Vanguard upgrading to Brokerage account comes with some nuisances

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akpk
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Vanguard upgrading to Brokerage account comes with some nuisances

Post by akpk » Sat Aug 06, 2016 2:08 pm

Yesterday, i saw an option on my vanguard mutual fund accounts to "upgrade" and consolidate everything in Brokerage account. I decided why not and clicked the upgrade button. Consolidation completed in one business day. But then i see that all automatic transactions have been put on hold until i fill out, sign and send "updated bank designation" form. I checked if there was an option to do this online and answer is no.

If i have to use my existing two checking accounts with new accounts, sending signed forms is the only option. Until i do that, i cannot take money out of vanguard using ACH or transfer any money.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by cfs » Sat Aug 06, 2016 2:25 pm

Did you call?

Did you call Vanguard about this issue?

Thanks for reading.
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Youngblood
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Youngblood » Sat Aug 06, 2016 2:32 pm

I'm pretty certain that didn't happen when we upgraded our accounts.
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by cfs » Sat Aug 06, 2016 3:08 pm

It happens.

It did happen to one of our accounts. You need to contact Vanguard when this happens.

Thanks for reading.
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akpk
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by akpk » Sat Aug 06, 2016 5:13 pm

Vanguard customer service is only available on weekdays till 7pm pacific....will call them on monday...

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by CABob » Sat Aug 06, 2016 7:53 pm

akpk wrote:Yesterday, i saw an option on my vanguard mutual fund accounts to "upgrade" and consolidate everything in Brokerage account.

Where on your account page did you see the notice or request? I haven't seen it but am wondering if I may have missed it.
Bob

akpk
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by akpk » Sat Aug 06, 2016 8:56 pm

CABob wrote:
akpk wrote:Yesterday, i saw an option on my vanguard mutual fund accounts to "upgrade" and consolidate everything in Brokerage account.

Where on your account page did you see the notice or request? I haven't seen it but am wondering if I may have missed it.

It was a link "upgrade" next to mutual fund account on account summary page.

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CABob
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by CABob » Sat Aug 06, 2016 10:03 pm

akpk wrote:
CABob wrote:
akpk wrote:Yesterday, i saw an option on my vanguard mutual fund accounts to "upgrade" and consolidate everything in Brokerage account.

Where on your account page did you see the notice or request? I haven't seen it but am wondering if I may have missed it.

It was a link "upgrade" next to mutual fund account on account summary page.

Well it looks like I am safe for a while longer. There was no link on my account page and I'm in not rush to "upgrade".
Bob

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by tetractys » Sat Aug 06, 2016 10:10 pm

akpk wrote:... i see that all automatic transactions have been put on hold until i fill out, sign and send "updated bank designation" form....

This didn't happen to me. But... I did have to go through all my account reinvestment options online and redo those.

It's probably safe to say when upgrading, one should go through and check every setting right away, and maybe time the upgrade away from any other account activity.

There are advantages to upgrading, like instantly available cash, and credit for pending transactions. -- Tet

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GerryL
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by GerryL » Sun Aug 07, 2016 1:12 am

I upgraded all four of my accounts about a year ago and DID have to re-designate my settings to reinvest dividends. At that time I was not having any automatic transfers done from my bank to purchase shares each month. Perhaps that is what prompts the need for the hard copy paperwork?

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by4pm
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by by4pm » Sun Aug 07, 2016 5:14 am

There is an "upgrade" inconvenience with an Inherited IRA.

One must sign a form to move Vanguard mutual funds into the brokerage account if you want to transfer funds between the brokerage account and the Vanguard mutual funds within the same Inherited IRA.

They will provide a fax number that can be used as an alternative to mailing the form.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by darkhorse346 » Sun Aug 07, 2016 7:46 am

The concerns expressed in this and similar threads gives me pause on upgrading/converting to brokerage accounts at Vanguard.

I worry that the Vanguard brand, which has historically epitomized trust, low-cost investing, and "doing the right things", may be tarnished by these ongoing bureaucratic issues associated with the brokerage upgrading and conversion process.

Personally, I'm holding off on upgrading as long as I can. In addition, I'm evaluating others, e.g., Fidelity, Schwab, et al., that have low-cost investing AND brokerage AND customer service expertise.

