Vanguard Switch to Brokerage Accounts

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cowdogman
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Vanguard Switch to Brokerage Accounts

Post by cowdogman » Thu Aug 09, 2018 8:43 pm

Hi:

I know this is an often discussed topic, but I am so irritated that I needed to post.

My wife and I have been with Vanguard well over 20 years and have been Flagship customers for a long time.

Several months ago our Flagship rep called my wife out of the blue and gave her a sales pitch for switching our joint account to the new brokerage account. I thought that was strange because I was the one that normally (solely actually) dealt with our rep, but I didn't think twice about it.

I ended up talking to the rep and he gave me the pitch. He made it sound like it was just an admin change and nothing else would change (he did say we would have to reestablish checkwriting and get new checks). So I agreed.

Now I'm learning bit by bit that quite a bit has changed.

1. First I noticed that my dividends were no longer re-invested in my designated fund. I used to have my stock fund dividends reinvested in a short term bond account, but after the change the dividends went to the settlement account, Prime Money Market--and I had to go online to re-transfer them to the bond fund.

2. Then I learned we can have checkwriting on only one fund, Prime Money Market.

3. Today I went online to transfer some funds from our joint account to a Vanguard individual 401(k) account--something I have done in the past. Today the transfer option was not available, and when I called Vanguard I was told that transfers were not allowed from the new brokerage accounts. I was told that I was not the first person to be surprised by this change.

In short, I think Vanguard lied to us in a sales call. When I talked to Vanguard today, I was told there were ups and downs with the new system and the ups went mainly to traders. So Vanguard is changing the system to benefit traders to the detriment of invest-and-forget investors like me? That sounds very un-Vanguard-like. And a misleading sales call from Vanguard to sell me something that is to our detriment? That also sounds very un-Vanguard-like.

Can anybody tell me whether there are any improvements in the brokerage account for traditional Vanguard customers like me?

And is there any difference between Vanguard and Fidelity now?

TBillT
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Re: Vanguard Switch to Brokerage Accounts

Post by TBillT » Thu Aug 09, 2018 8:50 pm

Like you I've heard about this probably 2 years now here on BH, but I do not think they have bothered us about it yet.
We make very few transactions, but a few.

mhalley
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Re: Vanguard Switch to Brokerage Accounts

Post by mhalley » Fri Aug 10, 2018 1:38 am

Here is a review with some pros and cons
http://www.mymoneyblog.com/vanguard-mer ... -cons.html

acegolfer
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Re: Vanguard Switch to Brokerage Accounts

Post by acegolfer » Fri Aug 10, 2018 6:25 am

Thanks so much with sharing your experience. Your post made me re-think switching to brokerage account. I'll stay with my current 2 accounts.

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heartwood
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Re: Vanguard Switch to Brokerage Accounts

Post by heartwood » Fri Aug 10, 2018 7:14 am

cowdogman,

re "2. Then I learned we can have checkwriting on only one fund, Prime Money Market."

You should check that. As far as I know, in a brokerage account, checkwriting uses the settlement fund only, which is Federal MM fund. You can have a Prime MM fund but not as the settlement fund. If you write a check there should be enough in Federal MM to cover it, not in Prime.

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pfrank
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Re: Vanguard Switch to Brokerage Accounts

Post by pfrank » Fri Aug 10, 2018 7:44 am

heartwood wrote:
Fri Aug 10, 2018 7:14 am
cowdogman,

re "2. Then I learned we can have checkwriting on only one fund, Prime Money Market."

You should check that. As far as I know, in a brokerage account, checkwriting uses the settlement fund only, which is Federal MM fund. You can have a Prime MM fund but not as the settlement fund. If you write a check there should be enough in Federal MM to cover it, not in Prime.
With the brokerage account you can set up an alternative redemption fund using the check writing form or under account maintenance. I have Prime as my alternative fund. No issues.

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Re: Vanguard Switch to Brokerage Accounts

Post by Call_Me_Op » Fri Aug 10, 2018 7:52 am

cowdogman wrote:
Thu Aug 09, 2018 8:43 pm
And is there any difference between Vanguard and Fidelity now?
Yes. Fidelity has much better customer service and a vastly superior website.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

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GoldStar
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Re: Vanguard Switch to Brokerage Accounts

Post by GoldStar » Fri Aug 10, 2018 7:57 am

After reading several threads here on the topic I have not changed yet. I suppose at some point they will force all to change but until then I will hold back.
My main concern is I have several funds set up to all reinvest in TSM (versus in themselves) - sounds like the brokerage accounts do not allow this.

rkhusky
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Re: Vanguard Switch to Brokerage Accounts

Post by rkhusky » Fri Aug 10, 2018 8:35 am

cowdogman wrote:
Thu Aug 09, 2018 8:43 pm
3. Today I went online to transfer some funds from our joint account to a Vanguard individual 401(k) account--something I have done in the past. Today the transfer option was not available, and when I called Vanguard I was told that transfers were not allowed from the new brokerage accounts. I was told that I was not the first person to be surprised by this change.
Does this hold true for Roth IRA accounts too (i.e. transfer from taxable joint brokerage account to Roth IRA brokerage account)? Even if you can't do it with one transaction, there must be a way to do it (e.g. transfer to settlement account and then transfer to 401k or transfer to checking account and then transfer back to 401k).

