Vanguard is Discontinuing their VanguardAdvantage Accounts

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PugetSoundguy
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by PugetSoundguy » Tue Mar 05, 2019 2:43 pm

indexfundfan wrote:
Tue Mar 05, 2019 2:35 pm

You are partially correct. For overseas use, the Fidelity CMA card has a 1% fee if used as debit card in a purchase transaction. But there is no fee if used in an ATM to withdraw cash. This is generally not a concern for most people because it is much better to use a credit card for purchases anyway.

The Schwab card has no fee for ATM or when used for debit purchases overseas.
Thanks, I didn't know that! I misunderstood the Fidelity CMA website. Hmmm, maybe I should have given more consideration to the Fidelity CMA....

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steve50
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by steve50 » Tue Mar 05, 2019 3:17 pm

One good thing about this is now, I will not have to log into my Vanguard account that often which is a good thing and will prevent me from making a stupid move. During a down market, I still had to log in and look at my balance before moving onto BillPay section every month.

Glamdring56
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Glamdring56 » Tue Mar 05, 2019 3:24 pm

steve50 wrote:
Tue Mar 05, 2019 1:49 pm
Looks like Fidelity CMA is the best option as a replacement. Fidelity can automatically liquidate MM for BillPay. Schwab cannot do this.
I have the impression (perhaps erroneous) that there is a overdraft protection on the Schwab bank account that would go to the brokerage account and liquidate funds from a money market. Is it true??

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Rager1
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Rager1 » Tue Mar 05, 2019 3:38 pm

We regretfully visited a Fidelity Service Center today and opened a Cash Management Account (CMA) to replace our Vanguard Advantage Account. We’ve used the Advantage account for the past 15 years so we’re very disappointed that Vanguard has eliminated this service for its customers.

The process at Fidelity was smooth and easy:

1. Completed an application
2. Had the application notarized there
3. Received wiring instructions to fund the account
4. Left with the details of our new checking account numbers so we can set up automatic “pulls” from the account (i.e. Utility bills, etc.), and deposits (i.e. Social Security, etc.)
5. Fidelity validated our parking so they picked up the $3 parking fee

The CMA offers us the following advantages:
1. No minimum account balance required
2. No monthly fees
3. Debit/ATM Card—(All ATM fees reimbursed nationwide)
4. Mobile check deposit
5. Bill pay service at no cost, including recurring transactions
6. Free checks, deposit slips, and online images of cleared checks
7. Both “push” and “pull” from the account
8. 24/7 phone support
9. No cost wire transfers

Ed

PatrickA5
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by PatrickA5 » Tue Mar 05, 2019 4:32 pm

Rager1 wrote:
Tue Mar 05, 2019 3:38 pm
We regretfully visited a Fidelity Service Center today and opened a Cash Management Account (CMA) to replace our Vanguard Advantage Account. We’ve used the Advantage account for the past 15 years so we’re very disappointed that Vanguard has eliminated this service for its customers.

The process at Fidelity was smooth and easy:

1. Completed an application
2. Had the application notarized there
3. Received wiring instructions to fund the account
4. Left with the details of our new checking account numbers so we can set up automatic “pulls” from the account (i.e. Utility bills, etc.), and deposits (i.e. Social Security, etc.)
5. Fidelity validated our parking so they picked up the $3 parking fee

The CMA offers us the following advantages:
1. No minimum account balance required
2. No monthly fees
3. Debit/ATM Card—(All ATM fees reimbursed nationwide)
4. Mobile check deposit
5. Bill pay service at no cost, including recurring transactions
6. Free checks, deposit slips, and online images of cleared checks
7. Both “push” and “pull” from the account
8. 24/7 phone support
9. No cost wire transfers

Ed
Sounds pretty good. Did they ask about your retirement accounts?

PugetSoundguy
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Location: Seattle

Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by PugetSoundguy » Tue Mar 05, 2019 4:32 pm

Glamdring56 wrote:
Tue Mar 05, 2019 3:24 pm
steve50 wrote:
Tue Mar 05, 2019 1:49 pm
Looks like Fidelity CMA is the best option as a replacement. Fidelity can automatically liquidate MM for BillPay. Schwab cannot do this.
I have the impression (perhaps erroneous) that there is a overdraft protection on the Schwab bank account that would go to the brokerage account and liquidate funds from a money market. Is it true??
Specifically asked Schwab rep. She explained the overdraft protection will only draw from the brokerage sweep account, which pays even less interest than the Schwab Bank checking account. Overdrafts will not automatically draw from conventional money market accounts.

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Rager1
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Rager1 » Tue Mar 05, 2019 4:39 pm

PatrickA5 wrote:
Tue Mar 05, 2019 4:32 pm
Rager1 wrote:
Tue Mar 05, 2019 3:38 pm
We regretfully visited a Fidelity Service Center today and opened a Cash Management Account (CMA) to replace our Vanguard Advantage Account. We’ve used the Advantage account for the past 15 years so we’re very disappointed that Vanguard has eliminated this service for its customers.

The process at Fidelity was smooth and easy:

1. Completed an application
2. Had the application notarized there
3. Received wiring instructions to fund the account
4. Left with the details of our new checking account numbers so we can set up automatic “pulls” from the account (i.e. Utility bills, etc.), and deposits (i.e. Social Security, etc.)
5. Fidelity validated our parking so they picked up the $3 parking fee

The CMA offers us the following advantages:
1. No minimum account balance required
2. No monthly fees
3. Debit/ATM Card—(All ATM fees reimbursed nationwide)
4. Mobile check deposit
5. Bill pay service at no cost, including recurring transactions
6. Free checks, deposit slips, and online images of cleared checks
7. Both “push” and “pull” from the account
8. 24/7 phone support
9. No cost wire transfers

Ed
Sounds pretty good. Did they ask about your retirement accounts?
Not a word. We explained that Vanguard was eliminating the Advantage Account so we needed to move quickly. And they responded.