The question I ultimately ask myself is who can I trust?

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SpringMan
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by SpringMan » Sun Aug 07, 2016 8:31 am

If you have authorization to trade on a spouse's account, you will lose this after upgrading to a brokerage account. This can't be fixed online or by phone, it requires a notarized signature authorization form be completed.
Best Wishes, SpringMan

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Doc » Sun Aug 07, 2016 9:08 am

Yeh. PITA for a while. But how many decades of better trade execution, easier "bookkeeping" and tax prep are you going to get in the future?
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Dan999 » Mon Aug 08, 2016 9:46 am

From what I heard from my rep, the brokerage tax forms will come out in mid February, whereas the 1099's come out in January.
For someone who files their 1040 the end for January, this will be a problem. I do this to beat the scammers who try to get my refund and otherwise mess up my account at the IRS.
So I am holding off until they force me to switch.
Dan999
Last edited by Dan999 on Mon Aug 08, 2016 12:10 pm, edited 1 time in total.

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HueyLD
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by HueyLD » Mon Aug 08, 2016 10:36 am

SpringMan wrote:If you have authorization to trade on a spouse's account, you will lose this after upgrading to a brokerage account. This can't be fixed online or by phone, it requires a notarized signature authorization form be completed.

And this new form requires, in addition to your notarized signature, signatures of two witnesses. As a result, if your bank does not provide witnesses, you will have to drag two of your friends to the bank for such a chore. It is a royal PITA.

I was told by my rep that the witness requirement was recently implemented to comply with the State of PA law. And Vanguard's back office is swamped with such forms, meaning it will take a few weeks to get it processed. :shock:

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by GerryL » Mon Aug 08, 2016 12:56 pm

Dan999 wrote:From what I heard from my rep, the brokerage tax forms will come out in mid February, whereas the 1099's come out in January.
For someone who files their 1040 the end for January, this will be a problem. I do this to beat the scammers who try to get my refund and otherwise mess up my account at the IRS.
So I am holding off until they force me to switch.
Dan999



I wrote and pointed out this issue to Vanguard. The response was that they have no plans at this time to speed up the release of brokerage tax forms (ostensibly the delay is a result of having to wait for companies to issue final statements) but that they would take note of the issue. I had suggested that they at least issue preliminary tax forms with the caveat that there may be changes in the final form that would come out in mid February.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Doc » Mon Aug 08, 2016 1:09 pm

GerryL wrote:I wrote and pointed out this issue to Vanguard. The response was that they have no plans at this time to speed up the release of brokerage tax forms (ostensibly the delay is a result of having to wait for companies to issue final statements) but that they would take note of the issue. I had suggested that they at least issue preliminary tax forms with the caveat that there may be changes in the final form that would come out in mid February.


The timing is pretty much industry standard for brokerage accounts. Getting preliminary forms can be a real PITA. I just received a corrected Form 1099-DIV in the last few months for Tax Year 2014.
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by GerryL » Mon Aug 08, 2016 2:00 pm

Doc wrote:
GerryL wrote:I wrote and pointed out this issue to Vanguard. The response was that they have no plans at this time to speed up the release of brokerage tax forms (ostensibly the delay is a result of having to wait for companies to issue final statements) but that they would take note of the issue. I had suggested that they at least issue preliminary tax forms with the caveat that there may be changes in the final form that would come out in mid February.


The timing is pretty much industry standard for brokerage accounts. Getting preliminary forms can be a real PITA. I just received a corrected Form 1099-DIV in the last few months for Tax Year 2014.


So if a corrected form can come out a year or more later, the mid February date is pretty much arbitrary.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by mickeyd » Mon Aug 08, 2016 3:49 pm

"Upgrade" is a pretty vague word. It often is preceded by the word free. I spoke with my Flagship Rep about this months ago and advised her that I did not care one way or the other. So, I was fine with it all remaining as it now is.

I guess that makes me an upgrade rejecter.
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by ofcmetz » Mon Aug 08, 2016 3:59 pm

I didn't have to change any thing with regards to my checking account when I switched to the brokerage option. But I've never withdrawn money from Vanguard and have only deposited money there.
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by jhfenton » Mon Aug 08, 2016 4:46 pm

HueyLD wrote:
SpringMan wrote:If you have authorization to trade on a spouse's account, you will lose this after upgrading to a brokerage account. This can't be fixed online or by phone, it requires a notarized signature authorization form be completed.

