Upgrade button on Vanguard IRA

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raveon
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Upgrade button on Vanguard IRA

Post by raveon » Fri Dec 30, 2016 2:22 pm

When logging in to my Vanguard account, I see a button saying 'Upgrade' for one Rollover IRA account. Anyone else seen this and what is the meaning of it? When I click on it, I get a page that says this:

"We'll open a new Vanguard Brokerage Account using the information from your mutual fund account. Your mutual funds, and some account options and services, will be transferred automatically—along with your transaction history, cost basis, personal performance, and other account information.

Note: Some account options may change. Please review any changing account options in Step 2 before you complete your request."

Don't really know what to make of it. I already have a Vanguard Brokerage Account so why another one?

DSInvestor
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Re: Upgrade button on Vanguard IRA

Post by DSInvestor » Fri Dec 30, 2016 3:11 pm

Your account is probably a mutual fund only account which can only hold Vanguard mutual funds. Vanguard is pushing people into a new type of account that can hold vanguard funds, non-vanguard funds, stocks, ETFs, bonds etc. If you upgrade your account, you will have a Rollover IRA brokerage account. If you don't need anything other than Vanguard mutual funds in this account, there is no need to upgrade.


I really like my mutual fund accounts and will not upgrade unless forced to. There are some nice features in the mutual fund accounts that will be lost if you upgrade - e.g. ability to direct dividend/capital gain distributions from one fund to another.
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Re: Upgrade button on Vanguard IRA

Post by The Wizard » Fri Dec 30, 2016 3:22 pm

Some folks have three accounts with Vanguard, taxable/personal, tIRA, and Roth IRA.
Each needs to be upgraded to brokerage account status separately.
If you open a new account with them now, as I did earlier this year, it starts out as a brokerage account automatically...
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Re: Upgrade button on Vanguard IRA

Post by LadyGeek » Sun Jan 01, 2017 9:39 am

This thread is now in the Investing - Theory, News & General forum (general question about Vanguard site).
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Re: Upgrade button on Vanguard IRA

Post by zaplunken » Sun Jan 22, 2017 5:18 pm

DON'T DO IT! I wish I could go back. This should be a warning -

Note: Some account options may change.

I used to get a nice ytd summary in December of the activity in my roll over IRA and Roth now I can't. I have 12 months of paper work for each account AND a trust account as well. I like paper but it is killing me! I used to save a 5 or 6 page statement for each year for each account (I had just 2) but when I created the Trust account I upgrade the other 2 and now I have dozens of pages for each account for each year.

I AM EXTREMELY UNHAPPY AND WAS LIED TO many times as they told me they converted my statements to provide me with a ytd December statement like I used to get. December 2016 came and it was just for December just like in 2015.

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Re: Upgrade button on Vanguard IRA

Post by sport » Sun Jan 22, 2017 5:34 pm

The "upgrade" change is irreversible if you do it. I will not change unless I have no choice.

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Re: Upgrade button on Vanguard IRA

Post by rob » Sun Jan 22, 2017 5:36 pm

sport wrote:The "upgrade" change is irreversible if you do it. I will not change unless I have no choice.
Me too... I'm never clicking on it so they will eventually do it without my permission.
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Re: Upgrade button on Vanguard IRA

Post by Kevin M » Sun Jan 22, 2017 7:59 pm

I too am deferring the upgrade as long as possible for most accounts. One example where I had to upgrade was to do a Roth conversion online--the newly created Roth IRA was of course on the new platform, and to do the conversion online the traditional IRA had to be upgraded to the new platform. You can't do an online conversion unless both accounts are on the same platform.

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Re: Upgrade button on Vanguard IRA

Post by abuss368 » Sun Jan 22, 2017 8:14 pm

It appears that Vanguard has been converting (or "upgrading") standard mutual fund accounts to brokerage accounts.

Is Vanguard provided any critical feedback so they can plan to improve the experience and the account features?
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Re: Upgrade button on Vanguard IRA

Post by abuss368 » Sun Jan 22, 2017 8:15 pm

DSInvestor wrote: I really like my mutual fund accounts and will not upgrade unless forced to.
Will Vanguard eventually be forcing all investors to "upgrade" to a brokerage account?
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Re: Upgrade button on Vanguard IRA

Post by Sailor36 » Sun Jan 22, 2017 8:22 pm

Reasons for me to delay the "upgrade" as long as possible:

1) Downloads to Quicken do not work well on the new style brokerage accounts. This has gotten better in the past month or so, but there are still problems in how the settlement account and cash withdrawals are handled in the downloaded transactions.

2) As others have mentioned, there is more flexibility in MF accounts re: how fund distributions can be directed. The brokerage accounts only offer Reinvest, keep in Settlement account, or send to my bank account. For stocks and ETFs, the only options are Reinvest or keep in settlement.

3) Mutual Fund account 1099s come out around Jan. 20, Brokerage not till mid-Feb.

I suppose there is an advantage for some in having one account rather than two. However until the limitations in the new platform are worked out or I am forced to change, I am sticking with the old style accounts.

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zaplunken
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Re: Upgrade button on Vanguard IRA

Post by zaplunken » Sun Jan 22, 2017 8:25 pm

abuss368 wrote:
DSInvestor wrote: I really like my mutual fund accounts and will not upgrade unless forced to.
Will Vanguard eventually be forcing all investors to "upgrade" to a brokerage account?
Well from what I read or was told a couple of years ago when I was opening the Trust account the answer was yes they are upgrading all accounts. When I opened the Trust account it had to be upgraded to the new style. I thought from what Vanguard was saying whether on the phone or in print, I don't remember which and maybe both, they were upgrading all accounts so I figured it was going to happen soon... like in months or within a year so I foolishly upgraded the rollover IRA and Roth to be brokerage accounts. When I got my December statement in 2016 and saw it was not a ytd summarization like I was promised for the 2nd year in a row I was so angry I was going to transfer all my investments to Fidelity. But then I thought what if they don't provide a ytd December statement or say they will and don't then I'm back where I am now so I did nothing. This has left a bad taste in my mouth and I may still call Fidelity and either hold the same VG funds there or just buy the Fido equivalents.

