VG wants everyone to transfer to a brokerage account?

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flamesabers
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Re: VG wants everyone to transfer to a brokerage account?

Post by flamesabers » Mon Sep 25, 2017 3:00 pm

knowmad wrote:
Sat Sep 23, 2017 1:36 pm
Because of the Equifax hack, the IRS is encouraging everyone to file their taxes as early as possible. Brokerage accounts deliver their 1099s much later than mutual fund accounts, and thus increase the risk of fraudulent tax returns being filed in your name.
This is one of the reasons why I've avoided transferring over to a brokerage account.

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Re: VG wants everyone to transfer to a brokerage account?

Post by Mr.BB » Mon Sep 25, 2017 3:13 pm

I got a email message from them regarding this, so I called them yesterday.
I ask them was this a "mandatory" thing? They said no.
I ask them what was the advantages of me doing this? (We have our Roths , my SEP and 2 regular mutual funds with them). They said:

A) "With the brokerage account if I made a mistake when buying some shares with my Roth account, they could undo the sale, where all purchases are final with the current platform.
B) "If enough people get on the brokerage platform it would be much cheaper for Vanguard to operate, and if possible they would be lowering fund expense ratios when possible. - I told them if they get to the point where they need one more person to get the lower expense ratios, then let me know and I'll think about doing it..(anything to help my fellow B.H friends out)...:-)

I told them the current platform does what I need, if it's not broke, don't fix it.
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Re: VG wants everyone to transfer to a brokerage account?

Post by bengal22 » Mon Sep 25, 2017 3:17 pm

When I got my invitation, I replied back that under their corporate structure, I am one of the owners and I choose not to switch. So far that approach has worked.

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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Mon Sep 25, 2017 3:26 pm

FactualFran wrote:
Mon Sep 25, 2017 2:25 pm
Doc wrote:
Sat Sep 23, 2017 7:57 am
All the people who are completely unconcerned with reinvestment of dividends have probably never been confronted with Vg's IT method of treating wash sales which completely negates the use of specific ID cost basis
I have never had a problem with Vg's IT method of anything. I have avoided making wash sales. I have not used specific share identification. With one exception, I have not tax loss harvested. I realized a tax loss years ago because of an unusually high marginal tax rate.

Some keep it simple and avoid complicated interpretations of IRS regulations.
I find it really distressing when we have to either go through hoops or not make a particular investment decision simply to "avoid complicated interpretations of IRS regulations".
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TD2626
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Re: VG wants everyone to transfer to a brokerage account?

Post by TD2626 » Tue Sep 26, 2017 10:59 pm

I bet sooner rather than later everyone will be made to move over to a brokerage account.

With all new accounts being brokerage accounts, eventually relatively few will have non-brokerage accounts. It would be nice if they grandfathered people in for at least several more years - and provide at least 1 year's notice before any mandatory changes.

However, it's hard and expensive to operate two similar systems - and this has been a multi-year push - so it's likely that the brokerage account system will win out and everyone will have to convert.

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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Wed Sep 27, 2017 9:54 am

TD2626 wrote:
Tue Sep 26, 2017 10:59 pm
It would be nice if they grandfathered people in for at least several more years - and provide at least 1 year's notice before any mandatory changes.
We converted in November 2014. At that time it was announced that all accounts would eventually be upgraded. That's almost three years notice.
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Re: VG wants everyone to transfer to a brokerage account?

Post by Investment101 » Thu Sep 28, 2017 3:28 pm

the email I got doesn't sound like they force you to switch , I got an invitation so it's optional "We'd like to invite you to transition your current account to a Vanguard Brokerage Account by November 3, 2017. There's no cost to make the switch."

I have mostly mutual funds and I am leaving them long term, I reinvest the dividends etc back into the funds automatically. I think the switch won't really benefit me right? just leave it as is.

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Re: VG wants everyone to transfer to a brokerage account?