Ed

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TheGreyingDuke
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by TheGreyingDuke » Tue Mar 05, 2019 5:42 pm

indexfundfan wrote:
Tue Mar 05, 2019 2:15 pm
I created the following to compare Fidelity, Schwab and Vanguard Advantage.

Image
One clarification, the Vanguard Advantage does NOT allow a backup account if the settlement account has insufficient funds, although when I overdrew once I did get a call from my rep and we managed to move some funds around.

Using the other checking approach Vanguard, where you are able to write checks for $250 or more DOES allow for an alternative redemption fund to be established.
"Every time I see an adult on a bicycle, I no longer despair for the future of the human race." H.G. Wells

TravelGeek
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by TravelGeek » Tue Mar 05, 2019 5:50 pm

Apologies if this has already been mentioned; I didn't read this entire thread since I don't have a VanguardAdvantage account (nor did I have plans to get one).

Anyway, perhaps coincidence, but I just got a survey from Vanguard:

"Vanguard would like to better understand your perspectives on managing your cash as well as get a better idea of your cash management picture. Your participation will help us improve the products and services we provide. Do you have a few minutes?"

FWIW.

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Zephavest
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Zephavest » Tue Mar 05, 2019 5:57 pm

mervinj7 wrote:
Tue Mar 05, 2019 2:36 pm
By the way, you can sign up for Guess Access to view internal Fidelity pages for 30 days without fully signing up for an account.
https://guest.fidelity.com/GA/profile
I signed up to for the Guest Access, it does not allow access to the Cash Management functions or features.

Taildragger
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Taildragger » Tue Mar 05, 2019 6:05 pm

Wells Fargo (WF) has issues. However, I consider it like an aircraft that has crashed. The resulting FAA safety improvements make it safer than ever. Having worked for Vanguard and other large companies, I trust that Wells Fargo will eventually get better from the increased scrutiny.

Several people I know worked for WF. They said it was a high-pressure environment, so -1 on that.

Can the above comparison matrix add WF? After all, it has over 5,800 branches?

If I feed WF the monthly expected expenditure, plus a little buffer, sent from Vanguard, the most I could loose every year is about 2% of the average WF account balance ($5,000). That’s about $100/yr. Not bad for access to 5,800 branches. That’s assuming Bill Pay is free.

I choose Wells Fargo for a USA-Wide bank because of Albuquerque, NM, which we visited last year. There are no Chase banks there, but has a bunch of WF banks.

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Barry Barnitz
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Barry Barnitz » Tue Mar 05, 2019 6:17 pm

A brief news release: Vanguard to end its small cash-management service, InvestmentNews, March 4, 2019.

The article provides a link to this forum topic.
The VanguardAdvantage program was launched in 2002 as a way to compete with banks. Customers who had between $500,000 and $1 million at Vanguard were charged an annual fee, while it was free for those with at least $1 million invested.

Less than 2% of eligible clients are using it, according to a Wall Street Journal report, and only half were active users in recent months.
While only a tiny portion of Vanguard customers may have used the program, the news of its demise has generated 270 comments on Bogleheads.org, a web forum for investors who use Vanguard funds.
regards,
Additional administrative tasks: Financial Page affiliate blog; finiki the Canadian wiki; The Bogle Center for Financial Literacy site; Wiki Bogleheads® España.

mervinj7
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by mervinj7 » Tue Mar 05, 2019 6:33 pm

Zephavest wrote:
Tue Mar 05, 2019 5:57 pm
mervinj7 wrote:
Tue Mar 05, 2019 2:36 pm
By the way, you can sign up for Guess Access to view internal Fidelity pages for 30 days without fully signing up for an account.
https://guest.fidelity.com/GA/profile
I signed up to for the Guest Access, it does not allow access to the Cash Management functions or features.
No, I believe you need to sign up for a CMA account to actually use the account. :D This was for an user who wanted to read internal documents on the Fidelity site or use their financial "planning" tools (no need for most bogleheads). Since I have an actual Fidelity account, I haven't used the guess access feature myself, just wanted to point it out.

Eno Deb
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Eno Deb » Tue Mar 05, 2019 6:45 pm

Taildragger wrote:
Tue Mar 05, 2019 6:05 pm
Wells Fargo (WF) has issues. However, I consider it like an aircraft that has crashed. The resulting FAA safety improvements make it safer than ever. Having worked for Vanguard and other large companies, I trust that Wells Fargo will eventually get better from the increased scrutiny.

Several people I know worked for WF. They said it was a high-pressure environment, so -1 on that.

Can the above comparison matrix add WF? After all, it has over 5,800 branches?

If I feed WF the monthly expected expenditure, plus a little buffer, sent from Vanguard, the most I could loose every year is about 2% of the average WF account balance ($5,000). That’s about $100/yr. Not bad for access to 5,800 branches. That’s assuming Bill Pay is free.