And this new form requires, in addition to your notarized signature, signatures of two witnesses. As a result, if your bank does not provide witnesses, you will have to drag two of your friends to the bank for such a chore. It is a royal PITA.

I was told by my rep that the witness requirement was recently implemented to comply with the State of PA law. And Vanguard's back office is swamped with such forms, meaning it will take a few weeks to get it processed. :shock:

When we opened our 5 new Vanguard accounts last October, we had to get the full authorization forms witnessed and notarized and send them in. You are right that it was a chore to get five people together to do the forms, but in our case we just stopped by the home of a friend of ours in the evening with my mother in law as one witness and the notary and his wife helped us out.

Once we sent in the forms, though, Vanguard processed them within 2 or 3 days. It was pretty fast.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by statman » Tue Aug 09, 2016 2:12 pm

The "upgrade" does come with nuisances, in addition to the late availability of tax forms. Pre-upgrade, bond fund dividends for (say) 6/30 appeared in my account on the morning of 7/1, invested in the funds I had specified. Now they appear on 7/2, dated 7/1, and can no longer be automatically be invested in funds of my choice.

Vanguard has also developed the habit of sending me ill-considered emails. I received a rather rudely worded email telling me I was not eligible to hold my chosen MM account, and that unless I responded at once they would close that account and mail me a check. This is wrong -- I just can't use it as settlement account, and had already set up Federal MM as required. It turned out that the email was intended for someone else, the holder of an organization account, and had been sent to me in error. Flagship rep said he would investigate and get back to me, but as usual he never did. Just today I got an email stating that "your account change confirmation is ready" -- moment of worry, as I had made no change. Went to the web site, found a notice that Federal MM was now my settlement account -- but I made it my settlement account months ago. One would think VG could use software that avoids sending such notices when they don't fit the client.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Artsdoctor » Tue Aug 09, 2016 4:32 pm

I don't know how many of the above posters have voice recognition at Vanguard but that has served as a workaround for a lot of paperwork that used to require a notary or signature guarantee. If you haven't already signed up for voice recognition, make sure you've done it.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by HueyLD » Tue Aug 09, 2016 4:51 pm

Artsdoctor wrote:I don't know how many of the above posters have voice recognition at Vanguard but that has served as a workaround for a lot of paperwork that used to require a notary or signature guarantee. If you haven't already signed up for voice recognition, make sure you've done it.

Yes, but certain forms still require customers to fill out the forms on paper, notarized/guaranteed and witnessed and mailed to a designated address. And their back office is so backed up right now that a simple form could take weeks to process. Worse yet, they don't acknowledge the receipt of your mail and may claim to have never received your mail when you call after several weeks.

So, one could be stuck in this never ending loop and may have to "fill out the form, get it notarized/guaranteed and witnessed, and mail it to Vanguard" more than once. They do not allow customers to fill out such forms online or fax the forms in.

What a nightmare. I have been a customer for a long time and even my rep could not help me with this nightmare. It is very unfortunate that the company I love and respect has deteriorated so much in customer service. At this rate, they will lose good customers.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by FactualFran » Tue Aug 09, 2016 5:28 pm

CABob wrote:Well it looks like I am safe for a while longer. There was no link on my account page and I'm in not rush to "upgrade".

You are safe until Vanguard does the upgrade for you. They did for one of my brokerage accounts. I now have a Federal Money Market fund account, with a zero balance, as the sweep fund. The previous sweep fund, a Prime Money Market fund account, is in a not yet upgraded mutual fund account.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Grasshopper » Tue Aug 09, 2016 9:56 pm

To Vanguard, The notice that my settlement account changed is unacceptable. I received a generic email confirmation of your account profile update on August 02, 2016. It seems like I get one every so often and usually has no important information, just alerting me to a change. Except this time if I didn't transfer some money into a new account(Federal MM) I would be bouncing some ACH and bill pay payments. An account rep told me that this was a quiet transaction. Well I think that Vanguard should have shouted it out. My flagship rep really should have given me a courtesy call to advise me of this change. A 32+ year customer of Vanguard but I am losing faith in your customer service.

