USAA selling investment business to Victory Capital

[MichaelB]

Saw this email this morning. A quick look at Victory Cap shows funds with loads. Ugh, I hope I’m wrong. The “benefits” write up sure is interesting. Not much substance there.

USAA is pleased to select Victory Capital, an investment industry leader, to acquire the USAA Asset Management Company, which includes our Mutual Fund and ETF businesses as well as the USAA 529 College Savings Plan.
./.
Benefits for You:
Victory Capital will offer members exceptional expertise, enhanced investment teams and more competitive choices, including:

Expanded investment capabilities and a strong performance track record

USAA's award-winning fixed income expertise now combined with Victory Capital's industry-leading multi-manager investment platform and its competitive performance across various asset classes

Double the number of Mutual Funds and triple the number of ETFs at competitive prices

Well-established investment products and services under the USAA brand, including Mutual Funds, ETFs and the USAA 529 College Savings Plan

 

[REWahoo]

I saw this last night and had the same "uh oh" reaction. I've been looking for a way to overcome inertia and convince DW to move her IRA funds out of USAA and this may do the trick.

 

[MrsHaloFIRE]

Thnks for sharing this. I think this is the nudge I needed to get motivated.

 

[target2019]

What luck. I'm currently looking at ways to streamline two piles of inherited investments from USAA. Haven't seen the letter yet, but we now have motivation to transfer all.
This is a shocker.

 

[Bamaman]

Makes you think.USAA wasn't very successful in the investment business.

 

[Lawrencewendall]

I dropped USAA years ago for investing when they began allowing other brokers to sell their funds. Their site sucked. Great for banking but not investing.

 

[athena53]

The word "enhanced" is always a red flag. Airline and hotel loyalty programs are fond of using that word every time they reshuffle their programs in ways that devalue the points/miles.

I have no military connection but for some reason was able to get a USAA checking account a few years ago. I love the checking account but no way I'd let a bank manage my investments.

 

[MrsHaloFIRE]

We used USAA for a free financial planning checkup when we were nearing retirement. We met in person with a CFP who reviewed at my request our income streams, insurance, etc. A couple sessions. I was every comfortable with him. HE said he was not going to recommend a USAA managed account for us bc he didn't feel like the squeeze was worth the juice as far as cost to performance. They just weren't performing that well in the managed portfolio arena. Fast forward and they were not doing in person meetings anymore but he said since we were local we could still meet him in person if we had followup questions or other needs arose. Fast forward another year and I get a friend request form him on FB. He had departed before the bloodletting started and joined a new private wealth mgmt. boutique in the local area. And now we see this USAA departure of managing their funds. USAA Im told has firm rules that each line of business is responsible for their own profitability. I did not feel the warm fuzzy relationship feeling with them when getting quoted on other products. Specifically insurance folks did not seem to care at all that I had big bucks in brokerage. I had to chew butt and actually go via this CFP described above for him to internally push my issue to get me some traction for resolution. What they did was I submitted an appraisal detailing some very specific items I wanted itemized high value insurance coverage on as we sent our household good to longterm storage. They picked out a handful they wanted to cover, ignored the rest, and issued me a policy on only a couple things. Had I not gone through it line by line I would not have known they did not cover the majority of what I submitted. Example is an item being described as "18th century" did not convey to them that it was "older than a hundred years" which is their rule for antiques. I asked them to tell me what year 18th century meant to them. And suddenly I had coverage on that item. Repeat ad nauseum. Ridiculous. For a company geared toward military that knows we tend to always be in transition and then retirement being this huge bloody ordeal to jump hoops and then some child doesn't know the conversion of "18th century" and does not understand how to communicate with a client that you are not going to insure their things got me disgusted to a newfound level.

 

[MichaelB]

The Victory Capital funds have loads, 12b-1 and high expense ratios. For example, their S&P Index fund has a load of 2.5% and expense ratio of 0.55%. http://vcm.onlineprospectus.net/VCM...mmaryProspectus/VF-INDEX-SUM/VF-INDEX-SUM.pdf

Victory Capital doubles its AUM with this acquisition. USAA is selling around $69B in investment assets, and getting a bit more than 1%.

Under terms of the purchase agreement, Victory Capital will acquire USAA Asset Management Company for $850 million plus the opportunity for additional contingent payments based on future business performance. https://globenewswire.com/news-rele...ompany-and-Reports-Third-Quarter-Results.html

I don’t see how this will benefit USAA customers. The investing world is moving toward low cost investing and USAA is going in the opposite direction.

