Why are they pushing me to buy ETFs?

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Bammerman
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Why are they pushing me to buy ETFs?

Post by Bammerman » Tue Jun 11, 2019 4:39 pm

I have a feeling that I'm going to get slammed for this question but I'll go ahead anyway. I feel like Vanguard, and now USAA, are really pushing ETFs. I'm happy with mutual funds. What's the big advantage, if any, of Exchange Traded Funds over mutual funds? And Vanguard also keeps pushing me to change my account to a brokerage account. Why? What's in it for me? Maybe I'm an old stick-in-the-mud, but I'm not seeing why I should change my account or why I should move toward ETFs instead of mutual funds. Does anybody else feel this way or is it just me?

PS: I just had my afternoon glass of wine and am feeling a bit uninhibited ....

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Bammerman
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Re: Why are they pushing me to buy ETFs?

Post by Bammerman » Tue Jun 11, 2019 4:54 pm

[Post removed by admin LadyGeek]

I'm blaming that glass of wine. Sorry if I'm using up valuable cyberspace.

MotoTrojan
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Re: Why are they pushing me to buy ETFs?

Post by MotoTrojan » Tue Jun 11, 2019 4:54 pm

Bammerman wrote:
Tue Jun 11, 2019 4:39 pm
And Vanguard also keeps pushing me to change my account to a brokerage account. Why? What's in it for me?
Reduced expense ratios for all of us, you really are quite rude by not making the transition when asked :P .

In all seriousness, I have only ever had the brokerage, but it is quite easy to buy mutual funds so no strong reason not to transition that I can see. If/when they are able to achieve 100% transition, they can stop supporting the old platform, which will have cost savings due to reduced maintenance, training needs, etc... Based on their pricing structure this will eventually be noted in reduced expenses for their funds.

retiredjg
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Re: Why are they pushing me to buy ETFs?

Post by retiredjg » Tue Jun 11, 2019 5:06 pm

For people who are starting out and have no preference, using ETFs might make more sense. They are probably the vehicle of the future. However, I like mutual funds and will continue using only mutual funds.

About moving over to the brokerage platform, I'm not moving either. I have no reason to. Eventually, we'll all die and Vanguard will only have one platform and that will be a simpler business to run. Till then, I'm happy where I am.

However, Im not getting any pressure or pushing. What kind of pushing are you getting?

Broken Man 1999
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Re: Why are they pushing me to buy ETFs?

Post by Broken Man 1999 » Tue Jun 11, 2019 5:20 pm

Bammerman wrote:
Tue Jun 11, 2019 4:39 pm
I have a feeling that I'm going to get slammed for this question but I'll go ahead anyway. I feel like Vanguard, and now USAA, are really pushing ETFs. I'm happy with mutual funds. What's the big advantage, if any, of Exchange Traded Funds over mutual funds? And Vanguard also keeps pushing me to change my account to a brokerage account. Why? What's in it for me? Maybe I'm an old stick-in-the-mud, but I'm not seeing why I should change my account or why I should move toward ETFs instead of mutual funds. Does anybody else feel this way or is it just me?

PS: I just had my afternoon glass of wine and am feeling a bit uninhibited ....
For me the best thing about going to the brokerage platform was I could reduce number of accounts at Vanguard to one rollover TIRA, one Roth account for each of us, so we ended up cutting the number of accounts in half.

And, each of our accounts now have access to all the offerings from Vanguard like CDs, individual bonds, and even individual stocks. Easier to manage everything.

On the subject of ETFs, I like them because they have lower ERs, and mine now have lower ERs than the equivalent Admiral Class of the mutual funds. DW didn't qualify for all Admiral funds because her holdings weren't high enough. But for DW she now has lower ERs via the ETFs than she would have had even if she did have enough for Admiral Class mutual fund shares. All the ETFs we hold are some of the 21 ETFs Vanguard lowered the ERs below the Admiral mutual fund shares. So, it got even better for both of us. A few bucks here, a few bucks there. Not life-changing amounts, but I will gladly take all I am offered.

ETFs are very portable to other brokerage accounts, should Vanguard disappoint me sometime in the future, they would be easy to move. In fact I have a Fidelity brokerage account set up with a tiny amount, so a move would be easy as could be.

Finally, I like knowing what I am going to receive when I sell, and what 'i will pay when I buy. If I am doing either activity I can set my price at whatever I want. No need to wonder what price I will get when the mutual fund is priced at the end of the day if I was dealing with a mutual fund.

At the end of the day I like the things I mentioned that are applicable to ETFs.

However, there isn't anything wrong with mutual funds, I just have personal preferences for ETFs. Not everyone does, and that is OK.

It sounds as though Vanguard might be considering using ETFs for their fund of fund offerings. They will continue to cut ERs and ETFs facilitate that process.

The only ETFs we have sold were our holdings in Vanguard REITs ETF and Vanguard Health Care ETF, and those proceeds ended up in Vanguard Total Stock Market ETFs and Vanguard Total International Stock Market ETFs. Just another activity of simplifying our portfolio.

ETFs work for me, YMMV. Mutual funds or ETFs are just personal preferences, either are fine investments.

By the way, I follow Mr Bogel's advice to only use broad-based index ETFs, and hold. I don't have any desire to trade ETFs other than the two ETFs I mentioned earlier, just simplifying our portfolio.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

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fortyofforty
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Re: Why are they pushing me to buy ETFs?

Post by fortyofforty » Tue Jun 11, 2019 6:48 pm

Bammerman wrote:
Tue Jun 11, 2019 4:39 pm
I have a feeling that I'm going to get slammed for this question but I'll go ahead anyway. I feel like Vanguard, and now USAA, are really pushing ETFs. I'm happy with mutual funds. What's the big advantage, if any, of Exchange Traded Funds over mutual funds? And Vanguard also keeps pushing me to change my account to a brokerage account. Why? What's in it for me? Maybe I'm an old stick-in-the-mud, but I'm not seeing why I should change my account or why I should move toward ETFs instead of mutual funds. Does anybody else feel this way or is it just me?

PS: I just had my afternoon glass of wine and am feeling a bit uninhibited ....
You are correct. I believe Vanguard is indeed pushing ETFs. Why pester me to get a "brokerage" account when I was perfectly happy before? Why keep advertising ETF after ETF after ETF? For Vanguard, more assets into the firm means more profits. Of course, after paying for salaries and the vast facility and expenses related to running all the funds and ETFs, Vanguard's profits are shared with us through lowering expense ratios. But that big, beautiful headquarters doesn't pay for itself.

The ETF industry is just a subset of the financial services industry, all of which exists to make money. Hopefully, as an investor, as much of that money as possible will end up in your pocket. Unfortunately, for many companies, they do not exist primarily for that purpose but to make the most money for themselves. As ETFs are hawked along with cars and burgers and insurance, the wisdom of these ETFs for any individual investor is subject to debate. Caveat emptor.

Full disclosure: In a spirit of peaceful coexistence, I own both ETFs and Mutual Funds (although they watch each other warily).
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | There are many roads to doublin'. | Original Vanguard Diehard

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Dialectical Investor
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Re: Why are they pushing me to buy ETFs?

Post by Dialectical Investor » Tue Jun 11, 2019 10:49 pm

What evidence do we have that Vanguard is pushing customers who are perfectly happy with their mutual funds to instead switch to ETFs? Advertising doesn't cut it.

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