I never would have seen this if I had not been to the billpay page.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by abuss368 » Tue Aug 09, 2016 10:21 pm

Bogleheads,

There appears to be frustration with the "upgrade" based on some of the posts I have read over the past year. Is this "upgrade" going to be mandatory? Our mutual fund accounts work fine and do the job! Thus we have been very hesitant to change anything and had no desire for a brokerage account.

If one is "upgraded", are your mutual funds converted to ETFs?

Best.
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Doc » Wed Aug 10, 2016 7:19 am

abuss368 wrote:Bogleheads,

There appears to be frustration with the "upgrade" based on some of the posts I have read over the past year. Is this "upgrade" going to be mandatory? Our mutual fund accounts work fine and do the job! Thus we have been very hesitant to change anything and had no desire for a brokerage account.

If one is "upgraded", are your mutual funds converted to ETFs?

Best.

At one point they had said upgrade was eventually mandatory. May have changed but they do not want to maintain 2 systems.

No on the ETFs.
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by abuss368 » Wed Aug 10, 2016 8:10 am

Doc wrote:
abuss368 wrote:Bogleheads,

There appears to be frustration with the "upgrade" based on some of the posts I have read over the past year. Is this "upgrade" going to be mandatory? Our mutual fund accounts work fine and do the job! Thus we have been very hesitant to change anything and had no desire for a brokerage account.

If one is "upgraded", are your mutual funds converted to ETFs?

Best.

At one point they had said upgrade was eventually mandatory. May have changed but they do not want to maintain 2 systems.

No on the ETFs.


Thanks Doc. Any timeframe on this?
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by alex345 » Wed Aug 10, 2016 8:10 am

Regarding the notarized forms for being authorized on spouse's account, Vanguard is doing this to everybody. It happened to us before we upgraded, when we rolled over a previous 403(b) into a roll-over IRA at Vanguard. Maybe they just do it when they have someone looking at your account. When we did that form previously it did not require the notary or witnesses, it is probably a requirement imposed on Vanguard. It took over a month to get re-authorized, it was quite a delay.

You have to be aware that the settlement fund will change, it was pretty obvious to me what happened when I logged in the next business day after I upgraded. So you've got to close out your previous settlement fund and xfer it over to the new one.

You have to double check the various distribution options post-upgrade, it might have changed. I found it to only take 5 minutes of checking after I upgraded to make sure it was how I wanted it.

Yes they upgraded one of my accounts without me asking, I was annoyed at first but I like the new system more and upgraded all other accounts in short order.

Perhaps the worst part is that I had some muni bonds that got xfered into the new brokerage account mid-month. I had been putting distributions in the settlement fund, however, the partial month distribution was paid out at the time of transfer and it was re-invested. Not really a big deal, but something to be aware of if your holding bond funds in taxable.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Doc » Wed Aug 10, 2016 9:00 am

Re: Required upgrade
abuss368 wrote:Thanks Doc. Any timeframe on this?

alex345 wrote:Yes they upgraded one of my accounts without me asking ...

My info is stale. We upgraded in November 2014. I tried to do it earlier but we had to upgrade all 3 of our accounts and that took some time. The "all or none" has now changed. Also they were going to require all accounts to change by "sometime". IIRC "sometime" was 3rd qtr 2016. But that could have changed also.

Re: Federal MM as clearing account.
Vanguard wrote:Beginning later in 2016, Vanguard Federal Money Market Fund will be the only money market fund you can use to settle brokerage trades.
https://investor.vanguard.com/mutual-fu ... et-reform/

Edited 10:09 E
Vanguard wrote:If you have a brokerage account, Vanguard Brokerage will change your settlement fund to the Federal Money Market Fund later this summer.
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by EnerJi » Wed Aug 10, 2016 5:02 pm

abuss368 wrote:
Doc wrote:
abuss368 wrote:Bogleheads,

There appears to be frustration with the "upgrade" based on some of the posts I have read over the past year. Is this "upgrade" going to be mandatory? Our mutual fund accounts work fine and do the job! Thus we have been very hesitant to change anything and had no desire for a brokerage account.

