Vanguard, Fidelity or Schwab?

[audreyh1]

But then there are fees on any transactions thereafter with those VG funds as I understand it. No? So I have to pay taxes to move the funds and convert, or pay transaction fees to Fido ever after?

If you convert to the equivalent ETFs at Vanguard first (non tax event) then transfer in kind, no fees*. Transaction fees at Fidelity would only incur for buying Vanguard mutual funds, not selling. For index funds if you wanted to buy more you could always buy the equivalent Fidelity index fund.

*At Fidelity no commissions on online stock or ETF trades. There may be a small SEC fee.

 

[pb4uski]

....When this book went to press a couple months ago, the default sweep fund yield at Schwab was 0.40% vs 3.7% at Vanguard or Fidelity...

I have have accounts at all three. Currently mostly Schwab with HSAs at Fidelity.

The above is the biggest complaint that I have with Schwab. I have to jump through hoops moving money to and from the 0.45% settlement account (last time that I looked) to SWVXX (currently over 5%).

OTOH, at Schwab I have to people who I can call and they actually answer the phone more often than not or if they don't and I leave a voicemail they get back to me promptly (always within 24 hours). I definitely didn't get that at Vanguard and doubt that I would at Fidelity.

 

[Rianne]

We have been with VG since 1995. We are self-managing customers, consolidated most all our assets there (401k rollovers), seldom needing customer service, etc. Have given way to the inevitable transition to digital account docs.

Our most recent direct contact with them was last fall when we wanted to efficiently manage the transfer of funds received at closing from the sale of our home.
I got quick service by phone, excellent advice, and the whole thing took place flawlessly.

+1, also with our house sale and purchase. I think we joined in the late mid to late 90s. I get good service by phone as well. I'm not sure if the amount of investment you have there matters with customer service. Especially the bond desk, excellent CS. Did many changes in the last year.

 

[pb4uski]

I’ve considered transferring some assets from Vanguard to Fidelity, but I am not willing to eat a taxable event or pay any future transaction fees to do so. I can move IRAs without a problem if I’m willing to convert to Fido funds, but not taxable (all in VG funds) as far as I can tell. I either have to sell VG funds and buy similar Fido funds (huge tax hit), or accept transaction fees on my VG funds. What am I missing? Since I need almost zero hand holding, deteriorating customer service at VG hasn’t been a big issue.

And Dr B seems to think the superior customer service at Fido and Schwab vs Vanguard won’t last forever, customer service isn’t free and Schwab and Fido’s low fee index funds aren’t bringing in much if any revenue - time will tell.

You should check that. I know that at Schwab I could transfer VG funds in-kind and avoid a taxable event and I would be surprised if Fidelity can't do the sa. I know I transferred some trust accounts from Vanguard to Schwab and VTSAX transferred no problem so if Fido can't transfer in kind then try Schwab.

 

[pb4uski]

But then there are fees on any transactions thereafter with those VG funds as I understand it. No? So I have to pay taxes to move the funds and convert, or pay a$75 transaction fee to Fido ever after?

Or just buy the Vanguard ETF equivalents and I suspect no fee.... or buy the Fido equivalent's with new money.. better than putting up with Vanguard's poor serviceIMO.

 

[Midpack]

You should check that. I know that at Schwab I could transfer VG funds in-kind and avoid a taxable event and I would be surprised if Fidelity can't do the sa. I know I transferred some trust accounts from Vanguard to Schwab and VTSAX transferred no problem so if Fido can't transfer in kind then try Schwab.

I guess I didn't word my post well. I know I can transfer in kind without a taxable event, but I then have to accept a $75 transaction fee on those funds ever after.

So I have to sell VG fund and buy Fido funds and create a taxable event OR pay transaction fees on my VG funds thereafter. Obviously the fees would be trivial compared to taxes.

It appears from audreys post above that transaction fees may only be on buying VG funds, not selling - and I could buy the equiv Fido fund if I want to add. Not a bad idea.

 

[pb4uski]

Me too. Regarding the change from defined benefit to defined contribution e.g. 401k's:

This shift in retirement funding offloaded the risk of shortfall (in plain English, living over your kid's garage) from employers to employees - good for them, bad for you. Saving and investing for retirement and then spending it down require no small amount of ability, investment knowledge and self-discipline, and it strains credulity to expect the average worker to execute all these things well. Imagine boarding an airliner. Instead of turning right and heading to your seat, the flight attendant tells you that the pilots have decided, because of the risk and stress of piloting, to stay home. Turn left at the door, please. You're flying the plane.

That's silly. All an employee would need to do is to put their 401k in a couple balanced funds and reinvest all dividends and then leave it in the same and set up automatic withdrawals on the way out. Unfortunately, the employer can't give investment advice but it could be done very easily as long as the 401k has one or more good balanced fund choices.

 

[tulak]

+1. Agree with the book review. The updates are interesting, but it’s largely the same content as the first edition. OTOH since my IP has been 100% based on his first book since 2002 thru today - I don’t begrudge sending book royalties to Dr B again.

