Vanguard Brokerage Account vs. regular Vanguard Account

[Bestwifeever]

We’ve been ignoring this. When it happens, will likely walk into a Fidelity or Schwab office and turn it all over as DH wants someone he can drive crazy face to face if I go first.

 

[BigMoneyJim]

I work at another financial firm and am not allowed to have brokerage accounts elsewhere. If VG forces this I'll have to pull all my money out.

They already missed out on a 6-figure rollover because when I was going to roll over accounts quickly between jobs I saw the word "brokerage" and aborted the whole thing.

I got an email yesterday about "transition to our new investment platform". I didn't realize they were trying to sneak me into a brokerage account.

 

[Souschef]

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

I feel your pain! I moved all of DW's accounts from UBS for the same reason.

 

[UpAnchor]

Received an email from Vanguard a couple of days ago urging transition under an "Action Needed" subject line. (Hadn't heard anything from them on this in quite some time.) They indicated they would be retiring the old platform but didn't say when.

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

Interestingly, they said this:

"We'd make the transition for you, but we can't unfortunately (regulatory reasons)."

So I wonder what that means for clients with meaningful amounts there who just don't get around to making the switch, intentionally or otherwise.

That said, I'm not really bothered by it. Nor do I have any other gripes with them. My needs are simple and Vanguard has met my expectations satisfactorily. The only thing I've wished for is the ability to have state taxes withheld upon IRA withdrawals. But as I also have retirement accounts at Fido, I just have them withhold whatever amount I deem appropriate EOY from those accounts instead. Works out fine.

 

[W2R]

I got an email from Vanguard about this a few days ago. It was phrased much more forcefully, I thought, than prior e-mails, or at least seemed so to me. It said in part:

We'll be retiring our old investment platform- - which is what you are using today - - and asking all our clients to transition to the new one.
We'd make the transition for you, but we can't unfortunately (regulatory reasons).

So OK, this time I got fooled and went ahead and did it about an hour ago. In the process they mentioned that all sales would be using the FIFO cost basis, not averaged, and I have been using the averaged method all these years as computed by Vanguard and doubt I still have the records needed for FIFO. They said that if we don't like that we can always change it back again. Oh goodie. Who knows what else I will need to do just to maintain things the way they were. This sounds like a real mess to me.

BTW, they mentioned that for a day or so during the transition it might be harder to access one's account. Also they give you a half dozen PDF's explaining things and the website almost timed me out because I was trying to at least skim over them briefly.

 

[Telly]

W2R, could you please share with us the Title of the email from Vanguard?

We get a lot of Vanguard emails, I read a few here and there, most seem of no interest to me. I wonder if I missed an important one!

 

[UpAnchor]

The email subject line is:

"Reminder: Take action on your account".

 

[W2R]

W2R, could you please share with us the Title of the email from Vanguard?

We get a lot of Vanguard emails, I read a few here and there, most seem of no interest to me. I wonder if I missed an important one!

The email subject line is:

"Reminder: Take action on your account".

Yes, that's correct. Mine was dated October 27th.

Maybe it wasn't THAT forceful, now that I look at it again. But after reading it I felt like I had to do the transition soon.

 

[gauss]

Does anyone have an actual copy of the email that they can post?

I didn't receive one and have concerns about receiving a forced distribution.

I already did one 60-day rollover this year already, so if they give me a forced distribution then I will be up a creek in that I will not be allowed to do a 2nd 60-day rollover.

Thanks
gauss

 

[donheff]

My VG accounts transitioned over to brokerage a while back and I don't recall seeing anything about FIFO. I just looked at my cost basis method and see it is set to average.

 

[RunningBum]

Does anyone have an actual copy of the email that they can post?

I didn't receive one and have concerns about receiving a forced distribution.

I already did one 60-day rollover this year already, so if they give me a forced distribution then I will be up a creek in that I will not be allowed to do a 2nd IRA rollover.

Thanks
gauss

First of all, they say they can't force you to switch over due to regulatory reasons.

Second, it's not a distribution, it's just a change from whatever they called their classic account type to a brokerage account. If you had an IRA, it's still an IRA. I don't think this counts as a rollover (maybe this is what you mean by a "distribution"), but that would be worth checking.

 

[Texas Proud]

Probably happening this weekend as I have seen a header saying you might not be able to get your account info on the 3rd...

