividends & capital gains. My taxable mutual funds are all set for average cost, so getting the money back out is going to bump my tax bill by damn near 50%. Am not pleased, & awaiting an explanation from my flagship representative.
Doc wrote:The tax accounting for the conversion went without a hitch except for a few nuances like loss of cost basis or reinvestment choices which is easy to fix in a few minutes if you are know to look for it which you now do.
Not :shock:

Sith happens. Caveat emptor.

Just change/review your "defaults" immediately after the transition and correct if needed. Don't reject the conversion simply because of this "hitch".
Setting before conversion : "sweep"; after conversion : "sweep". Vanguard Brokerage simply ignored it. This is going to cost me at least a couple of thousand dollars, unless Vanguard unwinds their mess. Am trending from "not pleased" to "furious"; still waiting on a explanation from Vanguard.
Growtch, grinch; paranoid contrarian
fortyofforty
Posts: 2083
Joined: Wed Mar 31, 2010 12:33 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by fortyofforty »

scotthal wrote:Setting before conversion : "sweep"; after conversion : "sweep". Vanguard Brokerage simply ignored it. This is going to cost me at least a couple of thousand dollars, unless Vanguard unwinds their mess. Am trending from "not pleased" to "furious"; still waiting on a explanation from Vanguard.
Ouch. My issues with the "forced" conversion are nothing in comparison to yours. I hope Vanguard can straighten things out.
User avatar
TimeRunner
Posts: 1644
Joined: Sat Dec 29, 2012 9:23 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by TimeRunner »

Not to defend VG, but if the process were flawless and 100% perfect, they would have just converted everyone over on some Holiday weekend. The vast majority of people who encountered no issues with conversion won't be posting to the Internet, but many who did have issues will speak out. I have empathy for VG that is "trying to change the tablecloth during Thanksgiving dinner." Hope all those for whom the conversion did not go smoothly get their issues worked out, which benefits all of us as VG can move on and put their resources and efforts elsewhere. Hang in there.
One cannot enlighten the unconscious.
PGR
Posts: 284
Joined: Thu Apr 10, 2008 6:25 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by PGR »

mhalley wrote:My conversion from old to new type accounts went smoothly, and took 3 business days.
Mike
Hi Mike - by 3 business days did it go something like this?

Day 1: you pressed the button and started it on business day 1,

Day 2: it was 'converting' for business day 2

Day 3: On day thru you logged in and everything was done and ready to go and you could begin transacting again...?


Something like that?
PGR
Posts: 284
Joined: Thu Apr 10, 2008 6:25 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by PGR »

Actually to better clarify...

If one wanted to convert so as to minimize the # of 1099s for 2015 and 2016 by achieving the conversion right at the new year....

What would be the best day to hit the upgrade button to ensure the old account(s) close close on or by 12/31 and the new stuff appears on 1/1?

Dec 30? 31st?
User avatar
TimeRunner
Posts: 1644
Joined: Sat Dec 29, 2012 9:23 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by TimeRunner »

PGR wrote:Actually to better clarify...

If one wanted to convert so as to minimize the # of 1099s for 2015 and 2016 by achieving the conversion right at the new year....

What would be the best day to hit the upgrade button to ensure the old account(s) close close on or by 12/31 and the new stuff appears on 1/1?

Dec 30? 31st?
I would think you are going to get two sets of 1099s (old account numbers, new account numbers) for your conversion year, regardless of when you convert during the conversion year. If that's the case, and you aren't planning to initiate any immediate transactions, the sooner the conversion, the less end-of-year uncertainty. You can call VG to get a more authoritative answer, since mine is just opinion. :)
One cannot enlighten the unconscious.
User avatar
cfs
Posts: 4154
Joined: Fri Feb 23, 2007 1:22 am
Location: ~ Mi Propio Camino ~

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by cfs »

Done.

Done upgrading my dw's account this morning. My accounts were upgraded in September 2015 and after a few minor issues all the functions were working properly as of last night (the last issue was the link to my bank account which is now working after submitting an upgraded authorization form via snail-mail). So, maintaining course and speed, steady as she goes.