I choose Wells Fargo for a USA-Wide bank because of Albuquerque, NM, which we visited last year. There are no Chase banks there, but has a bunch of WF banks.
I had checking, savings, brokerage and a Roth IRA at WF for many years. It was not bad. Everything works as expected, and I was even grandfathered in for 100 free trades per year that used to be a benefit of their premium relationship ("PMA", no longer available today). I used their self-directed brokerage service ("Wells Trade"). However, I moved my assets elsewhere after the fraud scandal since I didn't want to support such practices. Anyway, a few pluses and minuses that come to mind:

+ They have a good selection of mutual funds. They even provided access to Vanguard Admiral funds for many years when others didn't, sometimes even waiving the minimum investment requirements.
+ They never tried to upsell me on their advisor services or other products
+ Their mobile app works reasonably well and integrates both banking and investment accounts
+ As you say, they have a lot of branches. However, note that not all branches service investment accounts (I think this is due to regulations that force banks to keep their retail and investment businesses separate)
+ Banking services such as billpay work just fine

- Many things that you can do online at brokers like Fidelity require sending forms by mail (e.g. Roth conversions for Backdoor Roth).
- Buying treasuries and CDs is not possible online (only via phone)
- They have no competitive high-yield savings account
- They try to lock you in with very high account closure fees ($95 per account when I last checked), so keep this in mind if you think you may want to move elsewhere later

Regarding the table above, they reimburse ATM fees if you have a "Portfolio" account; you only need a minimum balance of $50,000 in linked banking and brokerage accounts to avoid a monthly fee for this. Their standard bank deposit sweep is FDIC insured, but has a low interest rate (0.25% I believe). A MMF settlement option is not available for personal brokerage accounts.

vencat
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by vencat » Tue Mar 05, 2019 7:07 pm

How about ACH payments from Vanguard ? I have set up automatic payments from Vanguard to my credit card accounts without using online bill pay. Will those be affected?

bck63
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by bck63 » Tue Mar 05, 2019 7:10 pm

The Fidelity CMA is great.

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William4u
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by William4u » Tue Mar 05, 2019 7:37 pm

vencat wrote:
Tue Mar 05, 2019 7:07 pm
How about ACH payments from Vanguard ? I have set up automatic payments from Vanguard to my credit card accounts without using online bill pay. Will those be affected?
Unfortunately, yes. ACH payments will no longer work. Your bills will no longer get paid through Vanguard, period (through a "pull" or a "push"). That will end in July. I have the same problem. I have many bills paid through my VanguardAdvantage account, and I will need to change all of them by the time they shut down my account. All direct deposits, ACHs, and credit cards paid through the account will cease to work. You can set up a different type of direct deposit later, but no bills can automatically "pull" or "push" from Vanguard anymore after they shut it down in July.

brndog2
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by brndog2 » Tue Mar 05, 2019 11:27 pm

PatrickA5 wrote:
Tue Mar 05, 2019 4:32 pm
Rager1 wrote:
Tue Mar 05, 2019 3:38 pm
We regretfully visited a Fidelity Service Center today and opened a Cash Management Account (CMA) to replace our Vanguard Advantage Account. We’ve used the Advantage account for the past 15 years so we’re very disappointed that Vanguard has eliminated this service for its customers.

The process at Fidelity was smooth and easy:

1. Completed an application
2. Had the application notarized there
3. Received wiring instructions to fund the account
4. Left with the details of our new checking account numbers so we can set up automatic “pulls” from the account (i.e. Utility bills, etc.), and deposits (i.e. Social Security, etc.)
5. Fidelity validated our parking so they picked up the $3 parking fee

The CMA offers us the following advantages:
1. No minimum account balance required
2. No monthly fees
3. Debit/ATM Card—(All ATM fees reimbursed nationwide)
4. Mobile check deposit
5. Bill pay service at no cost, including recurring transactions
6. Free checks, deposit slips, and online images of cleared checks
7. Both “push” and “pull” from the account
8. 24/7 phone support
9. No cost wire transfers

Ed
Sounds pretty good. Did they ask about your retirement accounts?
I plan on moving Roth and Tradition IRA. Both are in various Total stock or bond type funds. I will probably liquidate once at Fidelity and buy their TOTAL funds as they might just be lower cost. The customer service and 24/7 customer support has been excellent so far.

msimon
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by msimon » Wed Mar 06, 2019 12:06 am

The letter sent out to Vanguard Advantage account holders mentions that there is a way to request that your Advantage account be converted to a regular Vanguard brokerage account prior to the 7/31/2019 mandatory closure date. Has anyone done this yet?

I assume that if I wish to engage in checkwriting on my newly converted account I will need to submit a checkwriting form on my brokerage account - I assume I will only be able to do this after the downgrade has occurred. It would be nice if Vanguard could automatically send out new checkbooks for everyone who is currently signed up for checkwriting on their Advantage accounts.

Hopefully someone at Vanguard is thinking through these issues so the transition won't be any more painful than it needs to be.

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asset_chaos
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by asset_chaos » Wed Mar 06, 2019 2:11 am

Barry Barnitz wrote:
Tue Mar 05, 2019 6:17 pm
A brief news release: Vanguard to end its small cash-management service, InvestmentNews, March 4, 2019.

The article provides a link to this forum topic.
The VanguardAdvantage program was launched in 2002 as a way to compete with banks. Customers who had between $500,000 and $1 million at Vanguard were charged an annual fee, while it was free for those with at least $1 million invested.

Less than 2% of eligible clients are using it, according to a Wall Street Journal report, and only half were active users in recent months.
While only a tiny portion of Vanguard customers may have used the program, the news of its demise has generated 270 comments on Bogleheads.org, a web forum for investors who use Vanguard funds.
regards,
The article also says
Separately, [Vanguard] said it is exploring other cash management options it may offer.
If true, I wonder why Vanguard believes anyone would take up such a future service? Vanguard has now proven themselves unreliable in this area. If they turn off cash management, putting existing clients to the bother of redoing everything, only to turn on a rejigged offering some years from now, that would show a great deal of contempt to the existing users.
Regards, | | Guy

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Zephavest
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Zephavest » Wed Mar 06, 2019 8:00 am

I was half convinced maybe Fidelity CMA was a viable option but wanted to see the differences between my expected returns. There as been some discussion of Vanguard vs Fidelity Money Market Funds along with High Yield Savings Accounts and their yield, but no in depth look at what it will cost us to move from Vanguard.