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Re: Upgrade button on Vanguard IRA

Post by abuss368 » Sun Jan 22, 2017 10:44 pm

zaplunken wrote:DON'T DO IT! I wish I could go back. This should be a warning -

Note: Some account options may change.

I used to get a nice ytd summary in December of the activity in my roll over IRA and Roth now I can't. I have 12 months of paper work for each account AND a trust account as well. I like paper but it is killing me! I used to save a 5 or 6 page statement for each year for each account (I had just 2) but when I created the Trust account I upgrade the other 2 and now I have dozens of pages for each account for each year.

I AM EXTREMELY UNHAPPY AND WAS LIED TO many times as they told me they converted my statements to provide me with a ytd December statement like I used to get. December 2016 came and it was just for December just like in 2015.
That would bother and upset me as well. One of the best aspects of Vanguard is the ability to print one consolidated year to date statement with mutual fund accounts. Thus avoiding quarterly or monthly statements. To be unable to provide a year to date statement in today's business world is upsetting. How does this keep costs down?
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Re: Upgrade button on Vanguard IRA

Post by Silence Dogood » Sun Jan 22, 2017 11:49 pm

I only have one mutual fund (Vanguard Target Retirement 2055). Switching to a brokerage account would not simplify anything for me and would actually create more complexity because I would have to hold a settlement (Federal Money Market) fund.

Also, it's possible that future employers won't allow me to have a brokerage account or will require me to show them what I have in the brokerage account (and I'd rather not have to show an employer how much money I have).

Vanguard hasn't asked me to "upgrade" but if they do I will say, "No thanks."

I wish Vanguard would be more clear about whether or not they plan to force everyone into the new brokerage accounts or if they will continue to support the mutual-fund-only accounts.

If it were up to me, Vanguard would just get rid of its brokerage platform and stick to mutual funds.

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Re: Upgrade button on Vanguard IRA

Post by EyeDee » Mon Jan 23, 2017 10:51 am

.
Silence Dogood,

As much as I agree with you that I would prefer Vanguard would get rid of its brokerage platform and stick to mutual funds, I do not think it is likely to happen at this point. However, I would like to see them at least allow a simple mutual fund account when people sign up for a new account. From what others have posted, they are now forcing new accounts to be brokerage accounts. As brokerages introduce complication and are not allowed by some employers, the forcing of new accounts to be brokerage accounts has caused me to become very concerned about recommending Vanguard to new investors.
Silence Dogood wrote:If it were up to me, Vanguard would just get rid of its brokerage platform and stick to mutual funds.
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Re: Upgrade button on Vanguard IRA

Post by FrugalInvestor » Mon Jan 23, 2017 11:21 am

I had a brokerage account with Vanguard for many years that I never utilized. When I saw this discussed on Bogleheads in an earlier thread I called Vanguard, told them I had no use for the Brokerage account, and asked that be deleted. My request was granted and the Brokerage account has not appeared since. I also do not see an upgrade button.

I believe I was told when the account was deleted that it could not be re-added but I'm not certain about that.
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Re: Upgrade button on Vanguard IRA

Post by Doc » Mon Jan 23, 2017 1:19 pm

abuss368 wrote:It appears that Vanguard has been converting (or "upgrading") standard mutual fund accounts to brokerage accounts.

Is Vanguard provided any critical feedback so they can plan to improve the experience and the account features?
Yeh.
abuss368 wrote:Will Vanguard eventually be forcing all investors to "upgrade" to a brokerage account?
Yeh.
Sailor36 wrote:Downloads to Quicken do not work well on the new style brokerage accounts.
Huh?
Sailor36 wrote:As others have mentioned, there is more flexibility in MF accounts re: how fund distributions can be directed.
Yes
Sailor36 wrote:Mutual Fund account 1099s come out around Jan. 20, Brokerage not till mid-Feb.
That has to do with Gov rules & regs not a decision made by Vanguard.
zaplunken wrote:Well from what I read or was told a couple of years ago when I was opening the Trust account the answer was yes they are upgrading all accounts.
.
Yes they said that. But it is not longer true.

We converted all three of our accounts in November 2014. At the time we probably had five Vanguard accounts - his/hers/ours and mutual-fund-only/brokerage. We had to convert all or none and had to open a brokerage account when there was not one already. The main transfer went very smoothly - maintained cost basis info etc. After the first year we now get one composite 1099 for each of the three owner groups instead of one for each mutual fund plus the brokerage account. We no longer had the cash transfer problems with money market in one and an ETF buy/sell in another. All out tax data downloads correctly to tax software. One download for each owner group.

Some things took longer. We had to reset some direct deposit and bank transfers out. You cannot redirect dividends from one mutual fund to another. (You cannot do that at Schwab either.) There are some money transactions involving bank like transactions that are not available. That doesn't bother me. I don't think it is wise to "bank" at a non-bank institution. I can still do automatic deposits and withdrawals. But those are initiated by me not some third party unless I have set it up myself with that third party and that part is pre-verified. (There are some exceptions to this on a case by case basis but they are often more difficult.)

In general if you have outside assets at Vanguard the new platform is almost up to industry standards. If you have only Vanguard mutual funds it is also up to the industry standards from 1999. There is a learning curve. If you only have Vanguard mutual and are not put off by the fact that each position is in fact a separate account then go ahead and wait. You may not be forced to convert because I as understand it there are SEC regs that restrict financial professionals from investing in things other than mutual funds. Vanguard may not want to lose those customers.
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Re: Upgrade button on Vanguard IRA

Post by jhfenton » Mon Jan 23, 2017 1:42 pm

Silence Dogood wrote:If it were up to me, Vanguard would just get rid of its brokerage platform and stick to mutual funds.
I appreciate the few advantages of the old platform, but I would be out the door faster than you could say Parcheesi. I would have been a customer years before 2015 if not for the limitations of the separate brokerage and mutual fund platforms.

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Re: Upgrade button on Vanguard IRA

Post by FinancialDave » Mon Jan 23, 2017 1:47 pm

Even though I have both a Fund account and a Brokerage account, my December statement still shows the full year transaction history for the fund account, but only the December transaction history for the brokerage account. They are two separate account numbers but one account statement.

