Vanguard "Brokerage" account:

[mystang52]

Virtually all of my tax deferred retirement money is with Vanguard. Quite a few years ago I held a few individual stocks, ultimately cashing them in and rolling the proceeds into my deferred accounts.
I guess that was when, besides my deferred accounts, I had a separate brokerage account set up with Vanguard. It has a zero balance in it.
I never knew it existed until my Vanguard FA called me and suggested I move all of my deferred accounts into the brokerage account. Nothing will change, my Index fund holdings don't change, Expense Ratios don't change, etc.
"Why should I do so?," I asked him. I could not make heads or tails out of the FA's answer (incidentally, prior to this I have 100% trusted him and he was particularly VERY helpful in the years leading up to my ER).
Perchance can anyone shed any light on this? He called me a second time, yesterday, some 4 months after the first call. I still don't get it.

 

[LOL!]

This question is asked weekly over at bogleheads.org.

Here is one of the latest discussions:
https://www.bogleheads.org/forum/viewtopic.php?f=1&t=227511

i would say it is a non-event for you and you might as well do it.

For folks with taxable accounts, they may get 2 separate 1099-DIV for before and after. I know some folks didn't see the note that they would get 2 1099-DIVs and filed taxes when they got the first one and had to file an amended tax return when they got the second one. You don't have a taxable account, so this won't affect you.

 

[MRG]

OP.

Vanguard is a fund company and to some extent, out of necessity, a technology company.

Sometimes a company wants to retire old software that isn't possible or desirable to move forward on. Perhaps that technology stack isn't where Vanguard wants to be going forward? They may need or want to consolidate platforms or code bases.

I don't know that's the case with Vanguard and this situation. I w*rked in that industry and that was one of the techniques most frequently used to move technology forward. At some point there's a decision made about forcing customers to move forward. I'd rather not be on the leading or trailing edge of that conversion.

Could be your trustworthy advisor was given a technology document he didn't understand. Sadly I have seen that happen too many times.

 

[jim584672]

I don't see any downside to it. More options open up to you when it is a brokerage account.

 

[Another Reader]

Someone here (Audrey?) recently pointed out in another thread that SIPC insurance does not apply to mutual funds unless they are held in a brokerage account. That alone would convince me to make the switch.

 

[RetireAge50]

We have 2 IRA, 2 Roth, and a joint taxable account all viewable with the iPhone app on one screen/login. Whether they call it a brokerage or whatever is fine with me.

 

[Tadpole]

I've never done it because I've never been able to figure out whether it affects the legal status in my state of the retirement accounts. If I could assure myself that if Vanguard adds the word "Brokerage" to retirement accounts the accounts maintain their same legal protections, I would change them in a minute.

 

[mystang52]

OP.

Vanguard is a fund company and to some extent, out of necessity, a technology company.

Sometimes a company wants to retire old software that isn't possible or desirable to move forward on. Perhaps that technology stack isn't where Vanguard wants to be going forward? They may need or want to consolidate platforms or code bases.

I don't know that's the case with Vanguard and this situation. I w*rked in that industry and that was one of the techniques most frequently used to move technology forward. At some point there's a decision made about forcing customers to move forward. I'd rather not be on the leading or trailing edge of that conversion.

Could be your trustworthy advisor was given a technology document he didn't understand. Sadly I have seen that happen too many times.

I think you hit the nail on the head. I now remember he said something about this change becoming imminent anyway, so it's best to get ahead of the crowd. I appreciate everyone's replies, and I'll check out the Boglehead forum as well.

 

[meierlde]

Question is it listed as an IRA brokerage or a regular brokerage. In my case it is a rollover IRA and the brokerage is listed as a Rollover IRA Brokerage account. I have not yet done the update there but may soon (just rolled the 401k over as it was moving to a different custodian at the end of the year, real simple one call and 3 days later it was done)

 

[SecretlyFI]

This question is asked weekly over at bogleheads.org.

Here is one of the latest discussions:
https://www.bogleheads.org/forum/viewtopic.php?f=1&t=227511

i would say it is a non-event for you and you might as well do it.

For folks with taxable accounts, they may get 2 separate 1099-DIV for before and after. I know some folks didn't see the note that they would get 2 1099-DIVs and filed taxes when they got the first one and had to file an amended tax return when they got the second one. You don't have a taxable account, so this won't affect you.

I was one of those people. Just be aware that one of those 1099's comes out much later than the other!

They are heavily pushing this "upgrade", as they call it, and have been for about 2 years. I agree with the software hypothesis.

 

[meierlde]

I was one of those people. Just be aware that one of those 1099's comes out much later than the other!

They are heavily pushing this "upgrade", as they call it, and have been for about 2 years. I agree with the software hypothesis.

It is about 15 to 20 days later. The reason stated is that there are so many companies and other investments that change things from Jan 25 that they need to wait until mid feb to send results to avoid changed 1099s being sent out. BTW Wells fargo Advisors does the same delay thing, so I suspect that any account at any brokerage will do it with stocks will do this. Of course for IRA accounts it is not a big deal since the only 1099 you get from them is the 1099-R for distributions, no 1099 div or int. Its not so much dividends but some of the more exotic products that cause the delay. One such is holding partnership shares in the brokerage.

There are historical reasons for division. Once upon a time Vanguard outsourced the brokerage operations to Pershing. As they got bigger they brought the brokerage operation in house, and in that year you got 2 combined 1099s for 1 year 1 from Pershing, and a second from Vanguard.

 

[Texas Proud]

I do have a ROTH brokerage account separate from my other ROTH accounts.... this was set up before they did whatever they have done and are now pushing them...


For me, that would be 5 or 6 brokerage accounts... individual, tIRA, ROTH, DWs tIRA, DWs ROTH.... and as said, an existing ROTH brokerage.... so 5 more brokerage accounts...

I do not think they have pushed that on the education accounts...

As of now I have not seen any good reason for me to change... I do NOT want to change... it would just give me more opportunity to trade in multiple accounts.... I do not want to be tempted...


I am perfectly satisfied with the setup I have had for many years... I will not change unless I am forced to do so... we will see if they force the issue...