Vanguard Brokerage Account vs. regular Vanguard Account

[W2R]

I got another "Reminder: take action on your account" email from Vanguard last week and almost had myself talked into rolling all my money out of VG because I figure they're eventually going to force the move, and I can't have a brokerage account outside of my employer, and I didn't want to be forced to change things on their schedule.

But then I read the small print at the end:



If I can opt out of these "reminders", that means this is just promotional marketing, right?

I guess that's the good news. But the bad news is that this kind of deceptive marketing enrages me, and now I'm thinking of bailing out due to anger. I can buy the same Vanguard funds I want with another custodian.

Clearly at least one of you made unwanted changes because you thought you were being forced over time, and I was thinking the same way. If they're going to be this deceptive, these aren't the kind of people I want to keep my long-term funds with.

They DID say in that e-mail,

Over the past few years, we've made some improvements to our investment platform. As a result of these improvements, we'll be retiring our old investment platform—which is what you're using today

I guess we don't HAVE to switch over, but if our "investment platform" is "retired", then we'd be in an impossible situation.

I think the verbiage you quoted about opting out of reminders is just standard canned verbiage that they use. Sure, we can opt out of reminders but if that has adverse consequences, then oh well, too bad for us.

Edited to add: I can sure understand your very reasonable reaction, especially given your investing restrictions.

 

[W2R]

I went to www.vanguard.com just now, not to log in but to check some share prices from yesterday (which I can do elsewhere).

Maybe it's because of the switch over that I initiated, but under "personal investors" I am getting a log in page which also says "upgrade in progress" and "We appreciate your patience while our website is temporarily unavailable." This is before I even try to log in and it has been this way for quite some time.

Some possible explanations:

(1) Maybe they are busy retiring the investment platform we all know and love, or
(2) Maybe it somehow can sense that it's me even though I didn't try to log in. Or
(3) Maybe as a result of being completely and totally exhausted, probably sick, and sleep deprived, I am not thinking straight, tonight.

Probably the latter.

EDIT: I just got a screen saying that they scheduled the website to be shut down this weekend of November 3rd. Whew. Yeah, I'm a little jumpy about this transition.

 

[Telly]

I just tried the website, same effect. Maybe they ARE just upgrading the website...


I went and looked at all Vanguard and Vanguard Voyager emails that we have received for the months of September, October, and the bit of November so far. Have not received ANY emails on the conversion topic. Don't know what to think.

 

[W2R]

I just tried the website, same effect. Maybe they ARE just upgrading the website...

I went and looked at all Vanguard and Vanguard Voyager emails that we have received for the months of September, October, and the bit of November so far. Have not received ANY emails on the conversion topic. Don't know what to think.

Thanks for checking. I really appreciate it.

I think it's one of those things that small investors like me, can do nothing about. All the end-of-the-earth scenarios possible are rolling through my head. I think I'll just put off thinking about it for a few days and hope everything is resolved by then. Yes, I am a nervous Nellie today. It's been an unusually difficult and tiring day already for other, unrelated reasons.

They are probably just upgrading their website as many websites tend to do now and then.

Vanguard has always been wonderful for me, before. I have never had a complaint and have been very happy with them.

 

[redduck]

EDIT: I just got a screen saying that they scheduled the website to be shut down this weekend of November 3rd. Whew. Yeah, I'm a little jumpy about this transition.

Yes, Vanguard announced several days ago on their site that the website would be down this weekend. As for the transition: I think this was done with my account in June(?). I never understood the brokerage account vs. the regular account before the transition and now after the transition I still don't understand the difference. I'm not sure the changes are of significance except for those investors with special circumstances. (I have no idea what the special circumstances may be).

 

[W2R]

Yes, Vanguard announced several days ago on their site that the website would be down this weekend. As for the transition: I think this was done with my account in June(?). I never understood the brokerage account vs. the regular account before the transition and now after the transition I still don't understand the difference. I'm not sure the changes are of significance except for those investors with special circumstances. (I have no idea what the special circumstances may be).

Thank you, redduck. That is very, very encouraging.

 

[mamadogmamacat]

Yes it is just a website upgrade.

However, it is a tad annoying as previous upgrades only took over night not an entire weekend. And all I'm doing is checking balances. Can understand your anxiety. I made the transition you are going through a few months ago, and they did not change my method from FIFO which it was and has been and still is.

