Author Topic: moving from Personal Capital  (Read 4808 times)

tmitchell

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moving from Personal Capital
« on: May 28, 2015, 09:31:15 PM »
hey M'stashers

got a question for you. i put about 300k in personal capital's managed account a couple years ago, but am now wanting to move the funds to avoid all the fees now that i'm better educated.

but PC has a bunch of individual stocks, which if I just sell & move to VTSAX will incur a bunch of $ in cap gains. i spoke to Wealthfront today and they have a pretty good strategy for dealing with this, as they also invest in individual stocks for tax efficiency (i.e. mimic the index for tax purposes).

however, over the long term i'm not so sure i want to have a variety of accounts (my tax advantaged accounts are at Vanguard). i'm wondering: do i save myself the cap gains and deal with another roboadvisor, or just suck it up and move it to VTSAX? my tax guy says i'd be out about $6500 which kind of sucks.

p.s. i'm currently in a high tax bracket as i'm still not FIRE--yet!! do i wait until i'm in a lower tax bracket to move? i hope to FIRE in 2-3 years.

thanks in advance for your thoughts!

MDM

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Re: moving from Personal Capital
« Reply #1 on: May 28, 2015, 10:33:24 PM »
Moving stocks from one broker to another should not cause you to incur capital gains, because you should not need to sell the stocks.  But if you want to sell....

You might get charged an exit fee (e.g., <$100) from PC to transfer stocks - don't know their policy.

If you think Fidelity Spartan funds are as good as Vanguard's, consider http://personal.fidelity.com/misc/ekits/pdf/cash_offer_terms.pdf.  As a percentage of your holdings, the bonus amounts are small, so it might be worth it to you to have everything at Vanguard.

Yes, $6500 to sell is annoying, but compared with how much your portfolio value changes on a given day...?  At least you would not be selling at the bottom of the market - if you sell at all.

GGNoob

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Re: moving from Personal Capital
« Reply #2 on: May 29, 2015, 08:13:32 AM »
but PC has a bunch of individual stocks, which if I just sell & move to VTSAX will incur a bunch of $ in cap gains. i spoke to Wealthfront today and they have a pretty good strategy for dealing with this, as they also invest in individual stocks for tax efficiency (i.e. mimic the index for tax purposes).

If you don't want to pay the PC fees, why would you want to pay the Wealthfront fees?

Would you be alright keeping the individual stocks for a while? If all you cared about is dropping the fees, you could move your stocks/funds in-kind over to Vanguard. You'd still have the same investments then, but you'd no longer be paying the management fee. You can then sell down the road as you choose.
« Last Edit: May 29, 2015, 08:17:35 AM by GGNoob »

Frankies Girl

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Re: moving from Personal Capital
« Reply #3 on: May 29, 2015, 08:28:49 AM »
Just move everything over in kind to Vanguard like has been suggested. At least you can stop paying the management fees. I'd also suggest changing that account once moved over to stop reinvesting dividends/cap gains and use that money to buy into VTSAX.


I just did this sort of thing for my mom recently; she had about 8 different mutual funds that were bought at the suggestion of a crappy adviser many decades ago and on top of that was paying a management fee to the financial group. We shifted everything over to a different financial group (that does not charge her fees just for having an account and it is now "self managed") and set the dividends/cap gains to stop reinvesting so the cash can then be used to buy into the low cost index funds she should have been in all along.

We are going to wait a year minimum to attempt to sell anything (if ever) since selling any of some of those funds has a back load if you sell in under a year (which is evil). I just don't see any way to get her income down low enough to get her into the 15% taxable bracket so she won't incur taxes on her cap gains (which were over $12K), so we'll have to figure out down the road.




tmitchell

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Re: moving from Personal Capital
« Reply #4 on: May 29, 2015, 08:56:42 AM »
thanks all. some good advice here. to answer a couple of your questions:

1. PC charges about .9%, whereas Wealthfront is only like .30% (all in) and i wouldn't incur the cap gains.

2. i don't exactly 'mind' keeping the individual stocks, and i know i can transfer them in kind, but i worry about the complexity of managing them which is why i was just thinking it'd be easier to sell and go straight into index funds.

p.s. is the ETF equivalent of VTSAX VTI?


Frankies Girl

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Re: moving from Personal Capital
« Reply #5 on: May 29, 2015, 09:20:26 AM »
thanks all. some good advice here. to answer a couple of your questions:

1. PC charges about .9%, whereas Wealthfront is only like .30% (all in) and i wouldn't incur the cap gains.

2. i don't exactly 'mind' keeping the individual stocks, and i know i can transfer them in kind, but i worry about the complexity of managing them which is why i was just thinking it'd be easier to sell and go straight into index funds.

p.s. is the ETF equivalent of VTSAX VTI?


Dude, just go to Vanguard with the account. PC and WealthFront are the same animal - still charging you money to "manage" things. You don't need management. You just need to move the stuff over to someplace that charges you nothing in fees (like Vanguard) and leave it alone for a little while so you can figure out when you can start selling off the dog funds and get into indexed funds.

The managed funds you're currently in don't need you to do anything with them; and you certainly don't need to pay someone else to look at them  every once in a while and say "yup. those funds are still very fund-like" and charge you for the privilege of their looking.

Move over to Vanguard and figure out later when would be the best time to sell them (optimally when you are in the 15% taxable bracket). You will not incur ANY cap gains unless you sell them, and you are above the 15% bracket. Just moving the funds into a new account located anywhere "in kind" will not trigger cap gains.

And yes, VTI is the ETF version of VTSAX.

BEN_BANNED

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Re: moving from Personal Capital
« Reply #6 on: May 29, 2015, 01:09:48 PM »
Give WiseBanyan a look/see.

https://www.wisebanyan.com/

It's free other than the fund expense ratios.

[MOD EDIT: Undisclosed referral link removed.]
« Last Edit: May 29, 2015, 03:28:42 PM by arebelspy »

NorCal

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Re: moving from Personal Capital
« Reply #7 on: May 29, 2015, 02:51:21 PM »
I wouldn't incur the taxes.  Paying now only reduces the amount you have to grow.  If there's ever a market downturn and your capital gains turn to losses, you can re-evaluate.

If you just want to consolidate brokerage's, you should be able to do a full account transfer without selling.  You'll still have to keep the underlying components though.

The difference between PC and Wealthfront isn't big enough to really be worried about.  I'm personally looking at Schwab's free managed service.

If you don't like the robo-model, I would recommend transferring your full account to a new brokerage without selling.  Over time you can sell shares when there's a market downturn or if you incur any capital losses that you can offset against the gain.


tmitchell

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Re: moving from Personal Capital
« Reply #8 on: May 30, 2015, 02:35:05 PM »
thanks!

a1smith

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Re: moving from Personal Capital
« Reply #9 on: May 31, 2015, 08:17:39 AM »
p.s. is the ETF equivalent of VTSAX VTI?

Already answered upthread (it is) but I'll teach you how to fish instead of giving you a fish in case you want to know for other Vanguard funds.

Here is the webpage for Vanguard Total Stock Market Index Fund Admiral Shares.  At the top they have links for the Investor Shares and the ETF.  Vanguard does this for all of their mutual funds.