Actually the statement format for me hasn't changed at all in the last 4 years.
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Re: Upgrade button on Vanguard IRA

Post by JoMoney » Mon Jan 23, 2017 2:33 pm

zaplunken wrote:DON'T DO IT! I wish I could go back. This should be a warning -

Note: Some account options may change.

I used to get a nice ytd summary in December of the activity in my roll over IRA and Roth now I can't. I have 12 months of paper work for each account AND a trust account as well. I like paper but it is killing me! I used to save a 5 or 6 page statement for each year for each account (I had just 2) but when I created the Trust account I upgrade the other 2 and now I have dozens of pages for each account for each year.

I AM EXTREMELY UNHAPPY AND WAS LIED TO many times as they told me they converted my statements to provide me with a ytd December statement like I used to get. December 2016 came and it was just for December just like in 2015.
Strange... The first page of my December statement on my upgraded account(s) is titled "December 31, 2016, year-to-date statement"
It's followed by a summary of all my upgraded brokerage accounts and the changes in balance from 31-Dec-2015 to 31-Dec-2016
That's followed by several pages of "account overview" that breaks down the changes in each individual account over the past year.
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Re: Upgrade button on Vanguard IRA

Post by Doc » Mon Jan 23, 2017 4:00 pm

JoMoney wrote:Strange... The first page of my December statement on my upgraded account(s) is titled "December 31, 2016, year-to-date statement"
It's followed by a summary of all my upgraded brokerage accounts and the changes in balance from 31-Dec-2015 to 31-Dec-2016
That's followed by several pages of "account overview" that breaks down the changes in each individual account over the past year.
I think that the gripe others have is that it only has the transactions for December not the whole year. I personally do not have a problem with that. The annual summary is there and that's all I need to save.
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Re: Upgrade button on Vanguard IRA

Post by zaplunken » Mon Jan 23, 2017 4:05 pm

I just got off the phone with Vanguard. The year end statement does contain "some" ytd info but with with a brokerage account it no longer will be a ytd accounting of all the activity for the year as was the case when I had a mutual fund account. In all the years I have held accounts at Vanguard I never had a lot of activity, Roth contributions were done in January in one fell swoop. Bond funds would generate monthly dividends but index equity funds I held generated activity twice a year or in some cases quarterly. My point is my activity/statements were fairly concise for the year but some accounts have many dozens or hundreds of transactions a year and that volume on paper for a year end summary was considerable and may have been part of the reason the brokerage statement change occurred. I tried again to get a ytd summary for 2016 but it is only possible online and going back to a mutual fund account is not possible. I was told that eventually Vanguard is going to convert all the mutual fund accounts to be brokerage accounts. He said that may take years but that is the direction the company is going so if it hasn't occurred yet it will one day.

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Re: Upgrade button on Vanguard IRA

Post by Silence Dogood » Mon Jan 23, 2017 4:19 pm

jhfenton wrote:
Silence Dogood wrote:If it were up to me, Vanguard would just get rid of its brokerage platform and stick to mutual funds.
I appreciate the few advantages of the old platform, but I would be out the door faster than you could say Parcheesi. I would have been a customer years before 2015 if not for the limitations of the separate brokerage and mutual fund platforms.
I do appreciate the benefits of the new brokerage account for those who need/want a brokerage; I'm just saying that if I had to choose one or the other it would be to keep the mutual-fund-only platform and ditch the brokerage.

Ideally they will allow for both.
Last edited by Silence Dogood on Mon Jan 23, 2017 4:20 pm, edited 1 time in total.

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Re: Upgrade button on Vanguard IRA

Post by GreatOdinsRaven » Mon Jan 23, 2017 4:19 pm

raveon wrote:When logging in to my Vanguard account, I see a button saying 'Upgrade' for one Rollover IRA account. Anyone else seen this and what is the meaning of it? When I click on it, I get a page that says this:

"We'll open a new Vanguard Brokerage Account using the information from your mutual fund account. Your mutual funds, and some account options and services, will be transferred automatically—along with your transaction history, cost basis, personal performance, and other account information.

Note: Some account options may change. Please review any changing account options in Step 2 before you complete your request."

Don't really know what to make of it. I already have a Vanguard Brokerage Account so why another one?
If you haven't already done it, I'd recommend you not do it. We did and my wife's "upgrade" worked and mine did not. My account is inaccessible. Can't exchange, buy, sell or convert to a Roth. Vanguard can't even fix it. They told me it's a known coding flaw affecting many and the backlog of fixes is so great I have to wait three (more) weeks to get it fixed. After complaining they told me they'd bump me to the top of the waiting list and convert the account to a Roth within two business days. That deadline passed and they did not do it. Nor did they call me like they said they would.

To be clear this started the first week of January. I complained that they can't keep me out of the market and their response was to fill out a paper form, fax it in and the trades that they estimate will now occur on Feb 9 will be backdated to the date of the trade request.

Beware this "upgrade".
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Re: Upgrade button on Vanguard IRA

Post by jhfenton » Mon Jan 23, 2017 6:37 pm

Silence Dogood wrote:
jhfenton wrote:
Silence Dogood wrote:If it were up to me, Vanguard would just get rid of its brokerage platform and stick to mutual funds.
I appreciate the few advantages of the old platform, but I would be out the door faster than you could say Parcheesi. I would have been a customer years before 2015 if not for the limitations of the separate brokerage and mutual fund platforms.
I do appreciate the benefits of the new brokerage account for those who need/want a brokerage; I'm just saying that if I had to choose one or the other it would be to keep the mutual-fund-only platform and ditch the brokerage.

Ideally they will allow for both.
:beer

And ideally they will also upgrade the brokerage platform to feature parity: mobile deposits, automatic Vanguard-fund-A-to-Vanguard-fund-B dividend reinvestments, and comprehensive year-end statements. None of those are inherently incompatible with brokerage accounts.

For me, if nothing else, the fact that VSS (Vanguard FTSE ex-US Small Cap) doesn't have Admiral Shares means I need our IRAs to have brokerage accounts.

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Re: Upgrade button on Vanguard IRA

Post by abuss368 » Mon Jan 23, 2017 6:47 pm

JoMoney wrote:
zaplunken wrote:DON'T DO IT! I wish I could go back. This should be a warning -

Note: Some account options may change.