Fidelity did the same thing, at least in my case, only more recently and without any con commit website outage.

 

[W2R]

Yes it is just a website upgrade.

However, it is a tad annoying as previous upgrades only took over night not an entire weekend. And all I'm doing is checking balances. Can understand your anxiety. I made the transition you are going through a few months ago, and they did not change my method from FIFO which it was and has been and still is.

Fidelity did the same thing, at least in my case, only more recently and without any con commit website outage.

Thanks for understanding! I feel like an idiot but it is so unnerving to have this website upgrade occurring just as I am transitioning my accounts over.

I shouldn't be too pessimistic, but HUGE website changes that take a whole weekend often do not seem to improve things for the customers and instead are worse, especially at first while they iron out the wrinkles. I think this is especially true with a website like Vanguard's, which to me seemed completely perfect as it already was.

I should get a t-shirt that says, "I HATE CHANGES!" or something like that.

 

[HI Bill]

I'm thinking of bailing out due to anger. I can buy the same Vanguard funds I want with another custodian.

Bail if you want to...one of the posters on Bogleheads offered this explanation for the desired switch:

"Cost, ease of future development, ease of security auditing, ease of financial auditing, ease of securing against hackers, ease of disaster recovery, ease of scheduling on call rotations for the development and sysadmin team, ease of training good customer support agents, ....

Another poster offered this explanation:

"1) Better aligns with what other providers offer (Fido, Schwab, etc.)
2) Longer term simplifies their administrative processes
3) Might have helped them get off legacy software that they no longer could upgrade/maintain
4) Simplifies life for customers that do trade ETFs/stocks, one account form opens the whole thing vs. two
5) Aligns with more customer expectations, e.g. if more customers want ETFs in particular this is easier for them."

I made the switch a couple of years ago, and other than the minor inconvenience of resetting some of your preferences, it was painless. While I don't think they can force you to change, it's in your best interest to do so, IMHO. Resisting change for resistances sake, without understanding what you're turning down is kind of like shooting yourself in the foot as a form of protest.

 

[target2019]

IRA (1 mutual fund), SEP-IRA (4 mf), Roth-IRA x 2 (4 mf), two tax-free funds. I don't need 5 brokerage accounts - may be easier for Vanguard, but no benefit for us.
This issue has been around for quite a while. With two 401k accounts to consolidate next year, my current thinking has a new account at Schwab or Fidelity, with SEP-IRA thrown in to make my path easier.

 

[RunningBum]

I made the switch a couple of years ago, and other than the minor inconvenience of resetting some of your preferences, it was painless. While I don't think they can force you to change, it's in your best interest to do so, IMHO. Resisting change for resistances sake, without understanding what you're turning down is kind of like shooting yourself in the foot as a form of protest.

Except that it hasn't been totally painless. Resetting preferences, especially cost-basis that shouldn't have been touched, two sets of tax forms in the first year with no warning of that, delayed tax forms in subsequent years, and difficulty in finding the correct form for some transactions--nothing big, but all a pain. With absolutely no gain that I can see. Making the change is what seems like shooting yourself in the foot for no good reason. I see nothing to indicate it is in one's best interest to change, though eventually VG will probably aim for your foot to convince you to do it. I trusted them and made the change a couple years ago and I have seen no gain, and some pains.

 

[BigMoneyJim]

So what I'm hearing is that if I don't move to a brokerage account I'm stuck on an inferior, outdated less secure system. Other firms upgrade their software without making me change accounts.

Aside from my job restrictions I also don't need more than one brokerage account, and I have 7 retirement investment accounts across 3 custodians.

I've had the majority of my money with Vanguard for over 27 years, initially because that's where my employer's 401(k) was when I was 21, and later because I liked their open-ended mutual funds and philosophy. I tried to roll over my Fidelity-held retirement accounts to Vanguard between jobs this year, but saw "brokerage" and halted the process because I knew where my next job would be and its restrictions.

Oh well, I guess if changes have to be made, I'll just consolidate all holdings with my current employer. They'll be happy, and I still won't hold any ETFs or stocks, and I'll still have Vanguard Admiral shares.

 

[target2019]

We're repeating things that have been said on different forums, that the legacy system is inferior and less secure. If I was trying to convince company sponsor about funding new platform, I would stress these characteristics. In the long run, not simple to quantify, though.
I'm sure the future will have brokerage accounts, to conform with regulation. But it doesn't mean there is a benefit for me in the short run.
Whatever web interface changes are in process right now, will be a key factor in how I feel about VG the institution.

