Vanguard has switched to brokerage only accounts

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goshenBogle
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Vanguard has switched to brokerage only accounts

Post by goshenBogle » Tue Apr 25, 2017 3:45 pm

We have been long time Vanguard investors. Most of our retirement is with Vanguard. Spoke to our Flagship rep the other day and was told that new accounts with Vanguard will be brokerage accounts. There are no more 'regular' (that is, non-brokerage) accounts. I find this disappointing. With the exception of an individual stock, all of our Vanguard investments are in 'regular' accounts and not in a brokerage account. And we will not change. Why? Well, we have had lots of administrative problems with the one brokerage account, such as: incorrect 1099 that took 3 months to fix; incorrectly reinvesting dividends; periodic statements with errors; etc.. Errors like these have never occurred with our regular accounts over 20+ years. Plus the statements from our brokerage account is (IMHO) poorly organized.

What experience do others have with Vanguard brokerage accounts?
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Sidney
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Re: Vanguard has switched to brokerage only accounts

Post by Sidney » Tue Apr 25, 2017 3:48 pm

I converted mine to brokerage last year. No problems.
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Ice-9
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Re: Vanguard has switched to brokerage only accounts

Post by Ice-9 » Tue Apr 25, 2017 3:49 pm

To add to the OP's question, see this page on Vanguard's website:
https://investor.vanguard.com/info/account-upgrade

livesoft
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Re: Vanguard has switched to brokerage only accounts

Post by livesoft » Tue Apr 25, 2017 3:49 pm

The Bogleheads forum is replete with ranting about Vanguard brokerage accounts. :)

I have simply learned to tolerate them and keep most of my money at other financial institutions.
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Re: Vanguard has switched to brokerage only accounts

Post by bloom2708 » Tue Apr 25, 2017 3:50 pm

I switched all accounts to brokerage only. I find there is no difference in the item that holds our various accounts.

I never understood why we had a "brokerage" account with nothing in it next to our "regular" account that held the index funds.

I converted, canceled all the extra accounts. They were removed from our Vanguard account. My account was recently updated to the new landing page. My wife's has been for over a year.

It was a "thumbs up", less is more change for us.
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Chuck
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Re: Vanguard has switched to brokerage only accounts

Post by Chuck » Tue Apr 25, 2017 3:52 pm

This is not something I'd worry about.

523HRR
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Re: Vanguard has switched to brokerage only accounts

Post by 523HRR » Tue Apr 25, 2017 3:53 pm

I never understood the point of the "non-brokerage" account model: multiple account numbers, multiple 1099s, ... Converted our mutual fund holdings to a single brokerage account a couple years ago; no problems; much simpler.

mouth
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Re: Vanguard has switched to brokerage only accounts

Post by mouth » Tue Apr 25, 2017 4:20 pm

Yeah I gotta say, although some people certainly have had problems ... which always happens when there is change, my transition was perfectly smooth. For anyone just starting now, I can't imagine how it would be any more, or less, error prone than starting under the old paradigm [shrug].

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prudent
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Re: Vanguard has switched to brokerage only accounts

Post by prudent » Tue Apr 25, 2017 5:27 pm

I also think it's simpler due to the single account number and 1099. And if I had a Flagship rep to call on if converting caused a problem, I wouldn't be concerned.

Broken Man 1999
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Re: Vanguard has switched to brokerage only accounts

Post by Broken Man 1999 » Tue Apr 25, 2017 5:40 pm

I nagged my agent until they converted our accounts to the current combined platform. We were able to reduce the number of accounts, a plus for me.

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JamesSFO
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Re: Vanguard has switched to brokerage only accounts

Post by JamesSFO » Tue Apr 25, 2017 5:53 pm

I switched mine over ~2 years ago as did my parents. Except for stray pennies in the settlement funds at times things have been much easier for us (my parents went from ~12 vanguard accounts to more like 4, etc.)

NiceUnparticularMan
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Re: Vanguard has switched to brokerage only accounts

Post by NiceUnparticularMan » Tue Apr 25, 2017 6:09 pm

It wasn't fun figuring out how to handle all this at the same time I was doing a backdoor Roth, but I assume that is now in the past.

