I will just point out that this is the way Fidelity has done it at least since 2006, probably much earlier, and probably Schwab, too. My only "account" at Fidelity was a brokerage account, and Fidelity funds were held within the brokerage account.
As far as I know it is still possible to have an account directly with a mutual fund company. Such an account has low, often no fees, but only allows you to invest in funds within the fund family. This is true for Dodge & Cox, for example. It was not possible to hold mutual funds in a brokerage account before the mid-1990s, when Schwab created the "OneSource Mutual Fund Supermarket."
Vanguard Brokerage Services was a sort of "private-badged" operation of Pershing LLC. In those days, Vanguard mutual funds and everything else were very clearly completely separate operations with different account numbers (and different rules and differences in how they were listed on account statements). You had one account at Vanguard, a direct mutual-fund account just as you might have at Dodge & Cox. You also had a brokerage account. They were joined at the hip, clumsily, by being able to share a single settlement account, display both sets of accounts on the same web page, see both accounts printed together on a single statement.
Circa 2009 Vanguard brought their brokerage operations in-house, i.e. truly began operating their "own" brokerage, but the Vanguard funds/Everything else split remained.
This really ticked off some Forum members. If I recall correctly, it affected what you could buy on a same-day "sell to buy." If you were selling something in order to buy a non-Vanguard fund, you could place the buy order the same day, because the brokerage's rules allowed them to assume that funds from the completed sale would be available for the purchase by the settlement date. But if you were selling in order to buy a Vanguard fund, you had to wait days for the sale to settle before you could buy, because actual cash money would need to leave the brokerage account. This led to the IMHO justifiable complaint that Vanguard made it easier for you to buy a competitor's fund than a Vanguard fund.
For sure this didn't happen at Fidelity, and I don't think it happened at Schwab either. Vanguard wasn't providing a "normal" experience.
So that's probably one of the reasons for the maneuver.
When is the ten-year anniversary of Vanguard bringing brokerage operations in-house? Perhaps, at that time, they will finally be able to celebrate an integrated, seamless experience for their customers.
Last edited by nisiprius
on Mon May 21, 2018 10:10 am, edited 1 time in total.
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