Frankly I thought the book would change more based on Dr B’s experience with his very high net worth clients reactions to 2008-09 - evidently many of them panicked and turned paper losses into real losses against Dr B’s recommendations.

And I really enjoy Dr B’s writing style and sense of humor, makes it very easy to read.

+1. His writing style is excellent. Very easy to read, especially considering the content.

I'm finding the updates to be well worth the cost of entry. I've been jumping around, reading specific sections. Chapter 6 was exactly what I was looking for in this update and where his recommendations have changed since the first edition. He goes into more detail about the liability matching portfolio (LMP) and risk portfolio (RP), which he admits are just a two bucket approach. But it makes sense if you want to deal with a 1966 year or future reduced real yields. Figure 6.2 is not fun.

It might be overly conservative on his part, but he's building a portfolio that can withstands the worst economic headwinds.

But yeah, the Four Pillars still stand, so not surprising that a lot of the content is the same.

 

[rkser]

You should check that. I know that at Schwab I could transfer VG funds in-kind and avoid a taxable event and I would be surprised if Fidelity can't do the sa. I know I transferred some trust accounts from Vanguard to Schwab and VTSAX transferred no problem so if Fido can't transfer in kind then try Schwab.

I have transferred from Vanguard to Fidelity IN KIND with no problem, not a taxable event.
The Vanguard ETFs VTI & VXUS which I held in Vanguard for long many years, now I hold them at Fidelity . They were transferred a lot easier than I initially thought.
I would call Fidelity & talk in detail before going ahead with the transfer or drive up to a local Fidelity Office if one is easily available after you set up an appointment.

Good Luck

 

[Car-Guy]

I've been with Schwab for over 40 years. I have had a few rough spots over that time but not enough to get me to move. The last few years their website had some intermittent performance/availability issues but those seem to be resolved now. I'm very comfortable navigating around the current design. They do make changes to their website from time to time but they are getting pretty good about telling you about the changes and not doing to much at once.

 

[Midpack]

That's silly. All an employee would need to do is to put their 401k in a couple balanced funds and reinvest all dividends and then leave it in the same and set up automatic withdrawals on the way out. Unfortunately, the employer can't give investment advice but it could be done very easily as long as the 401k has one or more good balanced fund choices.

As an manager who oversaw the 401k of 50-80 people for almost 20 years, and knew the pitiful participation/contributions of many, exactly what they held and the irresponsible withdrawals they chose - you might be surprised how hard it is to get most employees to understand that. Sure some get it, most don't despite every attempt on our part to help them (mandatory annual meetings by us and/or fund providers, and coaching whenever possible by me and my HR director). And it didn't matter if it was the lowest hourly employee or a well educated manager - most shot themselves in the financial foot over and over and over.

I know others here have had this frustrating experience. You can lead a horse to water and watch them drown themselves...

 

[pb4uski]

As an manager who oversaw the 401k of 50-80 people for almost 20 years, and knew the pitiful participation/contributions of many, exactly what they held and the irresponsible withdrawals they chose - you might be surprised how hard it is to get most employees to understand that. Sure some get it, most don't despite every attempt on our part to help them (mandatory annual meetings, and coaching whenever possible by me and my HR director). And it didn't matter if it was the lowest hourly employee or a well educated manager - they shot themselves in the financial foot over and over and over.

I know others here have had this frustrating experience. You can lead a horse to water and watch them drown themselves...

I don't disagree with what you wrote above at all and I have often seen the same thing. But it's not the 401k's fault. The opportunity is there for employees to easily invest for their retirement and they can keep it simple if they chose to.. so I would disagree with him... it doesn't require a great amount of ability or investment knowledge... but he is correct that it requires self discipline and the problem is that 99% of employees overthink it.

 

[Morgan22]

OTOH, at Schwab I have to people who I can call and they actually answer the phone more often than not or if they don't and I leave a voicemail they get back to me promptly (always within 24 hours). I definitely didn't get that at Vanguard and doubt that I would at Fidelity.

I get this at Fidelity also.

 

[youbet]

But then there are fees on any transactions thereafter with those VG funds as I understand it. No? So I have to pay taxes to move the funds and convert, or pay a$75 transaction fee to Fido ever after?

With Schwab, transaction fees paid for Vanguard MF's held there depend on what you negotiate. Perhaps it's similar with Fidelity:?

 

[Texas Proud]

But then there are fees on any transactions thereafter with those VG funds as I understand it. No? So I have to pay taxes to move the funds and convert, or pay a$75 transaction fee to Fido ever after?

Not sure about Fido... but I first had VG convert as many of my funds to ETFs before moving (unfortunately that was a whopping ONE fund) to Schwab... I then found out I had to sell my MM fund as that will not transfer...


But, just went into the account to see what would happen if I sold a VG mutual fund... zero costs... not sue if they would charge anything after agreeing to the sale as I cancelled it but nothing up front...

 

[Texas Proud]

I have have accounts at all three. Currently mostly Schwab with HSAs at Fidelity.

The above is the biggest complaint that I have with Schwab. I have to jump through hoops moving money to and from the 0.45% settlement account (last time that I looked) to SWVXX (currently over 5%).