Wishing all my BH shipmates a Feliz Navidad.
~ Member of the Active Retired Force since 2014 ~
MnD
Posts: 4618
Joined: Mon Jan 14, 2008 12:41 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by MnD »

I think I consolidated the last of my mutual funds with my other brokerage holdings in the late 80's.
That this is STILL an issue at Vanguard and still causing problems, wailing and gnashing of teeth is kind of astounding.
This issue mainly and other posts about some other anachronistic practices is why I haven't had a Vanguard account since the 1980's (Prime Money Market). I have loads of Vanguard funds (ETF versions) but sounds like the back office still can't get past 1990.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
User avatar
JamesSFO
Posts: 3247
Joined: Thu Apr 26, 2012 10:16 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by JamesSFO »

MnD wrote:I think I consolidated the last of my mutual funds with my other brokerage holdings in the late 80's.
That this is STILL an issue at Vanguard and still causing problems, wailing and gnashing of teeth is kind of astounding.
This issue mainly and other posts about some other anachronistic practices is why I haven't had a Vanguard account since the 1980's (Prime Money Market). I have loads of Vanguard funds (ETF versions) but sounds like the back office still can't get past 1990.
I think this is an unfair characterization of the situation. Both my parents and I converted our accounts (them 12 --> 6, and me 6 --> 3) without flaws over a year ago.

However, anytime you take a system that was working for people (e.g. not needing a brokerage account) and shift things around it can be hard.
jj987
Posts: 83
Joined: Mon Nov 19, 2007 4:13 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by jj987 »

So I am looking to buying some ETFs. I now understand I have to upgrade from my mutual fund account to a brokerage account. I did that for my mutual fund account. I did not upgrade my IRA (traditional and ROTH) although there is an "upgrade" link there. Is there any reason for me to upgrade my IRA? I will just continue to buy the mutual funds I have in there already. Owning ETFs in IRA is of no great interesting to me as I have Admiral shares of the funds already so no real savings there. Will Vanguard eventually upgrade all our accounts to brokerage accounts?

Would love input from anyone already having done this.
User avatar
TimeRunner
Posts: 1644
Joined: Sat Dec 29, 2012 9:23 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by TimeRunner »

jj987 wrote:Would love input from anyone already having done this.
If you read this thread, you'll find input from people who have done this. I'd flip your question around and ask why you wouldn't do this, since that's the direction Vanguard has chosen to take existing accounts and all new ones. [OT comment removed by admin LadyGeek]
One cannot enlighten the unconscious.
scotthal
Posts: 185
Joined: Wed Nov 06, 2013 9:20 pm
Location: Portland, Oregon

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by scotthal »

jj987 wrote:So I am looking to buying some ETFs. I now understand I have to upgrade from my mutual fund account to a brokerage account. I did that for my mutual fund account. I did not upgrade my IRA (traditional and ROTH) although there is an "upgrade" link there. Is there any reason for me to upgrade my IRA? I will just continue to buy the mutual funds I have in there already. Owning ETFs in IRA is of no great interesting to me as I have Admiral shares of the funds already so no real savings there. Will Vanguard eventually upgrade all our accounts to brokerage accounts?

Would love input from anyone already having done this.
FWIW - tried to convert some mutual fund shares (12/29) from a 'converted' traditional IRA to my mutual fund :: Roth IRA. No joy - Vanguard blocked the exchange. Had to convert the Roth to a brokerage acct, cash out the tIRA source funds, move the bucks to the new Roth settlement fund, & then reinvest. A couple days in transit. Multiple steps. Not really an improvement. Fortunately, had sufficient time to complete the taxable event within the calendar year.
Growtch, grinch; paranoid contrarian
User avatar
rob
Posts: 3441
Joined: Mon Feb 19, 2007 6:49 pm
Location: Here

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by rob »

Keep in mind another "advantage" of "upgrading" to brokerageaccounts....

Availability of Tax Forms.....
1099-B
Mutual fund accounts: Late-January
Brokerage accounts: Late-February

1099-DIV
Mutual fund accounts: Late-January
Brokerage accounts: Late-February
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien
ogrehead
Posts: 133
Joined: Tue Dec 08, 2015 9:32 am

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by ogrehead »

rob wrote:Keep in mind another "advantage" of "upgrading" to brokerageaccounts....

Availability of Tax Forms.....
1099-B
Mutual fund accounts: Late-January
Brokerage accounts: Late-February

1099-DIV
Mutual fund accounts: Late-January
Brokerage accounts: Late-February
Do you know for a fact that this difference applies to brokerage accounts containing only mutual funds? If true it's worth a gripe.
User avatar
VictoriaF
Posts: 19547
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Vanguard converting mutual fund accounts to brokerage?