If one is "upgraded", are your mutual funds converted to ETFs?

Best.

At one point they had said upgrade was eventually mandatory. May have changed but they do not want to maintain 2 systems.

No on the ETFs.


Thanks Doc. Any timeframe on this?


I received an email in May that implied that all existing brokerage accounts would become "upgraded" accounts at the same time as they convert to using the Federal Money Market fund as the settlement account. My guess is Vanguard will complete the process by October 1, which is when new SEC money market rules go into effect.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Doc » Wed Aug 10, 2016 6:31 pm

EnerJi wrote:I received an email in May that implied that all existing brokerage accounts would become "upgraded" accounts at the same time as they convert to using the Federal Money Market fund as the settlement account. My guess is Vanguard will complete the process by October 1, which is when new SEC money market rules go into effect.


I'm confused. My thinking is/was that existing brokerage accounts don't get "upgraded" they already are - except maybe for the change in MM account used for settlement. On the other hand maybe all "mutual" funds will get "upgraded" to brokerage accounts.

We already did it all except for the MM account change. We went from 5 accounts to 6 accounts so that we could get to 3 accounts which is where we are now. (His/hers/ours x brokerage/mutual = six.)

What I am concerned with now is that our settlement(MM) accounts will get changed without our knowledge and we will have problems with scheduled transactions.

Any insight?
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Kevin M » Wed Aug 10, 2016 7:12 pm

As I've posted before, I will not upgrade my main accounts until forced to. I'm happy with the way things are, and do not want to have to get more forms notarized nor have links to external banks broken.

Had to upgrade my wife's IRA to be able to do a Roth conversion to a newly created Roth IRA, since to do a conversion online the accounts must be of the same type. I understand that there is a workaround to this, but for this account there were no issues, and we like to do things online if possible.

When clicking through the upgrade screens for a trust account, you end up on a page for which the only choice is to download a form (last time I tried anyway). If filling out a form is required, I don't see how they can upgrade your account without your active participation. Again, I think we've seen posts indicating that there are workarounds for this, but this may at least be something that puts trust accounts last in the queue of accounts that must be upgraded.

Until recently the Upgrade link did not appear on my accounts. I just checked and now see it on many accounts, including some but not all that I have agent authority for (other people's accounts). I see no obvious pattern in terms of traditional IRA, Roth IRA, inherited traditional/Roth IRA, trust, individual, etc.

Doc wrote:I'm confused. My thinking is/was that existing brokerage accounts don't get "upgraded" they already are - except maybe for the change in MM account used for settlement. On the other hand maybe all "mutual" funds will get "upgraded" to brokerage accounts.

Depends on what you mean by "existing". Brokerage accounts on the old platform are/were attached to mutual fund accounts. The mutual fund account has/had at least a money market fund that is/was your sweep fund. I still have such accounts. On the new platform the brokerage account is everything--it includes both Vanguard mutual funds and stocks/ETFs. So if your existing brokerage account is old platform, it can be upgraded.

Kevin
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by alex345 » Wed Aug 10, 2016 7:51 pm

Existing brokerage accounts are "upgraded". The difference is the settlement fund and a new "view" in the "balances and holdings" tab and possible changes to the distribution options.

Other mutual fund accounts in the same "space" (space == taxable for person Y, or roth IRA for person Z, whatever) get collapsed into the existing brokerage account, if you had one, or into a new brokerage account. I went from 2X accounts (mutual fund + brokerage in each space) to X accounts, so it is easier to digest information on the "balances and holdings" tab.

I'd recommend initiating the process yourself at a time that is convenient to you, so it doesn't happen at a time when it is not.