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Re: Vanguard has switched to brokerage only accounts

Post by Nate79 » Tue Apr 25, 2017 7:29 pm

Vanguard, welcome to the 21st century.

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Re: Vanguard has switched to brokerage only accounts

Post by acr123 » Tue Apr 25, 2017 7:37 pm

Anyone who has recently switched who had multiple accounts and uses Quicken. I have been hesitant to convert since in the past when I looked online there had been numerous problems. Also, when I had inquired before SEP IRA & SEP Brokerage were not able to be converted. I think I would only be able to convert the Roth IRA & Roth Brokerage accounts. Does anyone have experience with these types of converting to Brokerage only accounts.

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Re: Vanguard has switched to brokerage only accounts

Post by acanthurus » Tue Apr 25, 2017 7:54 pm

Removed
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JoMoney
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Re: Vanguard has switched to brokerage only accounts

Post by JoMoney » Tue Apr 25, 2017 7:58 pm

Last year was my first full year after having converted all my accounts to the new brokerage accounts. I like the format of the new consolidated statements. There are some minor annoyances with longer time to get tax forms, and the way direct deposits and trade settlements work now. I don't even think those issues are a problem so much as just being a change from the 'old way' that I'll just have to adjust to.
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munemaker
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Re: Vanguard has switched to brokerage only accounts

Post by munemaker » Tue Apr 25, 2017 8:04 pm

Does this have anything to do with the "Upgrade" buttons I see on my Vanguard page?

What makes this an "upgrade?"

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Re: Vanguard has switched to brokerage only accounts

Post by sport » Tue Apr 25, 2017 8:07 pm

munemaker wrote:Does this have anything to do with the "Upgrade" buttons I see on my Vanguard page?

What makes this an "upgrade?"
Yes. This is the "upgrade" they are referring to. They call it an upgrade so it sounds like something attractive.

munemaker
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Re: Vanguard has switched to brokerage only accounts

Post by munemaker » Tue Apr 25, 2017 8:13 pm

sport wrote:
munemaker wrote:Does this have anything to do with the "Upgrade" buttons I see on my Vanguard page?

What makes this an "upgrade?"
Yes. This is the "upgrade" they are referring to. They call it an upgrade so it sounds like something attractive.
In that case, I would say that Vanguard has not switched to brokerage only accounts (at least not for everyone), since my wife and I have several accounts that still have the "upgrade" button.

Carl53
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Re: Vanguard has switched to brokerage only accounts

Post by Carl53 » Tue Apr 25, 2017 8:22 pm

For those that had multiple traditional and multiple Roths, have you had any difficulty maintaining your multiple accounts. My flagship rep advised against upgrading due to some problems relating to automatic combining of accounts that 'upgrading' initiated. He stated if we wanted to maintain multiple accounts for horse race conversions that we were better off not upgrading to avoid any issues.

Has anyone attempted to add additional accounts to their holdings once they had upgraded for the purpose of multiple competing conversions?

livesoft
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Re: Vanguard has switched to brokerage only accounts

Post by livesoft » Tue Apr 25, 2017 8:36 pm

^FWIW, my spouse has opened 2 new Roth IRAs at Vanguard while still having legacy rollover IRAs at Vanguard and a taxable account. She has not tried to recharacterize anything. The legacy Rollover IRA has an "upgrade" button, but it also has an old-style Rollover Brokerage Account with balance of $0.00. The money to fund one Roth IRA was a conversion from a legacy traditional IRA at Vanguard that now has balance of $0.00 and an "upgrade" button, too.

I doubt there would be any issues that you write about, but who could really know?
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Re: Vanguard has switched to brokerage only accounts

Post by friar1610 » Tue Apr 25, 2017 8:40 pm

I converted w/in the past calendar year. Conversion was without problems. We (my wife and I) did get 2 2016 statements each for our RMDs (one each from the old mutual fund account and the new brokerage account) but that was only because the transition was mid-year. Next year there will only be one for each of us.