Post by Doom&Gloom » Thu Sep 28, 2017 5:03 pm

I got the same e-mail today. It reads like if I don't make the switch by November 3, it is just another lost opportunity for me. Seems like an odd way to phrase the inevitable.

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Re: VG wants everyone to transfer to a brokerage account?

Post by retiredjg » Thu Sep 28, 2017 5:43 pm

Yeah, I got it too.

They are being polite. Some of us are being recalcitrant. With all the complaining early on, it's easy to see why. But maybe none of that matters now, I don't know.

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Re: VG wants everyone to transfer to a brokerage account?

Post by tooluser » Thu Sep 28, 2017 9:44 pm

I finally received an invite e-mail a few weeks ago, having been a customer for about 20 years, and owning nothing but mutual funds there. Everything has transferred smoothly. Trust accounts require a mailed-in form, the others were completed with very little effort on-line.

It opens the door to easily consolidating accounts at Vanguard when I retire, should I choose to do so. Simplicity is a good goal.
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Re: VG wants everyone to transfer to a brokerage account?

Post by Dead Man Walking » Fri Sep 29, 2017 9:20 pm

I may be wrong, but the conversion to brokerage accounts may be for marketing ETFs. ETFs are being created to cover nearly every type of investment. Vanguard is creating ETFs to remain competitive with other investment companies.

I don't buy the argument that having two platforms is more expensive. Having one platform makes it easier for their representatives to deal with clients. Many posters have pointed out that some of them can't handle anything too complicated.

DMW

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Re: VG wants everyone to transfer to a brokerage account?

Post by Uncle Pennybags » Fri Oct 06, 2017 8:09 pm

Messy_Orchid_51 wrote:
Thu Sep 21, 2017 10:00 pm
Hmm glad to see others facing the same dilemma.

What is the fundamental difference between the retirement account I have and a brokerage account?

There must be some disparity otherwise no reason for the conversion.
I was strong armed into converting and don't care for it. It totally messed up my accounting, Quicken can't handle "settlement accounts". My account before conversion was with Vanguard Fiduciary Trust Company, after conversion it is with Vanguard Marketing Corporation. So I went from a fiduciary to a marketer handling my money.

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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Sat Oct 07, 2017 5:49 am

Uncle Pennybags wrote:
Fri Oct 06, 2017 8:09 pm
It totally messed up my accounting, Quicken can't handle "settlement accounts".
It's not Quicken. Different brokers handle cash and settlement accounts differently. Just ignore the settlement account in Q and treat everything as just cash. Delete downloaded "sweeps".

(The source of the problem is trade date balances that haven't yet swept to the MM account.)
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Re: VG wants everyone to transfer to a brokerage account?

Post by retiredjg » Sat Oct 07, 2017 6:55 am

So...if one had 3 funds in an IRA, after changing to the new system, one would have the same 3 funds and a settlement account?

What's in the settlement account? I assume it is a money market of some kind? Is here a $3k minimum for it? What is the settlement account used for?

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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Sat Oct 07, 2017 7:47 am

retiredjg wrote:
Sat Oct 07, 2017 6:55 am
So...if one had 3 funds in an IRA, after changing to the new system, one would have the same 3 funds and a settlement account?

What's in the settlement account? I assume it is a money market of some kind? Is here a $3k minimum for it? What is the settlement account used for?
Vanguard wrote:The role of your money market settlement fund
https://investor.vanguard.com/investing ... ement-fund
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Re: VG wants everyone to transfer to a brokerage account?

Post by retiredjg » Sat Oct 07, 2017 8:18 am

Thanks Doc. :happy

A few practical questions I did not see addressed.

It appears that "exchanges" are eliminated. In my current mutual fund account, when I want to rebalance, I sell TSM and buy TBM all in the same transaction called "exchange". Using the brokerage, it appears I'll have to sell TSM and wait a day (several days?) and then buy TBM using money from the settlement fund. Is that correct? An extra day and now two transactions instead of one?