Gig em
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Re: Vanguard Switch to Brokerage Accounts

Post by Gig em » Fri Aug 10, 2018 9:11 am

I am just starting taxable investing (retirement maxed) and wanting to save for our next home purchase in ~7 years.

Something I really want is the abilities to have direct deposit directly into a Vanguard mutual fund. My pay is not constant, so my plan is divert 10% into the house fund. My employer will allow this.

Vanguard told me I could do this with a brokerage account. Not true. You can only direct deposit into a federal money mart. However you can do this with the old mutual fund accounts.

BUT you can open one of the old accounts if you CALL them and specifically ask for it. (I outlined my situation and goal and they mailed me a paper form.) I'll let you know how it works, but I could be an effective option to "switch back."

Nate79
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Re: Vanguard Switch to Brokerage Accounts

Post by Nate79 » Fri Aug 10, 2018 9:20 am

Believe it or not but as was posted in the last rant thread on Vanguard brokerage vs mutual fund accounts that Vanguard will be transitioning all accounts to brokerage accounts in the near future. I would not be making long tern plans based on the mutual fund structure. However, we also know Vanguard has been slowly adding functionality to the brokerage accounts.

Bacchus01
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Re: Vanguard Switch to Brokerage Accounts

Post by Bacchus01 » Fri Aug 10, 2018 9:26 am

Nate79 wrote:
Fri Aug 10, 2018 9:20 am
Believe it or not but as was posted in the last rant thread on Vanguard brokerage vs mutual fund accounts that Vanguard will be transitioning all accounts to brokerage accounts in the near future. I would not be making long tern plans based on the mutual fund structure. However, we also know Vanguard has been slowly adding functionality to the brokerage accounts.
And if they force that, I will likely move to Fidelity.

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Oicuryy
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Re: Vanguard Switch to Brokerage Accounts

Post by Oicuryy » Fri Aug 10, 2018 9:27 am

Gig em wrote:
Fri Aug 10, 2018 9:11 am
BUT you can open one of the old accounts if you CALL them and specifically ask for it.
Thank you for confirming this. The prospectus for Vanguard mutual funds says you can hold funds directly with Vanguard Group Inc. (mutual fund account) as well as though Vanguard Brokerage Services (brokerage account). But you are the first person I've seen who has done it for a new account.

Ron
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Rupert
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Re: Vanguard Switch to Brokerage Accounts

Post by Rupert » Fri Aug 10, 2018 9:33 am

Can anyone tell me how this switch would affect someone attempting a backdoor Roth IRA for the first time this year? If the person already has a Roth account at Vanguard, which is an old mutual fund account, but opens a new tIRA at Vanguard, which is a new brokerage account, will there be any hiccups in converting the new tIRA funds to the old Roth account?

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Re: Vanguard Switch to Brokerage Accounts

Post by jhfenton » Fri Aug 10, 2018 9:55 am

rkhusky wrote:
Fri Aug 10, 2018 8:35 am
cowdogman wrote:
Thu Aug 09, 2018 8:43 pm
3. Today I went online to transfer some funds from our joint account to a Vanguard individual 401(k) account--something I have done in the past. Today the transfer option was not available, and when I called Vanguard I was told that transfers were not allowed from the new brokerage accounts. I was told that I was not the first person to be surprised by this change.
Does this hold true for Roth IRA accounts too (i.e. transfer from taxable joint brokerage account to Roth IRA brokerage account)? Even if you can't do it with one transaction, there must be a way to do it (e.g. transfer to settlement account and then transfer to 401k or transfer to checking account and then transfer back to 401k).
You can transfer from a taxable joint brokerage account to a Roth IRA brokerage account. I do it regularly, usually a transfer from a bond fund in our taxable account to a fund in either my or my wife's Roth IRAs. You up with a sale, a purchase, and a cash transfer all from one exchange transaction.

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cowdogman
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Re: Vanguard Switch to Brokerage Accounts

Post by cowdogman » Fri Aug 10, 2018 10:08 am

Thanks to all for the replies.

Regarding the suggested pro/con article above, it seems to be on the mark, but I had to laugh when I read the sentence "If any of these “cons” affect your current settings, Vanguard should alert you during the upgrade process." My experience was the opposite. We got an out-of-the-blue sales call from my (soon to be former) Flagship rep with a "it's just an admin change" story. Why are Flagship reps making these calls? Is part of their performance/comp review based on converting customers? Reminds me of Wells Fargo.**

In a blistering message to Vanguard yesterday, I demanded Vanguard switch our accounts back to the old structure.

In any case, our 401(k) contributions this year will be going to Fidelity. Based on how that goes, I'll move some or all of our Vanguard accounts over.

I used to be a Vanguard true-believer (both in the company and the investment philosophy), but something has changed at Vanguard for the worse.