Post by VictoriaF »

I was not paying attention to the brokerage upgrade discussions until now. Here is my story.

In December, I rolled over some funds from the TSP to a Vanguard Rollover IRA and needed to convert some of these funds to Roth before the end of the year. I called Vanguard to find out how long the process of the Roth conversion is expected to take, and they said that I have to upgrade my account to brokerage first, and then the conversion will be easy. I did not have time to read about advantages and disadvantages of the brokerage upgrade and authorized it as I was instructed.

The upgrade took place over night and the next day I was able to perform a Roth conversion. One day later, I refined my tax estimates for 2015, and converted an additional amount to Roth. Both Roth conversions went very smoothly.

Today, when I stumbled on this thread, I decided to understand what I got myself into. Here are my take-aways:
.
  • 1. For the Roth conversion, the upgraded brokerage account works very fast.
    .
    2. I already had a Roth account at Vanguard but created a new Roth Brokerage account to hold my rollover-conversion funds, in case I want to recharacterize the conversion in the future. I don't know if this has anything to do with the brokerage upgrade, but I appreciate the capability.
    .
    3. I lost the ability to write checks in my taxable account, but I was not writing checks anyway. Apparently, my traditional account has been upgraded to brokerage earlier and I was not paying attention.
    .
    4. I had to modify dividend and capital gains distributions in my taxable account from "Reinvest" to "To the settlement fund." In the past they always were going to a money market account. Unfortunately, I already have some (a small amount of) short-term gains and have to be careful about selling this year.
    .
    5. I reviewed all my Vanguard accounts (taxable, Rollover IRA, and Roth IRAs) to ensure that my dividend and capital gains distributions are the way I want them to be. The changes I requested will take 2 business days.
    .
    6. In my beneficiary designation portion, I could only find entries for the Traditional, Rollover IRA, and the new Roth IRA accounts. I was wondering what has happened to my old Roth IRA designations. Finally, I checked the funds included under the new Roth IRA, and the old IRA funds were included there.
In summary:
- I was HAPPY that the new system enabled me to do Roth conversions on a short notice.
- I am INDIFFERENT to the new trading features and tax reporting.
- I was ALARMED that my distributions were changed.
- I was CONFUSED by the beneficiary designations for all Roth accounts lumped under one account number.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
dbr
Posts: 34289
Joined: Sun Mar 04, 2007 9:50 am

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by dbr »

I suppose these things are another reminder to keep a close eye on how one's accounts are working, verify everything when the brokerage changes its platforms, and ignore advice not to look at your accounts.
fortyofforty
Posts: 2083
Joined: Wed Mar 31, 2010 12:33 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by fortyofforty »

I don't know if anyone else is bothered by it, but I am repeatedly left with a penny in the "Settlement Fund". There is nothing I can do about it. It can't be moved. It can't be eliminated. So there it sits. It's annoying and ridiculous, since when you elect to move a chunk of money into the Settlement Fund, then move all of it out to another fund, you can never really move "all" of it. You move what it sees at the moment, but eventually the penny will appear due to what was "earned" by the Settlement Fund overnight. I don't want to leave anything in my Settlement Fund. Not a penny. Not a dollar. When I choose to move all, I want to move all. Why can't Vanguard figure this out? It's truly a minor point, but it still makes no sense.
User avatar
Doc
Posts: 9887
Joined: Sat Feb 24, 2007 1:10 pm
Location: Two left turns from Larry

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by Doc »

dbr wrote:I suppose these things are another reminder to keep a close eye on how one's accounts are working, verify everything when the brokerage changes its platforms, and ignore advice not to look at your accounts.
So everyone assumes that Vanguard who has been in the brokerage business for only seven years will be an automatic "expert" on all nuances of the brokerage business.
Dec 30, 2008 @ 3:44 pm By Andrew Coen wrote:Vanguard Brokerage Services, the broker-dealer unit of The Vanguard Group Inc., is ending its decade-long relationship with Pershing LLC and will self-clear its trades, according to Amy Chain, a spokeswoman for the fund manager

http://www.investmentnews.com/article/2 ... self-clear

VBS still has a lot to learn about the details of their "new" brokerage platform. In the mean time follow dbr's advice.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
ThisTimeItsDifferent
Posts: 269
Joined: Sat Jan 31, 2015 2:51 pm

Re: Vanguard converting mutual fund accounts to brokerage?