Here is the comparison table for your information and comments.

Image
Last edited by Zephavest on Wed Mar 06, 2019 8:06 am, edited 1 time in total.

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Nate79
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Nate79 » Wed Mar 06, 2019 8:04 am

Zephavest wrote:
Wed Mar 06, 2019 8:00 am
I was half convinced maybe Fidelity CMA was a viable option but wanted to see the differences between my expected returns. There as been some discussion of Vanguard vs Fidelity Money Market Funds along with High Yield Savings Accounts and their yield, but no in depth look at what it will cost us to move from Vanguard.

Here is the comparison table for your information and comments.

Image
Are you not aware that SEC yield already accounts for the expense ratio? You do not subtract the expense ratio from the posted SEC yield.

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indexfundfan
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by indexfundfan » Wed Mar 06, 2019 8:07 am

Zephavest wrote:
Wed Mar 06, 2019 8:00 am
I was half convinced maybe Fidelity CMA was a viable option but wanted to see the differences between my expected returns. There as been some discussion of Vanguard vs Fidelity Money Market Funds along with High Yield Savings Accounts and their yield, but no in depth look at what it will cost us to move from Vanguard.

Here is the comparison table for your information and comments.

Image
Two points:

1) The yield numbers from Vanguard and Fidelity are the yields, net of the expenses. You shouldn't be subtracting the expense ratios a second time.
2) To compare to the APY of savings account, you should be using the compound yield, not the 7-day yield.
My signature has been deleted.

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Zephavest
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Zephavest » Wed Mar 06, 2019 8:09 am

Nate79 wrote:
Wed Mar 06, 2019 8:04 am
Are you not aware that SEC yield already accounts for the expense ratio? You do not subtract the expense ratio from the posted SEC yield.
Thank you, I thought that may be true but the note on Fidelity seemed to indicate otherwise:

Exp Ratio - Annual or Semi-Annual Report (Net)
This expense ratio is reflected in the most current Annual or Semi-Annual Report. Expense ratio is a measure of what it costs to operate an investment, expressed as a percentage of its assets, as a dollar amount, or in basis points. These are costs the investor pays through a reduction in the investment's rate of return. For a mutual fund, the net expense ratio is the total annual fund or class operating expense from the fund's most recent Annual or Semi-Annual Report, after any fee waiver and/or expense reimbursements that will reduce any fund operating expenses. If the investment option is not a mutual fund, the expense ratio may be calculated using methodologies that differ from those used for mutual funds.

If someone else can please confirm this I will redo the table.

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Zephavest
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Zephavest » Wed Mar 06, 2019 8:14 am

indexfundfan wrote:
Wed Mar 06, 2019 8:07 am
Two points:
1) The yield numbers from Vanguard and Fidelity are the yields, net of the expenses. You shouldn't be subtracting the expense ratios a second time.
2) To compare to the APY of savings account, you should be using the compound yield, not the 7-day yield.
Okay, that is more clear, thanks for helping to to correct my mistake, from the bank websites they are listing the following:

PurePoint Financial Online Savings
2.35% Annual Percentage Yield

Ally Bank Online Savings
Annual Percentage Yield 2.20%

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Zephavest
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Zephavest » Wed Mar 06, 2019 8:21 am

Here is the corrected table, thank you to Nate79 and indexfundfan for the clarifications.

Image

stan1
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by stan1 » Wed Mar 06, 2019 8:27 am

Zephavest wrote:
Wed Mar 06, 2019 8:21 am
Here is the corrected table, thank you to Nate79 and indexfundfan for the clarifications.

Image
Not to further complicate matters but you should use tax equivalent yield if you pay state income taxes. States do not tax government obligation interest especially when comparing to FDIC accounts.

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Zephavest
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Zephavest » Wed Mar 06, 2019 8:38 am

stan1 wrote:
Wed Mar 06, 2019 8:27 am
Not to further complicate matters but you should use tax equivalent yield if you pay state income taxes. States do not tax government obligation interest especially when comparing to FDIC accounts.
Good point stan1, for those not living in Texas or other no state tax states, please adjust accordingly.

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by retiringwhen » Wed Mar 06, 2019 9:37 am

stan1 wrote:
Wed Mar 06, 2019 8:27 am
Zephavest wrote:
Wed Mar 06, 2019 8:21 am
Here is the corrected table, thank you to Nate79 and indexfundfan for the clarifications.

Image
Not to further complicate matters but you should use tax equivalent yield if you pay state income taxes. States do not tax government obligation interest especially when comparing to FDIC accounts.
This is excellent because it helps show that these CMA services are not "free" There is a real measurable opportunity cost on cash returns.

This why I have always kept my banking and investing separate. This whole CMA thing is just one more hook to upsell (or get cash in relatively high ER parking spots by the brokerages.)

PatrickA5
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by PatrickA5 » Wed Mar 06, 2019 9:40 am

msimon wrote:
Wed Mar 06, 2019 12:06 am
The letter sent out to Vanguard Advantage account holders mentions that there is a way to request that your Advantage account be converted to a regular Vanguard brokerage account prior to the 7/31/2019 mandatory closure date. Has anyone done this yet?

I assume that if I wish to engage in checkwriting on my newly converted account I will need to submit a checkwriting form on my brokerage account - I assume I will only be able to do this after the downgrade has occurred. It would be nice if Vanguard could automatically send out new checkbooks for everyone who is currently signed up for checkwriting on their Advantage accounts.