It also appears that it may take a day longer to get money sent to my checking account if it has to go through the settlement account first. And possibly 2 transactions again, instead of only one?

The apparent alternative is to keep a chunk of money in money market all the time - not my preference. And the link did not mention that there is no $3k minimum, so I assume one must at least initially put at least $3k there.


I did not see these questions directly addressed in the link. Perhaps someone who has already had the experience can help. It sure seems the way to make this work smoothly is to keep at least $10k in money market. I've had about $200 in money market for several years and that's how I like it.

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Re: VG wants everyone to transfer to a brokerage account?

Post by F150HD » Sat Oct 07, 2017 9:01 am

telemark wrote:
Fri Sep 22, 2017 10:24 am
Vanguard has been gradually rolling this out since 2013 or perhaps earlier. My turn came last spring, and so far I've just been ignoring it, because if I wanted a brokerage account I would have opened one in the first place. It's optional if you don't mind the nagging. But lots of people have converted without any problems, and anyone opening a new account gets a brokerage account.
All my accts at VG are entitled 'Brokerage' accounts whether a tax deferred account (i.e. Roth) or a simple taxable brokerage acct on can buy/trade stocks in.

Example: "John Q. Sample - Roth IRA Brokerage Account"

So, 'Brokerage' account isn't just a taxable account for trading stocks (to VG at least).

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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Sat Oct 07, 2017 9:07 am

retiredjg wrote:
Sat Oct 07, 2017 8:18 am
It appears that "exchanges" are eliminated. In my current mutual fund account, when I want to rebalance, I sell TSM and buy TBM all in the same transaction called "exchange". Using the brokerage, it appears I'll have to sell TSM and wait a day (several days?) and then buy TBM using money from the settlement fund. Is that correct? An extra day and now two transactions instead of one?
Image
No extra day. (The red was an unintentional highlight.)
You can even sell an ETF (T2 settlement) and buy a Vg mutual fund (T1 settlement) the same day.
And if you have bank transfers set up you can initiate a transfer from your bank to VG using your brokerage account and have the funds available to trade within a few minutes.
Brokerage accounts are in general more flexible than a mutual fund only account. The one thing you miss is the ability to have dividends from one fund deposited in another fund except for your settlement MM account. Some people think that is a PITA but I think numerous small lots resulting from reinvested dividends to be a bigger pain.
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Re: VG wants everyone to transfer to a brokerage account?

Post by F150HD » Sat Oct 07, 2017 9:10 am

retiredjg wrote:
Sat Oct 07, 2017 6:55 am
So...if one had 3 funds in an IRA, after changing to the new system, one would have the same 3 funds and a settlement account?

What's in the settlement account? I assume it is a money market of some kind? Is here a $3k minimum for it? What is the settlement account used for?
yea, that was a little confusing to me last year. If you hold VTSAX in a Roth and liquidate to cash, the cash gets put into your 'Settlement Fund' which is really just a moneymarket fund inside the Roth IRA. I think there's 2 money market funds to choose from for it go to into. One choice for example is VMFXX

Each 'brokerage account' you have (taxable or tax deferred) has its own 'Settlement Fund' where your cash sits in VMFXX for example.

What was confusing to me last year when doing some transactions is its not then just 'cash'. To use those funds to buy something else, you have to sell that 'fund' to buy a different fund or ETF. So you'd sell VMFXX to buy say VFIAX or VOO or whatnot.

Example below of uninvested cash in an account:

Image
As this account has ETFs and not 'funds', a little is left over as its not enough to buy a whole 'share' of any ETF I want.
Last edited by F150HD on Sat Oct 07, 2017 9:30 am, edited 3 times in total.

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Re: VG wants everyone to transfer to a brokerage account?