Post by ThisTimeItsDifferent »

VictoriaF wrote: 2. I already had a Roth account at Vanguard but created a new Roth Brokerage account to hold my rollover-conversion funds, in case I want to recharacterize the conversion in the future. I don't know if this has anything to do with the brokerage upgrade, but I appreciate the capability.
.
6. In my beneficiary designation portion, I could only find entries for the Traditional, Rollover IRA, and the new Roth IRA accounts. I was wondering what has happened to my old Roth IRA designations. Finally, I checked the funds included under the new Roth IRA, and the old IRA funds were included there.[/list]
Are you sure that the new Brokerage Roth is in fact really a separate account from the non-Brokerage Roth?
What if you have, or can you have, two separate brokerage Roth accounts?

I ask because when I did a conversion from a tIRA to a Roth at Vanguard a few years ago, they, despite my very clear instructions, put the new Roth in a sub account and performed a pro-rata calculation when I re-characterized.

Then they completely incorrectly stated what they did when I challenged them on it over 2 years and a few dozen emails and phone calls. I stated they were separate accounts and should not have the pro-rata rule, they just said, oh the math is really complicated, stop calling us until someone there finally revealed they were in these sub-accounts but by then it was too late for them to fix it.
User avatar
VictoriaF
Posts: 19547
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Vanguard converting mutual fund accounts to brokerage?

Post by VictoriaF »

ThisTimeItsDifferent wrote:
VictoriaF wrote: 2. I already had a Roth account at Vanguard but created a new Roth Brokerage account to hold my rollover-conversion funds, in case I want to recharacterize the conversion in the future. I don't know if this has anything to do with the brokerage upgrade, but I appreciate the capability.
.
6. In my beneficiary designation portion, I could only find entries for the Traditional, Rollover IRA, and the new Roth IRA accounts. I was wondering what has happened to my old Roth IRA designations. Finally, I checked the funds included under the new Roth IRA, and the old IRA funds were included there.[/list]
Are you sure that the new Brokerage Roth is in fact really a separate account from the non-Brokerage Roth?
What if you have, or can you have, two separate brokerage Roth accounts?

I ask because when I did a conversion from a tIRA to a Roth at Vanguard a few years ago, they, despite my very clear instructions, put the new Roth in a sub account and performed a pro-rata calculation when I re-characterized.

Then they completely incorrectly stated what they did when I challenged them on it over 2 years and a few dozen emails and phone calls. I stated they were separate accounts and should not have the pro-rata rule, they just said, oh the math is really complicated, stop calling us until someone there finally revealed they were in these sub-accounts but by then it was too late for them to fix it.
When I look at my Vanguard Balances and Holdings, I see different brokerage accounts as follows:
  • 1. Rollover IRA Brokerage Account <-- holds my (traditional) Rollover IRA funds remaining after the 2015 Roth conversion
    2. Roth IRA Brokerage Account <-- holds my old (pre-2015) Roth IRA funds
    3. Roth IRA Brokerage Account <-- holds my new Roth IRA funds after a recent conversion
It seems to me that the new Roth (#3) is, in fact, a separate account, because it has a different account number than the old Roth (#2). Roth accounts #2 and #3 are displayed separately and at the same level (no indentations), i.e., not as sub-accounts.

In the Beneficiary designations section, the beneficiaries for both Roth brokerage accounts are reported on a single line which carries the number of the new Roth (#3). But when I click on the holdings covered by that line, I see beneficiary designations for both Roth accounts, under their separate numbers.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
leftcoaster
Posts: 550
Joined: Mon Jul 23, 2007 4:04 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by leftcoaster »

I got an invitation for this service today and was told on sign on that none of my accounts were eligible.

You'd think their analytics department would know this and that I wouldn't have received the email...
User avatar
Doc
Posts: 9887
Joined: Sat Feb 24, 2007 1:10 pm
Location: Two left turns from Larry

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by Doc »

leftcoaster wrote:I got an invitation for this service today and was told on sign on that none of my accounts were eligible.

