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disadvantages of using broker acct for funds
Old 09-25-2009, 09:44 AM   #1
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disadvantages of using broker acct for funds

Is there any disadvantage using a brokerage account to buy another firms funds ?
I have a T. Rowe account, IRA and brokerage. I would like to invest some in Vanguard funds through the T Rowe mutual fund gateway. Is there any advantage going direct to Vanguard ?
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Old 09-25-2009, 09:49 AM   #2
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If TRP charges a transaction fee for buying Vanguard funds, then yes, there would be an advantage to buying directly from Vanguard (no transaction fee). Of course, in that case you'd have to weigh the fees through TRP against the convenience of having it all in one account and ask yourself if the convenience is worth the fee.
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Old 09-25-2009, 10:12 AM   #3
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Your post made me curious...here is TRP's fee schedule for their own and others' mutual fund transactions.
Brokerage Services: Trading Mutual Funds - T. Rowe Price

I use a hybrid approach...I deal directly with VG for my short term portfolio, where I do my monthly DCA to only VG funds with zero fees.
I use TDA for my long term buy and hold core portfolio, comprised of several fund families. I do very rare MF exchanges or purchases for a tiny fee. The few TDA services I use are all free for my portfolio size. I use them because of their excellent year end consolidated statements, i.e. my income tax data entry is easier.

I will eventually migrate everything to one place, TBD. It will probably be VG.
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Old 09-25-2009, 11:33 AM   #4
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I have almost everything in Vanguard, mainly because I am just to scatterbrained to keep us with multiple accounts. Vanguard does have a nice way of including outside investments, but you have to be a little careful. They include outsides in some summary figures, but not all.

I do maintain a full service brokerage account at Well Fargo nee A.G. Edwards. I like my broker on a purely personal level. Got to know him because he had the same schedule as we did at the local "dog park". After getting badly burned at C------ S-----, I wanted to be able to sit across the desk from the person I was doing business with. No more of this "You must be mistaken. None of our agents would have ever told you that" cr@p. I will spare you the ugly details, but it is unlikely that somebody is going to tell you one thing face-to-face, and then look you in the eye and deny ever saying it the next day. When you deal with a huge online broker, the guy you talked with yesterday is somehow never available when there is a problem.

I have learned all about the conflicts of interest though, and would never take his advice on bonds or front loaded funds again, and I never invest in individual stock. However, I maintain a small account there, mainly of ETFs. I pay a hefty commission to trade them, but I rarely trade them anyway, so it isn't much. I do like the personal touch. If something looks funny on a statement, he looks into it. When there is a question, he knows I trust him, so there isn't that instantly antagonistic vibe you get with anonymous customer service droids. He knows me, my partner, our account, and history. If I need cash, one telephone call means a check is waiting by the time I get there. All of this is worth some fees. Once, when I needed a medallion signature guarantee for my invalid mother he met me at her nursing home to witness the signature.

Gosh I am being garrolous old geezer today. My apologies.
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Old 09-25-2009, 02:44 PM   #5
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I own most of my mutual funds in a Fidelity brokerage account. It's convenient, but I do pay transactions fees for certain low-cost funds such as Vanguard. If someone were going to primarily buy Vanguard funds I would recommend they invest directly with the fund company instead of through a brokerage account.

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Old 09-25-2009, 02:52 PM   #6
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No Admiral shares?

At least that's the problem with my USAA brokerage account. I love the convenience but when I was approaching 100k in a certain Vanguard fund I started looking at the qualifications for converting to admiral shares but that wouldn't work thru USAA, at least as far as I could tell.

Luckily the recession solved the almost 100k problem.
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Old 09-25-2009, 02:56 PM   #7
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Fidelity sometimes has higher minimums and longer short-term redemption fee periods than the fund would have if bought directly. I go ahead and buy directly when it is easy and keep the rest in the brokerage account. They're all tied together through the same checking account, so it's fairly easy to rebalance.
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Old 09-25-2009, 03:52 PM   #8
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As said, TRowePrice is rather expensive as far as a fund family and broker goes.

The place I use because it is the cheapest is WellsFargo. One can purchase stocks, ETFs, TRowePrice funds, Fidelity funds, Vanguard funds all for no fee and no commission if you have PMA relationship with them and keep at least $25,000 in assets with them. This is NOT the WF thing that IndependentlyPoor wrote about. You can even get some admiral share class Vanguard funds for no commission.

Any place cheaper than WF would have to pay you to use them.
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Old 09-25-2009, 03:58 PM   #9
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I want to add that when commissions and trading are free, it really frees you up to make better decisions. No longer do you think, "Wow, I could rebalance, but I'll get hit with a $10 charge for selling that ETF and that $75 charge to buy more shares of Vanguard Total Stock Market." You also don't think, "Hmmm, I have to move money from TRowePrice over to Vanguard in order to get the best deal."
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Old 09-25-2009, 05:23 PM   #10
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LOL, what is a PMA relationship? I've never heard that term?
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Old 09-25-2009, 05:37 PM   #11
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The WF web site has details. I don't get paid to advertise for them.
PMA is their top-of-the-line free-everything checking account. You can add a free-everything brokerage account for free as well. Did I mention that everything was free?
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Old 09-25-2009, 05:59 PM   #12
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Oh...I'm not a fan of Big Banks but I am a fan of free...I will have to check out their website...thanks.
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Old 09-26-2009, 01:04 PM   #13
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I hold some Vanguard funds and etf's in my Schwab acct. I'm retired and in the withdrawal stage so there are no longer any monthly pruchases taking place. Therefore, fees due to buying Vanguard/Fidelity funds are minimal. Owning the etf equivalent of a Vanguard fund (VTI for VTSMX, etc.) gets you Admiral level fund fees or better. So, for a very small cost we get consolidation at Schwab and, because DW is not interested in the details of our finances, she gets access to a walk-in office should I be unavailable to handle things.

We're happy with Schwab. We get reasonably low cost access to Vanguard, Fidelity, etc., funds and DW is comfortable that should I unexpectedly not be available to do internet transactions, there is a walk-in office nearby. If DW was more interested and keeping up with our financial matters in a more detailed way, I'd probably be split between Vanguard and Schwab. But she isn't, so this works for us.
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Old 09-27-2009, 12:39 PM   #14
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Quote:
Originally Posted by youbet View Post
I hold some Vanguard funds and etf's in my Schwab acct. I'm retired and in the withdrawal stage so there are no longer any monthly pruchases taking place. Therefore, fees due to buying Vanguard/Fidelity funds are minimal. Owning the etf equivalent of a Vanguard fund (VTI for VTSMX, etc.) gets you Admiral level fund fees or better. So, for a very small cost we get consolidation at Schwab and, because DW is not interested in the details of our finances, she gets access to a walk-in office should I be unavailable to handle things.

We're happy with Schwab. We get reasonably low cost access to Vanguard, Fidelity, etc., funds and DW is comfortable that should I unexpectedly not be available to do internet transactions, there is a walk-in office nearby. If DW was more interested and keeping up with our financial matters in a more detailed way, I'd probably be split between Vanguard and Schwab. But she isn't, so this works for us.
I ue Schwab for similar reasons with good results. Usually I will buy ETFs when I want really low cost index funds, but I have bought the odd fund through schwab that was not available as an ETF. You pay a commission and usually that is that.

In addition to someone to talk to if I get hit by a bus thing, I like Schwab beter than VG because I trade options, bonds and stocks (as well as the occasional oddball thing like warrants) and I find that if I call the right area of Schwab I get much more sophisticated service than is the norm at VG. If your requirements are simpler than mine, it might not be worth the slightly higher cost.
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