In my personal accounts, (taxable, roth) and spouse's accounts (roth) the links to checking accounts (personal checking for my accounts, joint checking for spouse's accounts) were not changed by the upgrade process. My ability to trade on spouse's account was ended by the roll-over of a 403(b) to a roll-over IRA at Vanguard. That required the forms, notary, witnesses, and a month of delay to get trading ability back.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Doc » Wed Aug 10, 2016 8:06 pm

Kevin M wrote:Depends on what you mean by "existing". Brokerage accounts on the old platform are/were attached to mutual fund accounts. The mutual fund account has/had at least a money market fund that is/was your sweep fund. I still have such accounts. On the new platform the brokerage account is everything--it includes both Vanguard mutual funds and stocks/ETFs. So if your existing brokerage account is old platform, it can be upgraded

Ahhah. The settlement fund moves from Vg mutual to VBS.
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Misenplace » Wed Aug 10, 2016 8:17 pm

The upgrade has been pretty seamless for us. ACH to our brick and mortar bank is still there and super fast. I have accounts at VG, WF, Fido, and Merrill, but I know who I trust. VG :D

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Kevin M » Wed Aug 10, 2016 8:28 pm

alex345 wrote:Existing brokerage accounts are "upgraded".

Not necessarily true, unless you can upgrade an upgraded account. I would say that by definition an account that you can upgrade is not upgraded. I have brokerage accounts that have an Upgrade link attached, and therefore can be upgraded. The term "existing" is redundant, since any brokerage account that exists is existing.

I think it's more precise to simply characterize an account as on the old or new platform. "Existing" (redundant) brokerage accounts can be either on the old platform or on the new platform. An account can be on the new platform either by having created it since the new platform was the only platform you could create a new account on (in which case it is not upgraded, since it was never not on the new platform), or by upgrading an account on the old platform to the new platform.

As I said, a clear indicator that your brokerage account is on the old platform is that you will have a mutual fund account attached to it, and the mutual fund account will have a money market fund designated as the sweep account for the brokerage account. There are separate account numbers for the mutual fund and brokerage accounts, and the account numbers have different formats.

On the old platform you can have a mutual fund account without a brokerage account, but you cannot have a brokerage account without a mutual fund account.

An account on the new platform (any account, since all accounts on the new platform are brokerage accounts) has a single account number for both stocks/ETFs and mutual funds in the account. All mutual funds (if any) except the "Settlement fund" are shown in the same section as the ETFs and stocks (if any). The settlement fund is shown in a separate section above the stocks/ETFs and the other mutual funds, but under the same account heading.

As an aside, all of my wife's IRA accounts, all on the new platform, two upgraded and one created on the new platform, still have Prime Money Market as the settlement fund.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Kevin M » Wed Aug 10, 2016 8:59 pm

Doc wrote:
Kevin M wrote:Depends on what you mean by "existing". Brokerage accounts on the old platform are/were attached to mutual fund accounts. The mutual fund account has/had at least a money market fund that is/was your sweep fund. I still have such accounts. On the new platform the brokerage account is everything--it includes both Vanguard mutual funds and stocks/ETFs. So if your existing brokerage account is old platform, it can be upgraded

Ahhah. The settlement fund moves from Vg mutual to VBS.

On the old platform the settlement fund is tagged as a "sweep account", and also tagged with the account number of the associated brokerage account. On the new platform the settlement fund is tagged as a settlement fund. In either case the settlement fund is a mutual fund (money market fund). All mutual funds are moved into a brokerage account when you upgrade an account to the new platform, so there is nothing special about the treatment of the "sweep account" fund--it's just another mutual fund that gets moved into the brokerage account.

What actually happened in my wife's case is that a new Prime Money Market fund was added to the upgraded accounts and designated as the settlement fund. Her accounts on the old platform were mutual-fund only. Upon upgrading, her pre-existing Prime Money Market fund was transferred into the brokerage account on the new platform, and showed up in the same section as her other mutual funds (she has no stocks or ETFs). So at that point she had two MM funds, one in the section for the settlement fund, and one in the section for stocks, ETFs, and non-settlement mutual funds. Since this was stupid (and created unnecessary complexity for our spreadsheet), we exchanged everything from the old MM fund to the new settlement fund. I see now that the old MM funds no longer appear, even when I turn off the setting to hide zero balance funds (in my experience, a fund will stick around for quite some time with a zero balance, but eventually will be deleted).

So in her case, there was no settlement fund on the old platform, since she had only mutual fund accounts, and instead of using the existing MM fund as the settlement fund after upgrading, VG added a new (identical) MM fund as the settlement fund.