You'd think their analytics department would know this and that I wouldn't have received the email...
Same old same old except my invite was some 18 months ago. :D

It's not that they don't know it that is the really bad part but that they don't seem to be able to learn. :shock:
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
leftcoaster
Posts: 550
Joined: Mon Jul 23, 2007 4:04 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by leftcoaster »

Doc wrote:
leftcoaster wrote:I got an invitation for this service today and was told on sign on that none of my accounts were eligible.

You'd think their analytics department would know this and that I wouldn't have received the email...
Same old same old except my invite was some 18 months ago. :D

It's not that they don't know it that is the really bad part but that they don't seem to be able to learn. :shock:

This pattern of send email with link and then fail the desired operation is a classic phishing attack. Real user foes away disappointed. Attacker has password.
dkturner
Posts: 1626
Joined: Sun Feb 25, 2007 7:58 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by dkturner »

leftcoaster wrote:
Doc wrote:
leftcoaster wrote:I got an invitation for this service today and was told on sign on that none of my accounts were eligible.

You'd think their analytics department would know this and that I wouldn't have received the email...
Same old same old except my invite was some 18 months ago. :D

It's not that they don't know it that is the really bad part but that they don't seem to be able to learn. :shock:

This pattern of send email with link and then fail the desired operation is a classic phishing attack. Real user foes away disappointed. Attacker has password.
When receiving an Email from a "trusted" source one can always test its validity by attempting to log on with a fictitious screen name and password. If the website is for real it will reject your sign on. If it accepts your fictitious sign on its a bogus website.
leftcoaster
Posts: 550
Joined: Mon Jul 23, 2007 4:04 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by leftcoaster »

dkturner wrote:
leftcoaster wrote:
Doc wrote:
leftcoaster wrote:I got an invitation for this service today and was told on sign on that none of my accounts were eligible.

You'd think their analytics department would know this and that I wouldn't have received the email...
Same old same old except my invite was some 18 months ago. :D

It's not that they don't know it that is the really bad part but that they don't seem to be able to learn. :shock:

This pattern of send email with link and then fail the desired operation is a classic phishing attack. Real user foes away disappointed. Attacker has password.
When receiving an Email from a "trusted" source one can always test its validity by attempting to log on with a fictitious screen name and password. If the website is for real it will reject your sign on. If it accepts your fictitious sign on its a bogus website.
Good idea. Just don't do it too rapidly or they'll think you're an attacker doing password tests.
User avatar
obafgkm
Posts: 515
Joined: Fri Mar 11, 2016 9:12 am
Location: Pennsylvania

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by obafgkm »

I might have missed it in this thread, but what is the benefit to Vanguard for starting these conversions? Why are they doing this? Whenever I'm told that something will benefit me, I always wonder about the other side.
leftcoaster
Posts: 550
Joined: Mon Jul 23, 2007 4:04 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by leftcoaster »

obafgkm wrote:I might have missed it in this thread, but what is the benefit to Vanguard for starting these conversions? Why are they doing this? Whenever I'm told that something will benefit me, I always wonder about the other side.
Simplified systems is my guess. They have two and it's quite awkward.
User avatar
Blues
Posts: 1858
Joined: Wed Dec 10, 2008 11:58 am
Location: Blue Ridge Mtns

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by Blues »

obafgkm wrote:I might have missed it in this thread, but what is the benefit to Vanguard for starting these conversions? Why are they doing this? Whenever I'm told that something will benefit me, I always wonder about the other side.
I was offered the "opportunity" to switch from CSRS, (the old, defined benefit federal civil service retirement system), to FERS, (the newer program that replaced it), in the early to mid 80's.

I thanked the gov't for the 'wonderful opportunity' and told them that I was sure it was a better program than CSRS and that I might be sorry later on...but...I'd be staying with CSRS, thank you very much. Never regretted the decision.