Regarding a couple specific questions above:

1. Yes, the inability to move joint (non-retirement) funds to individual 401(k)s applies to Roth and non-Roth accounts. There is no online workaround, including thru a settlement account. The Vanguard rep yesterday actually suggested that I ask for a check from our joint account, deposit it in my checking account and then write a check to Vanguard for the 401(k). The simpler solution is write a check from our joint Vanguard account, but I still have to mail it.

2. Yes, you're right, the settlement account is Fed MMkt. I was operating from (faulty) memory when I posted yesterday. My main point tho was that only one account is allowed, whereas before I could write checks on a number of funds.

** I used to bank at Wells Fargo and absolutely every time I went in the teller would try to sell me a savings account. It was really annoying. Finally I said OK if there were no fees. The teller set up the account. The next month there was a $5 fee. I closed my accounts and switched to to another bank. A couple years later the Wells Fargo fake account scandal blew up. And even after I closed my accounts, for the next approx two years I would get a monthly statement in the US mail from Wells Fargo showing a balance of $0.01 in one account. After several months I called Wells Fargo and explained the situation. The person on the phone said I would have to visit a branch if I wanted to close the account (which I had already done). So I let it go on. After a couple years Wells Fargo sent me a check for $0.01, which I cashed.
Last edited by cowdogman on Fri Aug 10, 2018 10:15 am, edited 1 time in total.

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wander
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Re: Vanguard Switch to Brokerage Accounts

Post by wander » Fri Aug 10, 2018 10:09 am

Normally, I do not talk to any rep who calls me. If I need them to do something that I cannot handle on their website, I will call them.

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cowdogman
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Re: Vanguard Switch to Brokerage Accounts

Post by cowdogman » Fri Aug 10, 2018 10:14 am

Normally, I do not talk to any rep who calls me.
Yes, agreed. Usually I don't even answer my phone when it rings unless it's family/friends. But it's hard to ignore a call from someone assigned to look out for our money.

The lesson I have drawn from this is to not trust Vanguard. I used to.

MnD
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Re: Vanguard Switch to Brokerage Accounts

Post by MnD » Fri Aug 10, 2018 10:16 am

Times change. Vanguard is now much more than a mutual fund company and needs a platform to support that.
As a low-cost provider they can't afford to forever support a legacy mutual fund platform and a full service brokerage model platform. Employee training would be particularly troublesome and expensive.

In an switch from a legacy system to a new one, things will be missed about the way things worked "the old way", especially at first when familiarity is low with new system and all features. At some point when the number of customers on the old platform reaches a certain percentage they are going to pull the plug on the remainder so might as well get it over with.

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cowdogman
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Re: Vanguard Switch to Brokerage Accounts

Post by cowdogman » Fri Aug 10, 2018 10:29 am

Times change. Vanguard is now much more than a mutual fund company and needs a platform to support that.
As a low-cost provider they can't afford to forever support a legacy mutual fund platform and a brokerage platform. Employee training would be particularly troublesome and expensive.

In an switch from a legacy system to a new one, things will be missed about the way things worked "the old way", especially at first when familiarity is low with new system and all features. At some point when the number of customers on the old platform reaches a certain percentage they are going to pull the plug on the remainder so might as well get it over with.
All agreed. My issue is with Vanguard's deceptive practices.

If Vanguard wants to impose a change to all accounts, ok. Then it's up to the customer to stay or to leave. But it's not ok to offer two types of accounts and then try to switch people over to the new account with deceptive sales calls from a rep who is supposed to be looking out for our interest.

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Re: Vanguard Switch to Brokerage Accounts

Post by appleshampooid » Fri Aug 10, 2018 2:49 pm

cowdogman wrote:
Thu Aug 09, 2018 8:43 pm
1. First I noticed that my dividends were no longer re-invested in my designated fund. I used to have my stock fund dividends reinvested in a short term bond account, but after the change the dividends went to the settlement account, Prime Money Market--and I had to go online to re-transfer them to the bond fund.
This is my #1 frustration with the brokerage accounts. Not that there aren't others.

I was forced to upgrade to execute an incoming in-kind IRA rollover. Which didn't even need to be an in-kind since the funds are in cash already at the source. *shrug*
"If you aren't unhappy with part of your portfolio, you aren't diversified enough." -rudeboy

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heartwood
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Re: Vanguard Switch to Brokerage Accounts

Post by heartwood » Fri Aug 10, 2018 4:39 pm

pfrank wrote:
Fri Aug 10, 2018 7:44 am
heartwood wrote:
Fri Aug 10, 2018 7:14 am
cowdogman,

re "2. Then I learned we can have checkwriting on only one fund, Prime Money Market."

You should check that. As far as I know, in a brokerage account, checkwriting uses the settlement fund only, which is Federal MM fund. You can have a Prime MM fund but not as the settlement fund. If you write a check there should be enough in Federal MM to cover it, not in Prime.
With the brokerage account you can set up an alternative redemption fund using the check writing form or under account maintenance. I have Prime as my alternative fund. No issues.
pfrank Thanks. I didn't read the OPs item carefully enough. I assumed that "checkwriting" followed the same procedures as "bill pay." I use billpay within my Vanguard Advantage account. Federal MM is the settlement account in my bill pay, at least I've been unable to find a way to use an alternative redemption fund. I'll check with Vanguard next week.