Hopefully someone at Vanguard is thinking through these issues so the transition won't be any more painful than it needs to be.
If you call them they will send out the forms necessary to set up checking on your money market fund. I went ahead and closed my Advantage account while on the phone, but you don't have to. No reason to wait until 7/31 to set up check writing.

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jpsfranks
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by jpsfranks » Wed Mar 06, 2019 9:42 am

retiringwhen wrote:
Wed Mar 06, 2019 9:37 am
This is excellent because it helps show that these CMA services are not "free" There is a real measurable opportunity cost on cash returns.

This why I have always kept my banking and investing separate. This whole CMA thing is just one more hook to upsell (or get cash in relatively high ER parking spots by the brokerages.)
I do not believe that anyone in this thread has offered an alternative with a lower opportunity cost (i.e. a higher interest rate on a checking account) than Fidelity currently does using CMA and money market funds.

Perhaps I'm just lucky but in the 15 or so years I've had accounts at Fidelity I've never once been upsold either over the phone or during the few times I've visited an office.

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by indexfundfan » Wed Mar 06, 2019 9:56 am

jpsfranks wrote:
Wed Mar 06, 2019 9:42 am
retiringwhen wrote:
Wed Mar 06, 2019 9:37 am
This is excellent because it helps show that these CMA services are not "free" There is a real measurable opportunity cost on cash returns.

This why I have always kept my banking and investing separate. This whole CMA thing is just one more hook to upsell (or get cash in relatively high ER parking spots by the brokerages.)
I do not believe that anyone in this thread has offered an alternative with a lower opportunity cost (i.e. a higher interest rate on a checking account) than Fidelity currently does using CMA and money market funds.

Perhaps I'm just lucky but in the 15 or so years I've had accounts at Fidelity I've never once been upsold either over the phone or during the few times I've visited an office.
I agree.
Last edited by indexfundfan on Wed Mar 06, 2019 9:57 am, edited 1 time in total.
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by retiringwhen » Wed Mar 06, 2019 9:57 am

jpsfranks wrote:
Wed Mar 06, 2019 9:42 am
I do not believe that anyone in this thread has offered an alternative with a lower opportunity cost (i.e. a higher interest rate on a checking account) than Fidelity currently does using CMA and money market funds.
I have, find a local bank or credit union that will provide decent banking services and use them to manage your day to day banking needs, and keep all your cash in the Vanguard Money Markets with ACH links to the account. I have been doing it for 25 years, never pay a penny for banking services (and get a fine brick and mortar service if desired) and get the absolute highest return on my cash available in in the USA.

Note, CD's are left out of this discussion, I am only talking about totally liquid cash.

Maybe I am lucky, but the credit union I use has everything I need including a better rewards credit card than just about anything the rewards folks can gin up except big sign on bonuses. I get 2% all the time and almost every month they do a 5% promotion for stuff like gas or restaurants or Amazon.

All-in-one is almost always sub-optimal from a cost and service perspective.

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by indexfundfan » Wed Mar 06, 2019 9:58 am

retiringwhen wrote:
Wed Mar 06, 2019 9:37 am
stan1 wrote:
Wed Mar 06, 2019 8:27 am
Zephavest wrote:
Wed Mar 06, 2019 8:21 am
Here is the corrected table, thank you to Nate79 and indexfundfan for the clarifications.

Image
Not to further complicate matters but you should use tax equivalent yield if you pay state income taxes. States do not tax government obligation interest especially when comparing to FDIC accounts.
This is excellent because it helps show that these CMA services are not "free" There is a real measurable opportunity cost on cash returns.

This why I have always kept my banking and investing separate. This whole CMA thing is just one more hook to upsell (or get cash in relatively high ER parking spots by the brokerages.)
Yes, there is a cost to run a CMA but I don't see how the table shows the cost of CMA services. The numbers compare the current cost of using Vanguard Advantage versus Fidelity. Both are cash management accounts. If anything, it only shows that Fidelity charges higher ERs for its MMFs compared to Vanguard.
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Doc » Wed Mar 06, 2019 10:09 am

retiringwhen wrote:
Wed Mar 06, 2019 9:57 am
I have, find a local bank or credit union that will provide decent banking services and use them to manage your day to day banking needs, and keep all your cash in the Vanguard Money Markets with ACH links to the account. I have been doing it for 25 years, never pay a penny for banking services (and get a fine brick and mortar service if desired) and get the absolute highest return on my cash available in in the USA
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by TheGreyingDuke » Wed Mar 06, 2019 10:11 am

retiringwhen wrote:
Wed Mar 06, 2019 9:57 am
jpsfranks wrote:
Wed Mar 06, 2019 9:42 am
I do not believe that anyone in this thread has offered an alternative with a lower opportunity cost (i.e. a higher interest rate on a checking account) than Fidelity currently does using CMA and money market funds.
I have, find a local bank or credit union that will provide decent banking services and use them to manage your day to day banking needs, and keep all your cash in the Vanguard Money Markets with ACH links to the account. I have been doing it for 25 years, never pay a penny for banking services (and get a fine brick and mortar service if desired) and get the absolute highest return on my cash available in in the USA.

Note, CD's are left out of this discussion, I am only talking about totally liquid cash.

Maybe I am lucky, but the credit union I use has everything I need including a better rewards credit card than just about anything the rewards folks can gin up except big sign on bonuses. I get 2% all the time and almost every month they do a 5% promotion for stuff like gas or restaurants or Amazon.

