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Vanguard Heads-UP--Rant?
Old 11-06-2007, 07:15 PM   #1
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Vanguard Heads-UP--Rant?

This board generally holds Vanguard in pretty high regard. For those of you moving around, please include in your understanding, that Vanguard will "sit" on your money transferred in for 10 days prior to considering it "unrestricted". This is apparently regardless of your "status" with them--Flagship/Voyager/etc.
I EFTed $$ from my commerical account after a "sweet" CD matured and bank no longer wanted to be competitive. I have been thinking about increasing my funds at Vanguard and so it seemed a good idea to move these $ in.
Dollars move okay (had them to sweep to Prime MM), but then I find they are "restricted". After fussing with them, they agreed I could move to other Vanguard positions but could not remove from Vanguard for 10 days. At least I was able to get the $$ into the funds I wanted without sitting on the sidelines for 10 days. Crying out loud these are EFT $$ bucks not some paper check. Apparently this rule applies regardless of the size of relationship with Vanguard (mine exceeds by several times what was involved in the transfer.)
I am not sure how this restriction plays into Vanguard cost structure but do not assume you can immediately move new $ around much leave.
I have most of my stuff with Fido and get 3 day service on EFT $$--never 10 business days. Think I will keep it there--besides Fido web interface is still far superior to Vanguard IMHO.
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Old 11-06-2007, 07:24 PM   #2
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Sorry to hear that. Thanks for the heads up.

I'm curious, though - - what is better about the Fido web interface? I am only investing through Vanguard right now so I have never logged in to seen the Fido web interface, and I was curious about why you said that. Vanguard seems pretty slick to me.
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Old 11-06-2007, 07:28 PM   #3
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The 10 day rules are for your own protection. There is just so much identity theft and identity fraud.

Imagine how you would feel under circumstances where someone else assumed your identity.

So you have given me yet another reason to like Vanguard.
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Old 11-06-2007, 07:34 PM   #4
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The 10 day rules are for your own protection. There is just so much identity theft and identity fraud.

Imagine how you would feel under circumstances where someone else assumed your identity.

So you have given me yet another reason to like Vanguard.

M'kay, but don't i recall reading that Fido offers identity theft protection/indemnification free gratis while Vanguard does not? Or am i starting a wild rumour
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Old 11-06-2007, 07:51 PM   #5
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Was it a large transfer? I've transfered $5000-$15000 to Vanguard about 10 times this year via EFT, and there's never been a hold.
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Old 11-06-2007, 07:59 PM   #6
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Originally Posted by MasterBlaster View Post
The 10 day rules are for your own protection...
They also lock your funds if you change your address.

I remember when I sold my house a decade of so ago,
I gave my lawyer a Vanguard deposit slip to send in
my proceeds. Knowing about the lockup, I planned to
postpone telling Vanguard about my move. However,
the oh so helpful lawyer filled out the back of the
deposit slip with address change information.....

My funds were definitely tight that month!


Despite such policies I still keep the majority of my
assets with Vanguard, for the simple reason that I am
cheap!!! Fido may be "waiving" fees on their index
funds, but I trust Vanguard to keep their fees low even
after I have built up large unrealized gains.
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Old 11-06-2007, 08:08 PM   #7
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I searched for information about the hold on the diehards forum. All I found was this:

The ways to avoid holds is to push the money instead of pulling it. If you want the money in your Vanguard account, initiate the transfer at Fidelity. That way it will show up at Vanguard as a 'direct deposit' and not have a hold. You will need an Advantage account to do these transfers.

This works for me -- I push the funds via EFT from my brokerage account, and I don't get a hold.
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Old 11-06-2007, 08:24 PM   #8
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I'm curious, though - - what is better about the Fido web interface? I am only investing through Vanguard right now so I have never logged in to seen the Fido web interface, and I was curious about why you said that. Vanguard seems pretty slick to me.
Their web site is one of the things Fidelity sees as a real competitive advantage and they have just put more work into it than most on-line brokerages. I have seen individuals post here who don't like the Fidelity site, but every review I have seen rates them as the best or nearly best web site and that is how I would also rate them. They have a lot of content and they have it very well organized.

Fidelity is certainly much better for stock trading than Vanguard and it also provides a lot of free research information on stocks. They also include a nice tool called Full View for looking at all your finances in one place and a very good bill pay service among other things.

