Vanguard Brokerage Account vs. regular Vanguard Account

[Telly]

I did a search, but anything with "Vanguard" in it goes on and on and...

DW received an email from Vanguard:

[FONT=&quot]Help us improve the way we serve you
[/FONT][FONT=&quot]You'll soon receive an email from us asking you to transition your current Vanguard account to a Vanguard Brokerage Account at no additional cost.[/FONT][FONT=&quot]

We're transitioning most of our accounts to the new account structure to significantly streamline our operations and help us continue to lower the cost of investing.

You don't need to take any action today. We simply want to inform you of the upcoming invitation.

Thank you for your consideration.[/FONT]

Has this recently been discussed here in depth? If so, then please point me to it.

I am wondering what possible Negatives there would be to doing so.

 

[samclem]

I am wondering what possible Negatives there would be to doing so.

Once the mutual funds are transitioned to a brokerage account, the government allows Vanguard to send your your tax forms about a month later than if you still held them directly.
I don't see any advantage, for us, in transitioning, and I'm starting to get a little POed at Vanguard's heavy push to get us to become brokerage clients. No, already!

 

[pjm-7]

I'm just fine with my mutual funds. I don't have any reason to set up a brokerage account (actually three, a taxable account, a Roth and an IRA). I hope they don't force me to look elsewhere.

 

[bw5972]

I did a search, but anything with "Vanguard" in it goes on and on and...

DW received an email from Vanguard:
Has this recently been discussed here in depth? If so, then please point me to it.

I am wondering what possible Negatives there would be to doing so.

As I currently hold my non-IRA mutual funds in a brokerage account (not Vanguard), I am curious as well about any negatives to this configuration.

 

[Sunset]

Vanguard moved us to brokerage accounts quite some time ago.

I like it as my stocks and mutual funds all show up on the same page separated out by type. I find there is nothing about it I don't like so I wouldn't change back (if it was even possible).
It seems it is like all other brokerages (that I have).

There was about a 1 or 2 day delay where stuff was in limbo, so to put your mind at rest, take a screenshot of your accounts before the transition.

I found all my brokerages were slow with the tax forms this year.

 

[RunningBum]

You will get 2 sets of 1099 tax forms in the year you transition. It was confusing to me until I remembered that they had merged it. I thought that was a negative, being unnecessarily confusing. I can't recall whether my tax program handled it ok but I remember wondering why I had 2 different sets of dividends for funds, etc.


Other than that it seemed like a wash, no benefit, no loss. If there was any advantage I don't recall, but no other problems either. I probably wouldn't have done it knowing the tax reporting issue, except they'd probably be nagging me about it every year.

 

[Sue J]

My traditional IRA opened in 2016 has always been a brokerage account. I didn't expect that when I opened it online and thought I did something wrong so I called them about it. All accounts were being opened as brokerage, it's their default. I asked what advantage there was to this and they told me that I could invest in ETFs. Also, I've noticed that prices are updated earlier in the day.

My Roth IRA from 2010 was not a brokerage account and I kept getting reminders to "upgrade". It was easy enough to do it online so I went ahead and did it.

My inherited IRA is not a brokerage account yet and when I go to upgrade online it takes me to form to fill out and mail in as inherited IRAs are treated differently for this. I haven't bothered to make the change. Having it as a mutual fund account is fine at this point.

 

[frank2009]

I don't remember whether Vanguard did the brokerage conversion or I had to ask for it.

In any case it's not a big deal. May have had to re establish my automatic investments.That took 5 minutes or so.

 

[meierlde]

You will get 2 sets of 1099 tax forms in the year you transition. It was confusing to me until I remembered that they had merged it. I thought that was a negative, being unnecessarily confusing. I can't recall whether my tax program handled it ok but I remember wondering why I had 2 different sets of dividends for funds, etc.


Other than that it seemed like a wash, no benefit, no loss. If there was any advantage I don't recall, but no other problems either. I probably wouldn't have done it knowing the tax reporting issue, except they'd probably be nagging me about it every year.

Part of the reason for the distinct accounts is once upon a time Vanguard did not have its own brokerage system, but used Pershing. So the year when they started the in house brokerage effort you got two statements for the brokerage for the time until Vanguards in house efforts took over and after that time.