All-in-one is almost always sub-optimal from a cost and service perspective.
I am leaning to establish just this as well; actually, I have maintained for years a separate credit union checking account and will now focus on it. They do charge $10 for an incoming wire but with some attention, I can avoid the need for such a rush infusion.
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Zephavest » Wed Mar 06, 2019 10:13 am

indexfundfan wrote:
Wed Mar 06, 2019 9:58 am
Yes, there is a cost to run a CMA but I don't see how the table shows the cost of CMA services. The numbers compare the current cost of using Vanguard Advantage versus Fidelity. Both are cash management accounts. If anything, it only shows that Fidelity charges higher ERs for its MMFs compared to Vanguard.
The intent of the table is to show the interest earned or lost (the cost of CMA services?):
1) If you keep $10,000 on average in the fund, it will cost you $8 at Fidelity
2) If you keep $50,000 on average in the fund, it will cost you $40 at Fidelity
3) If you keep $100,000 on average in the fund, it will cost you $80 at Fidelity

So the good news is, if you want the convenience of a CMA, the interest lost at Fidelity is not significant, but is one factor to consider.

Next I'm comparing like for like funds, Total Stock Market, Total Bond Market, Total International Market, Short Term Bond Funds, etc.

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by sport » Wed Mar 06, 2019 10:17 am

Zephavest wrote:
Wed Mar 06, 2019 8:00 am
I was half convinced maybe Fidelity CMA was a viable option but wanted to see the differences between my expected returns. There as been some discussion of Vanguard vs Fidelity Money Market Funds along with High Yield Savings Accounts and their yield, but no in depth look at what it will cost us to move from Vanguard.

Here is the comparison table for your information and comments.

Image
I note from the table that it appears the Vanguard fund has a yield before expenses of 2.45% (2.34+0.11) while the Fidelity fund has a yield before expenses of 2.68% (2.26+0.42). This must mean one of two things:
1. The Fidelity fund is taking more risk to get their yield higher.
2. Fidelity is not charging the fund the full ER. If they are subsidizing the ER, it seems that subsidy could end at some future date.

I don't think I would want to sign up for either of these situations.

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by MnD » Wed Mar 06, 2019 10:21 am

retiringwhen wrote:
Wed Mar 06, 2019 9:37 am
stan1 wrote:
Wed Mar 06, 2019 8:27 am
Zephavest wrote:
Wed Mar 06, 2019 8:21 am
Here is the corrected table, thank you to Nate79 and indexfundfan for the clarifications.

Image
Not to further complicate matters but you should use tax equivalent yield if you pay state income taxes. States do not tax government obligation interest especially when comparing to FDIC accounts.
This is excellent because it helps show that these CMA services are not "free" There is a real measurable opportunity cost on cash returns.

This why I have always kept my banking and investing separate. This whole CMA thing is just one more hook to upsell (or get cash in relatively high ER parking spots by the brokerages.)
Actually is shows that the separating banking from investing for the choices given in the table provides the worst return compared to Fidelity or Vanguard CMA. Not to mention the additional financial complexity of additional accounts, ACH transfers ect.
Last edited by MnD on Wed Mar 06, 2019 10:22 am, edited 1 time in total.

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by drk » Wed Mar 06, 2019 10:22 am

PugetSoundguy wrote:
Tue Mar 05, 2019 1:51 pm
The companion Schwab brokerage account has a sweep settlement account that pays 0.33%. According to the Schwab telephone representative, this 0.33% sweep account serves as a backup to the Schwab Bank checking account if there is an overdraft. In the Schwab brokerage account, you can also hold money market funds. The Schwab U.S. Treasury Money Fund (SNSXX), for example, currently pays about 2.04%. However, neither this fund nor any other Schwab money market fund (other than the 0.33% account described above) will serve as an automatic backup in case of Schwab Bank overdrafts.
All of this is true. Note that this means that an overdraft when you don't have cash available will create a margin loan.
PugetSoundguy wrote:
Tue Mar 05, 2019 1:51 pm
Also ACH transfers to Schwab Bank take four days to clear, which seems a bit long. Direct deposits are credited the same day. For some reason, ACH transfers to the brokerage account seems to take only three days to clear (and then you can transfer the cleared funds to your Schwab Bank account the same day).
Do you mean ACH transfers via pull or via push? While there is a holding period for cash pulled into the account, I've always found that pushes into the account were credited as soon as it's pushed by the other bank (e.g., money pushed Monday by business close from Merrill Edge shows up Tuesday before business open in Schwab checking).

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by William4u » Wed Mar 06, 2019 10:23 am

indexfundfan wrote:
Wed Mar 06, 2019 9:58 am
retiringwhen wrote:
Wed Mar 06, 2019 9:37 am
stan1 wrote:
Wed Mar 06, 2019 8:27 am
Zephavest wrote:
Wed Mar 06, 2019 8:21 am
Here is the corrected table, thank you to Nate79 and indexfundfan for the clarifications.

Image
Not to further complicate matters but you should use tax equivalent yield if you pay state income taxes. States do not tax government obligation interest especially when comparing to FDIC accounts.
This is excellent because it helps show that these CMA services are not "free" There is a real measurable opportunity cost on cash returns.

This why I have always kept my banking and investing separate. This whole CMA thing is just one more hook to upsell (or get cash in relatively high ER parking spots by the brokerages.)
Yes, there is a cost to run a CMA but I don't see how the table shows the cost of CMA services. The numbers compare the current cost of using Vanguard Advantage versus Fidelity. Both are cash management accounts. If anything, it only shows that Fidelity charges higher ERs for its MMFs compared to Vanguard.
This chart is misleading AND COMPARES APPLES TO ORANGES, since...
(A) In the upper rows, the chart compares Fidelity's low-minimum Prime MM fund to Vanguard's low-minimum Federal/Government Fund (Prime funds are higher interest than Federal funds).
(B) In the lower rows, the chart compares Fidelity's $100k minimum Prime MM fund to Vanguard's low-minimum Prime MM fund (higher minimum funds pay higher interest).