Post by Toons » Sat Oct 07, 2017 9:15 am

Doc wrote:
Fri Sep 22, 2017 3:46 pm
DaftInvestor wrote:
Fri Sep 22, 2017 3:39 pm
goingup wrote:
Fri Sep 22, 2017 9:22 am
I haven't upgraded and won't until forced.
*We only use mutual funds
*Have multiple auto-exchanges set up between MM fund and other funds, which isn't possible in brokerage
*Have dividends from one fund directed to another fund, which isn't possible in brokerage

Upgrading to a brokerage would derail the automation.
I haven't been asked yet. The last automation is something I do. Do you know if they are planning on addressing these requirements in brokerage accounts?
Otherwise they are creating more manual work for us.
Having dividends reinvested in a taxable account is an accounting nightmare. Having those dividends reinvested in a separate account would be a nightmare squared.
Doesn't Vanguard keep track of your cost basis.?
I have never had an issue with cost basis accounting :happy
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Re: VG wants everyone to transfer to a brokerage account?

Post by dh » Sat Oct 07, 2017 9:16 am

Gnirk wrote:
Fri Sep 22, 2017 6:06 pm
I didn't accept the invitation to convert because the "new" brokerage account won't automatically invest the dividends and capital gains from one fund into another fund. I would have to direct them to the cash settlement fund, and then manually move them from the cash fund into the other fun, which means they wouldn't be reinvested the same day.
I did convert mine and all of my dividends and capital gains are reinvested the same day. My account shows a settlement fund (with a $0.00 balance) that I never use. You can choose to have dividends and capital gains of funds you own to be reinvested, or have them sent to your settlement fund. I haven't had any problems, yet I don't see the advantage of having converted. The change wasn't significant to me, but if it helped Vanguard lower fees for all of us then that is great.

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Re: VG wants everyone to transfer to a brokerage account?

Post by retiredjg » Sat Oct 07, 2017 9:19 am

Ok. It appears that "exchange" is still an option. That solves that.

"Withdraw from IRA" sounds like something that would be sent directly to me/my checking account rather than go through the settlement account and then get sent out. So I'll assume that issue is settled too.

The brokerage account may be more flexible for some, but I have no need of it's "extra options". For me, this is a new-fangled thing that makes something simple into something more complicated. But I guess I'll eventually "go along" with the plan.

Thanks for the screen shot of options in the "new" type of account.

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Re: VG wants everyone to transfer to a brokerage account?

Post by F150HD » Sat Oct 07, 2017 9:25 am

retiredjg wrote:
Sat Oct 07, 2017 9:19 am
Thanks for the screen shot of options in the "new" type of account.
One issue I ran into was on a RMD on an inherited account this year- the settlement fund I had could'nt accept the RMD for some reason, worked on it for an hour then I had to call VG to have them do it for me. There was something about the particular settlement fund where the RMD couldn't go into the settlement fund. :confused

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Re: VG wants everyone to transfer to a brokerage account?

Post by dbr » Sat Oct 07, 2017 9:28 am

As a perspective, brokerage account is pretty much what everyone has always had at most any other company where people place investments, including a brokerage link in the 401K. 401k plans themselves might look different from that.

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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Sat Oct 07, 2017 9:41 am

Toons wrote:
Sat Oct 07, 2017 9:15 am
Doesn't Vanguard keep track of your cost basis.?
I have never had an issue with cost basis accounting
According to Vanguard we currently have a long term loss for a position acquired last month.

Vanguard's compliance with Dodd-Frank is a work in (very slow) progress. But what the heck its only been 9 years. :wink:
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Re: VG wants everyone to transfer to a brokerage account?