We have our emergency fund and other non-portfolio funds there. Like others, this is the nudge I’ve needed to relocate them.

 

[REWahoo]

I realize members of this forum are far more likely to be cost-conscious regarding investments than the general public, but based on the initial reaction here to this announcement I wonder how many other USAA investors will flee? The new owners could see a substantial decline in the AUM they thought they purchased.

Guess that's why "...the opportunity for additional contingent payments based on future business performance" is a stipulation in the purchase agreement. I'll bet USAA wanted more and Victory Capital used this as a way to justify a lower initial price until they saw how much business they actually received.

Since the purchase won't really play out until later next year, I think we will wait until after year end and 2019 RMD withdrawals to make the move. DW already has an account at Vanguard so that may be the easiest option as a new home for her IRA money.

 

[target2019]

According to this article, the transition will take quite a bit of time.
https://www.expressnews.com/busines...investment-management-company-to-13367931.php

Our strategy will be to sell the USAA mutual funds they picked for in-laws' AUM, and xfer the cash to checking. The cap gains should be minor. The individual stocks and ETFs will transfer to some lucky institution.

To be honest, we will be glad to kiss USAA IM goodbye. They did reasonably well for in-laws, but having them in the same 11 funds in taxable and IRA accounts was not optimum.

 

[ExFlyBoy5]

This isn't too surprising to me. First hit was the mortgage underwriting folks...my DW was in RE sales years ago and had some pretty significant issues with her buyers when using USAA. Second hit was the consistent increases in our insurance rates (that were quite excessive) that ultimately made us fire them for insurance. Third hit(s) is this and my attempt to get a new insurance quote for a house we are buying. The CSR barely spoke English and it took almost 40 minutes to get the quote from her...this is NOT the USAA that I joined back in '94.

 

[MRG]

The Victory Capital funds have loads, 12b-1 and high expense ratios. For example, their S&P Index fund has a load of 2.5% and expense ratio of 0.55%. http://vcm.onlineprospectus.net/VCM...mmaryProspectus/VF-INDEX-SUM/VF-INDEX-SUM.pdf

Victory Capital doubles its AUM with this acquisition. USAA is selling around $69B in investment assets, and getting a bit more than 1%.
I don’t see how this will benefit USAA customers. The investing world is moving toward low cost investing and USAA is going in the opposite direction.

We have our emergency fund and other non-portfolio funds there. Like others, this is the nudge I’ve needed to relocate them.

I don't see it benefits anyone except Victory directly. Perhaps some current USAA customers benefit by transferring to a lower cost provider than USAA.[emoji111]

 

[kitesurfer2]

another reason for me to drop USAA. homeowners, vehicles, ira and retail stocks all need to be moved. Fla does not have a lot of home owners insurance avail as many moved out because of hurricanes.

 

[target2019]

Note that there are separate companies using USAA as part of the name. For example, USAA Insurance Co. will not discuss any USAA Investment Management Co. products.

 

[corn18]

Hmmm, heard about this but haven't gotten the letter yet. I keep everything at USAA for simplicity but may have to transfer everything to FIDO. I never use USAA funds but it was nice being able to buy FIDO funds at no cost in my USAA brokerage.

I have a lot of cap gains in my USAA taxable brokerage account but it is all FIDO funds. Can I just transfer the funds in kind to my FIDO brokerage and not take the cap gains?

I still like them for checking/savings and my 2.5% cash back credit card. I have shopped my auto and homeowner's insurance but no one beats them when I compare apples to apples. I carry $1M liability limits and put a $1M umbrella on top of that and that drives the quotes from competitors up to the same as USAA.

USAA was never good at investment services anyway. Getting them to do lot ID and sell specific lots was always a PITA.

 

[audreyh1]

Hmmm, heard about this but haven't gotten the letter yet. I keep everything at USAA for simplicity but may have to transfer everything to FIDO. I never use USAA funds but it was nice being able to buy FIDO funds at no cost in my USAA brokerage.

I have a lot of cap gains in my USAA taxable brokerage account but it is all FIDO funds. Can I just transfer the funds in kind to my FIDO brokerage and not take the cap gains?

I still like them for checking/savings and my 2.5% cash back credit card. I have shopped my auto and homeowner's insurance but no one beats them when I compare apples to apples. I carry $1M liability limits and put a $1M umbrella on top of that and that drives the quotes from competitors up to the same as USAA.