Looking at the "upgraded" account of one of my daughters, who did hold ETFs (and mutual funds) prior to the upgrade, I see that the settlement fund is indeed the Federal MM fund, but I also see that she has a Prime MM fund in the account. So I think what happened here is that VG migrated the Prime MM fund, which was her sweep account on the old platform, to the new platform, and created an additional MM fund to serve as her settlement fund.

So it appears that in upgrading either a MF-only or brokerage account, a new MM account is added to the account to serve as the settlement fund, and your MM fund on the old platform, whether a sweep account or not, is moved into the brokerage account on the new platform. Maybe it has worked differently for others.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by TheGreyingDuke » Wed Aug 10, 2016 9:02 pm

Artsdoctor wrote:I don't know how many of the above posters have voice recognition at Vanguard but that has served as a workaround for a lot of paperwork that used to require a notary or signature guarantee. If you haven't already signed up for voice recognition, make sure you've done it.


Indeed, this is the key, I believe. I had no problem in making the transition, there was a matter of needing to reset the directing of dividends to an external account and the voice password let it happen over the phone.

This was especially useful when I was in China for an extended period and needed to do something or another that would otherwise have required a medallion guarantee.. in China!
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by CedarWaxWing » Wed Aug 10, 2016 9:04 pm

Grasshopper wrote:To Vanguard, The notice that my settlement account changed is unacceptable. I received a generic email confirmation of your account profile update on August 02, 2016. It seems like I get one every so often and usually has no important information, just alerting me to a change. Except this time if I didn't transfer some money into a new account(Federal MM) I would be bouncing some ACH and bill pay payments. An account rep told me that this was a quiet transaction. Well I think that Vanguard should have shouted it out. My flagship rep really should have given me a courtesy call to advise me of this change. A 32+ year customer of Vanguard but I am losing faith in your customer service.

I never would have seen this if I had not been to the billpay page.


My impression for the Fed MMF change is that for some reason that is required by law to be the settlement account...

M

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by EnerJi » Wed Aug 10, 2016 9:46 pm

mspadorchard wrote:
Grasshopper wrote:To Vanguard, The notice that my settlement account changed is unacceptable. I received a generic email confirmation of your account profile update on August 02, 2016. It seems like I get one every so often and usually has no important information, just alerting me to a change. Except this time if I didn't transfer some money into a new account(Federal MM) I would be bouncing some ACH and bill pay payments. An account rep told me that this was a quiet transaction. Well I think that Vanguard should have shouted it out. My flagship rep really should have given me a courtesy call to advise me of this change. A 32+ year customer of Vanguard but I am losing faith in your customer service.

I never would have seen this if I had not been to the billpay page.


My impression for the Fed MMF change is that for some reason that is required by law to be the settlement account...

M


Vanguard has a detailed page (including an informative webcast) that explains all the details behind the new SEC regulation and why Vanguard chose to adopt a change in settlement fund (they didn't have to change, but they believe doing so is in the best interests of Vanguard customers, and for what it's worth, I agree). See below:

https://investor.vanguard.com/mutual-fu ... et-reform/

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by EnerJi » Wed Aug 10, 2016 9:52 pm

Doc wrote:
EnerJi wrote:I received an email in May that implied that all existing brokerage accounts would become "upgraded" accounts at the same time as they convert to using the Federal Money Market fund as the settlement account. My guess is Vanguard will complete the process by October 1, which is when new SEC money market rules go into effect.


I'm confused. My thinking is/was that existing brokerage accounts don't get "upgraded" they already are - except maybe for the change in MM account used for settlement. On the other hand maybe all "mutual" funds will get "upgraded" to brokerage accounts.

We already did it all except for the MM account change. We went from 5 accounts to 6 accounts so that we could get to 3 accounts which is where we are now. (His/hers/ours x brokerage/mutual = six.)

What I am concerned with now is that our settlement(MM) accounts will get changed without our knowledge and we will have problems with scheduled transactions.

Any insight?


There's been some good discussion related to your question already, but I thought I'd circle back with a partial snippet of my Vanguard email from back in May which provides corroboration.

In the section explaining the changes in brokerage settlement fund to the Federal Money Market Fund is the following text (my emphasis):

Vanguard email from May 2016 wrote:We'll be making the changes over several weeks, so if you have more than one brokerage account, you may see one account's settlement fund change earlier than another account's. All settlement funds should be changed by the end of September. You'll receive a confirmation after the change to your settlement fund has been made.