I used to get a nice ytd summary in December of the activity in my roll over IRA and Roth now I can't. I have 12 months of paper work for each account AND a trust account as well. I like paper but it is killing me! I used to save a 5 or 6 page statement for each year for each account (I had just 2) but when I created the Trust account I upgrade the other 2 and now I have dozens of pages for each account for each year.

I AM EXTREMELY UNHAPPY AND WAS LIED TO many times as they told me they converted my statements to provide me with a ytd December statement like I used to get. December 2016 came and it was just for December just like in 2015.
Strange... The first page of my December statement on my upgraded account(s) is titled "December 31, 2016, year-to-date statement"
It's followed by a summary of all my upgraded brokerage accounts and the changes in balance from 31-Dec-2015 to 31-Dec-2016
That's followed by several pages of "account overview" that breaks down the changes in each individual account over the past year.
I do remember many years ago contacting Vanguard and requesting year to date statements. I did not have any problems.
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Re: Upgrade button on Vanguard IRA

Post by abuss368 » Mon Jan 23, 2017 6:48 pm

So eventually there will no more mutual fund accounts? Vanguard will be brokerage only?
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Re: Upgrade button on Vanguard IRA

Post by zaplunken » Mon Jan 23, 2017 7:19 pm

abuss368 wrote:So eventually there will no more mutual fund accounts? Vanguard will be brokerage only?
From what I was told today yes. I heard that 2 years ago also and thought it would have been done by now. So that is the direction they are going and like he said to me it may take years but eventually there will be no more mutual fund account just brokerage.

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Re: Upgrade button on Vanguard IRA

Post by cherijoh » Mon Jan 23, 2017 7:58 pm

Kevin M wrote:I too am deferring the upgrade as long as possible for most accounts. One example where I had to upgrade was to do a Roth conversion online--the newly created Roth IRA was of course on the new platform, and to do the conversion online the traditional IRA had to be upgraded to the new platform. You can't do an online conversion unless both accounts are on the same platform.

Kevin
Hmm, I have been wondering about that. Does that mean if you mail in the paperwork for the Roth Conversion that you can leave your mutual fund account intact? I am planning to do a series of Roth Conversions in early retirement. I currently have a regular MF account and old-style brokerage account for tIRA and a regular MF account for Roth. Maybe I need to transfer some of my tIRA elsewhere and do the Roth Conversions there. Then move the money back after I'm sure I am not doing a recharacterization.

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Re: Upgrade button on Vanguard IRA

Post by Silence Dogood » Mon Jan 23, 2017 8:38 pm

zaplunken wrote:
abuss368 wrote:So eventually there will no more mutual fund accounts? Vanguard will be brokerage only?
From what I was told today yes. I heard that 2 years ago also and thought it would have been done by now. So that is the direction they are going and like he said to me it may take years but eventually there will be no more mutual fund account just brokerage.
I just called Vanguard and asked if everyone will eventually be forced into the new brokerage account. The rep who answered said that they will not be forcing everyone into the new brokerage account and that people who want to keep mutual-fund-only accounts will be able to do so.

I encourage other Bogleheads to call Vanguard, ask about this, and post their responses here. Maybe then we can get a better idea about what Vanguard actually plans to do.

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Re: Upgrade button on Vanguard IRA

Post by zaplunken » Mon Jan 23, 2017 9:03 pm

It appears that what we are told depends upon what we are told, different reps seem to have different advice. The guy I spoke to didn't say "force" just that eventually they will be "converted". Honestly at this point I don't see what calling would accomplish cuz each rep you talk to may say yes conversions will happen or no they won't. I am starting to feel Vanguard isn't quite as wonderful as I have thought over the past decade but I also suspect that any other place may have issues too... out of the frying pan and into the fire.

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Re: Upgrade button on Vanguard IRA

Post by GreatOdinsRaven » Mon Jan 23, 2017 9:58 pm

zaplunken wrote:It appears that what we are told depends upon what we are told, different reps seem to have different advice. The guy I spoke to didn't say "force" just that eventually they will be "converted". Honestly at this point I don't see what calling would accomplish cuz each rep you talk to may say yes conversions will happen or no they won't. I am starting to feel Vanguard isn't quite as wonderful as I have thought over the past decade but I also suspect that any other place may have issues too... out of the frying pan and into the fire.
Here's my experience. I've been a Vanguard client for >10 years. Over that time, I found them to be very particular, by the book and honestly sometimes difficult to work with. We recently opened a custodial account with TD Ameritrade and have had a much easier/better experience. The impetus for change has been a series of events over the past year.

We had a difficult interaction with Vanguard, where we tried to reestablish joint access between my wife's accounts and mine and vice versa. We have had this privilege for over 10 years and then one day the Vanguard website revoked these privileges for an unknown reason following a website upgrade. Vanguard required witnessed notarized forms (even though we had had access for years) and although we did what was asked of us I incorrectly filled out one line negating the authorization form. We had to start over with new forms, notary etc.

Our experience with TDA has been very different. To authorize account access all we had to do was sign an electronic form on their website and access was granted within minutes. No taking time off from work to find a notary. No faxing. No finding witnesses.

I love Vanguard and what they do for the common investor. But that said over the past year we've had several problems that just shouldn't have happened.

in addition to losing access authorization to each other's accounts we also lost the ability to buy, sell and exchange from our Vanguard Prime Money Market mutual fund account when the website was upgraded early last year. We also lost the ability to dollar cost average through pre-existing automatic exchanges to our IRAs (Vanguard says because we were contributing to individual retirement accounts from a joint Vanguard prime MMF account). The latter issue required a few hours over two weeks on the phone and submission of notarized forms (for a privilege we had until their website revoked it). Then, we opened a joint taxable brokerage account with Vanguard because it was suggested we do so to "upgrade" and after doing so we learned that I couldn't have our direct deposit sent to the brokerage account and I couldn't establish automatic exchanges- like I had on the mutual fund account. The latest issue we have had involved a Roth conversion. My wife's conversion worked. Mine is still hung up due to a website "coding error" for which Vanguard has no fix and no estimate on when their software will be repaired. My conversion was attempted near the beginning of the month. Right now I am prohibited from buying, selling and exchanging in that account. I called Vanguard and even they can't do anything. Their rep told me that it's a known coding problem affecting many people and that their ETA for fixing it is Feb 9 at the earliest (and that they would backdate the transaction to the date they received my faxed instructions. They wouldn't even take the order over the phone...)

