In-kind/liquidation transfer to VG from Managed account

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JuneBug
Posts: 4
Joined: Tue May 15, 2018 12:12 am

In-kind/liquidation transfer to VG from Managed account

Post by JuneBug » Tue May 15, 2018 12:40 am

Hello. In Mid-January, my husband and I transferred our accounts (taxable Brokerage, Roth, IRA) from VG to another institution. At the new institution, our assets are managed by an independent financial advisor who positioned himself as a holistic financial planner for those nearing retirement. Unfortunately, he has not fulfilled that role. For the time being, I would prefer to leave the RIA firm the advisor works for unnamed -- it is not one of the “biggies” usually discussed here. Fidelity is custodian of the managed assets.

We realize after the past few months we are not getting much from the relationship except for a monthly AUM wrap fee, confusing performance reporting, and as you can see below, investments in way too many (high priced) funds and etfs. The long listing below of our managed investments are those only in our non-retirement account (!). We would be considered a Flagship client at VG.

Before I initiate the process of moving the assets back, I researched the Boglehead forum for information on the best way to facilitate the transfer for both non retirement and retirement assets. I called VG and spoke to someone who can help me with the transfer, however I would like to get the input of the investment experts here since I, myself, have to initially contact the “selling” side before the custodian- to -custodian transfer can correctly happen -and I only have one shot at this.

I read thru the “agreement” we signed with the advisor and a letter is required by the RIA firm in order to terminate the relationship. Ok, the first paragraph is the easy part. The agreement also mentions a closing fee to Fidelity; I believe it was in the area of $150. There is nothing in the agreement referring to any additional fees incurred with closing of an account.

The VG rep mentioned that a wrap fee generally covers the cost of liquidating and selling holdings. So I assume I will have to ask about that in the termination letter although I am not exactly clear how to ask this question with regard to both the liquidating of some funds and the in-kind transfer of others. I would appreciate some guidance with this.
Which brings me to the question about an in-kind transfer of our taxable brokerage account—I looked up each fund at VG we are currently invested in and discovered quite a few are not transferable in-kind due to: 1) High minimums (most of the funds own Institutional shares) or
2) VG flat out does not accept some of the funds we own on their brokerage platform. Am I correct to assume the stinker funds have to be liquidated on the selling side first before they are transferred to a money market at VG? Am I responsible to provide a "list" of the funds to be liquidated first?

Some of the funds are transferable but are not sold on VGs platform via Fund Access-so I guess that’s better than nothing since I assume I can get the funds over to VG in-kind and then liquidate on VG’s side with no additional fee?
Most of the funds have a transaction fee of $50 when looked up on VGs quote research tool. What does this fee exactly refer to? Some of the processes mentioned above or something else?
Below is the fund listing of our managed account for non-retirement assets. I have put an asterisk (*) and reason next to the funds that have an issue with transferring in-kind to VG.
I appreciate you reading this far and look forward to your advice to best transfer the account back to VG from a managed (mess) account. Of course, if there is anything else you need to know or I should be aware of not mentioned above, please do not hesitate to let me know—!
Thank you.

STOCK MUTUAL FUNDS (28% of holdings)
1) *CIVIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT Cannot TX. $1,000,000 min. Redemption fee 2%<60days
2) SVAIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT
3) QISGX https://investor.vanguard.com/mutual-fu ... IntExt=EXT
4) GGOIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT TX ok. No Fund Access
5) GICIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT TX ok. No Fund Access
6) HAVLX https://investor.vanguard.com/mutual-fu ... IntExt=EXT
7) *HLMIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT Min:$100,000 Redemption Fee 2%<90days
8) *LZEMX https://investor.vanguard.com/mutual-fu ... IntExt=EXT Closed to New Investors. Is this transferable in kind or not?
9) *LSGRX https://investor.vanguard.com/mutual-fu ... IntExt=EXT Closed to New Investors. Is this transferable in-kind or not?
10) MENYX (NTF) https://investor.vanguard.com/mutual-fu ... IntExt=EXT
11) *MGGIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT Cannot TX. $5,000,000 min
12) NRIIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT TX ok. No Fund Access
13) ODVYX https://investor.vanguard.com/mutual-fu ... IntExt=EXT Closed to ALL investors. Is this transferable in kind or not?
14) OAYLX https://investor.vanguard.com/mutual-fu ... IntExt=EXT
15) *TCVIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT Fund is not available for purchase or transfer
16) PXQSX https://investor.vanguard.com/mutual-fu ... IntExt=EXT