More changes to your brokerage account
At the same time we change your settlement fund, we're also making changes to your brokerage account. These changes will allow you to hold Vanguard mutual funds within your brokerage account and add services that previously weren't available on your brokerage account.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Gnirk » Wed Aug 10, 2016 10:31 pm

When I found out that with the upgraded brokerage account I cannot "automatically" have the dividends and capital gains of one Vanguard fund invested into another, I told them I didn't want their "upgrade". I complained about it to my Flagship rep, and he said I was just "spoiled" by the current system. Fine, I want to remain "spoiled"!

I currently am authorized to do the online trading for my husband's accounts and my daughter's accounts, which I understand will require setting it all up AGAIN with notarized and witnessed signatures, which is a real PITA since my daughter lives 80 miles away.
Ugh.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by robertalpert » Wed Aug 10, 2016 10:42 pm

Doc wrote:Re: Required upgrade
abuss368 wrote:Thanks Doc. Any timeframe on this?

alex345 wrote:Yes they upgraded one of my accounts without me asking ...

My info is stale. We upgraded in November 2014. I tried to do it earlier but we had to upgrade all 3 of our accounts and that took some time. The "all or none" has now changed. Also they were going to require all accounts to change by "sometime". IIRC "sometime" was 3rd qtr 2016. But that could have changed also.

Re: Federal MM as clearing account.
Vanguard wrote:Beginning later in 2016, Vanguard Federal Money Market Fund will be the only money market fund you can use to settle brokerage trades.
https://investor.vanguard.com/mutual-fu ... et-reform/

Edited 10:09 E
Vanguard wrote:If you have a brokerage account, Vanguard Brokerage will change your settlement fund to the Federal Money Market Fund later this summer.


Does having Federal MM settlement fund require an account upgrade?

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by richardglm » Thu Aug 11, 2016 3:30 am

robertalpert wrote: Does having Federal MM settlement fund require an account upgrade?


I already have the Federal MM settlement fund and my account is not upgraded, so no. The Federal MM fund doesn't appear as an owned fund in your list until it has a transaction, but it is definitely there.

Also, they left my Prime MM fund open with the same $ amount that it had before. It is merely no longer the settlement fund for the brokerage side. So Prime MM is not converted, they simply open a new Federal MM fund.

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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Doc » Thu Aug 11, 2016 9:03 am

We were early upgraders so a lot of our experience may no longer apply. Nevertheless Mrs. Doc came up with a letter from Vanguard from November 30, 2015.

Vanguard wrote:Changes to your money market settlement fund are coming

In 2014, the … (SEC) adopted money market reform rules designed to protect investors.

You don’t have to do anythingcompliant with these money market reform rules by the October 14, 2016, effective date.

In February 2016, VBS will be adding Vanguard Federal Money Market Fund as a settlement and using it as the money market settlement fund for all new brokerage accounts.

Later in 2016, all brokerage clients will be required to use Vanguard Federal Money Market as their money market settlement fund.


I think this reconciles most of the “discrepancies” people have been reporting except for Prime MM being moved to the “upgraded” brokerage fund and the Federal MM fund being added to the “upgraded” account as the settlement fund. When we upgraded the Prime MM account was moved to the brokerage account with remove/add transactions. They even kept the lots separate. But at the time the Federal fund was not available as a settlement account so that’s no longer relevant.

I think I’ll just use our non-Vanguard margin account for cash management until October 14th. Vanguard will get this all worked out eventually. :annoyed
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by Doc » Thu Aug 11, 2016 10:10 am

So I decided to try to change my settlement account from Prime MM to the Federal MM account on my own.

$3k minimum. Don't have that much "cash". Catch 22. :D
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Re: Vanguard upgrading to Brokerage account comes with some nuisances

Post by peterinjapan » Thu Aug 11, 2016 10:22 am

One reason I quite Vanguard was their system was just hard for me to figure out. Instead of "buying" shares of a fun I "redeemed" shares of one fund (the money market fund my cash was in) for shares of whatever I wanted to buy. The learning curve was significant and unpleasant, and I'm much happier at Fidelity now.

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