Your suggestion to see the check writing form makes it clear that it works for check writing.

passiveTiger
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Re: Vanguard Switch to Brokerage Accounts

Post by passiveTiger » Fri Aug 10, 2018 9:46 pm

cowdogman wrote:
Fri Aug 10, 2018 10:08 am
We got an out-of-the-blue sales call from my (soon to be former) Flagship rep with a "it's just an admin change" story. Why are Flagship reps making these calls?

I used to be a Vanguard true-believer (both in the company and the investment philosophy), but something has changed at Vanguard for the worse.
They have been aggressive, but my cynical view is that Vanguard's point of view is that we cannot make brokerage transactions, if we do not have brokerage accounts. Therefore, we must have these "upgraded" accounts.

Gig em
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Re: Vanguard Switch to Brokerage Accounts

Post by Gig em » Wed Aug 15, 2018 7:03 pm

Oicuryy wrote:
Fri Aug 10, 2018 9:27 am
Gig em wrote:
Fri Aug 10, 2018 9:11 am
BUT you can open one of the old accounts if you CALL them and specifically ask for it.
Thank you for confirming this. The prospectus for Vanguard mutual funds says you can hold funds directly with Vanguard Group Inc. (mutual fund account) as well as though Vanguard Brokerage Services (brokerage account). But you are the first person I've seen who has done it for a new account.

Ron

Update: this worked as expected. I now have a brand new taxable mutual fund account with 3 funds.

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jhfenton
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Re: Vanguard Switch to Brokerage Accounts

Post by jhfenton » Wed Aug 15, 2018 8:20 pm

cowdogman wrote:
Fri Aug 10, 2018 10:08 am
1. Yes, the inability to move joint (non-retirement) funds to individual 401(k)s applies to Roth and non-Roth accounts. There is no online workaround, including thru a settlement account. The Vanguard rep yesterday actually suggested that I ask for a check from our joint account, deposit it in my checking account and then write a check to Vanguard for the 401(k). The simpler solution is write a check from our joint Vanguard account, but I still have to mail it.
It may apply to Roth and non-Roth 401(k) accounts, but it does not apply to Roth IRAs, which was the earlier question someone asked. I did it today in fact with both of our Roth IRA accounts, exchanging directly from VOHIX (Vanguard Ohio Long-Term Tax Exempt) in a joint taxable account to my Roth and my wife's Roth. I've done it a few dozen times in the last 3 years.

And the exchange can go into a specific fund or into the Roth settlement fund. Today, for example, I exchanged $850.00 from VOHIX into my wife's Roth, $84x.xx into the settlement fund to cover 21 shares of VWO (Vanguard Emerging Markets ETF) that I had purchased earlier, with the $x.xx balance of the $850.00 into an existing position in VEMAX (Vanguard Emerging Markets Admiral). That finished off my wife's $5,500 Roth contribution for the year.

I don't know why they don't allow it to 401(k) accounts, but the prohibition doesn't extend to IRAs.

baseball2horse
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Re: Vanguard Switch to Brokerage Accounts

Post by baseball2horse » Thu Aug 16, 2018 3:54 pm

Gig em wrote:
Fri Aug 10, 2018 9:11 am
Something I really want is the abilities to have direct deposit directly into a Vanguard mutual fund. My pay is not constant, so my plan is divert 10% into the house fund. My employer will allow this.

Vanguard told me I could do this with a brokerage account. Not true. You can only direct deposit into a federal money mart. However you can do this with the old mutual fund accounts.
I mean sure maybe the money briefly stops in the MM account but then it automatically goes into the account you specify so it really makes no difference with free trading. I have direct deposit set up from my bank every month into two funds in a brokerage account and its works just fine

Mr.BB
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Re: Vanguard Switch to Brokerage Accounts

Post by Mr.BB » Thu Aug 16, 2018 4:17 pm

When I sign in I sometimes get messages about making the switch to their brokerage account. In fact one of the messages says "we can't do this without you (approval). I don't want it, don't need it and this post just serves to remind me that it is not in my best interest to switch platforms.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

Finridge
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Re: Vanguard Switch to Brokerage Accounts

Post by Finridge » Thu Aug 16, 2018 11:11 pm

I also recommend NOT switching, if you have a choice.

It's been all hassle and no benefits. That is, I cannot think of a single good thing that changing to a brokerage account has brought us. But I can think of a lot of glitches and new restrictions.