If, by any chance, you have made gifts to charities by transferring MF shares to the charity's VG MF account in the past and want to do so in the future there is one new wrinkle. PM me if you want the details.
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Re: Vanguard has switched to brokerage only accounts

Post by abuss368 » Tue Apr 25, 2017 8:46 pm

Hi Bogleheads -

We have the older mutual fund accounts for a long time and this has worked well. I would guess I prefer not to change. If however, Vanguard does change all clients to one account structure and our expense ratios decline even more, I can understand the strategy.

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Re: Vanguard has switched to brokerage only accounts

Post by masteraleph » Tue Apr 25, 2017 10:18 pm

munemaker wrote:Does this have anything to do with the "Upgrade" buttons I see on my Vanguard page?

What makes this an "upgrade?"
If nothing else, it qualifies for SIPC coverage. That wasn't the case with the mutual fund accounts.

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FreeAtLast
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Re: Vanguard has switched to brokerage only accounts

Post by FreeAtLast » Tue Apr 25, 2017 10:43 pm

What happens if I refuse to give Vanguard permission to switch my mutual fund accounts (which is what they all are) to brokerage? :annoyed
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Re: Vanguard has switched to brokerage only accounts

Post by pkcrafter » Wed Apr 26, 2017 10:49 am

FreeAtLast wrote:What happens if I refuse to give Vanguard permission to switch my mutual fund accounts (which is what they all are) to brokerage? :annoyed
I don't think they are going to ask for your permission. :happy


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HueyLD
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Re: Vanguard has switched to brokerage only accounts

Post by HueyLD » Wed Apr 26, 2017 10:55 am

FreeAtLast wrote:What happens if I refuse to give Vanguard permission to switch my mutual fund accounts (which is what they all are) to brokerage? :annoyed
Have you called Vanguard yet? They should be able to give you a definitive answer.

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Re: Vanguard has switched to brokerage only accounts

Post by jebmke » Wed Apr 26, 2017 10:55 am

pkcrafter wrote:
FreeAtLast wrote:What happens if I refuse to give Vanguard permission to switch my mutual fund accounts (which is what they all are) to brokerage? :annoyed
I don't think they are going to ask for your permission. :happy


Paul
When I spoke with my Flagship rep, she said that I would not be forced to convert existing MF accounts but any new accounts would be BR (this is what happened when I transferred an IRA not too long ago).

I haven't had any issues with the brokerage account. It takes a little longer for a couple of things to clear but other than that, no problems. Their UI is a bit weird -- when you do an exchange in MF accounts, the accounts are set up with sending on the left and receiving on the right. When you do this in brokerage, it appears to be the other way. Not the best UI design.
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goingup
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Re: Vanguard has switched to brokerage only accounts

Post by goingup » Wed Apr 26, 2017 11:03 am

We haven't switched to the new platform yet. The precipitating event may be when we roll a 401K to Vanguard in a few years.

Glad to hear the favorable reports about simplification. It sounds like the bugs and tics in the "upgrade" process may be diminishing.

I hesitate to upgrade because of the auto-exchanges set up from MM to various funds. My understanding is that auto-exchanges between funds aren't possible in the brokerage account. :annoyed

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Re: Vanguard has switched to brokerage only accounts

Post by Danzangdc » Wed Apr 26, 2017 11:29 am

My account 'upgrade' was (and continues to be) a huge PITA. It was done automatically without me realizing it. I found out when I tried to do my backdoor roth and couldn't figure out any way to do it. Upon calling, rep explained that I needed to jump through x, y, z hoops first.

Months later, I realized that the 'upgraded' accounts were not reinvesting dividends like the original accounts had been doing for years. I have a ticket in to reimburse the money I lost as a result. It's been 6+ months with no response.

I also got a notice from that IRS that I failed to pay taxes on $11k. What? Oh, it was because whatever Vanguard submitted to the IRS led them to think I had withdrawn from the roth accounts when I had only re-characterized. I think this is associated with the 'upgrade'.

I'm still at Vanguard because it has legacy good will with me for what it has done to the industry with indexing, but my customer experience has been GARBAGE, and I have been permanently set back in my savings (assuming Vanguard won't credit my accounts after turning off automatic reinvesting).