Post by retiredjg » Sat Oct 07, 2017 9:42 am

dbr wrote:
Sat Oct 07, 2017 9:28 am
As a perspective, brokerage account is pretty much what everyone has always had at most any other company where people place investments, including a brokerage link in the 401K. 401k plans themselves might look different from that.
Probably. I've just never had a brokerage account before. :D

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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Sat Oct 07, 2017 9:43 am

retiredjg wrote:
Sat Oct 07, 2017 9:42 am
dbr wrote:
Sat Oct 07, 2017 9:28 am
As a perspective, brokerage account is pretty much what everyone has always had at most any other company where people place investments, including a brokerage link in the 401K. 401k plans themselves might look different from that.
Probably. I've just never had a brokerage account before. :D
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Re: VG wants everyone to transfer to a brokerage account?

Post by Papajoe56 » Sat Oct 07, 2017 9:52 am

I changed to brokerage account shortly after it was first "offered".
It has not effected me in a negative way.
I do not think the business philosophy at Vanguard is to do anything detrimental to clients.
They have lowered fund mgmt. fees on some funds in the last couple of years,so maybe the brokerage acct. change has helped lower costs.

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Re: VG wants everyone to transfer to a brokerage account?

Post by tibbitts » Sat Oct 07, 2017 12:39 pm

I have both types of accounts at Fidelity. Even for the trivial transactions I have to do the brokerage version is less functional and far more complicated than the mutual fund account, so I'll hold off on migrating at Vanguard as long as possible. I hate to do that because at work I'm the person who usually tries to persuade customers to upgrade to newer, more functional software (for free), but I only see less functionality for me here.

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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Sat Oct 07, 2017 12:55 pm

tibbitts wrote:
Sat Oct 07, 2017 12:39 pm
... but I only see less functionality for me here.
Other than the inability to direct dividends to another fund where is the "less"?
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Re: VG wants everyone to transfer to a brokerage account?

Post by Christine_NM » Sat Oct 07, 2017 1:06 pm

Doc wrote:
Sat Oct 07, 2017 12:55 pm
tibbitts wrote:
Sat Oct 07, 2017 12:39 pm
... but I only see less functionality for me here.
Other than the inability to direct dividends to another fund where is the "less"?
1099s received much later. With old platform I have taxes done before I'd receive the 1099s with a brokerage system. This is not just personal preference. It's become a matter of identity security.
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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Sat Oct 07, 2017 1:37 pm

Christine_NM wrote:
Sat Oct 07, 2017 1:06 pm
1099s received much later. With old platform I have taxes done before I'd receive the 1099s with a brokerage system. This is not just personal preference. It's become a matter of identity security.
When the 1099's issue is a function of the investments not the platform. If you only had Vanguard mutual funds in your brokerage account are you sure the 1099's would be later?

That said, I have my taxes done within a few $k in income by December 31st but never file them until April 15th. Don't give the tax man his money until you have to. :D

For 2016 I got corrected 1099's as late as June so getting my taxes filed in the middle of March would not have done any good. Like I said it's the investment not the platform.
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Re: VG wants everyone to transfer to a brokerage account?

Post by Christine_NM » Sat Oct 07, 2017 1:53 pm

Doc -

I had a brokerage account within an IRA until 2016 (or 15, I forget), on the old platform. I always received all 1099s including 1099B in time to do taxes in early Feb.

Any payment is due in April regardless of when you file the 1040.

Do the security issues of hacked info used to file an early return not concern you?
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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Sat Oct 07, 2017 3:20 pm

Christine_NM wrote:
Sat Oct 07, 2017 1:53 pm
Doc -

I had a brokerage account within an IRA until 2016 (or 15, I forget), on the old platform. I always received all 1099s including 1099B in time to do taxes in early Feb.

Any payment is due in April regardless of when you file the 1040.

Do the security issues of hacked info used to file an early return not concern you?
You are getting me confused.

1) I don't get any 1099Bs for my ROTH.

2) I don't need to file my return in order to pay the tax. Even if I don't pay enough by April 15 I just have to pay a penalty which is basically only the interest on the under payment.

3) I don't understand at all the security issues due to being somehow hacked because I didn't file my return until mid April. Please explain.
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Re: VG wants everyone to transfer to a brokerage account?