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celia
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Re: Vanguard Switch to Brokerage Accounts

Post by celia » Fri Aug 17, 2018 2:00 am

rkhusky wrote:
Fri Aug 10, 2018 8:35 am
cowdogman wrote:
Thu Aug 09, 2018 8:43 pm
3. Today I went online to transfer some funds from our joint account to a Vanguard individual 401(k) account--something I have done in the past. Today the transfer option was not available, and when I called Vanguard I was told that transfers were not allowed from the new brokerage accounts. I was told that I was not the first person to be surprised by this change.
Does this hold true for Roth IRA accounts too (i.e. transfer from taxable joint brokerage account to Roth IRA brokerage account)? Even if you can't do it with one transaction, there must be a way to do it (e.g. transfer to settlement account and then transfer to 401k or transfer to checking account and then transfer back to 401k).
No, this does not apply to IRAs. What happened is that the 401Ks are now maintained by a third party company for Vanguard, possibly because of the rules that apply to the accounts (Safe Harbor and such). It might help to think of the 401Ks as being on a separate platform (I think). Try pulling from your bank account, instead, not between Vanguard accounts.

I got several notices about the 401K changes a year or two ago and we don't even have a 401K. (Had one with Vanguard but rolled it to an IRA about 25 years ago, so maybe we are still tagged as having one.)

cowdogman wrote:
Fri Aug 10, 2018 10:08 am
Yes, the inability to move joint (non-retirement) funds to individual 401(k)s applies to Roth and non-Roth accounts. There is no online workaround, including thru a settlement account. The Vanguard rep yesterday actually suggested that I ask for a check from our joint account, deposit it in my checking account and then write a check to Vanguard for the 401(k). The simpler solution is write a check from our joint Vanguard account, but I still have to mail it.
Have you tried moving money from your joint Vanguard account to your bank checking account? Then after a few days, transfer it from your bank checking account to the 401k? That should avoid the cross-platform issue that seems to be part of the problem.

Nate79 wrote:
Fri Aug 10, 2018 9:20 am
Believe it or not but as was posted in the last rant thread on Vanguard brokerage vs mutual fund accounts that Vanguard will be transitioning all accounts to brokerage accounts in the near future. I would not be making long tern plans based on the mutual fund structure. However, we also know Vanguard has been slowly adding functionality to the brokerage accounts.
Don't believe everything you read on Bogleheads! Vanguard has assured me that they can't force anyone to upgrade and they can't do it without your permission. In fact, people who work in the financial industry are not permitted to have brokerage accounts.

Rupert wrote:
Fri Aug 10, 2018 9:33 am
Can anyone tell me how this switch would affect someone attempting a backdoor Roth IRA for the first time this year? If the person already has a Roth account at Vanguard, which is an old mutual fund account, but opens a new tIRA at Vanguard, which is a new brokerage account, will there be any hiccups in converting the new tIRA funds to the old Roth account?
To do a Roth conversion online (by yourself), both accounts need to be on the same platform. If you need to move money between the two platforms, you need to call in and ask them to do it for you.

WanderingInvestor
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Re: Vanguard Switch to Brokerage Accounts

Post by WanderingInvestor » Fri Aug 17, 2018 6:38 am

In fact, people who work in the financial industry are not permitted to have brokerage accounts.
Say what? Of course they are permitted. Often it's considered weird if somebody working on financial services doesn't have a brokerage account. "How's your trading going?" is common break-room and water cooler chat among us modest programmers and back office people for brokerages, banks, investing support firms. (Source: my own life working at many such firms, before retirement.)

It's just restricted to their own employer's brokerage if it has one, or choice from a list of designated brokerages, if the employer firm doesn't have a retail brokerage. Or, some employers will allow any brokerage as long as they get copies of all confirms and statements. But usually it's designated-brokerage only, because they likely have electronic monitoring in place. Fidelity, Schwab, TD Ameritrade, E*Trade are commonly on designated brokerage lists. Vanguard Brokerage rarely is.

Yes, back in the 1990s and early 2000s some financial services employees could work around those restrictions by having a "mutual fund account" directly with a fund company. I did that with Janus and what was then Twentieth Century, back when I worked for a wirehouse as a codemonkey.

But that was then. Mutual fund-only accounts are antiques now. Many fund companies, not just Vanguard, are getting rid of them, or already have. Try to find how to open a mutual fund direct account at Fidelity - there's no way nor even any form on their website. Schwab funds must only be bought in brokerages - their own or another. I think Janus Henderson and many other fund sponsor firms also are moving to "buy at your brokerage" rather than direct accounts, including at least keeping antique, paper-in-mail type processes, in an age of apps and instant bank linking for online brokerage deposits, as a deliberate discouragement to mutual fund direct accounts, even if technically still offered.

There's no way Vanguard is going to keep its mutual-fund-only account platform going simply for helping the employees of its competitors. Nor for a decreasing and aging minority of its own investors. Like it or not, brokerage accounts are where all mutual fund investing will happen by individual investors.

Unfortunately Vanguard has a substandard brokerage platform with higher than 2018 expectations cost, and non-modern features, so the almost-forced move at Vanguard is causing a lot of grief to old-school Vanguard funds folks.

Rupert
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Re: Vanguard Switch to Brokerage Accounts

Post by Rupert » Fri Aug 17, 2018 6:48 am

celia wrote:
Fri Aug 17, 2018 2:00 am
Rupert wrote:
Fri Aug 10, 2018 9:33 am
Can anyone tell me how this switch would affect someone attempting a backdoor Roth IRA for the first time this year? If the person already has a Roth account at Vanguard, which is an old mutual fund account, but opens a new tIRA at Vanguard, which is a new brokerage account, will there be any hiccups in converting the new tIRA funds to the old Roth account?
To do a Roth conversion online (by yourself), both accounts need to be on the same platform. If you need to move money between the two platforms, you need to call in and ask them to do it for you.
Thank you. That's what I was afraid of.