Of course if you mainly want to invest in Vanguard products, which is certainly a reasonable strategy, then the Vanguard site is the best place to do that.
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Old 11-06-2007, 08:26 PM   #9
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Of course if you mainly want to invest in Vanguard products, which is certainly a reasonable strategy, then the Vanguard site is the best place to do that.
Thanks - - that is what I plan to do, but was wondering what sort of web delights I might be missing. Thanks for the info!
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Old 11-06-2007, 08:41 PM   #10
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I "pull" the money to Vanguard every month from my checking account using EFT. The money is always subjected to the 10 day hold. The money is deposited in my taxable VG sweep account (Prime MMF), but I don't have to wait 10 days to exchange it to another Vanguard fund within the same account. However, I can't pull the money from the account until the 10 days are up (which means I can't write a check against the new money transferred, I can't buy ETFs, individual stocks or non-Vanguard funds in my VG brokerage account, I can't transfer the money to an IRA and I can't transfer the money back to my checking account). I go around this by doing the following:

If I transfer $1000 a month into my VG taxable account, I leave $1000 in the sweep account at all time, so that when the transfer occurs I can immediately invest the $1000 which I originally left in the sweep account, and the new $1000 are just left on hold in the sweep account until next month's transfer. Off course this does not work when I make large or irregular transfers to my accounts. In those cases I have to wait 10 days if I want to buy something other than a VG fund within the same account.

Overall though, the 10 day holding period does not bother me, except when I transfer large amounts of money that I am eager to invest.
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Old 11-06-2007, 09:34 PM   #11
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Dollars move okay (had them to sweep to Prime MM), but then I find they are "restricted". After fussing with them, they agreed I could move to other Vanguard positions but could not remove from Vanguard for 10 days. At least I was able to get the $$ into the funds I wanted without sitting on the sidelines for 10 days. Crying out loud these are EFT $$ bucks not some paper check. Apparently this rule applies regardless of the size of relationship with Vanguard (mine exceeds by several times what was involved in the transfer.)..........
I am not sure this is strictly a "Vanguard" thing.

I know at WaMU, when I deposit large amounts they are entitled/required? by the "rules" (Fed. banking system? State bank rules?) to restrict that deposit amount for 10 business days. The money goes in on day 1 and earns interest on day 1, but it is not available to cover checks I write until day 11.

Now, WaMu does apparently have authority to override this "hold" on occassion based on my history with them. But the larger the deposit, the less chance of removing the hold.

Maybe this relates to your Vanguard experience, or maybe it is some other rule/procedure entirely I have experienced at WaMU, not relating to whatever Vanguard does.
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Old 11-06-2007, 10:43 PM   #12
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The 10 day rules are for your own protection. There is just so much identity theft and identity fraud.

Imagine how you would feel under circumstances where someone else assumed your identity.

So you have given me yet another reason to like Vanguard.
It not a matter of disliking Vanguard--because i don't. More a matter of an excessive rule.
All for good identity protection but this transfer came an account of long standing to an account with identical registration. Hard to see what the risk is for this type of transaction. Some hold but 10 days?!!
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Old 11-06-2007, 11:37 PM   #13
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Banks can not hold for 10 days IIRC... it is 3 days for deposits in state and (not sure here) but 7 or 8 for out of state deposits... I am sure someone will look it up..

BUT, Vanguard is NOT a bank.. so the rules do not apply to them..

I have had funds 'held', but as mentioned was able to move them to another fund with the same hold..

To me, not a problem as I have enough funds that is not 'held' to do what I need.
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Old 11-07-2007, 12:17 AM   #14
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It not a matter of disliking Vanguard--because i don't. More a matter of an excessive rule.
All for good identity protection but this transfer came an account of long standing to an account with identical registration. Hard to see what the risk is for this type of transaction. Some hold but 10 days?!!
nwsteve
I think you're getting the customer service that you pay for.

10 days isn't for our identity-theft concerns... I wonder if it's so that Vanguard can get lower premiums on their SIPC insurance.

When I use Fidelity's website to transfer money from my credit union's checking account, the EFT is considered to be at Fidelity a microsecond after I click the mouse button. I can use it right then to buy stocks because they know they have three trading days to obtain the funds before they have to deliver shares.

When I deposit a check with my credit union, it's available the next business day (after they empty the ATM drawer). If it's more than $2500 then they may put a two-day admin hold on it, but interest is credited to the date of deposit and lately I've notice that the deposit shows up in the transaction log the very next day.

I've never used Vanguard's website, but Fidelity's has survived through the busiest trading days this year. Even five years ago they struggled with that, so I think a lot of time & effort (and customer money) has gone into improving its speed, capacity, and security. And if not, they're insured for it.