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Re: Vanguard has switched to brokerage only accounts

Post by Bob Alou » Wed Apr 26, 2017 11:55 am

I have not converted my accounts yet, but it seems to me that this will remove the short term market risk involved in moving IRA assets away from vanguard. If I can move fund holdings in kind to another firm without having to go to cash, I will then have more control over the timing of the liquidation of the old fund and immediate reinvestment into the new. This will increase the likelihood that I will be diversifying away from vanguard

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Re: Vanguard has switched to brokerage only accounts

Post by jhfenton » Wed Apr 26, 2017 11:59 am

goshenBogle wrote:What experience do others have with Vanguard brokerage accounts?
I would probably have moved to Vanguard years earlier if they had had integrated brokerage accounts holding Vanguard mutual funds. The old system of mutual fund only accounts and separate brokerage accounts was enough to keep me elsewhere.

There are a few small features missing from the new brokerage accounts. (1) Mobile check deposit isn't working yet. (2) You cannot automatically reinvestment dividends from one fund into another. (3) You cannot automate exchanges between funds.

But beyond that, having everything integrated makes life easier. Now you can rebalance from an ETF to a Vanguard mutual fund the same day. (Vanguard covers the settlement float.) That would have taken 4 days under the old separate accounts (i.e., sell, settle 3 days later, transfer, buy).

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Re: Vanguard has switched to brokerage only accounts

Post by hushpuppy » Wed Apr 26, 2017 12:04 pm

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Re: Vanguard has switched to brokerage only accounts

Post by dpc » Wed Apr 26, 2017 12:09 pm

I'm an extremely lazy investor so I switched to brokerage since I couldn't see going to the hassle of moving my money elsewhere and I was generally happy with Vanguard.

In the transition, there were a lot of transactions that occurred but in the end, I don't recall having any major issues. I still don't comprehend how having my mutual funds in a brokerage account really helps me or Vanguard, but you have to pick your battles. I don't do backdoor Roths (see above) and anecdotally, it seems that those were an issue when the transition happened.

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Re: Vanguard has switched to brokerage only accounts

Post by dm200 » Wed Apr 26, 2017 12:18 pm

goshenBogle wrote:We have been long time Vanguard investors. Most of our retirement is with Vanguard. Spoke to our Flagship rep the other day and was told that new accounts with Vanguard will be brokerage accounts. There are no more 'regular' (that is, non-brokerage) accounts. I find this disappointing. With the exception of an individual stock, all of our Vanguard investments are in 'regular' accounts and not in a brokerage account. And we will not change. Why? Well, we have had lots of administrative problems with the one brokerage account, such as: incorrect 1099 that took 3 months to fix; incorrectly reinvesting dividends; periodic statements with errors; etc.. Errors like these have never occurred with our regular accounts over 20+ years. Plus the statements from our brokerage account is (IMHO) poorly organized.
What experience do others have with Vanguard brokerage accounts?
We were converted last year (for an organization I manage part time). Some aspects are annoying and less strightforrward (such as posting the monthly GNMA dividend to the settlement MM account), but all the dollars and cents eventually match up.

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Re: Vanguard has switched to brokerage only accounts

Post by hushpuppy » Wed Apr 26, 2017 12:34 pm

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Re: Vanguard has switched to brokerage only accounts

Post by Doc » Wed Apr 26, 2017 12:48 pm

hushpuppy wrote:This issue was brought to the attention of my Flagship representative that could not be bothered. This issue was then brought to the attention of a Client Manager, Vanguard Flagship Services. I asked that this pitfall which could potentially harm any less than fully aware Vanguard customer converting, but then recharacterizing, be widely disseminated to all Vanguard representatives to allow consistency between CSRs. The Vanguard Client Manager would not hear of such a thing.
The problem may be that Vanguard does not support Specific ID in tax advantaged accounts. It is not a consequence of mutual fund only or Vg brokerage.
Vanguard's cost basis service offers average cost information only for IRAs established after July 11, 2011.
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Re: Vanguard has switched to brokerage only accounts

Post by Whakamole » Wed Apr 26, 2017 12:49 pm

goingup wrote:We haven't switched to the new platform yet. The precipitating event may be when we roll a 401K to Vanguard in a few years.