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Re: Vanguard Switch to Brokerage Accounts

Post by UpperNwGuy » Fri Aug 17, 2018 7:17 am

Thank you, WanderingInvestor, for putting this whole issue into perspective.
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ThisTimeItsDifferent
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Re: Vanguard Switch to Brokerage Accounts

Post by ThisTimeItsDifferent » Fri Aug 17, 2018 7:28 am

baseball2horse wrote:
Thu Aug 16, 2018 3:54 pm
Gig em wrote:
Fri Aug 10, 2018 9:11 am
Something I really want is the abilities to have direct deposit directly into a Vanguard mutual fund. My pay is not constant, so my plan is divert 10% into the house fund. My employer will allow this.

Vanguard told me I could do this with a brokerage account. Not true. You can only direct deposit into a federal money mart. However you can do this with the old mutual fund accounts.
I mean sure maybe the money briefly stops in the MM account but then it automatically goes into the account you specify so it really makes no difference with free trading. I have direct deposit set up from my bank every month into two funds in a brokerage account and its works just fine
Do you have to manually move the direct deposit from the MM/settlement account into the mutual fund of choice if you have brokerage accounts?

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Re: Vanguard Switch to Brokerage Accounts

Post by bayview » Fri Aug 17, 2018 7:44 am

WanderingInvestor wrote:
Fri Aug 17, 2018 6:38 am

...There's no way Vanguard is going to keep its mutual-fund-only account platform going simply for helping the employees of its competitors. Nor for a decreasing and aging minority of its own investors. Like it or not, brokerage accounts are where all mutual fund investing will happen by individual investors.

Unfortunately Vanguard has a substandard brokerage platform with higher than 2018 expectations cost, and non-modern features, so the almost-forced move at Vanguard is causing a lot of grief to old-school Vanguard funds folks.
We have one account that's brokerage and three that are still mutual fund. The brokerage account still drives me a bit batty, but that is at least partly because of the nature of what's in there (individual Treasuries and brokered CDs.)

I'm resigned to everything eventually going brokerage, especially as you say that everyone else is doing it as well, but I hope to heaven that they have got the "substandard brokerage platform" improved by that point.
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Re: Vanguard Switch to Brokerage Accounts

Post by darkhorse346 » Fri Aug 17, 2018 8:28 am

Changed from mutual fund to brokerage accounts several years ago. No real benefits to us since we just hold VG mutual funds and nothing else.

I think the switch from mutual fund accounts to brokerage accounts was a good strategic move for Vanguard, especially when they get their "commission-free" ETF buffet off the ground.

Surely VG is going to gain income by having these 1800 ETFs available on their platform.

Hopefully, another income stream from non-Vanguard assets, yet held at Vanguard, can go towards improving IT and customer service.

My opinion: IT and customer service go hand-in-hand. Generally speaking, better web site, tools, etc., = better service.

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Re: Vanguard Switch to Brokerage Accounts

Post by abuss368 » Fri Aug 17, 2018 9:42 am

Nate79 wrote:
Fri Aug 10, 2018 9:20 am
Believe it or not but as was posted in the last rant thread on Vanguard brokerage vs mutual fund accounts that Vanguard will be transitioning all accounts to brokerage accounts in the near future. I would not be making long tern plans based on the mutual fund structure. However, we also know Vanguard has been slowly adding functionality to the brokerage accounts.
This is my understanding as well based on my call to Vanguard a week ago.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: Vanguard Switch to Brokerage Accounts

Post by abuss368 » Fri Aug 17, 2018 10:49 am

I would not have a problem with brokerage accounts. It does not seem to be anything major. However, the one thing that is preventing us from changing (and thus getting upset) is the brokerage statements. Our mutual fund accounts have year to date statements. We only save a print on statement each year. No way do I have any interest in 12 statements for each account.

I expressed this to Vanguard on the telephone and they mentioned that this is a problem and that they are hearing this from clients.
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Re: Vanguard Switch to Brokerage Accounts

Post by Doc » Fri Aug 17, 2018 11:06 am

abuss368 wrote:
Fri Aug 17, 2018 10:49 am
I would not have a problem with brokerage accounts. It does not seem to be anything major. However, the one thing that is preventing us from changing (and thus getting upset) is the brokerage statements. Our mutual fund accounts have year to date statements. We only save a print on statement each year. No way do I have any interest in 12 statements for each account.
You can always print a transaction report for any time period of your choosing after 1/1/1993. It will even include "old platform" transactions if you want. Would that not suffice along with the current year end statement?
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

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Re: Vanguard Switch to Brokerage Accounts

Post by abuss368 » Fri Aug 17, 2018 2:07 pm

Doc wrote:
Fri Aug 17, 2018 11:06 am
abuss368 wrote:
Fri Aug 17, 2018 10:49 am
I would not have a problem with brokerage accounts. It does not seem to be anything major. However, the one thing that is preventing us from changing (and thus getting upset) is the brokerage statements. Our mutual fund accounts have year to date statements. We only save a print on statement each year. No way do I have any interest in 12 statements for each account.
You can always print a transaction report for any time period of your choosing after 1/1/1993. It will even include "old platform" transactions if you want. Would that not suffice along with the current year end statement?
I know. My preference would be for one simple and easy to read statement. But I hear you.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: Vanguard Switch to Brokerage Accounts

Post by SquawkIdent » Fri Aug 17, 2018 2:28 pm

I haven't had the "pleasure" of doing this yet. But if they force me to do it, I'll move to Fidelity and/or T. Rowe Price.