Post by abuss368 » Sat Oct 07, 2017 7:06 pm

Bogleheads -

I talked with a Vanguard representative a month or so ago. I was informed that all new clients must open brokerage accounts. In the same call we were also told we can stay with mutual fund accounts and do not need to change.

Best.
Last edited by abuss368 on Sat Oct 07, 2017 7:16 pm, edited 2 times in total.
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Re: VG wants everyone to transfer to a brokerage account?

Post by abuss368 » Sat Oct 07, 2017 7:12 pm

Doc wrote:
Fri Sep 22, 2017 3:46 pm
DaftInvestor wrote:
Fri Sep 22, 2017 3:39 pm
goingup wrote:
Fri Sep 22, 2017 9:22 am
I haven't upgraded and won't until forced.
*We only use mutual funds
*Have multiple auto-exchanges set up between MM fund and other funds, which isn't possible in brokerage
*Have dividends from one fund directed to another fund, which isn't possible in brokerage

Upgrading to a brokerage would derail the automation.
I haven't been asked yet. The last automation is something I do. Do you know if they are planning on addressing these requirements in brokerage accounts?
Otherwise they are creating more manual work for us.
Having dividends reinvested in a taxable account is an accounting nightmare. Having those dividends reinvested in a separate account would be a nightmare squared.
Vanguard provides cost basis reporting statements with the year end tax reporting statements.
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Re: VG wants everyone to transfer to a brokerage account?

Post by Christine_NM » Sat Oct 07, 2017 7:15 pm

I don't understand at all the security issues due to being somehow hacked because I didn't file my return until mid April. Please explain.
Doc --

It's a security issue if your info is used to file a return in your name and ssn before you get around to it. Early filer gets the worm, so to speak, legit or not. I would not want to be the second filer using my ssn so I want all 1099s asap. The IRS has written about this if you Google "filing fraudulent tax returns" but the problem still exists.

I am not trying to change your mind about anything. Carry on doing whatever you do. :happy
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Re: VG wants everyone to transfer to a brokerage account?

Post by flamesabers » Sat Oct 07, 2017 10:20 pm

Doc wrote:
Sat Oct 07, 2017 1:37 pm
Christine_NM wrote:
Sat Oct 07, 2017 1:06 pm
1099s received much later. With old platform I have taxes done before I'd receive the 1099s with a brokerage system. This is not just personal preference. It's become a matter of identity security.
When the 1099's issue is a function of the investments not the platform. If you only had Vanguard mutual funds in your brokerage account are you sure the 1099's would be later?

That said, I have my taxes done within a few $k in income by December 31st but never file them until April 15th. Don't give the tax man his money until you have to. :D

For 2016 I got corrected 1099's as late as June so getting my taxes filed in the middle of March would not have done any good. Like I said it's the investment not the platform.
Doc,

I'm not sure if the 1099s will come later if I upgrade but continue to hold only Vanguard mutual funds. Since the upgrade is irreversible, I'm not eager to see what happens in this regard. :?

As far as delaying payment to the IRS, when I filed my taxes for 2016 there was an option to select the date of payment for the taxes I owed the IRS. Unless you're mailing a check to the IRS, I would imagine you could do the same so that you don't have to wait until the last minute to file your taxes.

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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Sun Oct 08, 2017 9:06 am

Christine_NM wrote:
Sat Oct 07, 2017 7:15 pm
I don't understand at all the security issues due to being somehow hacked because I didn't file my return until mid April. Please explain.
Doc --

It's a security issue if your info is used to file a return in your name and ssn before you get around to it. Early filer gets the worm, so to speak, legit or not. I would not want to be the second filer using my ssn so I want all 1099s asap. The IRS has written about this if you Google "filing fraudulent tax returns" but the problem still exists.
Thanks for the Google suggestion. Some of the results were helpful but I also think that they should reduce your concern that filing early is needed to reduce the risk of identity theft.

