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Moving between Fidelity and Vanguard
Old 08-14-2016, 03:08 PM   #1
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Moving between Fidelity and Vanguard

Sorry, but I couldn't find this topic using search... but my search skills are pretty lame.

All of my investments are at Vanguard, and I'm becoming concerned about having all of my eggs in one basket -- not because I think Vanguard will "fail" but because I'm concerned about account lock-out (it has happened before: for 40+ years I have styled my name as "J. Mortimer Prufrock" rather than "Jehosephat M. Prufrock" which has led to difficulties on occasion, post 9-11).

Thus I have decided to put some investments at Fidelity. My first roadblock is that at Vanguard, everything is in Vanguard funds, so I'd have to sell them, take the cap gains hit, and move cash to Fido. Not good.

However, I will soon have a significant chunk of new cash to invest from a real estate sale, and I'd like to put that at Fido. My thought is to buy iShares ETFs rather than Fidelity funds, so that I have future flexibility to move assets among institutions.

Is this "right thinking?"

Thanks!
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Old 08-14-2016, 03:22 PM   #2
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Actually you can transfer most if not all Vanguard funds to Fido no problem. Personally did so when I combined our assets at Fido. Many of the Vang funds can be converter prior to transfer to V equivalent ETF which will give you more flexibility when you sell. No tax and no change in basis.
When transferring/opening account at Fido, be sure to ask for what incentives are available. Free trades and potentially cash depending on size of transfer.
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Old 08-14-2016, 03:30 PM   #3
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Thanks.

You mean I can covert, say, Vanguard Total Stock Market Admiralty shares to the Vanguard Total Stock Market ETF without tax or change in basis? That's very interesting.

And I didn't know that Fidelity might provide incentives for moving assets from Vanguard.

So naive ....

A call to Fidelity tomorrow is clearly warranted.
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Old 08-14-2016, 03:45 PM   #4
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I think it's a good idea with the fund companies you picked, but not all fund companies. Account lockouts can happen for multiple reasons so your getting better odds it won't happen twice.

The other reason folks ask is if they get hacked. There's only four "systems of record" for ~260 fund companies. Fidelity and Vanguard each have their own. The other 258 use the two vended transfer agency systems. So you have also improved your data protection from fraud and DR. I've never seen a discussion on disaster recovery here but perhaps one would be good.

What happens if a large fund companies data center is not there? Not a power outage, or small issue but a natural disaster. Like a big earthquake under company X's data center. How would fund companies recover? Sure there are off site backups and they all have DR exercises. I used to w*rk around this and sometimes disaster recovery takes longer than planned. In some cases disaster recovery creates big issues with data validity. While they will be resolved it might take a longer time than I would like.

So brilliant idea! I'm going to do the same(actually in flight right now).
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Old 08-14-2016, 03:46 PM   #5
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One more Fido item, if you can put a Million or more there you will get Private Client status which may juice your "bonus" as well provide a dedicated contact that unlike Vanguard does not put auto send you to a pool if your rep is busy.
As private client we have a dedicated rep PLUS a dedicated associate who actually handles a lot for the administriva--I probably talk with her more than the advisor.
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Old 08-14-2016, 04:03 PM   #6
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Thanks, nwsteve!

Yep, I can move $1M+ with the real estate proceeds and some Vanguard funds. And maybe an IRA. Good to know.

I absolutely hated Fidelity when it was the custodian of my 401(k) accounts at two employers. I am encouraged that it will be better as an buy-and-hold individual investor, especially in the Private Client class.
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Old 08-14-2016, 04:09 PM   #7
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One point of clarification on Vang ETF conversion--prior to transfer you will have to convert any Admiral Accts you want to transfer to Investor Accounts since Vang does not permit any other broker to hold Admiral accounts.
More V mechanics than anything else since ETF costs are comparable to Admiral rates.
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Old 08-14-2016, 04:10 PM   #8
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Originally Posted by GreyDawg View Post
You mean I can covert, say, Vanguard Total Stock Market Admiralty shares to the Vanguard Total Stock Market ETF without tax or change in basis?
I don't think you can have Admiral shares at Fidelity, only the Investor class.
But the transfer from Admiralty shares at Vanguard to Investor shares at Fidelity should not involve any actual sale, so no tax liability.

I'm not 100% positive about that, but you can probably get an official answer easily from the folks you talk to at Vanguard.
Edit: Oops. nwsteve already told you the same thing.

Personally, about ⅔ of my portfolio is at Fidelity, and I have been extremely happy with them for many years.
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Old 08-14-2016, 04:58 PM   #9
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Yes ask about incentives. I moved from Smith Barney to Fido and got a boatload of free trades and a $250 Apple gift card. $1 million plus gets you Private Client status too.
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Old 08-14-2016, 05:41 PM   #10
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FWIW, a few years ago I transferred some shares of VBR (small-cap value index ETF) to Fidelity and collected a 50,000 Frequent Flyer mile bonus. In all that time, I have made zero trades at Fidelity and paid no commissions. I have the dividends automatically transferred to my external checking account.