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Re: Vanguard Switch to Brokerage Accounts

Post by Gig em » Fri Aug 17, 2018 8:02 pm

ThisTimeItsDifferent wrote:
Fri Aug 17, 2018 7:28 am
baseball2horse wrote:
Thu Aug 16, 2018 3:54 pm
Gig em wrote:
Fri Aug 10, 2018 9:11 am
Something I really want is the abilities to have direct deposit directly into a Vanguard mutual fund. My pay is not constant, so my plan is divert 10% into the house fund. My employer will allow this.

Vanguard told me I could do this with a brokerage account. Not true. You can only direct deposit into a federal money mart. However you can do this with the old mutual fund accounts.
I mean sure maybe the money briefly stops in the MM account but then it automatically goes into the account you specify so it really makes no difference with free trading. I have direct deposit set up from my bank every month into two funds in a brokerage account and its works just fine
Do you have to manually move the direct deposit from the MM/settlement account into the mutual fund of choice if you have brokerage accounts?
Yes. But not with an old style account. This is key for set it and forget it investing of a percentage of your paycheck when your paycheck is variable.

BTW, they were very helpful on the phone and explained this when I explained my objective and situation.

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Re: Vanguard Switch to Brokerage Accounts

Post by Dude2 » Fri Aug 17, 2018 9:14 pm

abuss368 wrote:
Fri Aug 17, 2018 9:42 am
Nate79 wrote:
Fri Aug 10, 2018 9:20 am
Believe it or not but as was posted in the last rant thread on Vanguard brokerage vs mutual fund accounts that Vanguard will be transitioning all accounts to brokerage accounts in the near future. I would not be making long tern plans based on the mutual fund structure. However, we also know Vanguard has been slowly adding functionality to the brokerage accounts.
This is my understanding as well based on my call to Vanguard a week ago.
I thought their motivation was to eliminate people that had both a brokerage account and also use mutual funds. They want them to become purely brokerage types. OTOH, a pure mutual fund investor does them no harm at creating extra costs. Mutual funds are not going to cease to exist, and there are many funds that do not have corresponding ETFs.

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Re: Vanguard Switch to Brokerage Accounts

Post by abuss368 » Fri Aug 17, 2018 9:16 pm

Dude2 wrote:
Fri Aug 17, 2018 9:14 pm
abuss368 wrote:
Fri Aug 17, 2018 9:42 am
Nate79 wrote:
Fri Aug 10, 2018 9:20 am
Believe it or not but as was posted in the last rant thread on Vanguard brokerage vs mutual fund accounts that Vanguard will be transitioning all accounts to brokerage accounts in the near future. I would not be making long tern plans based on the mutual fund structure. However, we also know Vanguard has been slowly adding functionality to the brokerage accounts.
This is my understanding as well based on my call to Vanguard a week ago.
I thought their motivation was to eliminate people that had both a brokerage account and also use mutual funds. They want them to become purely brokerage types. OTOH, a pure mutual fund investor does them no harm at creating extra costs. Mutual funds are not going to cease to exist, and there are many funds that do not have corresponding ETFs.
If one transitions to a brokerage account, it is my understanding you can hold mutual funds in the account. You do not need to move to ETFs correct?
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: Vanguard Switch to Brokerage Accounts

Post by Dude2 » Fri Aug 17, 2018 9:25 pm

abuss368 wrote:
Fri Aug 17, 2018 9:16 pm
If one transitions to a brokerage account, it is my understanding you can hold mutual funds in the account. You do not need to move to ETFs correct?
This appears to be correct. Thanks Abuss. So, I guess that when you own MFs that are wrapped inside a brokerage account you have to play by the rules of the brokerage account. Ok, I guess I will be another person that will refrain from converting.