I basically begged them to expedite the conversion and they agreed to do it within 48 hours and to call me when they did so. That was last week and it still hasn't happened.

So, in summary, I wouldn't convert to their brokerage account until they force you to.
Last edited by GreatOdinsRaven on Tue Jan 24, 2017 3:57 am, edited 2 times in total.
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Re: Upgrade button on Vanguard IRA

Post by abuss368 » Mon Jan 23, 2017 10:01 pm

zaplunken wrote:
abuss368 wrote:So eventually there will no more mutual fund accounts? Vanguard will be brokerage only?
From what I was told today yes. I heard that 2 years ago also and thought it would have been done by now. So that is the direction they are going and like he said to me it may take years but eventually there will be no more mutual fund account just brokerage.
Incredible. Thank you for the update. I actually like our mutual fund accounts. So everyone will have ETF shares? Bid/Ask spreads and no more Admiral Shares?
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Re: Upgrade button on Vanguard IRA

Post by abuss368 » Mon Jan 23, 2017 10:05 pm

Silence Dogood wrote:
zaplunken wrote:
abuss368 wrote:So eventually there will no more mutual fund accounts? Vanguard will be brokerage only?
From what I was told today yes. I heard that 2 years ago also and thought it would have been done by now. So that is the direction they are going and like he said to me it may take years but eventually there will be no more mutual fund account just brokerage.
I just called Vanguard and asked if everyone will eventually be forced into the new brokerage account. The rep who answered said that they will not be forcing everyone into the new brokerage account and that people who want to keep mutual-fund-only accounts will be able to do so.

I encourage other Bogleheads to call Vanguard, ask about this, and post their responses here. Maybe then we can get a better idea about what Vanguard actually plans to do.
Yeeeeee Haaaawwwww!
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Re: Upgrade button on Vanguard IRA

Post by GreatOdinsRaven » Mon Jan 23, 2017 10:08 pm

abuss368 wrote:
zaplunken wrote:
abuss368 wrote:So eventually there will no more mutual fund accounts? Vanguard will be brokerage only?
From what I was told today yes. I heard that 2 years ago also and thought it would have been done by now. So that is the direction they are going and like he said to me it may take years but eventually there will be no more mutual fund account just brokerage.
Incredible. Thank you for the update. I actually like our mutual fund accounts. So everyone will have ETF shares? Bid/Ask spreads and no more Admiral Shares?

Abuss368,
Here's what I learned when we converted our taxable account- we could no longer direct deposit to the brokerage money market fund because they can't accept MMF direct deposits. Likewise, no more automatic exchanges into Vanguard funds because the brokerage account can't handle direct deposits and automatic exchanges. That's bad for the average DCA investor.

GOR
Last edited by GreatOdinsRaven on Tue Jan 24, 2017 3:27 am, edited 1 time in total.
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Re: Upgrade button on Vanguard IRA

Post by clip651 » Mon Jan 23, 2017 11:41 pm

abuss368 wrote:
zaplunken wrote:
abuss368 wrote:So eventually there will no more mutual fund accounts? Vanguard will be brokerage only?
From what I was told today yes. I heard that 2 years ago also and thought it would have been done by now. So that is the direction they are going and like he said to me it may take years but eventually there will be no more mutual fund account just brokerage.
Incredible. Thank you for the update. I actually like our mutual fund accounts. So everyone will have ETF shares? Bid/Ask spreads and no more Admiral Shares?
abuss368 - You can certainly still have mutual funds, including admiral shares in brokerage accounts. Brokerage accounts allow you to hold ETFs, stocks, and other instruments, but they also allow you to hold mutual funds. So if all you want is mutual funds, you can have those in a brokerage account.

I have one mutual fund only account and one newer brokerage account at Vanguard (one is IRA, one is taxable). I have VG admiral share mutual funds in both accounts. The statements and some options are a bit different between the two accounts. but you can have your VG mutual funds in either type of account.

I personally don't see any reason for anyone happy with their mutual fund accounts to voluntarily "upgrade" to the brokerage style account. But both are fine for most/many things.

best wishes,
cj

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Re: Upgrade button on Vanguard IRA

Post by FrugalInvestor » Tue Jan 24, 2017 12:32 am

Silence Dogood wrote:
zaplunken wrote:
abuss368 wrote:So eventually there will no more mutual fund accounts? Vanguard will be brokerage only?
From what I was told today yes. I heard that 2 years ago also and thought it would have been done by now. So that is the direction they are going and like he said to me it may take years but eventually there will be no more mutual fund account just brokerage.
I just called Vanguard and asked if everyone will eventually be forced into the new brokerage account. The rep who answered said that they will not be forcing everyone into the new brokerage account and that people who want to keep mutual-fund-only accounts will be able to do so.

I encourage other Bogleheads to call Vanguard, ask about this, and post their responses here. Maybe then we can get a better idea about what Vanguard actually plans to do.
As I posted previously, I once had a brokerage account that I had never used. When these rumors began circulating and I saw the 'upgrade' button on my account I called Vanguard, told them I had no interest in a Brokerage account, and asked if it could be deleted leaving my MF accounts in tact. The rep said yes and made that happen. I am now MF only and haven't heard anything about upgrading since.
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Re: Upgrade button on Vanguard IRA

Post by Doc » Tue Jan 24, 2017 9:11 am

GreatOdinsRaven wrote:Here's what I learned when we converted our taxable account- we could no longer direct deposit to the brokerage money market fund because they can't accept MMF direct deposits. Likewise, no more automatic exchanges into Vanguard funds because the brokerage account can't handle direct deposits and automatic exchanges. That's bad for the average DCA investor.
There is some confusion here. You can certainly direct deposit into your settlement money market account. We do it all the time. You can also set up automatic investments with the source of funds being either an outside bank or the accounts own settlement account. The average DCA investor is covered.

There are a few things that may lead to some confusion.