I suppose if I ever had to sell shares of VBR, then I would simply transfer them to a no-commission brokerage of mine and sell. That way, I would never have paid any commissions to Fidelity.
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Old 08-14-2016, 06:12 PM   #11
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FWIW, a few years ago I transferred some shares of VBR (small-cap value index ETF) to Fidelity and collected a 50,000 Frequent Flyer mile bonus. In all that time, I have made zero trades at Fidelity and paid no commissions. I have the dividends automatically transferred to my external checking account.

I suppose if I ever had to sell shares of VBR, then I would simply transfer them to a no-commission brokerage of mine and sell. That way, I would never have paid any commissions to Fidelity.
Hardly worth the paper work to transfer when Fido's sales charge is only 7.95! But I guess there is some satisfaction knowing you could get the freebies and never spend a nickle ;-)
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Old 08-14-2016, 07:11 PM   #12
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Thanks.

You mean I can covert, say, Vanguard Total Stock Market Admiralty shares to the Vanguard Total Stock Market ETF without tax or change in basis?
Switching to the ETF would be a taxable event. Switching the share type of the same mutual fund is different. Fidelity would let you hold the Vanguard Investor shares.
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Old 08-14-2016, 07:41 PM   #13
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As far as Fidelity incentives, this is what they advertise for IRA rollover of funds outside of Fidelity:
  • Deposits of $50,000 to $99,999 - $200 cash bonus
  • Deposits of $100,000 to $249,999 - $300 cash bonus
  • Deposits of $250,000 to $499,999 - $600 cash bonus
  • Deposits of $500,000 to $999,999 - $1,200 cash bonus
  • Deposits of $1,000,000 - $2,500 cash bonus
You can open a new account or use an existing account after you register. Here is the link to Fidelity promotions page: https://rewards.fidelity.com/offers/...ndfamilyoffer1

Last week, I moved a $200K IRA from Janus to Fidelity (to consolidate, and to get as far from Janus as I can). I made a point to meet with my investment advisor beforehand, and he promised to get me the $2500 cash bonus for this money move. So there appears to be some flexibility on the bonus amounts/clip levels.

I am a long time Fidelity customer (+$1M in investment), and have been happy with them. The iShares ETFs for zero fees are a great deal.

My other fund family is T Rowe Price.
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Old 08-14-2016, 07:53 PM   #14
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Switching to the ETF would be a taxable event. Switching the share type of the same mutual fund is different. Fidelity would let you hold the Vanguard Investor shares.
When I converted my Admiral to Investor to the Vanq-equiv ETF, there was not a taxable event. I believe V has an IRS ruling to make the conversion without creating a taxable event. I do think you have to do it while you are at V so you are transferring the ETF's to another broker.
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Old 08-14-2016, 11:30 PM   #15
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I recently opened an account at Schwab and moved 140K of stocks from Vanguard to Schwab "IN KIND" which means don't sell them so I had no tax issues.

Schwab gave me $600 for that, so if you are move a lot more than that, your bonus should be a lot more.
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Old 08-15-2016, 03:55 AM   #16
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We have some funds in multiple non-brokerage high-yield savings accounts. These would cover any "lock out" problem. Ultimately you just need enough relatively liquid assets stashed somewhere else the cover this type of emergency.
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Old 08-15-2016, 07:12 AM   #17
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Switching to the ETF would be a taxable event. Switching the share type of the same mutual fund is different. Fidelity would let you hold the Vanguard Investor shares.
At Vanguard switching from Vanguard Admiral share class to ETF share class of the same fund would not be a taxable event nor would your total basis change. Yes, I think DrRoy has stated something incorrectly.

Consult vanguard.com or bogleheads.org for the details.

One cannot go from ETF share class to Admiral share class though without selling the ETF shares.
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Old 08-15-2016, 07:16 AM   #18
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Hardly worth the paper work to transfer when Fido's sales charge is only 7.95! But I guess there is some satisfaction knowing you could get the freebies and never spend a nickle ;-)
The paperwork to transfer is not paperwork anymore, but a few clicks in one's browser. Actually, it is about the same number of clicks as it takes to sell shares in the first place.
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Old 08-15-2016, 12:07 PM   #19
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We have some funds in multiple non-brokerage high-yield savings accounts.
I've got about 6 months of cash at CapOne money market earning 1%, and another 1.5 years at Vanguard MM prime earning .... didly.

What high-yield savings accounts do y'all suggest, other than CapOne?
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Old 08-16-2016, 03:22 PM   #20
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Fidelity just sent me an offer of up to $2500 to open or fund a new account.
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