This chart really should be comparing the low minimum Federal MM funds to each other, and should be comparing the low minimum Prime MM funds to each other. So it should be...

Comparison #1: Vanguard is 29bp higher
2.05% Fidelity Government MM Fund SPAXX
2.34% Vanguard Federal MM Fund VMFXX

Comparison #2: Vanguard is 20bp higher
2.26% Fidelity Prime MM Fund SPRXX
2.46 Vanguard Prime MM Fund VMMXX
Last edited by William4u on Wed Mar 06, 2019 10:33 am, edited 1 time in total.

PatrickA5
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by PatrickA5 » Wed Mar 06, 2019 10:31 am

retiringwhen wrote:
Wed Mar 06, 2019 9:57 am
jpsfranks wrote:
Wed Mar 06, 2019 9:42 am
I do not believe that anyone in this thread has offered an alternative with a lower opportunity cost (i.e. a higher interest rate on a checking account) than Fidelity currently does using CMA and money market funds.
I have, find a local bank or credit union that will provide decent banking services and use them to manage your day to day banking needs, and keep all your cash in the Vanguard Money Markets with ACH links to the account. I have been doing it for 25 years, never pay a penny for banking services (and get a fine brick and mortar service if desired) and get the absolute highest return on my cash available in in the USA.
+1 My local bank has everything (for free) that a CMA has plus things only a physical bank can offer (Safe Deposit Box, easy large cash, etc). The only thing it doesn't offer is high interest rates which is what I use VG PMM for. The main positive that I got from the Advantage account had was the ability to write a very large check (say for a car) on the spot, since I keep my "real" money there. Also, it's a small hassle to move money to my bank monthly. I also probably lose around $75 in interest a year by having a small balance in my bank account.

If I could find a local bank with free everything that paid great interest, I'd be set.

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by indexfundfan » Wed Mar 06, 2019 10:37 am

MnD wrote:
Wed Mar 06, 2019 10:21 am
retiringwhen wrote:
Wed Mar 06, 2019 9:37 am
stan1 wrote:
Wed Mar 06, 2019 8:27 am
Zephavest wrote:
Wed Mar 06, 2019 8:21 am
Here is the corrected table, thank you to Nate79 and indexfundfan for the clarifications.

Image
Not to further complicate matters but you should use tax equivalent yield if you pay state income taxes. States do not tax government obligation interest especially when comparing to FDIC accounts.
This is excellent because it helps show that these CMA services are not "free" There is a real measurable opportunity cost on cash returns.

This why I have always kept my banking and investing separate. This whole CMA thing is just one more hook to upsell (or get cash in relatively high ER parking spots by the brokerages.)
Actually is shows that the separating banking from investing for the choices given in the table provides the worst return compared to Fidelity or Vanguard CMA. Not to mention the additional financial complexity of additional accounts, ACH transfers ect.
LOL. This is correct. In addition, for daily banking, you can't have all the money sitting in the online savings account (Ally, Purepoint, etc). You would also have to have money sitting in a bank checking account, which typically yields significantly lower than the online savings accounts.
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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by William4u » Wed Mar 06, 2019 10:38 am

PatrickA5 wrote:
Wed Mar 06, 2019 10:31 am
retiringwhen wrote:
Wed Mar 06, 2019 9:57 am
jpsfranks wrote:
Wed Mar 06, 2019 9:42 am
I do not believe that anyone in this thread has offered an alternative with a lower opportunity cost (i.e. a higher interest rate on a checking account) than Fidelity currently does using CMA and money market funds.
I have, find a local bank or credit union that will provide decent banking services and use them to manage your day to day banking needs, and keep all your cash in the Vanguard Money Markets with ACH links to the account. I have been doing it for 25 years, never pay a penny for banking services (and get a fine brick and mortar service if desired) and get the absolute highest return on my cash available in in the USA.
+1 My local bank has everything (for free) that a CMA has plus things only a physical bank can offer (Safe Deposit Box, easy large cash, etc). The only thing it doesn't offer is high interest rates which is what I use VG PMM for. The main positive that I got from the Advantage account had was the ability to write a very large check (say for a car) on the spot, since I keep my "real" money there. Also, it's a small hassle to move money to my bank monthly. I also probably lose around $75 in interest a year by having a small balance in my bank account.

If I could find a local bank with free everything that paid great interest, I'd be set.
For me this is a significant hassle compared to just using my Advantage account where I kept my "real" money. My expenses vary widely from month to month, so to use an external bank I need to double check all my credit cards and other expenses to make sure my checking account has enough in it for that month. That is a lot of extra work. With my advantage account, I just kept 6 months of typical expenses in the MM fund, which could easily cover any actual month's expenses. Not only will I need to check more closely all my CC statements (etc.) and calculate how much I need to transfer to my checking account, I will also need to leave more money in my low-interest checking account. It is a little extra work and stress every month.

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by mervinj7 » Wed Mar 06, 2019 11:40 am

indexfundfan wrote:
Wed Mar 06, 2019 10:37 am
LOL. This is correct. In addition, for daily banking, you can't have all the money sitting in the online savings account (Ally, Purepoint, etc). You would also have to have money sitting in a bank checking account, which typically yields significantly lower than the online savings accounts.
+1 I'm always amazed how people can look at the same data and interpret it completely differently. I completely agree that it doesn't make sense to compare a savings account like Ally which is restricted to 6 withdrawals a month to a full-featured account like CMA to a high-yield prime money market fund like VMMXX. They all serve different purposes and have different constraints.