 

[samclem]

I haven't gotten the email, and still don't have a brokerage account with VGD.

I wish they'd at least try to explain how having my VGD mutual funds in a brokerage account helps me. Answer: it doesn't, and it allows them to send me my tax forms about a month later, which is distinctly not a benefit to me.

A brokerage account is for trading. Vanguard will be making it very easy for me to just buy something else rather than sticking with these traditional, directly-held-in-house Vanguard mutual funds.

 

[gauss]

First of all, they say they can't force you to switch over due to regulatory reasons.

Second, it's not a distribution, it's just a change from whatever they called their classic account type to a brokerage account. If you had an IRA, it's still an IRA. I don't think this counts as a rollover (maybe this is what you mean by a "distribution"), but that would be worth checking.

Thank you. I understand all this and agree that they can't force you to switch.

On the other hand, they can unilaterally choose to close your account--possibly without notice or maybe just 30 days notice.

If this were to occur, some of us would likely receive checks and the associated 1099-R tax reporting document.

I really hope that Vanguard would handle this in a more appropriate way, but I wouldn't want to bet my IRA status on it.

-gauss

 

[audreyh1]

I got an email from Vanguard about this a few days ago. It was phrased much more forcefully, I thought, than prior e-mails, or at least seemed so to me. It said in part:



So OK, this time I got fooled and went ahead and did it about an hour ago. In the process they mentioned that all sales would be using the FIFO cost basis, not averaged, and I have been using the averaged method all these years as computed by Vanguard and doubt I still have the records needed for FIFO. They said that if we don't like that we can always change it back again. Oh goodie. Who knows what else I will need to do just to maintain things the way they were. This sounds like a real mess to me.

BTW, they mentioned that for a day or so during the transition it might be harder to access one's account. Also they give you a half dozen PDF's explaining things and the website almost timed me out because I was trying to at least skim over them briefly.

Why are you selling anything? Why can’t you transfer in kind?

 

[W2R]

Why are you selling anything? Why can’t you transfer in kind?

I will, to transfer over there. I'm just concerned about future selling in two months when I rebalance, and I also wonder what else I'll need to deal with but didn't notice (since they sort of soft-pedaled their plans to change the basis computations).

 

[W2R]

Does anyone have an actual copy of the email that they can post?

I didn't receive one and have concerns about receiving a forced distribution.

I already did one 60-day rollover this year already, so if they give me a forced distribution then I will be up a creek in that I will not be allowed to do a 2nd 60-day rollover.

Thanks
gauss

Like I said, it seemed more forceful but it's not THAT forceful. I'm just such a timid soul. Here it is:

Transition to our new investment platform
Dear (W2R's name),

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—and asking all our clients to transition to the new one.

We'd make the transition for you, but we can't unfortunately (regulatory reasons). Complete it today!

Get started now (button to press)

It's quick and easy
Just go to vanguard.com, log on, and then simply follow our quick, 3-step process to complete the transition. There are no additional fees or tax consequences to make the move. While you're there, you can also:
•
Get more details on why we're asking you to do this.
•
Explore the similarities and differences.
•
Understand how it will affect you.

A little more background
Having all our clients transition will help simplify things—for you and for us. It will enable us to lower our operating expenses and give us more money to invest in the new platform. And that translates to an even better investment experience for you.

Thank you for making the transition.

Legal notices and email administration
All investing is subject to risk, including the possible loss of the money you invest.

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.

Because you're a valued Flagship client, we thought you'd be interested in this information. If you prefer not to receive emails of this type, simply email us. Please do not reply to this message to opt out.

© 2018 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor of the Vanguard Funds.

455 Devon Park Drive | Wayne, PA 19087-1815 | vanguard.com

 

[RunningBum]

So OK, this time I got fooled and went ahead and did it about an hour ago. In the process they mentioned that all sales would be using the FIFO cost basis, not averaged, and I have been using the averaged method all these years as computed by Vanguard and doubt I still have the records needed for FIFO. They said that if we don't like that we can always change it back again. Oh goodie. Who knows what else I will need to do just to maintain things the way they were. This sounds like a real mess to me.