And I have not (yet) regretted the decision not to convert our Vanguard accounts, either. Call me a (cynical) Luddite. :twisted:
“Tactics without strategy is the noise before defeat.” - Sun Tzu | "Everybody has a plan until they get punched in the mouth." - Mike Tyson
User avatar
bertilak
Posts: 8090
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by bertilak »

leftcoaster wrote:
obafgkm wrote:I might have missed it in this thread, but what is the benefit to Vanguard for starting these conversions? Why are they doing this? Whenever I'm told that something will benefit me, I always wonder about the other side.
Simplified systems is my guess. They have two and it's quite awkward.
There used to be lots of complaints right here on BH about the old two-part system, mostly based on the one day delay (or more if weekends involved?) for transactions involving the settlement fund. The change fixes that. Vanguard now behaves pretty much like every other brokerage. Vanguard no longer needs to respond to questions like "If Fidelity can do X in Y days why can't Vanguard?"
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
User avatar
Doc
Posts: 9887
Joined: Sat Feb 24, 2007 1:10 pm
Location: Two left turns from Larry

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by Doc »

bertilak wrote:
leftcoaster wrote:
obafgkm wrote:I might have missed it in this thread, but what is the benefit to Vanguard for starting these conversions? Why are they doing this? Whenever I'm told that something will benefit me, I always wonder about the other side.
Simplified systems is my guess. They have two and it's quite awkward.
There used to be lots of complaints right here on BH about the old two-part system, mostly based on the one day delay (or more if weekends involved?) for transactions involving the settlement fund. The change fixes that. Vanguard now behaves pretty much like every other brokerage. Vanguard no longer needs to respond to questions like "If Fidelity can do X in Y days why can't Vanguard?"
It's sometimes more than one day. For example if you sell an ETF it settles in 3 days (T-3). Under the "dual" system you couldn't buy a Vg mutual fund T-1 until the 4th day because the money had to be in your settlement fund first. Even on the new platform you can't make the buy first but you don't have to wait 4 days, only as long as the sell order takes to execute. (The latter is somewhat different from other brokers we deal with in that they let you place the mutual fund buy first although with a warning to have the money in the account by settlement day.)

The T-4 trade date difference instead of T-0 can be important in some cases like TLH when you don't want to be out of the market for any length of time. This can be very important if you follow Lifesoft's advice of doing TLH on RBD's.

Tax reporting is also much simpler since you get only one set of 1099's not one for each mutual fund.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
User avatar
bertilak
Posts: 8090
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by bertilak »

Doc wrote: ... It's sometimes more than one day. ...
There is another, similar, consideration relating to the difference between margin and non-margin accounts. Back when I was with Schwab I used to be a more active trader and would sometimes do same-day swaps from one asset to another. In my taxable account, Schwab would lend me the dollar amount to bridge until the sell settled (a few days later). They did this without making it clear to me that I was using margin to make the trade. All perfectly legal and above board in a margin account.

Unfortunately, IRAs are not allowed to be margin accounts. Brokers are not allowed to lend you money in an IRA. When I tried a same-day swap in my IRA, Schwab covered the transaction but sent me a nasty-gram warning me not to do that again! They said it was a common mistake/misunderstanding so always gave people a warning before doing anything drastic -- like cancelling the trade or even closing the account! If your IRA has a cash balance to cover the buy half of the swap, all is OK.

None of my VG accounts are margin accounts, even the taxable.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
User avatar
Doc
Posts: 9887
Joined: Sat Feb 24, 2007 1:10 pm
Location: Two left turns from Larry

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by Doc »

bertilak wrote:Unfortunately, IRAs are not allowed to be margin accounts. Brokers are not allowed to lend you money in an IRA. When I tried a same-day swap in my IRA, Schwab covered the transaction but sent me a nasty-gram warning me not to do that again! They said it was a common mistake/misunderstanding so always gave people a warning before doing anything drastic -- like cancelling the trade or even closing the account! If your IRA has a cash balance to cover the buy half of the swap, all is OK.
I've done the swap in a Schwab IRA. I think the difference is whether or not the trades are on the same day and the sell settles on or before the buy. I did recently get a trade cancelled for insufficient funds but got a phone call that said to replace the order again if that was my intent. This all happened over a few minutes not a few days.

Question: Can you have a margin account in a Vanguard taxable mutual fund account?

At VBS you can initiate a cash transfer from your bank and buy something with those funds a few minutes later even though the bank isn't debited for another one or two days which is plenty of time to transfer money from your margin account at another broker into your bank. This may be a workaround for the non-marginable IRA. This workaround was given to me by a VBS rep as common practice at least in taxable accounts.
bertilak wrote:None of my VG accounts are margin accounts, even the taxable.
Yep :D
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
User avatar
bertilak
Posts: 8090
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by bertilak »

Doc wrote: Question: Can you have a margin account in a Vanguard taxable mutual fund account?
Yes.