Our ER portfolio has an average expense ratio of under 25 basis points. At this point I'm not interested in moving to Vanguard for a 15-20 basis-point discount, especially if I have to navigate penalty minefields.
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Old 11-07-2007, 02:04 AM   #15
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They probably want to make sure the new money can clear the transfer... they don't get scr3wed by mistakes or fraud. It appears to me that VG is fairly conservative and they have rules regarding new money. My bank does the same thing if I deposit a large check.

I think the company has some rules that are hold overs from the old days when they had a few mutual funds. They might figure that when a person moves money in, they might put it in the longer-term investment (Mutual-Fund)... not park it for 2 days. If the money is destined for trading in the brokerage account... I can see where that could be an issue.


I think VG is primarily a low-cost MF company... Brokerage services are adequate.
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Old 11-07-2007, 07:57 AM   #16
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I use Vanguard for Vanguard funds and have been happy with them. I do not want it to be easy to liquidate my VG funds and transfer them out. The thought that someone could steal my username and password and drain my funds in a matter of minutes or seconds is scary as hell. As I understand things, all I can do easily is transfer to another linked account. All I can do there (easily) is transfer to another linked account. Eventually it gets to my checking account. I am not sure how easy that is to pilfer. I know it seems all someone needs to pull funds from checking is an account number and a routing number. How are we protected if an unauthorized party "pulls" funds from checking? Is that what the hold is about? What if you don't notice the drain until after the hold period?
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Old 11-07-2007, 09:04 AM   #17
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Hmm, I've swung six figure amounts by wire and EFT through vanguard with great regularity with only one hitch that I can recall. I tried to get them to do a wire to an escrow account once and they wanted ten days to verify the account on the receiving end. Which was a problem because I was closing the next day. Other than that, I've experienced no holds or restrictions on my money. I've never tried putting a six figure amount into vanguard and then take it out again within ten days though.

I *have* experienced extra layers of paperwork and delays with vanguard though. They're intent is to service people who want to put money there and leave it there, preferably in the same funds for a longer period of time. I frankly dont think they cater well to customers that want to flip a lot of money around, market time and change funds frequently.

I overcame the ten day restriction in the case above by wiring the money to a local bank we had already 'connected' to vanguard, then having that bank wire the money the next day to the escrow account.

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Old 11-08-2007, 11:21 AM   #18
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I *have* experienced extra layers of paperwork and delays with vanguard though. They're intent is to service people who want to put money there and leave it there, preferably in the same funds for a longer period of time. I frankly dont think they cater well to customers that want to flip a lot of money around, market time and change funds frequently.

I overcame the ten day restriction in the case above by wiring the money to a local bank we had already 'connected' to vanguard, then having that bank wire the money the next day to the escrow account.
CFB
Ditto on the exta paperwork w/Vanguard. Administrative activities just seem to be more "drawn-out" w/Vanguard vs Fido. For example even updating addresses on a move was streteched out much longer with them than Fido.
I have no issues w/ a conservative approach for new accounts but for long established accounts and balances in excess of the activity, V's process are a bit uncustomer friendly in contrast. You can find ways around their "rules" ala your wire from a V bank, but jeeze I have other things that are more enjoyable than sorting out V's maze.
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Old 11-08-2007, 01:00 PM   #19
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True. I think its quite intentional. I think they'd prefer that things happen slowly and evenly and money stays in the same places for a long time. Maybe how they keep costs down.

I thought it was massively stupid when we made an account change and had to get a 'medalion signature guarantee' from a local bank. It was a big pain in the butt and as it turned out the guy who guaranteed our signature never came out of the vault since he was halfway through counting ATM receipts and if he left the desk he'd have to start over.

Some guarantee. :
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Old 11-08-2007, 01:53 PM   #20
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True. I think its quite intentional. I think they'd prefer that things happen slowly and evenly and money stays in the same places for a long time. Maybe how they keep costs down.

I thought it was massively stupid when we made an account change and had to get a 'medalion signature guarantee' from a local bank. It was a big pain in the butt and as it turned out the guy who guaranteed our signature never came out of the vault since he was halfway through counting ATM receipts and if he left the desk he'd have to start over.

Some guarantee. :
He could have been taking the word of the person who took it to him... I have done that with some when I did it way back when... it is not like a notary that is supposed to see you sign, but it is the bank guaranteeing the signature... so anyone at the bank can see you do it and tell the guy to sign the medalion.

And the guarantee is much more than a notary also.. they are on the hook for the financial transaction if it is not your sig...
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