I think Vanguard Just Called Me Difficult and Expensive

[RASAP]

Decades ago, I chose to invest with Vanguard because they had a reputation for low costs, which benefits investors. When they asked me to help by switching to a brokerage account, I was glad to do my part. It was painless.

+1

 

[target2019]

I get that. In my experience, this is pretty much like eating the same burger and fries, just in a different room of the pub. But they're telling you to pick up your plate and drink and go move to another room right now, and why should you have to do that?

That's me too. I'm a PIA to live with.

I grew tired of the VG emails and messages about switching platforms. I gave in at the beggining of 2022. They are still "modernizing" their platform, and I lose my way trying to find my monthly numbers. Eventually I succeed.

So, we ended up with four sweep accounts (not used at all). I transferred one taxable fund to Schwab brokerage to avoid account conversion there.

Wife's IRA is smaller, so we're converting that to Roth over two years. Consolidation is king in our household now.

TBH, I would not have predicted this 10 years ago. But the old web site and very slow CS answers just got to me. Now, Schwab has 48% of our assets, and another 12% will be transferred from a 403(b) very soon.

I'm still eating burgers, but have found a better experience. I still support the first restaurant, but they grew too big and neglected changing expectations of customers.

 

[jollystomper]

I don’t understand why this has to be so tough. Simply adjust the fees on the old platform to reflect the added cost in a transparent manner.

I still don't know what the deal is, or how it saves them money. The gist is, I just do not care enough to find out.

There is likely an IT platform angle to it. Simply put, the old MF platform may have been implemented on older technology that is becoming more expensive to maintain and is less flexible from the standpoint of integrating with new technologies. A simple example, without getting into the weeds too much, is stuff written in COBOL vs. Java or python or other modern languages. It is much harder to find COBOL programmers, and to upgrade code to support new requirements (most of the time a more modern front-end is applied, but that can only go so far). You cannot just "migrate" COBOL to modern languages, you need to do a rewrite. And this may be code that over decades has become "spaghetti".

The newer platform might be more flexible and easier to maintain and add features to, using modern programming and virtualization/application subsystem technologies. You also do not have to maintain staff for both the old and the newer platforms, as few people understand both (I did, which helped keep me gainfully employed at Megacorp ).

Those things are likely reasons why for them it is more cost effective to get rid of the old platform, rather that just charge folks still on it more.

 

[ransil]

I got the same mail. I have a half dozen accounts with vanguard and a couple years ago I'd get a prompt to convert every time I logged on. The system never told me which account it was converting. I must have gone through the conversion process a dozen times, never knowing which account was being converted. I converted more times than I have accounts. Even though I got the mail I can't figure out which account isn't converted or how I would go about it. Vanguard's website is maddening.

I got the email too and cant figure out what account(s) they are talking about, thought i converted years ago.

 

[easysurfer]

I got the same email. I didn't get that vibe at all. I think they may be a bit sheepish about the fact that their old system is dying and can't be supported. Easier to cajole us into switching than to say switch or get lost.

I actually thought I'd switched everything, but maybe not. I need to go in and see what account they're talking about.

Here's part of their note:

"However, you may not be aware that it's becoming increasingly difficult—and costly—to support your experience..."

I suspect your issue is that they made it "personal" by including "you" and "your" instead of saying simply "our system is dying - get out now."

On a scale of 1 to 10 about taking it personal, 10 the most, I'd say I'm at about a 4.

As for the switch or not to switch and the switch over reminders, another comparison is if I'm a smoker (which I'm not) but you get reminding over and over again to stop smoking for the greater good of people around you and your own benefit. But if I'm a smoker, I'm happy that way. My lungs.

Same with if I'm just happy in my own mutual fund way instead of ETFs etc. Let me eat that burger and fries the way I'm used to .

 

[John Galt III]

That is a pretty heavy letter. I transitioned about a year ago. I was afraid of there being fees on the other side. The transition went well, but once there, I found the website kludgy and self-contradictory. You had to figure out how it worked by using it, since it didn't always do what it said it would do. Or it did additional things you did not want. However, they made a change to it, and it is better now. But still you have to know where to go. It's still not clear to a newcomer. And I haven't had any fees yet !! Knock on wood. I made sure the 'new issue' cds don't have fees. Some stuff does, though.