USAA was never good at investment services anyway. Getting them to do lot ID and sell specific lots was always a PITA.

Yes, FIDO should be able to transfer those assets for you in kind. They’ll take care of it for you. Just be clear about transferring “in kind”.

Then verify cost basis on lots etc, to make sure it is correct,

 

[athena53]

<snip>Second hit was the consistent increases in our insurance rates (that were quite excessive) that ultimately made us fire them for insurance. Third hit(s) is this and my attempt to get a new insurance quote for a house we are buying. The CSR barely spoke English and it took almost 40 minutes to get the quote from her...this is NOT the USAA that I joined back in '94.

This saddens me. I was in the property-casualty business for almost 40 years and USAA was always considered a class act. Not anymore, I guess. Part of the problem is that, similar to airfares, people are buying based mostly on price. The race to the bottom continues.

 

[Choices]

I left the investment side of the house about 5 years ago and transferred it to Vanguard. That was an ordeal. We still have a MM because that’s where the subscribers’ savings check go.
I have been a member since 1968. The insurance is fine though they would not insure my Gulf Coast rentals due to hurricane action. Drat!
I have felt for a while that they were spreading themselves too thin. Anybody remember Sears?

 

[natetheb]

When I first setup IRAs with USAA for my DW and I the person I spoke to recommended USAA funds. Knowing nothing better, at the time, I followed his advice. The last two years I have started taking a very active interest in retirement performances and noticed those USAA funds were seeing an increase of 10% or less when my S&P index saw a 17+% increase last year. That was the last nail and I started moving our investments from USAA to Vanguard at the beginning of 2018.


I still have auto and homeowners insurance through USAA and will still keep it for now, though some of the above commenters have made me a little more leery about sticking with USAA for even those things.

 

[ncbill]

This saddens me. I was in the property-casualty business for almost 40 years and USAA was always considered a class act. Not anymore, I guess. Part of the problem is that, similar to airfares, people are buying based mostly on price. The race to the bottom continues.

I though USAA always used different insurers (& rates) based on whether you were a service member or just a relative.

 

[braumeister]

I though USAA always used different insurers (& rates) based on whether you were a service member or just a relative.

Yes, that has always been true.

While I've never used their investment arm, I've been a USAA member for a very long time (auto/home/umbrella) and every time I've ever checked other companies I've never been able to beat my USAA rates for the same coverage. I have the impression (no actual knowledge) that their second tier insurance for those who don't qualify for membership doesn't have quite the same value.

 

[ExFlyBoy5]

Yes, that has always been true.

While I've never used their investment arm, I've been a USAA member for a very long time (auto/home/umbrella) and every time I've ever checked other companies I've never been able to beat my USAA rates for the same coverage. I have the impression (no actual knowledge) that their second tier insurance for those who don't qualify for membership doesn't have quite the same value.

I have heard (and experienced) the polar opposite of this. The camels back was broken when I was able to get the exact same coverage from Amica and pay 1/2 as much (for car insurance) than what I was paying with USAA. In all the years I had USAA, the premium NEVER EVER went down, but that has happened TWICE now with Amica.

And the quote I got the other day from USAA for same coverage (auto/home/umbrella) I have with Amica? $318 more a year. No thanks.

 

[braumeister]

I have heard (and experienced) the polar opposite of this. The camels back was broken when I was able to get the exact same coverage from Amica and pay 1/2 as much (for car insurance) than what I was paying with USAA.

That's just amazing to me. A couple of years ago somebody here (maybe it was you?) shared a similar story and I got a quote from Amica as a result. It was nearly double what I pay USAA. So there's a tremendous amount of variability in their pricing scheme. I've always thought it was mainly based on where you live, but there must be other factors at least as important.

 

[ExFlyBoy5]

That's just amazing to me. A couple of years ago somebody here (maybe it was you?) shared a similar story and I got a quote from Amica as a result. It was nearly double what I pay USAA. So there's a tremendous amount of variability in their pricing scheme. I've always thought it was mainly based on where you live, but there must be other factors at least as important.

Most definitely. My Dad went with Amica after his quote w/ USAA was almost twice as much and it really doesn't make too much sense. I haven't priced with any other companies, so it's very possible I *could* be paying less, but I sleep better at night knowing that Amica (or USAA) seems to be about the best thing going if there is a claim to be made.