Glad to hear the favorable reports about simplification. It sounds like the bugs and tics in the "upgrade" process may be diminishing.

I hesitate to upgrade because of the auto-exchanges set up from MM to various funds. My understanding is that auto-exchanges between funds aren't possible in the brokerage account. :annoyed
Can you explain what "auto-exchanges between funds" is? I can see if it is possible in the brokerage account.

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Re: Vanguard has switched to brokerage only accounts

Post by hushpuppy » Wed Apr 26, 2017 1:02 pm

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Re: Vanguard has switched to brokerage only accounts

Post by goingup » Wed Apr 26, 2017 1:23 pm

Whakamole wrote:
goingup wrote:We haven't switched to the new platform yet. The precipitating event may be when we roll a 401K to Vanguard in a few years.

Glad to hear the favorable reports about simplification. It sounds like the bugs and tics in the "upgrade" process may be diminishing.

I hesitate to upgrade because of the auto-exchanges set up from MM to various funds. My understanding is that auto-exchanges between funds aren't possible in the brokerage account. :annoyed
Can you explain what "auto-exchanges between funds" is? I can see if it is possible in the brokerage account.
Sure. We have monthly and quarterly exchanges scheduled between Vanguard MM fund and Vanguard TSM, FTSE and SC funds.

My recollection is that these scheduled auto-exchanges between funds can't be done in a Vanguard Brokerage account. Thanks for checking!

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Re: Vanguard has switched to brokerage only accounts

Post by Doc » Wed Apr 26, 2017 1:27 pm

hushpuppy wrote:The posts I made are not related to Specific ID in any way. I am only referring to conversions to Roth followed by any recharacterization(s)
When you tried to make the characterization they couldn't identify the last shares in becaue they have no way to "specifically identify" the lot that you wanted to characterize. I was picking up the situation Kitces described. I interpreted the Kitces example as only having a single fund in the account but with multiple lots. Our IRA's at Fidelity and Schwab have separate lot identification even if the cost per share is the same at one. At Vanguard all we have is "uncovered" shares. In any case I don't think the distinction is brokerage account vs. mutual fund only account.
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Re: Vanguard has switched to brokerage only accounts

Post by TBillT » Wed Apr 26, 2017 1:39 pm

Not aware of the switch...we have only the regular VG accounts.
I do my brokerage accounts with FiDo.
I suppose if we had VG brokerage accounts it would encourage me to trade more fixed income at VG, and maybe pull some out of VG funds, which I guess they have no shortage of buyers.

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Re: Vanguard has switched to brokerage only accounts

Post by DaftInvestor » Wed Apr 26, 2017 2:01 pm

I have 1 regular Mutual Fund Account with my index funds, 1 T-IRA account (with $0 in it - use this for yearly deposit before back-door Roth), and 1 Roth IRA.
I haven't seen any reason to change so haven't. (If it isn't broke - don't fix it). I don't plan on trading stocks or ETFs within Vanguard so why would I "upgrade"?

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Re: Vanguard has switched to brokerage only accounts

Post by hushpuppy » Wed Apr 26, 2017 2:06 pm

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Re: Vanguard has switched to brokerage only accounts

Post by Doc » Wed Apr 26, 2017 3:02 pm

@hushpuppy

OK. I am not well versed in the whole ROTH conversion/re-characterization thing. I got myself hung up on the average cost default method that Vanguard uses for mutual funds and thought it was applicable. My bad.
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Re: Vanguard has switched to brokerage only accounts

Post by Whakamole » Wed Apr 26, 2017 4:09 pm

goingup wrote:
Whakamole wrote:
goingup wrote:We haven't switched to the new platform yet. The precipitating event may be when we roll a 401K to Vanguard in a few years.

Glad to hear the favorable reports about simplification. It sounds like the bugs and tics in the "upgrade" process may be diminishing.

I hesitate to upgrade because of the auto-exchanges set up from MM to various funds. My understanding is that auto-exchanges between funds aren't possible in the brokerage account. :annoyed
Can you explain what "auto-exchanges between funds" is? I can see if it is possible in the brokerage account.
Sure. We have monthly and quarterly exchanges scheduled between Vanguard MM fund and Vanguard TSM, FTSE and SC funds.