I don't think this early filing idea has much relevance to the Vanguard platform choice. One can always file their tax return on the first business day of the year and then amend the return when they get their 1099's in early or mid-February depending on the platform and the type of investments you own.
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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Sun Oct 08, 2017 9:15 am

abuss368 wrote:
Sat Oct 07, 2017 7:12 pm
Vanguard provides cost basis reporting statements with the year end tax reporting statements.
Since the new broker reporting requirements went into effect a few years ago the cost basis reporting statements issue by Vanguard and other brokers have not always been accurate and/or are not completely compliant with the IRS regs. In my opinion it's a good idea to have your own data. Automatically reinvesting dividends especially in a different fund, complicates that record keeping and can make wash sale accounting a nightmare.

Having a broker correct the wash sale reporting and winding up after the correction with 1000 shares of a fund with zero cost is an example that actually occurred.
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Re: VG wants everyone to transfer to a brokerage account?

Post by goingup » Sun Oct 08, 2017 10:24 am

If I change to a brokerage account I'll have to become a different kind of investor. Right now I have automatic exchanges set up monthly and quarterly to purchase several funds, exchanging from MM. Automatic. No second guessing when or how much to buy. Dividends from one International fund go to another International fund automatically. This is to be in position to TLH.

The brokerage account doesn't have 2 features I currently use and offers me no benefits I want (that I know of). I'd like to be on the old platform for 3-5 more years, while we are still in accumulator mode with lumpy bonuses and options sales to invest. Sorry if this sounds selfish but this is how I've invested for 20 years and it's works for us. My intention isn't to be obdurate or drive cost into Vanguard. If they force the issue then of course, we'll migrate.

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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Sun Oct 08, 2017 10:45 am

goingup wrote:
Sun Oct 08, 2017 10:24 am
If I change to a brokerage account I'll have to become a different kind of investor. Right now I have automatic exchanges set up monthly and quarterly to purchase several funds, exchanging from MM. Automatic. No second guessing when or how much to buy. Dividends from one International fund go to another International fund automatically. This is to be in position to TLH.
There might be a workaround for what you want to do. You can set up automatic investments or withdrawals from/to your bank. So you route your dividends directly to your bank and then set up an automatic investment from that same bank. Alternatively direct your dividends to your MM account and then do an auto withdraw from there to your bank and then auto invest back to the desired fund.

There are a lot of variations to this scheme. I've used something like this to invest dividends from one broker to a fund at another broker. As long as you keep a little extra in the "from" account this can be done without being out of the market at all. In fact if you work it right you might be able to be out of the market for minus one day.

The "lumpy" transactions need to be set up in lumps but you can invest in multiple funds at the same time.
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Re: VG wants everyone to transfer to a brokerage account?

Post by mouses » Sun Oct 08, 2017 2:34 pm

I had a Vanguard Roth account lying around with a zero balance for years. In July I started doing Roth to Roth transfers into it. I only hold Vanguard mutual funds in it.

How do I know if it's a brokerage account or not?

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Re: VG wants everyone to transfer to a brokerage account?

Post by randomizer » Sun Oct 08, 2017 2:38 pm

I don't even know what kind of account I have.

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Re: VG wants everyone to transfer to a brokerage account?

Post by Doc » Sun Oct 08, 2017 2:57 pm

mouses wrote:
Sun Oct 08, 2017 2:34 pm
How do I know if it's a brokerage account or not?
randomizer wrote:
Sun Oct 08, 2017 2:38 pm
I don't even know what kind of account I have.
See if you can buy a stock or EFT.
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Re: VG wants everyone to transfer to a brokerage account?