 

[MRG]

Bail if you want to...one of the posters on Bogleheads offered this explanation for the desired switch:

"Cost, ease of future development, ease of security auditing, ease of financial auditing, ease of securing against hackers, ease of disaster recovery, ease of scheduling on call rotations for the development and sysadmin team, ease of training good customer support agents, ....

Another poster offered this explanation:

"1) Better aligns with what other providers offer (Fido, Schwab, etc.)
2) Longer term simplifies their administrative processes
3) Might have helped them get off legacy software that they no longer could upgrade/maintain
4) Simplifies life for customers that do trade ETFs/stocks, one account form opens the whole thing vs. two
5) Aligns with more customer expectations, e.g. if more customers want ETFs in particular this is easier for them."

I made the switch a couple of years ago, and other than the minor inconvenience of resetting some of your preferences, it was painless. While I don't think they can force you to change, it's in your best interest to do so, IMHO. Resisting change for resistances sake, without understanding what you're turning down is kind of like shooting yourself in the foot as a form of protest.

+1
Spent my career in this industry doing IT. All of those are valid points.

Funny how everyone complains about Vanguard's website being old and clunky. Over the last few weeks they've had some minor issues with availability....

However how can they make it better when nobody wants anything to change? Does anyone here understand the operational complexity of running two similar systems with different infrastructures? You need many more SMEs and the chances of issues are exponentially higher. Someone mentioned taxes, they're currently making the same regulatory changes every year on two disparate systems!

Hahaha I'm glad I'm retired!

I've been on the brokerage system since 2016, no problem. Of course people don't like change that they know about.

You might be surprised that many companies in this space install hundreds of changes every week that you know nothing about! Does anyone here remember Y2K? Did your mutual fund account's balance disappear? No, they didn't! Those changes were significantly larger.[emoji12]

 

[samclem]

Funny how everyone complains about Vanguard's website being old and clunky. Over the last few weeks they've had some minor issues with availability....

However how can they make it better when nobody wants anything to change? Does anyone here understand the operational complexity of running two similar systems with different infrastructures? You need many more SMEs and the chances of issues are exponentially higher. Someone mentioned taxes, they're currently making the same regulatory changes every year on two disparate systems!

I don't much care about the inner challenges of Vanguard's IT, until they become mine. IMO, Vanguard should honestly explain why they are doing this. It >doesn't< give me any added utility, so they shouldn't try to tell me that it does. I think people do understand that the company wants to make improvements to save costs (i.e. dismantle the legacy architecture--not just the IT, but the legal status under Vanguard holds customer accounts--and replace it with something else). If they become more efficient, it saves me money, and I like that. They should also take all steps to assure customer service doesn't suffer. They haven't done this. For example: putting the forms where people can find them (and clearly labeling them so there's no confusion). And, getting year-end tax data on my MFs to me at the same time it has always been ready--not a month later.

 

[W2R]

Just now I went to the website, and logged in. The upgrades seem to be complete (both with the website itself, and with my transition to brokerage accounts that I began on 11/1).

To my great relief, the website seems basically the same except the accounts say they are brokerage accounts and the Federal MM account is there too, with $0.00 in it. I'm sure there are probably other small differences that I haven't yet noticed, but basically navigation after logging in seems very familiar and reasonable. I had no trouble finding my messages or the tax center for my accounts and so on.

So, I'd say they did their best to accommodate those of us who are set in our ways and do not relish change. Kudos to Vanguard for that.

 

[deserat]

Just now I went to the website, and logged in. The upgrades seem to be complete (both with the website itself, and with my transition to brokerage accounts that I began on 11/1).

To my great relief, the website seems basically the same except the accounts say they are brokerage accounts and the Federal MM account is there too, with $0.00 in it. I'm sure there are probably other small differences that I haven't yet noticed, but basically navigation after logging in seems very familiar and reasonable. I had no trouble finding my messages or the tax center for my accounts and so on.

So, I'd say they did their best to accommodate those of us who are set in our ways and do not relish change. Kudos to Vanguard for that.

