Transfer SEP to Vanguard: Liquidate/In-Kind/Timing,etc.

[CHstp]

Hello,

Some fantastic information here, and while I've think most of what I'm asking is covered in other posts, forgive me
if you will for trying to get some consolidated info for my specific situation.

I have a fairly substantial SEP as well as a couple of smaller IRAs, that I'd really like to get into a much simpler mix.
Current advisors have me in 27 funds in the SEP.  I may be seeing that my greatest earning years are on the decline, so
I really want to protect these assets and gain a much better understanding of their perfomance. I can't see how they can make reasonable sense of it and keep tabs on a reasonable allocation and the fees therein.

So in a transfer to Vanguard am I right to think:

Have current broker liquidate and open cash account in Vanguard vs. "in kind" on 27 funds. 
Current advisor says, "Ticket charges range from zero to $29 per trade for same day trades, but if we set the trades up a day ahead of execution we can avoid those charges.  Otherwise, there are no other costs." 

Then perhaps sit on the sidelines until I can buy back into Vanguard simpler scenario during some bit of a down market? (Something I've thought about a fair bit).

Please poke holes in this and set me straight.
i.e. is their just too much timing risk in the liquidation esp. if I set up trades a day ahead to save a few bucks.?

As for a joint taxable acct. I also have with the current advisor (23 funds), seems like "in kind" is probably the only way to
go, and then make conversions over time to VG products to streamline it, yes?

Thanks in advance for your thoughts on this.














 

[seattlecyclone]

For the retirement accounts I'd probably set the trades up a day ahead of time, liquidate the whole thing, and transfer cash to Vanguard. Vanguard charges more than $0 for most non-Vanguard mutual fund trades. I wouldn't worry about any risk in setting the trades up a day ahead of time. You never know whether the market will go up or down tomorrow. It goes up a little more often than down, but either way is relatively likely. What you can control are your fees, and it sounds like they would be lower if you don't demand same-day service.

Capital gains taxes come into play with the taxable accounts. I might plan to realize half the gains now and the other half just after the first of the year to balance things out a bit between tax years. Unless it's a truly huge sum of money, it probably isn't worth stretching the conversion process out over a longer amount of time than that, since every day you're in the old funds you're paying higher fees for the privilege. Just as with the retirement accounts, whatever you're selling this year you might as well sell before the transfer because Vanguard's trading fees will likely be more than $0 for your current funds.

[MustacheAndaHalf]

... Have current broker liquidate and open cash account in Vanguard vs. "in kind" on 27 funds.  ...

The most important problem with this statement is that you initiate transfers on Vanguard's end.  The company that has your money has every incentive to delay or keep your money - you don't start the transfer there.  You contact Vanguard and provide account information to make the transfer.

The second problem is that you have 27 funds, where many experienced investors can cover everything they need with just 3 funds.  They cover US stocks (Vanguard Total Stock Market), international stocks (Vanguard Total International), and bonds (Vanguard Total Bond Market).  You can't get more diversified US stock investments than the total stock market, which covers every stock.  So most of those 27 funds are probably guesses and attempts to beat a very efficient, passive approach to investing.  Passive investing doesn't pay the broker's bills - I'd urge you to listen to your broker much less often.  Preferably not at all, but maybe you aren't ready for that yet.

Later you mention $0 to $29 stock trades, and an option for "free" trades made the day before.  I'm not sure why a large investment company would offer to save you money, but I have a suspicion they are making use of your stocks in a way that takes some of the gains from you.  If you instead transfer the funds over to Vanguard, you can pay $7/trade to sell each fund (assumes under $500k assets).  They do limit sub-$50k accounts to 20 trades at $7 (and $20/trade after that), but I suspect with 29 funds you have more than $50k in that account.

I'd suggest contacting Vanguard to transfer your account over to them.  Use their $7/trade to sell funds and buy Vanguard funds (which cost $0/trade at Vanguard).

[seattlecyclone]

Vanguard's $7 trading fee is for stocks and non-Vanguard ETFs. They have a separate fee schedule for mutual funds, which could be as high as $35 per trade depending on what type of fund it is and how much you already have in Vanguard assets.

[CHstp]

Thanks very much for your replies.