 

[jblack]

I was emailed about this by Vanguard today as well. Based on the above comments and the fact that I don't trade in ETFs or individual securities I don't see any benefit in transferring.

I guess for now our portfolio is too boring ;-)

 

[gauss]

I find brokerage account statements overly complicated compared to holding just a few mutual funds at Vanguard in a non-brokerage account.

-gauss

 

[target2019]

I did a search, but anything with "Vanguard" in it goes on and on and...

DW received an email from Vanguard:
Has this recently been discussed here in depth? If so, then please point me to it.

I am wondering what possible Negatives there would be to doing so.

I found an old thread on this, called "New Vanguard Account Structure":
http://www.early-retirement.org/forums/f28/new-vanguard-account-structure-78437.html

We would end up with 4-5 add'l money market accts, so have not converted. Our investments at Vanguard are pretty much core holdings, so not much to manipulate, and no tangible advantage.

 

[Badger]

All our IRA mutual funds are with Vanguard and all our individual stocks are with Scottrade. We have no interest in buying or selling anything since we will be taking RMD that will be for more than we have a need plus we can harvest the sweep account from the stock dividends if necessary. This is a simple method for us and see no need to change. If for some reason it causes us to lose a couple of dollars I doubt it would make a difference.

Cheers!

 

[mathjak107]

vanguard brokerage accounts are covered under spic insurance , mutual fund accounts are not .

perhaps because brokerage accounts are held in street name .

 

[Sue J]

There was a reminder today about this when I went to my Vanguard account site so I went ahead and filled it out and printed it off. The account is an Inherited IRA and those can't be converted online, you have to mail it in.


For anybody else taking care of this with a printed version, remember to use all caps so that you don't have to print this out twice like some of us who skimmed the instructions and didn't catch that part

 

[RunningBum]

Realized another drawback to this. VG has two sets of forms for about everything, for the two account types. If you search, you almost always get the regular account. Since I have the brokerage account, it gets returned to me or I got a message that it wasn't accepted. The last one needed a medallion signature, which is a pain to get. Fortunately the brokerage form can be verified with voice recognition so I don't need to burn time doing that again. Bit by bit, these kind of things are pushing me to move my account elsewhere.

 

[mathjak107]

I dumped vanguard and all their policies and headaches. I have none of there bull from fidelity or chase

 

[Splash]

We have both regular accounts and brokerage accounts at Vanguard.

The only negative I see is that we get the 1099 for the brokerage account a few weeks later than the 1099 for our regular account.

 

[mathjak107]

I dumped them when they stopped allowing beneficiaries on joint accounts . They told us we either have to split the accounts in to two individual accounts or their newly promoted trust dept can help us with a trust .

Both my chase rep and fidelity rep found it so hard to believe they had to confirm it for themselves

 

[HI Bill]

VG is trying to eliminate the regular accounts and wants everyone to switch over. I agree, there is no meaningful difference. I like getting the consolidated 1099 form.

 

[Telly]

I'm the OP, and I had completely forgotten about this topic!

Vanguard finally gave up trying to get DW and me to convert. Have not seen or heard anything about it for quite a while. I figure Vanguard decided that the people they couldn't cajole or, dare I say "trick" into converting, that they liked having our accounts the way they are better than losing us. Good choice.

 

[easysurfer]

I noticed that too about not getting the trying to convert me notifications. I suppose sometimes good being a hopeless case .

 

[jebmke]

I converted my IRAs because I had a new rollover IRA that was a brokerage account (they stopped creating new mutual fund accounts) and it was easier to consolidate things if the accounts were the same form. I have left our joint accounts as mutual fund. I don't find a significant difference that affects how we do business. They never nagged me either.

 

[MRG]

They have two systems that have similar but different capabilities built on different technology stacks. At some point the old will be retired permanently. Even if it's functionally stabilized, every year they have to make tax reporting, security, and audit changes to an old code base built on older technology. At some point it becomes too expensive to support the remaining accounts on the legacy system.

At some point you probably won't have a choice. I'd rather do it on.my timeline.

 

[mickeyd]

This is being discussed @ Bogleheads now. Bottom line is if VG shuts it down, we will all have to change to Brokerage. No biggie...I plan on holding out until VG offers me a free coffee mug.