You need to apply to VBS.

I had one as the administrator of a trust (now gone).

EDIT: There were TWO trust accounts, the old-sryle two-part arrangement, in case you were making that distinction. Both had the margin feature. VG still lists them for me and I just checked their "More->Trading Profile." Both indicate Margin Status as "Yes (automatic)."
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
User avatar
heartwood
Posts: 1725
Joined: Sat Nov 23, 2013 1:40 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by heartwood »

Just a head's up, after 'upgrading' to a combined brokerage account I can no longer use the Vanguard smartphone app Mobile Deposit option to scan and deposit checks to my account. It's not a deal breaker but inconvenient. I now have to deposit checks at my local bank (or via the local bank app) and then move the proceeds to Vanguard. Its apparently not a high priority fix for Vanguard but may be reinstated by year's end.

Otherwise the upgrades went smoothly. There's minor personal adjustments to be made on how to look at funds, but those are generally intuitive or change of habit.
User avatar
jhfenton
Posts: 4695
Joined: Sat Feb 07, 2015 11:17 am
Location: Ohio

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by jhfenton »

heartwood wrote:Just a head's up, after 'upgrading' to a combined brokerage account I can no longer use the Vanguard smartphone app Mobile Deposit option to scan and deposit checks to my account. It's not a deal breaker but inconvenient. I now have to deposit checks at my local bank (or via the local bank app) and then move the proceeds to Vanguard. Its apparently not a high priority fix for Vanguard but may be reinstated by year's end.

Otherwise the upgrades went smoothly. There's minor personal adjustments to be made on how to look at funds, but those are generally intuitive or change of habit.
Yeah. I questioned that too when we transferred all our accounts in last year. I couldn't figure out why selecting "Mobile Check" on the iOS app generated an unhelpful error: "Alert / Go to vanguard.com or contact us to transact on this account". They told me that it only worked on the old mutual fund platform. :?:
Gnirk
Posts: 1357
Joined: Sun Sep 09, 2012 3:11 am
Location: Western Washington

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by Gnirk »

I just spoke with my Vanguard Flagship rep about the email I received about combining accounts. Currently, I have the dividends and capital gains from one Vanguard fund automatically reinvested into a different Vanguard fund. If I combine my accounts, that will no longer be possible. The dividends and capital gains would transfer to the MM settlement fund, and then I would need to manually reinvest them into the other fund. He suggested I keep the accounts as is, and not combine them.
uberme
Posts: 63
Joined: Wed Aug 12, 2015 3:17 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by uberme »

I'm not a happy camper with them. Opened a brokerage account and was on the phone for north of 20 minutes to unlock my account after I accidentally locked it. They need to hire more staff. Still didn't unlock it, need to try again. At this rate I may move my account if I can ever unlock it.

Being I hold Vanguard funds, its a bit concerning.
uberme
Posts: 63
Joined: Wed Aug 12, 2015 3:17 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by uberme »

Yeah... no question, closing this account. What a joke
User avatar
TomatoTomahto
Posts: 11652
Joined: Mon Apr 11, 2011 1:48 pm

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by TomatoTomahto »

Uberme, I'm sorry you weren't happy with vanguard; they do seem to have grown a bit faster than support can keep up. For most of us, the good news is that we don't require much support in accounts that are long-standing.
I get the FI part but not the RE part of FIRE.
gkaplan
Posts: 7034
Joined: Sat Mar 03, 2007 8:34 pm
Location: Portland, Oregon

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by gkaplan »

uberme wrote:I'm not a happy camper with them. Opened a brokerage account and was on the phone for north of 20 minutes to unlock my account after I accidentally locked it. They need to hire more staff. Still didn't unlock it, need to try again. At this rate I may move my account if I can ever unlock it.

Being I hold Vanguard funds, its a bit concerning.