My recollection is that these scheduled auto-exchanges between funds can't be done in a Vanguard Brokerage account. Thanks for checking!
In my brokerage account, under "Account Maintenance", there is a "Automatic Investment" feature which lets you move money from your settlement fund (which should be your MM fund) into a mutual fund you currently own. You can do this monthly, weekly, biweekly, or semimonthly. You can have it run until a specific date or until you manually tell it to stop (which could be never.) You can set a start date if you want this to begin in the future. You can also purchase multiple mutual funds at a time (so you can move $100 out of your money market fund and put $50 into TSM and $50 into SC, or 33% into each fund, or whatever.) You can also have it pull from a bank account instead of your settlement account.

I did not enable it but it looks fairly self-explanatory. Note that this doesn't support buying ETFs or putting additional money into your settlement fund but that doesn't sound like something you want to do. The only thing that sounds missing is that they don't support quarterly exchanges. You also have to give a specific dollar amount, there doesn't appear to be a way to say "send everything in my settlement fund into these funds."

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Re: Vanguard has switched to brokerage only accounts

Post by goingup » Wed Apr 26, 2017 4:18 pm

Whakamole wrote:
goingup wrote:
Whakamole wrote:
goingup wrote:We haven't switched to the new platform yet. The precipitating event may be when we roll a 401K to Vanguard in a few years.

Glad to hear the favorable reports about simplification. It sounds like the bugs and tics in the "upgrade" process may be diminishing.

I hesitate to upgrade because of the auto-exchanges set up from MM to various funds. My understanding is that auto-exchanges between funds aren't possible in the brokerage account. :annoyed
Can you explain what "auto-exchanges between funds" is? I can see if it is possible in the brokerage account.
Sure. We have monthly and quarterly exchanges scheduled between Vanguard MM fund and Vanguard TSM, FTSE and SC funds.

My recollection is that these scheduled auto-exchanges between funds can't be done in a Vanguard Brokerage account. Thanks for checking!
In my brokerage account, under "Account Maintenance", there is a "Automatic Investment" feature which lets you move money from your settlement fund (which should be your MM fund) into a mutual fund you currently own. You can do this monthly, weekly, biweekly, or semimonthly. You can have it run until a specific date or until you manually tell it to stop (which could be never.) You can set a start date if you want this to begin in the future. You can also purchase multiple mutual funds at a time (so you can move $100 out of your money market fund and put $50 into TSM and $50 into SC, or 33% into each fund, or whatever.) You can also have it pull from a bank account instead of your settlement account.

I did not enable it but it looks fairly self-explanatory. Note that this doesn't support buying ETFs or putting additional money into your settlement fund but that doesn't sound like something you want to do. The only thing that sounds missing is that they don't support quarterly exchanges. You also have to give a specific dollar amount, there doesn't appear to be a way to say "send everything in my settlement fund into these funds."
Thanks! I'm not sure now where I got the idea that I'd have to give up auto-exchanges if the account was upgraded to brokerage. This will spur more research on my end! Appreciate that you plunked around in your own account to find the answer. :beer

hushpuppy
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Re: Vanguard has switched to brokerage only accounts

Post by hushpuppy » Wed Apr 26, 2017 4:27 pm

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Kevin M
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Re: Vanguard has switched to brokerage only accounts

Post by Kevin M » Wed Apr 26, 2017 4:36 pm

If you don't like the new platform, don't "upgrade" to it unless you have to.

I am not upgrading my accounts in general, but we've upgraded a few traditional IRA accounts because it's necessary if you want to do online Roth conversions into new Roth accounts. All new accounts are on the new platform, and you can't do online conversions between accounts on different platforms (I think people have said you can do it by phone).

I create a new Roth for each conversion that I might recharacterize. I created three Roths for this purpose last year, and did full recharacterizations on two and a partial recharacterization on the third. The conversions were done online, and the recharacterizations were done by phone. No problems.

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Re: Vanguard has switched to brokerage only accounts

Post by *3!4!/5! » Wed Apr 26, 2017 5:01 pm

Why does this thread even exist? The title makes it sound like it is reporting some news. :confused

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