1) "Direct deposit" implies the transaction is initiated by the outside source not Vanguard. This money goes into your cash on hand and is swept to your settlement money market account. We do this routinely to transfer money from other brokers to VBS. Also VBS allows automatic investments into any of its own mutual funds. These are not direct deposits because the transfer is initiated at Vanguard not the outside source. We do the latter on a monthly basis automatically. (I don't know if you can invest in non-Vanguard funds in this way because we only have Vanguard funds in our Vangaurd taxable accounts and I don't contribute to our IRAs on a regular basis.)

2) Because of changes in federal regs effective last fall some money market funds were no longer able to guarantee a $1.0000 share price and thus they became unsuitable as a settlement fund. Vanguard Prime Money Market was one which was no longer "suitable". Vanguard chose to make clients change their settlement fund. Schwab and Fidelity just changed the character of their settlement money market accounts to make them suitable.

3) You can exchange one fund for another on the VBS platform as long as the two funds are from the same fund company. It is a sell/buy pair. At Schwab and Fidelity the same fund restriction does not apply.

4) Regarding direct deposit: Vanguard's correspondent bank and/or account is not the same for the mutual fund accounts and the brokerage account so existing direct deposit instructions may need to be revised.

All that being said, Vanguard is new to the brokerage business and they are not up to standard in some areas. But they are getting better. Slowly and surely.
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Re: Upgrade button on Vanguard IRA

Post by Sailor36 » Tue Jan 24, 2017 9:42 am

Doc wrote:
Vanguard chose to make clients change their settlement fund.
To clarify (because this confused my wife) - the old style brokerage accounts had you specify a money market fund in your mutual fund account that was used as the settlement fund. The "upgraded" accounts include the settlement fund (Federal Money Market) within the brokerage account. In order to buy in the brokerage, you must first transfer money to the brokerage's settlement account. This is NOT the same as transferring to Federal Money Market in your mutual fund account. Dividends from holdings in the brokerage account flow to the settlement account and not to your mutual fund account.

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Re: Upgrade button on Vanguard IRA

Post by Doc » Tue Jan 24, 2017 10:05 am

Sailor36 wrote:Doc wrote:
Vanguard chose to make clients change their settlement fund.
To clarify (because this confused my wife) - the old style brokerage accounts had you specify a money market fund in your mutual fund account that was used as the settlement fund. The "upgraded" accounts include the settlement fund (Federal Money Market) within the brokerage account. In order to buy in the brokerage, you must first transfer money to the brokerage's settlement account. This is NOT the same as transferring to Federal Money Market in your mutual fund account. Dividends from holdings in the brokerage account flow to the settlement account and not to your mutual fund account.
Let's try to clarify the clarification. We no longer have any Vanguard mutual fund accounts so I have to speculate there. In all of our seven brokerage accounts at three firms all of our settlement money market accounts had to be changed in some way last fall in order to comply with the new regs. If you only have a mutual fund account you don't really need a "settlement" account because all trades are really exchanges between Vanguard's own funds (maybe?).

You don't "need" to transfer money into the brokerage account FIRST. The money just has to be there when the buy trade settles. Our settlement account in the brokerage account was originally Prime MM. When the regs changed we had two MM funds. One was the prime MM fund but it was not the "settlement" fund. The settlement fund was Federal MM and it had a zero balance until I actually sold something like the Prime MM fund. Maybe if you had not upgraded and had both a mutual fund account and a brokerage account that you could wind up with a Federal Money Market account in both. But I don't know which would be the settlement fund.

Since we upgrade long before the new MM settlement changes became effective I don't have any first hand knowledge here. I do know that for a short time we had two different MM funds in our brokerage account.

(I think I just joined the confused wife. :? )
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Re: Upgrade button on Vanguard IRA

Post by GreatOdinsRaven » Tue Jan 24, 2017 10:26 am

Doc wrote: There is some confusion here. You can certainly direct deposit into your settlement money market account. We do it all the time.
I cannot and Vanguard confirmed to me that I cannot. And, they have no estimate on when I might be able to do so. No impending plans for "fixing" this issue for me.
Doc wrote:
You can also set up automatic investments with the source of funds being either an outside bank or the accounts own settlement account. The average DCA investor is covered.

True. But it's hard for me to keep things straight. If I'm having automatic investments from say a bank checking account and I'm investing taxable, 529s, paying a mortgage and bills it's hard to keep up with what transfers are pending, impending and recently completed. Sure, I could open up a new bank account to handle it- or I could keep doing what I had been doing and direct deposit to Vanguard and keep automatic exchanges in place.
Doc wrote:
There are a few things that may lead to some confusion.

1) "Direct deposit" implies the transaction is initiated by the outside source not Vanguard. This money goes into your cash on hand and is swept to your settlement money market account. We do this routinely to transfer money from other brokers to VBS.
This may be the case. We have been able to use this feature with the Vanguard mutual fund account. Their MMF is through Wells Fargo. However, this is certainly not the case with our experience with the Vanguard brokerage account (when transacting in the opposite direction). The brokerage account MMF uses JP Morgan and TDA has told us that JPM does not allow ACH transfers to TDA.
Doc wrote: Also VBS allows automatic investments into any of its own mutual funds. These are not direct deposits because the transfer is initiated at Vanguard not the outside source.
True, but I'd have to transact through a bank instead of through our settlement account (since we are unable to have our paycheck directly deposited to our brokerage settlement account).
Doc wrote: We do the latter on a monthly basis automatically. (I don't know if you can invest in non-Vanguard funds in this way because we only have Vanguard funds in our Vangaurd taxable accounts and I don't contribute to our IRAs on a regular basis.)
Doc wrote:
3) You can exchange one fund for another on the VBS platform as long as the two funds are from the same fund company. It is a sell/buy pair. At Schwab and Fidelity the same fund restriction does not apply.
Absolutely.