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Re: Vanguard Switch to Brokerage Accounts

Post by abuss368 » Fri Aug 17, 2018 9:31 pm

Dude2 wrote:
Fri Aug 17, 2018 9:25 pm
abuss368 wrote:
Fri Aug 17, 2018 9:16 pm
If one transitions to a brokerage account, it is my understanding you can hold mutual funds in the account. You do not need to move to ETFs correct?
This appears to be correct. Thanks Abuss. So, I guess that when you own MFs that are wrapped inside a brokerage account you have to play by the rules of the brokerage account. Ok, I guess I will be another person that will refrain from converting.
Thanks!
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: Vanguard Switch to Brokerage Accounts

Post by jhfenton » Fri Aug 17, 2018 9:41 pm

abuss368 wrote:
Fri Aug 17, 2018 9:16 pm
Dude2 wrote:
Fri Aug 17, 2018 9:14 pm
abuss368 wrote:
Fri Aug 17, 2018 9:42 am
Nate79 wrote:
Fri Aug 10, 2018 9:20 am
Believe it or not but as was posted in the last rant thread on Vanguard brokerage vs mutual fund accounts that Vanguard will be transitioning all accounts to brokerage accounts in the near future. I would not be making long tern plans based on the mutual fund structure. However, we also know Vanguard has been slowly adding functionality to the brokerage accounts.
This is my understanding as well based on my call to Vanguard a week ago.
I thought their motivation was to eliminate people that had both a brokerage account and also use mutual funds. They want them to become purely brokerage types. OTOH, a pure mutual fund investor does them no harm at creating extra costs. Mutual funds are not going to cease to exist, and there are many funds that do not have corresponding ETFs.
If one transitions to a brokerage account, it is my understanding you can hold mutual funds in the account. You do not need to move to ETFs correct?
Correct. You do not have to invest in stocks, bonds, ETFs, non-Vanguard mutual funds, etc. You can invest in Vanguard mutual funds and only Vanguard mutual funds if you like, and as many or as few of those as you like. It just gives you more flexibility in choosing investments and allows you to move between them with same-day purchases and sales.

I actually stayed away from Vanguard for years because of their antiquated separate direct mutual fund and third-party brokerage setup. I don't actually know when they introduced the modern combined in-house brokerage platform, but I moved all of our accounts over in October 2015 when I realized they had finally joined the late 20th century. (I had held Vanguard ETFs at TD Ameritrade for several years before, but there were also some Vanguard mutual funds I wanted that weren't available at TD Ameritrade or at least not without hefty commissions.)

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Re: Vanguard Switch to Brokerage Accounts

Post by UpperNwGuy » Fri Aug 17, 2018 9:42 pm

Why are people so afraid of the brokerage account? I find it to be very easy to use. In fact (and this might be heresy around here), I find it easier to use than Schwab. All my investments are in Vanguard mutual funds. I have no ETFs and no individual stocks or bonds.
Retiree with a pension and a 60/40 taxable portfolio: Total Stock + Total Int'l + Total Bond + Interm Term Tax Exempt.

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Re: Vanguard Switch to Brokerage Accounts

Post by Dude2 » Fri Aug 17, 2018 10:06 pm

jhfenton wrote:
Fri Aug 17, 2018 9:41 pm
It just gives you more flexibility in choosing investments and allows you to move between them with same-day purchases and sales.
Does this mean you can actually trade mutual funds with same-day purchases? You can get around the 30-day frequent trading restrictions? Or do mutual funds within a brokerage account still follow the same rules? I would assume so.

Forgive my ignorance, but I often find that you do not get the answers to these questions until you cross the line. My employer 401k and my HSA are similar. They both have it to where you can't find the information on what you can invest in until you sign up to for a brokerage account. The marketing makes it appear that everything is so great behind the wall, just make the leap and your life will be so great. Then when you cross the line, you find it isn't really that great. You have to join the club first to find out what the club is all about.

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Re: Vanguard Switch to Brokerage Accounts

Post by Cloud » Sat Aug 18, 2018 7:36 am

UpperNwGuy wrote:
Fri Aug 17, 2018 9:42 pm
Why are people so afraid of the brokerage account? I find it to be very easy to use. In fact (and this might be heresy around here), I find it easier to use than Schwab. All my investments are in Vanguard mutual funds. I have no ETFs and no individual stocks or bonds.
The brokerage accout doesn't support automatically sending the dividend payments to my linked bank account every month. I have better things to do then request this every month. All of our IRA accounts we allowed to be converted but our cash account will not be converted until Vanguard supports the same features as the legacy account. I've asked Vanguard several times when this will be supported. It's been 2 years and I'm still waiting.

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Re: Vanguard Switch to Brokerage Accounts

Post by cowdogman » Sat Aug 18, 2018 10:01 am

Although it is interesting to hear people's thoughts on the pro and cons of the switch to brokerage accounts, I think the underlying issue most "legacy" account holder have is that they have spent years fine tuning their relationship with Vanguard (especially with regard to the treatment of dividend payments)--and now Vanguard is disrupting that with the switch to Brokerage accounts.

And in addition Vanguard has handled the switch in an extremely poor way by:

1. Introducing the brokerage account before it was fully-functional (including functions that would mimic the legacy accounts).

2. Trying to talk people into the move (sometimes using deceptive methods) rather than simply implementing it.

So that now we have the situation where there are two types of accounts co-existing (and, at least per a couple posts in this thread, Vanguard continues to open legacy accounts), and this situation:

1. Makes the people with legacy accounts anxious about the future switch.

2. Makes people who made the switch (like me) pissed off, especially seeing that the legacy accounts still exist and will continue to do so with no definite switch over date in sight.

It's a self-made mess for Vanguard.

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