BOND FUNDS (54% of holdings)
1) *ANGIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Taxable Bond) Cannot TX in kind. Min: $1,000,000. Reclass to Class A shares ANGLX avail at Van for no load? M* and company website reference 2.25% sales load for A shares; Vanguard shows “no load” for A shares.
2) *ESFIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Taxable Bond) Fund is not available for purchase or transfer
3) DBLTX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Taxable bond) Min $100,000. Account value close to min.
4) *SBTYX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Tax Ex Bond) Cannot TX. Min $1,000,000
5) MMIIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Tax Ex Bond) TX ok. No FundAccess.
6) *MWTIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Taxable Bond) Cannot TX. Min: $3,000,000
7) *LSFYX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Taxable Bond) Closed to New Investors. Is this transferable in kind or not?
8) *NSTLX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Taxable Bond) Cannot TX. MIN: $1,000,000
9) FLTRX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Tax Ex Bond) TX ok. No FundAccess.
10) FSHYX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Tax Ex Bond) TX ok. No Fund Access.
11) PBYMX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Tax Ex Bond) TX ok. No Fund Access.
12) *PPSIX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (domestic stocks ?) This fund is not available for purchase and cannot be transferred to your Vanguard Brokerage Services® account from another financial institution. Can fund be reclassified as PPSAX? Does 3.75% load apply?
13) PDBZX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Taxable Bond) TX ok. No FundAccess.

14) PRTAX (NTF) https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Tax Exempt Bond)
15) *BIBTX https://investor.vanguard.com/mutual-fu ... IntExt=EXT (Taxable Bond) Cannot TX. MIN: $1,000,000
16) *SHRIX https://www.bloomberg.com/quote/SHRIX:US Proprietary, not transferable.

EXCHANGE TRADED PRODUCTS (17% of holdings)
Equity ETPS
1) First Trust Dow Jones Global Select Dividend Index Fund (NYSE Arca : FGD)
2) Global X SuperDividend U.S. ETF (NYSE Arca : DIV)
3) Global X MLP ETF (NYSE Arca : MLPA)
4) SPDR® S&P Global Dividend ETF (NYSE Arca : WDIV)
5) SPDR® S&P Emerging Markets Dividend ETF (NYSE Arca : EDIV)
6) Vanguard FTSE Developed Markets Index Fund ETF Shares (NYSE Arca : VEA)
7) Vanguard High Dividend Yield ETF (VYM)
8) Vanguard S&P 500 ETF (VOO)
Fixed Income ETPs
1) iShares 20+ Year Treasury Bond ETF (NASDAQ Stock Market Exchange Large Cap ( : TLT)
2) VanEck Vectors Fallen Angel High Yield Bond ETF (NYSE Arca : ANGL)

dbr
Posts: 27207
Joined: Sun Mar 04, 2007 9:50 am

Re: In-kind/liquidation transfer to VG from Managed account

Post by dbr » Tue May 15, 2018 8:35 am

One question I can answer is that the Vanguard transaction fee of $50 is their commission to sell each one of those funds, in addition to fees already mentioned. You will have to pay it unless the fine print says this is a fee for buying but there is none for selling. Some brokers work that way but I don't know about Vanguard

Lafder
Posts: 3805
Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: In-kind/liquidation transfer to VG from Managed account

Post by Lafder » Tue May 15, 2018 8:52 am

Do you have a solid plan for what you want to do with the money once you move it?

You just made major changes to your holdings 4 months ago, and now you are making changes again. Are you sure you won't want to make another change 4 months from now?

I agree with you that the management fees are not worth it and moving back to low cost self management, or paying Vanguard's PAS fees will cost much less than you are paying now so I support that decision.

My main point is to have a solid plan of what to do with the money overall once you get it to VG or wherever you are moving it to. The moving it part VG can help you with.

In my experience, calling Vanguard's concierge service or your Flagship rep if you have one, will help you sort out the most cost effective way to transfer the holdings. They will make 3 way calls with you on the phone and help you do any online requests as well as get you the forms and walk you through anything that needs paper forms filled out and turned in. They will help you make a road map and carry it out.

Market performance has not been great since January. You may not have been happy with performance had you left it where it was before January. But, again, I agree with you that there is no need to pay extra management fees for an overly complex and expensive portfolio.

If you were not happy with VG before, and Fidelity is already involved, would it be simpler to move the holdings to a self managed Fidelity account?

lafder

retiredjg
Posts: 33905
Joined: Thu Jan 10, 2008 12:56 pm

Re: In-kind/liquidation transfer to VG from Managed account

Post by retiredjg » Tue May 15, 2018 9:21 am

Before doing anything, I would contact Fidelity and find out if transferring to them might be a lot cheaper. There would not be a problem with "we don't hold that fund here" since you are already doing it. You would eliminate the account closing fee (maybe).