Doc wrote:
4) Regarding direct deposit: Vanguard's correspondent bank and/or account is not the same for the mutual fund accounts and the brokerage account so existing direct deposit instructions may need to be revised.
Please see above. JPM doesn't seem to allow ACH transfers in or out. At least according to TDA and the Vanguard rep with whom I spoke. When I established ACH trasnfers with my banks through TDA they all worked including the Vanguard mutual fund account (Wells Fargo), but not the brokerage account (JPM)
Doc wrote:
All that being said, Vanguard is new to the brokerage business and they are not up to standard in some areas. But they are getting better. Slowly and surely.
Doc, I'm as big a Boglehead as most on this forum, but I just can't accept this answer. They're the world's largest mutual fund company. They had the second largest ETF inflows in the world last year, behind Blackrock and they're approaching 4 Trillion in AUM. There's no excuse for these growing pains. If they were a small community credit union, sure, I could accept routine problems. It's hard to overlook the issues we've had over the past year.
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Re: Upgrade button on Vanguard IRA

Post by Doc » Tue Jan 24, 2017 12:31 pm

I'm going to try to piece this. Something's screwy or we are talking two different things.

Doc wrote:
There is some confusion here. You can certainly direct deposit into your settlement money market account. We do it all the time.
GreatOdinsRaven wrote: I cannot and Vanguard confirmed to me that I cannot. And, they have no estimate on when I might be able to do so. No impending plans for "fixing" this issue for me
Vanguard wrote: Transaction information
Settlement date 11/04/2016
Trade date 11/04/2016
Transaction type Funds Received
Transaction description Money Market Direct Deposit
Principal amount $211.03
Total fees and commissions $0.00
Total amount $211.03
The Sweep to MM was the same date as the funds received.
GreatOdinsRaven wrote:However, this is certainly not the case with our experience with the Vanguard brokerage account (when transacting in the opposite direction). The brokerage account MMF uses JP Morgan and TDA has told us that JPM does not allow ACH transfers to TDA.
I don't know what you mean by "in the opposite direction". What is "TDA". (Are you addressing direct deposits from VBS to TDAmeritrade?) I just looked at Vanguard's "setup for direct deposit" and when I type in TD up pops TD Ameritrade.

Thought. When you set up a direct deposit the sender sends small prior deposits for confirmation. After the confirmation from the client they try to "suck it back" which of course doesn't work because it's one way. One call to the sender (in my case Schwab) and it was fixed in about two minutes.

We have most incoming money go to our checking accounts then "pull it" to VBS. Some transfers are scheduled automatically and some are manually as needed. As a general principle I don't use brokerage houses for checking. I won't even use Schwab Bank which is a true bank just owned by Schwab. On occasion I will move money from Schwab to VBS by direct deposit.

Before VBS got the JPM link up and running a Vanguard rep told me use this bank "cutout" procedure. Now that the JPM link is up I can direct deposit. Maybe the problem is with the sender not Vanguard. I confirmed the procedure with the bank and in/out the same date was no problem.

BTW both Schwab and VBS use JPM. Does that make a difference?
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Re: Upgrade button on Vanguard IRA

Post by jhfenton » Tue Jan 24, 2017 1:23 pm

Doc wrote:I'm going to try to piece this. Something's screwy or we are talking two different things.

Doc wrote:
There is some confusion here. You can certainly direct deposit into your settlement money market account. We do it all the time.
GreatOdinsRaven wrote: I cannot and Vanguard confirmed to me that I cannot. And, they have no estimate on when I might be able to do so. No impending plans for "fixing" this issue for me
We do it too. I set it up on Vanguard.com and gave the info to my employer to direct deposit a portion of each paycheck:

Image

You can select it under Account Maintenance and set up a new one directing a percentage to up to four different accounts:

Image

The deposits can only go to the settlement fund.

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Re: Upgrade button on Vanguard IRA

Post by zaplunken » Tue Jan 24, 2017 2:21 pm

abuss368 wrote:
zaplunken wrote:
abuss368 wrote:So eventually there will no more mutual fund accounts? Vanguard will be brokerage only?
From what I was told today yes. I heard that 2 years ago also and thought it would have been done by now. So that is the direction they are going and like he said to me it may take years but eventually there will be no more mutual fund account just brokerage.
Incredible. Thank you for the update. I actually like our mutual fund accounts. So everyone will have ETF shares? Bid/Ask spreads and no more Admiral Shares?
No you can hold mutual funds in s brokerage account, you are not required to use ETF only in a brokerage account. I have 3 brokerage accounts and hold only mutual funds in all three. Naturally if I wanted to hold ETfs then I could do that too.

ETA - I see this was answered before my post, I posted 1st then read thru the rest of the posts. :oops:

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Re: Upgrade button on Vanguard IRA

Post by toto238 » Tue Jan 24, 2017 2:25 pm

I think some of the confusion here has to do with account types.

Some people only ever had Mutual-Fund-Only accounts, with no brokerage capabilities ever. Those people I don't believe are being forced to upgrade, though they may be pressured to do so. Pressure may include:

1. Charging a fee for legacy platform users
2. Removing features from the old platform as features are added to the new one
3. Re-allocating tech support budget to the new platform, allowing glitches and other issues to proliferate on the old platform for longer
4. Creating a separate phone queue for old-platform users with limited reps, resulting in much higher wait times
5. Not enabling backward compatibility for any new features that are come out with the old platform

The list goes on. There are a number of ways VG could pressure its clients into doing this without technically forcing them. They can't open a brokerage account for a client without gathering employment information and finding out if they are associated with a FINRA firm or a control person. If they don't have that information about you, they don't even have the technical ability to open the account.


Other people had brokerage, but were using the old brokerage platform. As far as I can tell, virtually everyone using this old platform was upgraded at about the same time that everyone had to switch settlement funds from Prime Money Market to Federal Money Market. This situation is one where Vanguard seemingly CAN force you to upgrade. But they can't make you consolidate your mutual-fund account into your brokerage account. All they can do is sever the link between the accounts and then upgrade the old brokerage account to a new brokerage account.

So bottom line: If you're in that first situation, it seems unlikely that you will be forced to upgrade, it may not even be possible. Though VG has a lot of options available to pressure you to do so anyway. If you're in the second situation, you've probably already been force upgraded, and if you haven't than you will soon.



Me personally, I held off on the upgrade until it was necessary. I was selling an ETF and wanted to buy a mutual fund with the proceeds. Under the old brokerage account structure you had to wait 3 FULL business days PLUS an overnight cycle. The end result was me being out of the market for 4 business days. This was absolutely unacceptable to me. I upgraded so I sold the ETF at 3:55pm ET and had my order in for the mutual fund in by 3:57pm ET. Total time out of the market: 5 minutes.