After reading the whole thread and your conclusion, this was done for heir benefit, not yours....if the UI hasn't changed except for the name of type of account, what did this bring you? I had VG harassing me for awhile, too, and I got on the phone and asked them exactly what it would do for me....they couldn't give me a good answer on that based on how I use their services. Your note which says they were going to convert you unwillingly anyway concerns me....but I guess I'll cross that bridge later.

 

[W2R]

Except that it hasn't been totally painless. Resetting preferences, especially cost-basis that shouldn't have been touched, two sets of tax forms in the first year with no warning of that, delayed tax forms in subsequent years, and difficulty in finding the correct form for some transactions--nothing big, but all a pain. With absolutely no gain that I can see. Making the change is what seems like shooting yourself in the foot for no good reason. I see nothing to indicate it is in one's best interest to change, though eventually VG will probably aim for your foot to convince you to do it. I trusted them and made the change a couple years ago and I have seen no gain, and some pains.

OK, now that my transfer to brokerage accounts is complete, I just went to choose my cost basis method and all it said was that I hadn't indicated a preference. So, I chose the averaging method (that I have always used), and submitted that choice. Hopefully this insane problem is now solved for me.

Also another problem with the transfer has been resolved. They said that all dividends would be reinvested (and this has not been my choice for my taxable accounts). So today I checked, and despite the fact that they said my dividends would be reinvested, all my prior preferences are still intact. My Roth IRA dividends will be reinvested as always, and dividends on my taxable accounts will not. The only difference is that the latter will be going to the Federal MM settlement account that they added for me, instead of to VMMXX. Either is fine. I just wanted to get them in cash rather than reinvesting.

I am relieved that the software is still about the same, so I was able to do all this without undue searching through menus and so on.

Seriously, whoever wrote the verbiage on the screen during the transfer process, should either be hanged, or else forced to spend the rest of his days reassuring and holding the hands of some nervous Nellie old ladies like me during these transfers.

 

[pb4uski]

.... Don't forget that you'll be getting two sets of 1099-CONS come tax time, one from each account.

.... Ugh.

That is why I think it best to do the conversion in early 2019 before any 2019 dividends are received or any 2019 transaction are done.

 

[JDRbole]

I found this Vanguard review 2018
Vanguard Brokerage Account vs. Mutual Fund Account.
https://investorjunkie.com/5769/vanguard-review/

Pros
Great Selection of Funds — Vanguard offers a broad selection of mutual funds and ETFs.
Handy Tools — Vanguard's screeners are a great addition.
Good Customer Service — Getting hold of help is seldom a challenge.

Cons
Fees Favor Vanguard Products — Unsurprisingly, stocks and non-Vanguard ETFs can be expensive to purchase through the broker.
Not the Best Broker for Stocks — Vanguard is a good fit only for investors looking to trade mutual funds and ETFs.
High Minimum for Mutual Funds — The minimum investment amount for Vanguard mutual funds is $3,000.

Summary
Vanguard is great if you use their funds and ETFs. When you venture outside of this realm, their service is ok at best. If you ever decide to buy individual stocks, you are best to find another stock broker for that purpose. Vanguard’s research tools are almost nonexistent. Unless you have a significant amount invested in them, it may not make sense to use their service for the lower trading fees.

It is assumed you go for Vanguard only for their low cost indexed mutual funds and ETFs. Though they are no longer have exclusivity in this area. Most mutual fund houses offer similar, and in some cases lower annual fees when compared to Vanguard. Many of the brokers offer commission free ETFs, further lowering your transaction costs to match Vanguard.

I recommend using Vanguard for your retirement account if possible (there are many poor alternatives, unfortunately), or if you prefer to use only Vanguard funds for your investing. Firms like Fidelity, and TD Ameritrade offer much more comprehensive services, if you are looking for a one stop brokerage firm.

 

[RunningBum]

I found this Vanguard review 2018
Vanguard Brokerage Account vs. Mutual Fund Account.
https://investorjunkie.com/5769/vanguard-review/

Where did you get the bolded part? This is just a review of Vanguard in general vs. other discount brokerages, not one VG acct type vs. the other.

 

[JDRbole]

Vanguard Brokerage

The Vanguard regular account can only purchase Vanguard Funds & ETFs.


The Vanguard Brokerage account can also purchase stocks & other funds, etc.


As I read it, if you only need Vanguard Funds & ETFs, the Vanguard account is good.

If you want a brokerage account, you are better off to use another broker vs. changing to a Vanguard Brokerage account.