A caution - occasionally people will find a Fidelity advisor who would put you in a similar terrible portfolio. You will need to be cautious there too and make it clear you are looking for low cost, preferably index funds.

There's a reason you transferred away from Vanguard in the first place. Does that still apply?

Do you know about how much you have in capital gains? It might not be much. Might be a good idea to just liquidate and move. Do you know if there would be a fee to sell each fund?


Whoever did this to you should be ashamed.

JuneBug
Posts: 4
Joined: Tue May 15, 2018 12:12 am

Re: In-kind/liquidation transfer to VG from Managed account

Post by JuneBug » Wed May 16, 2018 11:34 am

Lafder wrote: Do you have a solid plan for what you want to do with the money once you move it?

You just made major changes to your holdings 4 months ago, and now you are making changes again. Are you sure you won't want to make another change 4 months from now?

I agree with you that the management fees are not worth it and moving back to low cost self management, or paying Vanguard's PAS fees will cost much less than you are paying now so I support that decision.

Market performance has not been great since January. You may not have been happy with performance had you left it where it was before January. But, again, I agree with you that there is no need to pay extra management fees for an overly complex and expensive portfolio.
To clarify, we were not unhappy with VG before we moved to the other firm in January; and market performance was not an issue since most of the non-retirement money moved out of VG were cash proceeds from a real estate sale. Yes, I know, given those facts, you are probably thinking why did we not just contact a VG advisor or post a query to Bogleheads in the first place ?--without getting into a lot of details, I can only say it was a one time big time lapse in judgement.
Lafder wrote: My main point is to have a solid plan of what to do with the money overall once you get it to VG or wherever you are moving it to. The moving it part VG can help you with.

In my experience, calling Vanguard's concierge service or your Flagship rep if you have one, will help you sort out the most cost effective way to transfer the holdings. They will make 3 way calls with you on the phone and help you do any online requests as well as get you the forms and walk you through anything that needs paper forms filled out and turned in. They will help you make a road map and carry it out.

If you were not happy with VG before, and Fidelity is already involved, would it be simpler to move the holdings to a self managed Fidelity account?
Yes, you are correct, a solid plan is needed once the funds are transferred. I have been in contact with a VG rep and for some reason, he did not review all of the managed funds "transferablity" to VG. I then decided to review all the holdings myself with VG's quote tool and post over here for some guidance.
I have another phone meeting set up with VG rep to review the managed holdings now that they have all been researched.
I very much appreciate your response !
JuneBug

JuneBug
Posts: 4
Joined: Tue May 15, 2018 12:12 am

Re: In-kind/liquidation transfer to VG from Managed account

Post by JuneBug » Wed May 16, 2018 11:48 am

retiredjg wrote: Before doing anything, I would contact Fidelity and find out if transferring to them might be a lot cheaper. There would not be a problem with "we don't hold that fund here" since you are already doing it. You would eliminate the account closing fee (maybe).

A caution - occasionally people will find a Fidelity advisor who would put you in a similar terrible portfolio. You will need to be cautious there too and make it clear you are looking for low cost, preferably index funds.

There's a reason you transferred away from Vanguard in the first place. Does that still apply?
As I answered in my prior reply, the transfer away from VG was a big mistake and the reasons for doing so were a serious lapse in good judgement. We prefer to invest with VG.
retiredjg wrote: Do you know about how much you have in capital gains? It might not be much. Might be a good idea to just liquidate and move. Do you know if there would be a fee to sell each fund?
Yes, I have pulled the capital gains information and have taken into consideration with regard to selling the funds and s/t gains generated. I do not know if there is a fee to sell each fund and will be asking about it.
Thank you for your reply!
JuneBug
Last edited by JuneBug on Wed May 16, 2018 3:06 pm, edited 1 time in total.

JuneBug
Posts: 4
Joined: Tue May 15, 2018 12:12 am

Re: In-kind/liquidation transfer to VG from Managed account

Post by JuneBug » Wed May 16, 2018 12:05 pm

dbr wrote:
Tue May 15, 2018 8:35 am
One question I can answer is that the Vanguard transaction fee of $50 is their commission to sell each one of those funds, in addition to fees already mentioned. You will have to pay it unless the fine print says this is a fee for buying but there is none for selling. Some brokers work that way but I don't know about Vanguard
Thank you for your comment!

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