Post by randomizer » Tue Oct 10, 2017 12:48 pm

Doc wrote:
Sun Oct 08, 2017 2:57 pm
mouses wrote:
Sun Oct 08, 2017 2:34 pm
How do I know if it's a brokerage account or not?
randomizer wrote:
Sun Oct 08, 2017 2:38 pm
I don't even know what kind of account I have.
See if you can buy a stock or EFT.
Turns out this is what I see when I log in:
Image
So I guess that answers that then.

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Re: VG wants everyone to transfer to a brokerage account?

Post by pfrank » Thu Nov 02, 2017 4:31 am

I just wanted to let people know about my upgrade fiasco. My wife and I went through the process of upgrading our mutual fund accounts to the new brokerage accounts. Our rollover and Roth IRA accounts upgraded seamlessly. It was done overnight. All of the funds and account settings (i.e., bank info, automatic investment schedule) transferred over. The nightmare began when we tried to upgrade our taxable account which is held by our revocable trust. It only holds two Vanguard mutual funds. We had to fill out all of these additional forms and provide all of our trust information again. Finally we got a brokerage account for our trust, but not really only because it partially exists. It is in some sort of limbo. The trust brokerage account is listed when I log in, but we can't do anything with it and Vanguard doesn't know why. Vanguard keeps saying: "just wait....a Principal will take care of it". The transfer of mutual funds between the accounts is hung up too. No one knows what is going on. Is the money in my old account or new account? It was supposed to be a simple upgrade..... :annoyed

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Re: VG wants everyone to transfer to a brokerage account?

Post by Pigeye Brewster » Thu Nov 02, 2017 8:44 am

My taxable account is also in the name of my living trust. I considered converting to brokerage but when I saw I'd have to provide all the relevant documents (which had already been provided once for the mutual fund account), I decided to not mess with it for now. Please provide an update on how this gets resolved.

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Re: VG wants everyone to transfer to a brokerage account?

Post by pfrank » Thu Nov 23, 2017 12:29 pm

Pigeye Brewster wrote:
Thu Nov 02, 2017 8:44 am
My taxable account is also in the name of my living trust. I considered converting to brokerage but when I saw I'd have to provide all the relevant documents (which had already been provided once for the mutual fund account), I decided to not mess with it for now. Please provide an update on how this gets resolved.
Here is an update. After many phone calls to Vanguard, my money was finally transferred between the accounts. Although it is an "upgrade", you still have to submit the paperwork as if it is a new account. My wife and I were able to submit the trust brokerage account form and trust documents via DocuSign. All of the other forms (bank information, check writing, etc.) required a wet signature and had to be mailed in. You also had to re-establish automatic investments. This only applies to trust accounts.

The other issue was why our money held in limbo. Here was the problem: when Vanguard opened my new trust brokerage account they only used my and my wife's middle initials. The original mutual fund account and associated trust paperwork listed our full middle names. The Vanguard computer system would not link the two accounts to do a transfer of assets even though it was the same social security numbers. A manager finally found the issue and corrected the problem. Now everything is fine. Good luck!

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Re: VG wants everyone to transfer to a brokerage account?

Post by abuss368 » Thu Nov 23, 2017 2:32 pm

Doc wrote:
Fri Sep 22, 2017 3:46 pm
DaftInvestor wrote:
Fri Sep 22, 2017 3:39 pm
goingup wrote:
Fri Sep 22, 2017 9:22 am
I haven't upgraded and won't until forced.
*We only use mutual funds
*Have multiple auto-exchanges set up between MM fund and other funds, which isn't possible in brokerage
*Have dividends from one fund directed to another fund, which isn't possible in brokerage

Upgrading to a brokerage would derail the automation.
I haven't been asked yet. The last automation is something I do. Do you know if they are planning on addressing these requirements in brokerage accounts?
Otherwise they are creating more manual work for us.
Having dividends reinvested in a taxable account is an accounting nightmare. Having those dividends reinvested in a separate account would be a nightmare squared.
Does Vanguard keep track of cost basis and accounting for brokerage accounts like they do for mutual fund accounts?
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