 

[donheff]

I must admit that I was skeptical the first few times they asked. I thought there must be some ulterior motive. I fact, I may have asked here "What's in it for them?" But I couldn't figure out what that motive could be other than cutting costs, which seemed reasonable to me, so I eventually gave in and switched. It has not affected my life, as far as I can tell.

+1. I felt the same way but the move was seamless. Now I have ETFs which could come in handy with the Debt Ceiling market timing experiment (fiasco?) I am playing with.

 

[NW-Bound]

There is likely an IT platform angle to it. Simply put, the old MF platform may have been implemented on older technology that is becoming more expensive to maintain and is less flexible from the standpoint of integrating with new technologies. A simple example, without getting into the weeds too much, is stuff written in COBOL vs. Java or python or other modern languages. It is much harder to find COBOL programmers, and to upgrade code to support new requirements (most of the time a more modern front-end is applied, but that can only go so far). You cannot just "migrate" COBOL to modern languages, you need to do a rewrite. And this may be code that over decades has become "spaghetti".

The newer platform might be more flexible and easier to maintain and add features to, using modern programming and virtualization/application subsystem technologies. You also do not have to maintain staff for both the old and the newer platforms, as few people understand both (I did, which helped keep me gainfully employed at Megacorp ).

Those things are likely reasons why for them it is more cost effective to get rid of the old platform, rather that just charge folks still on it more.

Thanks for the explanation.

It sounds like the Vanguard old system is reaching its end of life. At some point, they will have to shut it down and ask people to transfer the assets elsewhere.

If the clients have no other brokerages for them to transfer to, can Vanguard redeem all the funds to cash and send the clients a check? This would be a taxable event due to funds being sold, and can Vanguard legally do this?

Hmmm... It's a conundrum. As I said, I just acted nice and did as they requested.

 

[jldavid47]

Seems like there are problems with all the brokerages...

• Schwab is a pain to buy treasuries (at auction upon), compared to Vanguard which gives me a list of the ones at auction
  

Huh? Click on the Treasury Auctions link and the list of available auctions appears. What pain?

 

[harllee]

I got the same email from Vanguard but I converted all my accounts to brokerage years ago. I logged into my account to double check to make sure and I found that everything is already in a brokerage account. Maybe I got the email by error?

 

[jazz4cash]

There is likely an IT platform angle to it. Simply put, the old MF platform may have been implemented on older technology that is becoming more expensive to maintain and is less flexible from the standpoint of integrating with new technologies.

That could all very well be true but I suspect it’s as simple as having to maintain two near parallel platforms. Regardless of the merits of each system it’s expensive and impractical.

 

[John Galt III]

As a typical 'Joe Sickspak' user, I would have been more amenable to it had they simply come out with the classic 'Good news! We are updating our system to better serve you! On this date, you will see our new glorious website! You will retain all the functionality you now have, and, if you ** DESIRE **, you may partake of new options! Wowza! And no fees !!!' I would have gone along with that. Maybe some legal reason they could not do that ?

 

[skyking1]

I'm draining out the vanguard account for construction money. It'll give me a chance to look at possibilities when we sell the current house.
We will get a fresh start.

 

[fritz]

This is the very last part of the email notice sent to my wife (full email text added below), asking her to transition her accounts to brokerage. It's down in the Legal notice. It was not in bold as is the rest of the email's Legal notice. An interesting bit of information. SIPC coverage is $500K per each type of account - Individual, IRA/Roth ($250K cash).

Vanguard funds not held in a brokerage account are held by The Vanguard Group, Inc., and are not protected by SIPC. Brokerage assets are held by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA and SIPC.


Transition your account for an enhanced experience

We value our ongoing relationship with you and want to ensure you receive the best experience possible when managing your investments. However, you may not be aware that it's becoming increasingly difficult—and costly—to support your experience because one or more of your accounts remain on an aging mutual fund-only investment platform.
We're working to retire this legacy platform and would like to see you avoid future fees—including the annual account service fee—as well as any potential interruptions to account services by transitioning your account to our modern Vanguard brokerage platform.
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In most cases, you can make the change online in a few minutes without changing your investment strategy or the funds you've selected. If you recently completed this transition, please disregard this notice.
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[target2019]

In most cases, you can make the change online in a few minutes without changing your investment strategy or the funds you've selected. If you recently completed this transition, please disregard this notice.