I'm not sure why you're blaming Vanguard for an error that originated with you.
Gordon
c078342
Posts: 103
Joined: Mon Jun 15, 2009 9:32 am

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by c078342 »

I haven't read all of the posts, so maybe this has been covered before. We did have 1 problem with the conversion. We had a short term corporate bond joint account with checkwriting privileges. We use in very infrequently. I wrote a small check ($350) recently fortunately to a friend for an upcoming golf trip and Vanguard would not honor the check because in the conversion process a different bank was brought in as the clearing entity. So my check to my friend bounced -- which will subject me to much mirth when we get together for golf. It ended well though as our Flagship rep was extremely proactive in arranging new checks and a quick transfer of funds to my BoA checking account. She wan't available when I first called to inquire what happened and I talked to a different rep and within minutes of ending that call the Flagship rep called to see what she could do. Great job Vanguard. I'm sure they told me that my old checks would not work going forward, but I missed it.
iceman68
Posts: 23
Joined: Sat Aug 02, 2008 9:24 am

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by iceman68 »

I have a question about merging two Vanguard brokerage accounts. Here are the relevant facts:

1. For many years I've had a Rollover IRA mutual fund account with Vanguard. I had resisted upgrading it to a brokerage account until recently.

2. Several weeks ago, I rolled over a cash balance pension plan from a former employer into a Vanguard Rollover IRA. During the online rollover process, it did not appear to be possible to roll the money into the existing Rollover IRA account in (1). Instead, Vanguard created a new Rollover IRA brokerage account for the rollover.

3. Subsequently, I figured "what the heck" and converted my original Rollover IRA mutual fund account in (1) to a Rollover IRA brokerage account.

4. I now have two separate Rollover IRA brokerage accounts, with different account numbers. Each account holds the same Target Retirement fund.

It seems silly to have two separate Rollover IRA brokerage accounts with the same fund held twice. Is it possible to merge the two accounts into a single account with only one occurrence of the Target Retirement fund (whose balance would obviously equal the combined balances of the two separate funds I have now)? I realize I can call Vanguard about this, but I wanted to find out first if anyone on this board has done what I'd like to do. Thanks!
crefwatch
Posts: 815
Joined: Sun Apr 15, 2007 1:07 pm
Location: New Jersey, USA

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by crefwatch »

Gnirk wrote: automatically reinvested into a different Vanguard fund. If I combine my accounts, that will no longer be possible. The dividends and capital gains would transfer to the MM settlement fund, and then I would need to manually reinvest them into the other fund.
Having started the conversion plan, I believe this is not correct. I have viewed the new div/cap gains choice page, and it looks like I could do anything I could have done when the Mutual Funds were in a separate package. You click on "change elections". The only hitch was the (unrelated) SEC requirement for a new MM fund for settlement. You can't order deposit of div/CG into an account with a zero balance! First you have to move your old settlement MM fund money into the new Vanguard Federal MM fund they will be using going forward.

I'd also note that I was told that my mother's accounts (which I have authority over) are not eligible for upgrading (!) simply because I have duplicate confirmations (nothing else) mailed to me on paper. That's okay with me.
User avatar
Doc
Posts: 9887
Joined: Sat Feb 24, 2007 1:10 pm
Location: Two left turns from Larry

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by Doc »

crefwatch wrote:
Gnirk wrote: automatically reinvested into a different Vanguard fund. If I combine my accounts, that will no longer be possible. The dividends and capital gains would transfer to the MM settlement fund, and then I would need to manually reinvest them into the other fund.
Having started the conversion plan, I believe this is not correct. I have viewed the new div/cap gains choice page, and it looks like I could do anything I could have done when the Mutual Funds were in a separate package. You click on "change elections". The only hitch was the (unrelated) SEC requirement for a new MM fund for settlement. You can't order deposit of div/CG into an account with a zero balance! First you have to move your old settlement MM fund money into the new Vanguard Federal MM fund they will be using going forward.

I'd also note that I was told that my mother's accounts (which I have authority over) are not eligible for upgrading (!) simply because I have duplicate confirmations (nothing else) mailed to me on paper. That's okay with me.
I think you are both partially correct. You can reinvest distributions in the same fund but not into another fund except the settlement fund. (This is the same as cash that is swept and may take an additional day.) This must have been addressed upthread because I don't reinvest dividends myself.)
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
linenfort
Posts: 2241
Joined: Sat Sep 22, 2007 9:22 am
Location: #96151D

Re: "Vanguard converting mutual fund accounts to brokerage?

Post by linenfort »

fortyofforty wrote:I don't know if anyone else is bothered by it, but I am repeatedly left with a penny in the "Settlement Fund".
Something like that happened to me once, and I ended up receiving a paper check for one cent from Vanguard.
I keep it as a souvenir.
Post Reply