OTOH, at Schwab I have to people who I can call and they actually answer the phone more often than not or if they don't and I leave a voicemail they get back to me promptly (always within 24 hours). I definitely didn't get that at Vanguard and doubt that I would at Fidelity.

+1 on this...



fixing the low interest rate would make them a clear winner... but then again I have very little at Fido so really do not know about them... but they already have a good sweep for cash...

 

[youbet]

Not sure about Fido... but I first had VG convert as many of my funds to ETFs before moving (unfortunately that was a whopping ONE fund) to Schwab... I then found out I had to sell my MM fund as that will not transfer...


But, just went into the account to see what would happen if I sold a VG mutual fund... zero costs... not sue if they would charge anything after agreeing to the sale as I cancelled it but nothing up front...

If you pay commissions to buy Vanguard funds at Schwab, then the commission is all on the buy side.

 

[braumeister]

I get this at Fidelity also.

Me, too. Usually someone at Fidelity answers the phone when I call. I've never had a rep take more than 24 hours to call me back.

 

[Midpack]

Like others have said many times, you can't go for very wrong with Vanguard, Fidelity or Schwab. It depends on exactly what funds you want to hold more than anything else IMO.

I have had experience with all three, my 401k was with Schwab and I started our personal accounts with Fidelity and moved everything to Vanguard 20+ years ago only because they were the only ones with all the index funds I wanted (Four Pillars) back then.

I was perfectly happy with Fidelity service, and their website/tools have always been better than Vanguard. If Vanguard becomes a problem, I will move our 3 IRAs to Fidelity at zero cost, and moving our taxable holdings in kind may not force any transaction fees if I'm willing to buy Fido index fund equivalents thereafter.

 

[COcheesehead]

I get this at Fidelity also.

I rarely call Fido, but when I do the call is answered right away. If the main rep can’t help me, they’ll transfer me to a specialist. They have always been helpful and we have had some odd stuff over the years. I have also found using chat, not the virtual assistant, but the live chat works well too. You can multi task and chat simultaneously.

 

[pb4uski]

I guess that I should clarify. I have two people at Schwab that I can call and when I call them more often than not they answer the phone. I can also call the Private Client Services 800 number. I've also had good service calling the Fidelity 800 number, but at Fidelity I don't have the numbers of a personal representative... people that I have meet with. That said, I suspect that if I had as much at Fidelity as I have at Schwab that perhaps I might have a person available to me.

Obviously, isn't happening at Vanguard. Way back when I did have a person assigned to my account and their picture show up when I logged in and I could send them an email using their secure messaging tool.

 

[jazz4cash]

That's silly. All an employee would need to do is to put their 401k in a couple balanced funds and reinvest all dividends and then leave it in the same and set up automatic withdrawals on the way out. Unfortunately, the employer can't give investment advice but it could be done very easily as long as the 401k has one or more good balanced fund choices.

I hearya and the pilot analogy is a bit extreme in an attempt to humor but almost everyone I know is very nervous about making decisions for their 401k. They are nothing like the forum members here who embrace the opportunity.

 

[nwsteve]

I’ve considered transferring some assets from Vanguard to Fidelity, but I am not willing to eat a taxable event or pay any future transaction fees to do so. I can move IRAs without a problem if I’m willing to convert to Fido funds, but not taxable (all in VG funds) as far as I can tell. I either have to sell VG funds and buy similar Fido funds (huge tax hit), or accept transaction fees on my VG funds. What am I missing? Since I need almost zero hand holding, deteriorating customer service at VG hasn’t been a big issue.

Personally moved a chunk of non-Admiral funds to Fido as inkind transfers and there was no fee to sell them. Fido won't accept Admiral but it is a simple non taxable event to convert Admiral to the standard version while at Vanguard. Transfer came with correct basis from Vanguard, but I did proactively asked for help from Fido to insure the data came over from V.

 

[hpnutty]

Likewise I moved all my Vanguard funds to Fidelity recently. I had to sell my admiral mutual funds from my 401K before moving. All my ETFs, T-Bills and even CDs moved in kind but a few fractional shares got sold. It took about 2.5 weeks for all the dust to settle: interest and dividends to be captured and to get funds into the settlement accounts. Vanguard charged $50 for the transfers and Fidelity gave me a nice bonus for the move. The bonus is paid after 60 days and allocated into the various accounts (tIRA, rothIRA and brokerage) based on value.

I moved funds because my experience with Fidelity over the last two years has been great. It started with finding a home for my HSA and then opening a corporate account to move HOA funds into a T-Bill ladder from a horrible regional bank MM. I found the Fidelity options for fixed income investing have had better yields and maturities than those at Vanguard. Lastly, after reading a thread here about how to plan for your spouse to take over household finances after your death, I liked the idea of B&M store and a face to face person to provide guidance from investing to taxes to managing our estate.

 

[easysurfer]

I moved from VG to Fidelity, all in kind. Most of my money is in retirement accounts (Index funds). Those I already moved over Fidelity's zero expense ratio index funds.

As of now, I'm still holding some VG individual index funds (Admirals had no problem moving in kind). For these, I'll rebalance into the Fidelity funds when that time comes.