I guess that answers the questions about receiving the email even after transitioning.

It's also an opportunity for Vanguard to get you to call them, and then the conversation goes to services they offer.

I do think they have an end date in mind, and will some day inform you that there are x days remaining, and then...

 

[Free bird]

I don’t expect to get paid to do something that benefits everyone including me. I guess they could pay a bonus to everyone that dumps a less efficient system but that isn’t consistent with controlling costs.

 

[pb4uski]

At some point, they should just add a fee of $100 a year to stay on the MF platform, or tell them that the MF platform is being closed and if they don't get a brokerage account then their MF account will be closed.

 

[Koolau]

At some point, they should just add a fee of $100 a year to stay on the MF platform, or tell them that the MF platform is being closed and if they don't get a brokerage account then their MF account will be closed.

IIRC they said each MF would coast an extra $20/year unless one made the switch. I know I get a heck of a lot more paper - some monthly - in the mail since the switch - don't see how that saves V any money, but I guess not needing to upgrade a big program is where the savings lie. YMMV

 

[punkinhead]

At some point, they should just add a fee of $100 a year to stay on the MF platform, or tell them that the MF platform is being closed and if they don't get a brokerage account then their MF account will be closed.

Or they could just make it easy for those of us who would convert if it were possible. When I log on it should tell me which account(s) need converted and have a simple button allowing me to do it.

 

[jazz4cash]

Haven’t noticed anyone saying they wish they’d never switched. Seems like self imposed drama by VG.

 

[punkinhead]

Or they could just make it easy for those of us who would convert if it were possible. When I log on it should tell me which account(s) need converted and have a simple button allowing me to do it.

I logged back on this morning to see if I could figure out how to convert. Between traditional IRAs, Roths, taxables, and joint accounts with my kids I have 10 accounts. There was no indication on the initial "balances" screen which account(s) needed converted. As I mentioned earlier, I would routinely click the "convert" button when they started prompting me after login a few years ago. Never any indication what account was being converted, no indication of which accounts had already converted, and no message once a conversion had completed. Eventually the site quit asking me to convert every time I logged in so I figured I'd gotten them all.

9 of my 10 accounts had the word "brokerage" in their name so I clicked down through the one that didn't and found a "convert" button. I had to read carefully to spot the button because it was lost in their Fisher Price UI design where everything is in a huge font and nothing is highlighted or made distinct. When I clicked it and started the conversion process it wanted to convert 5 of my 10 accounts. So it wants to convert accounts that are already listed a brokerage. 4 of those 5 are IRAs from 401k rollovers I've done within the last year so I have no idea why they would be in the old system. The system said the conversions will take a couple days. Based on past experience I don't expect any notification of when, or if, any of these are converted. I also have zero confidence they actually will all be converted or that I'll have any way to know which ones are still on the old platform.

 

[Trooper]

I resisted for the longest time, but finally converted about a year ago. There are plusses and minuses to the user experience -- for example I found Roth conversions to be a tad more difficult - but it's mostly a wash.

The big plus is the ability to buy CDs and T-Bills.

 

[Rianne]

I don't get it. We had no issues converting to the brokerage account. When I call customer service there is a small wait or I get a callback within 20 minutes or so. When I sold our bond funds and created a bond ladder they were super helpful. Walked me through the difference between treasury bonds and notes. I stated I wanted cash flow in our tIRA, so the coupons would be put in the settlement account and we could manage taxes and cash flow. I had difficulty with the new online format. My questions were explained on a relatively long call, showing me where to click to find this or that.

We are self-managed, and never paid for guidance. CDs, bonds, and treasuries are super easy to buy and manage. Maybe I'm just used to them or am missing out on some wonderful customer service somewhere else.

 

[CaptainO]

I thought I saw somewhere that they ask for personal information like net worth and income when you switch. Is that true? Can you decline giving that kind of information and still make the switch?

 

[punkinhead]

I thought I saw somewhere that they ask for personal information like net worth and income when you switch. Is that true? Can you decline giving that kind of information and still make the switch?

Yes, they do. They claim it's a regulatory requirement so I doubt you can choose not to answer.