If you've only ever used their mutual funds, then I guess I can see why this whole upgrade doesn't appeal to you. If you used any of their brokerage functions before, though, this upgrade is a godsend. Maybe it's not up to the same standards as other brokers, but it's at least in the same class. The previous separated structure was absolutely horrid.

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Re: Upgrade button on Vanguard IRA

Post by Doc » Tue Jan 24, 2017 2:43 pm

Doc wrote:The deposits can only go to the settlement fund.
Yes but if that deposit is always on the same day of the month you can also do an automatic exchange from your settlement fund to the fund of your choice. (I think actually it's just a buy not an exchange when the source is the settlement MM account.) I just do a monthly scheduled buy with a bank as the source. The trade executes that day or the last business day before that day. The bank debit is ~3 business days before the buy so you need to build that in but the time offset may depend on the bank.
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Re: Upgrade button on Vanguard IRA

Post by jhfenton » Tue Jan 24, 2017 3:40 pm

Doc wrote:
Doc wrote:The deposits can only go to the settlement fund.
Yes but if that deposit is always on the same day of the month you can also do an automatic exchange from your settlement fund to the fund of your choice. (I think actually it's just a buy not an exchange when the source is the settlement MM account.) I just do a monthly scheduled buy with a bank as the source. The trade executes that day or the last business day before that day. The bank debit is ~3 business days before the buy so you need to build that in but the time offset may depend on the bank.
My one complaint about the direct deposit functionality is that they run the previous day's incoming ACH batch processes after they run the periodic investment orders scheduled for that day.

Plan: My employer pushes $250 direct deposit to Vanguard brokerage every other Thursday. It shows up like clockwork every other Friday morning. So I schedule an automatic investment for every other Friday morning to buy $250 of VOHIX (Vanguard OH Long-Term Tax Exempt). Perfect.

Result: On Friday morning at ~6:00 AM, Vanguard processes pending automatic investment for $250 of VOHIX. The purchase fails because settlement fund balance is $0. I get email telling me it failed. At ~7:00 AM, overnight incoming ACHs are processed. $250 received and now available for purchases. But the automatic investment has already failed, so I have to manually enter the order.

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Re: Upgrade button on Vanguard IRA

Post by Doc » Tue Jan 24, 2017 3:57 pm

jhfenton wrote:Plan: My employer pushes $250 direct deposit to Vanguard brokerage every other Thursday. It shows up like clockwork every other Friday morning. So I schedule an automatic investment for every other Friday morning to buy $250 of VOHIX (Vanguard OH Long-Term Tax Exempt). Perfect
And it fails, so try this:

Have your employer deposit the $250 into you bank every other Friday. Every other Friday have Vanguard do a scheduled $250 automatic investment with the money coming from the same bank.

Vanguard is not a bank. It is a damn good mutual fund company and a wannabe broker. Don't try to get it to be bank too. :D

I'm willing to bet you a Starbucks that the bank posts its incoming money before the outgoing.
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Re: Upgrade button on Vanguard IRA

Post by jhfenton » Tue Jan 24, 2017 4:25 pm

Doc wrote:
jhfenton wrote:Plan: My employer pushes $250 direct deposit to Vanguard brokerage every other Thursday. It shows up like clockwork every other Friday morning. So I schedule an automatic investment for every other Friday morning to buy $250 of VOHIX (Vanguard OH Long-Term Tax Exempt). Perfect
And it fails, so try this:

Have your employer deposit the $250 into you bank every other Friday. Every other Friday have Vanguard do a scheduled $250 automatic investment with the money coming from the same bank.

Vanguard is not a bank. It is a damn good mutual fund company and a wannabe broker. Don't try to get it to be bank too. :D

I'm willing to bet you a Starbucks that the bank posts its incoming money before the outgoing.
:?: I'm not trying to make it a bank. :beer I was trying to buy a mutual fund automatically out of my paycheck, and they make it impossible without building in a one-business-day delay. So I gave up on the automatic investment part and just do my buys manually. It's no big deal, just silly.

Your suggestion works too, and I've ended up doing that for our Roth IRAs rather than setting up direct deposit.

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Re: Upgrade button on Vanguard IRA

Post by GreatOdinsRaven » Tue Jan 24, 2017 4:36 pm

jhfenton wrote:
Doc wrote:I'm going to try to piece this. Something's screwy or we are talking two different things.

Doc wrote:
There is some confusion here. You can certainly direct deposit into your settlement money market account. We do it all the time.
GreatOdinsRaven wrote: I cannot and Vanguard confirmed to me that I cannot. And, they have no estimate on when I might be able to do so. No impending plans for "fixing" this issue for me
We do it too. I set it up on Vanguard.com and gave the info to my employer to direct deposit a portion of each paycheck:

Image

You can select it under Account Maintenance and set up a new one directing a percentage to up to four different accounts:

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The deposits can only go to the settlement fund.
This looks promising. I'll check into it. I tried once to do this online and it wouldn't work, so I called Vanguard and they told me that the brokerage account settlement funds couldn't accept employer direct deposits. It sounded incorrect and I really pressed the customer rep. It didn't make any sense that I could have Direct deposit to a mutual fund account but not to the brokerage account. She actually told me it was a reason not to close the Vanguard mutual fund account.

I was able to find the Vanguard brokerage direct depositing routing info a few weeks ago. That's what I used when I tried to set up an ACH with TD Ameritrade. I wanted all of my accounts to be able to transfer money for the purposes of rebalancing, etc.

When I used that info to set up an account with TD Ameritrade I got an error message saying that the JPM federal money market settlement fund was one of a few entities that would not work with TD Ameritrade.

You are correct. They deposit a few cents and then take them back. I didn't have any problems with the Vanguard mutual fund prime MMF, but it was a no-go with the brokerage Fed MMF settlement account.

I'll call Vanguard again and hopefully find someone who can help me.

One question for all of you: which bank accepts these direct deposits to your Fed MMF settlement account? Is it JP Morgan or Wells or someone else?
"The greatest enemies of the equity investor are expenses and emotions." -John C. Bogle, Little Book of Common Sense Investing. | | "Winter is coming." Lord Eddard Stark.

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