Vanguard pushing me to brokerage account

[bltkmt]

Excuse me if this has been discussed previously - I did a search on Vanguard and came up with many posts but did not see this topic. I have a Vanguard mutual fund account currently - only holding Wellington. Using the old app, I was able to process transactions (buys/sells) on my phone with no issue. When I was forced to use the new app, I noticed that I could no longer do transactions on my phone. When I asked, they said that I would need to convert to a brokerage account in order to do so. Are there noted downsides of doing this? Costs?

 

[Time2]

Excuse me if this has been discussed previously - I did a search on Vanguard and came up with many posts but did not see this topic. I have a Vanguard mutual fund account currently - only holding Wellington. Using the old app, I was able to process transactions (buys/sells) on my phone with no issue. When I was forced to use the new app, I noticed that I could no longer do transactions on my phone. When I asked, they said that I would need to convert to a brokerage account in order to do so. Are there noted downsides of doing this? Costs?

Wow, you made it along time before feeling compelled to open the brokerage account.
No costs, it may be that sometimes your sale assets get sent to the brokerage for you to shift elsewhere, but that could just be my ineptness in the the way I did the transaction.

 

[steelyman]

I did the conversion last year. The only hassle, which someone rightly warned about here on e-r.org, was that I received duplicate statements from Vanguard the year of conversion (one each for brokerage and fund accounts). That was a bit confusing to me.

 

[TheWizard]

Their brokerage account is just fine.
You can still link to your checking account and buy mutual funds on your smartphone.
I also setup limit orders for ETF purchases...

 

[fosterscik]

I made the switch some time ago and had no problems. If I recall correctly you get two sets of IRS tax forms (old account and new account both reported) in the year of the switch, so if its not tax sheltered you may want to complete the change soon after the start of the new year. That way your returns for this year won't change and the switch will occur before any taxable events occur in the new year. The only downside I know of the new accounts is a slightly slower issue of tax forms each year.

 

[target2019]

Excuse me if this has been discussed previously - I did a search on Vanguard and came up with many posts but did not see this topic. I have a Vanguard mutual fund account currently - only holding Wellington. Using the old app, I was able to process transactions (buys/sells) on my phone with no issue. When I was forced to use the new app, I noticed that I could no longer do transactions on my phone. When I asked, they said that I would need to convert to a brokerage account in order to do so. Are there noted downsides of doing this? Costs?

Vanguard is attempting to transition all mutual fund clients to their brokerage platform. We're still sitting pretty with the old accounts. Sounds like you need to convert or you can't use the app.

 

[Sunset]

We switched years ago, no extra cost. I liked the ability to be able to buy non-vanguard things, like a regular brokerage.

 

[RetiredAt55.5]

Excuse me if this has been discussed previously - I did a search on Vanguard and came up with many posts but did not see this topic. I have a Vanguard mutual fund account currently - only holding Wellington. Using the old app, I was able to process transactions (buys/sells) on my phone with no issue. When I was forced to use the new app, I noticed that I could no longer do transactions on my phone. When I asked, they said that I would need to convert to a brokerage account in order to do so. Are there noted downsides of doing this? Costs?

Not applicable to you probably, but if you have a lot of Vanguard accounts, the already large Balances & Holdings page gets even larger and more tedious to scroll through.

I'm planning on converting my accounts in early January since it looks like they're finally following through with their threat to not implement some functionality with their legacy accounts.

I'm waiting till early January since that should make the double statements issue less confusing.

 

[MRG]

The brokerage system is where they're going. The 30+ year old mutual fund system is being deprecated and you should get off. Now!

As systems get towards end of life you will have more issues as the staff that supports the old system is going forward to the new systems or retiring. IIRC that system is built on CICS and COBOL II and you can't hire new programmers that want to do 30 year old technology.

In any case it's not a great idea to hang around expecting it to get better cause it's not. At some point they will simply convert you or tell you the ONLY fix is is to convert. Kind of what you were told. Do it before you have bad problems that are much worse. Do it on the last or first business day to avoid double tax statements.

 

[RetiredAt55.5]

As systems get towards end of life you will have more issues as the staff that supports the old system is going forward to the new systems or retiring. IIRC that system is built on CICS and COBOL II and you can't hire new programmers that want to do 30 year old technology.

No, that's not accurate. There is not a separate "system" for legacy accounts, and there is not a separate set of programmers for old and new.

It is just more costly for Vanguard to continue supporting both (more code, more test cases and testing, more database tables, more stored procedures, etc.).

 

[gauss]

A couple of other things that bug me that others don't seem too concerned about:

#1) You may/will receive your "combined" (1099-B/-DIV-INT etc) brokerage statements later than you normally do today (1099-DIV by Jan 31). This will be an ongoing change an not limited to just the first year.


#2) If you wish to invest solely in Vanguard mutual funds and not other securities, you might not welcome the complexities that the full brokerage account will bring your way (ie statements ).

#2a) A bigger issue on statements is that with Vanguard mutual fund accounts, you could just retain the final December (YTD) statement that would show transactions for the entire year. You could dispose of the quarterly statements in that the YTD December statement had all of the transactions rolled into it. The brokerage accounts, however, only seem to have a concept of a monthly cycle so you will need to save all 12 months if your like keeping the statements around.

Bottom line, go in with your eyes open if these items are an issue for you.

At the end of the day, however, it will be Vanguard's unilateral choice to close your account if you have not migrated to the new system at some point. I am hoping that they will give some firm notice on this and not just cut me a check. I think the most recent vanguard mutual fund agreement might give some hint of how this would be handled.

-gauss