For example, if I wanted to use Ally as my primary checking account, I would have to keep $10k on average with an low yield of 0.10%. I would then keep a further 6 months ($30k) in Ally savings with an APY of 2.2%.

Or I could just keep all of it in one Fidelity CMA in a Treasury MMF with a Tax Equivalent Yield (TEY) of 2.32%.

Until 3 months ago, I used to recommend VMMXX for folks who need hold short-term liquid funds but now I recommend holding short-term T-bills instead. You can hold those in a CMA, too. For example, my actual EF of $30k is held as an auto-rolling ladder of 6 month T-bills. Yield is roughly 2.53% with a TEY of 2.88%.

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Zephavest » Wed Mar 06, 2019 11:53 am

mervinj7 wrote:
Wed Mar 06, 2019 11:40 am
+1 I'm always amazed how people can look at the same data and interpret it completely differently. I completely agree that it doesn't make sense to compare a savings account like Ally which is restricted to 6 withdrawals a month to a full-featured account like CMA to a high-yield prime money market fund like VMMXX. They all serve different purposes and have different constraints.
Agreed, amazing but at the same time interesting since each one of us looks a things differently, the combined knowledge is beneficial.
mervinj7 wrote:
Wed Mar 06, 2019 11:40 am
Or I could just keep all of it in one Fidelity CMA in a Treasury MMF with a Tax Equivalent Yield (TEY) of 2.32%.
Which Fidelity fund are you referring to, I found this 2.32% listing at this link:
Fidelity Investments Money Market Government Portfolio - Class I (FIGXX)
https://fundresearch.fidelity.com/mutua ... ields/TGMM

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by MnD » Wed Mar 06, 2019 12:19 pm

indexfundfan wrote:
Tue Mar 05, 2019 2:15 pm
I created the following to compare Fidelity, Schwab and Vanguard Advantage.

Image
This is very helpful. I don't keep anything in the Schwab settlement account in our brokerage accounts (well ok - I have 87 cents total across 6 accounts). The brokerage account that includes our liquid savings is 25% in in SWVXX at 2.33% and 75% in a 6-month 6-bill t-bill ladder at TEY 2.66%. Our paired Schwab checking is at 0.40% and we keep an average balance of $4K on monthly expenses about twice that. The latter 4k balance at .4% is the "cost" versus Fidelity. I appreciate the Schwab global ATM fee reimbursement and it's something to note that Schwab is in a very broad ATM network. So with most ATM usage with the Schwab debit there is no fee charged to be reimbursed since Schwab is a network member.

I could lower the average checking balance with interventions, but if for example I kept it at $2K with fiddling that's an annual $40 savings. We're done bothering with on-line or local banks and shuffling funds back and forth and I haven't seen any bank checking/savings that are competitive with our approach without gimmicks. We had a "high yield" online bank for while and had problems with the very limited transaction limits on the MM savings account. if one can get past the familiarity bias of "banking here, investing there" I think CMA in general is a great system. My kids have grown up on it and I don't foresee them ever having banking at a separate institution.

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Taildragger » Wed Mar 06, 2019 12:25 pm

Just signed up for Wells Fargo with a real, nice person at a branch one mile away. They offer FREE:

- Bill Pay with eBills, ACH, hand-written paper checks and electronically generated paper checks. Just like the Vanguard Advantage account.
- 2.7% Platinum savings account, Money Market fund linked, zero fees per the manager, with a $25K minimum. $500 to open to avoid fees.
- Checking, $25 to open, $1,500 minimum daily balance to avoid fees.
- Free debit card.

This fits my bill pay strategy.

So, I’ll give it a try and report back after I have added these two Wells Fargo Bank accounts at Vanguard, funded the Bill Pay account (checking) and paid a bill.
Last edited by Taildragger on Wed Mar 06, 2019 7:18 pm, edited 1 time in total.

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Re: Discontinuing VanguardAdvantage Accounts

Post by mariezzz » Wed Mar 06, 2019 12:32 pm

ruhigste wrote:
Thu Feb 28, 2019 11:01 am
I was unaware of the Advantage Plan. I am using an automatic monthly transfer from a Vanguard IRA to my regular checking account at my Bank. It works well enough. Neither Vanguard nor my bank are charging fees for the service.
I do something similar -- I keep some extra cash in VMMXX in my individual Vanguard account & then transfer back to my bank account as needed. But if you do this, it's not as automated as some here prefer. My mortgage is the only 'bill' that has permission to automatically pull from any account - in general, I prefer to have to review the charges for each bill & instigate each payment monthly (but I keep the number of monthly 'bills' quite low and everything that can be put on a credit card gets paid via CC).

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Re: Vanguard is Discontinuing their VanguardAdvantage Accounts

Post by Zephavest » Wed Mar 06, 2019 12:41 pm

Taildragger wrote:
Wed Mar 06, 2019 12:25 pm
Just signed up for Wells Fargo with a real, nice person at a branch one mile away. They offer FREE:
- 2.7% Platinum savings account, Money Market fund linked, zero fees per the manager, with a $25K minimum. $500 to open to avoid fees.
How did you get 2.7% ? perhaps zip code rates are different around the country when you enter their page?

This is what my zip code shows:
Platinum Savings - Standard Interest Rate Interest Rate 0.05%

Platinum Savings - Special Interest Rate (Footnote 6) 1.49% ($25,000 or more)
Footnote 6: Special Interest Rate lasts for 12 months, and requires $25,000 new funds deposited to the account from sources outside of Wells Fargo Bank, N.A., or its affiliates.

https://www.wellsfargo.com/savings-cds/rates/

I assume your 2.7% is a limited time teaser rate that lasts for 12 months?

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