I'm really surprised they would change an existing fund that (presumably) you've already sold from, out of averaging. I didn't think you could do that. If you've bought an equal # of shares at 11, 12, 13, and 14, and sold some, the average basis would be 12.5. So, which of those purchased shares are remaining that would be sold FIFO? And those are simple numbers, most people buy different #s of shares at a time, at uneven prices.

Maybe they just changed the default and not carried over your previous choice. That would be lazy programming, as they should be able to retain your basis in your brokerage account, but not too big of a deal to change back if you're aware. Or maybe they just mean going forward they are using FIFO for new purchases.

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

 

[audreyh1]

I will, to transfer over there. I'm just concerned about future selling in two months when I rebalance, and I also wonder what else I'll need to deal with but didn't notice (since they sort of soft-pedaled their plans to change the basis computations).

Why do you have to sell to transfer? Why can't they simply transfer existing shares?

I assume you are talking about a taxable account since you are worried about tracking the cost basis.

 

[W2R]

I'm really surprised they would change an existing fund that (presumably) you've already sold from, out of averaging. I didn't think you could do that. If you've bought an equal # of shares at 11, 12, 13, and 14, and sold some, the average basis would be 12.5. So, which of those purchased shares are remaining that would be sold FIFO? And those are simple numbers, most people buy different #s of shares at a time, at uneven prices.

And also this is over decades and, and at one point I was reinvesting dividends too.

Maybe they just changed the default and not carried over your previous choice. That would be lazy programming, as they should be able to retain your basis in your brokerage account, but not too big of a deal to change back if you're aware. Or maybe they just mean going forward they are using FIFO for new purchases.

Maybe so. I tend to follow the age old advice,

When in danger or in doubt, run in circles scream and shout.

In other words, I'm probably over-reacting simply because I didn't WANT to change anything and feel that they pushed me to make these changes and it's a crummy feeling.

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

Ugh.

 

[RunningBum]

Why do you have to sell to transfer? Why can't they simply transfer existing shares?

I assume you are talking about a taxable account since you are worried about tracking the cost basis.

What I'm hearing is that they are transferring now her shares now--no selling. As a separate thing that W2R would be doing no matter if the switch were being done or not, she is planning to sell some shares in a couple of months.

 

[W2R]

Why do you have to sell to transfer? Why can't they simply transfer existing shares?

I assume you are talking about a taxable account since you are worried about tracking the cost basis.

What I'm hearing is that they are transferring now her shares now--no selling. As a separate thing that W2R would be doing no matter if the switch were being done or not, she is planning to sell some shares in a couple of months.

RunningBum is correct. I am just whining because I will have to fiddle-f with defaults and get everything back to where it was, after I get there and before selling for rebalancing in January. I don't even know where on their website I'd go to do that so I'll need to explore.

Another change is that my dividends will go into a new Federal MM account instead of my present VMMXX account. I really don't understand why they had to change that.

In an observation unrelated to basis, but that might be comforting to some here, I just logged back in, and it looks the same but shows both my old accounts (with amounts intact) and new accounts (with $0.00 in each), and a statement that the transfer is in progress. That was better than I expected, so far.

 

[RunningBum]

Wait until you go looking for a form to do something, like transferring/gifting shares to another account, or recharacterizing an IRA, or anything like that. It'll be real easy to find the form, you'll mail it off, maybe after going through the headache of getting a medallion signature, only to get a call that you used the wrong form. They have separate forms for brokerage accounts for about everything. That was my moment. They told me to just call and ask for the right form, and they'll pre-fill as much as they can. OK, as long as I remember, and with a Flagship account I can get through quickly, but it may take longer for others to get through.

 

[W2R]

Wait until you go looking for a form to do something, like transferring/gifting shares to another account, or recharacterizing an IRA, or anything like that. It'll be real easy to find the form, you'll mail it off, maybe after going through the headache of getting a medallion signature, only to get a call that you used the wrong form. They have separate forms for brokerage accounts for about everything. That was my moment. They told me to just call and ask for the right form, and they'll pre-fill as much as they can. OK, as long as I remember, and with a Flagship account I can get through quickly, but it may take longer for others to get through.

Oh wonderful (NOT!)

I just resent it so much when organizations have a system that works, and they feel compelled to change it drastically like this.

 

[BigMoneyJim]

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:

Because you're a valued Voyager client, we thought you'd be interested in this information. If you prefer not to receive emails of this type, simply email us. Please do not reply to this message to opt out.

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.