Author Topic: Vanguard email to switch to a Brokerage Account - Can anyone shed light?  (Read 11106 times)

Bettis

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Hi, I currently have a Roth IRA (VTSAX) through Vanguard and have for about 3 years.  I got the following email below.  Can anyone fill me in as to what the pros/cons are to make the switch?  I haven't been able to max out my retirement accounts so I won't be investing in any non-retirement funds in the foreseeable future in case that matters.

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Transition your Vanguard account by November 3, 2017
Dear,

We'd like to invite you to transition your current account to a Vanguard Brokerage Account by November 3, 2017. There's no cost to make the switch.

By transitioning your account, you'll:
•   Help Vanguard streamline our operations, which will improve our ability to serve you long-term.
•   Gain fast, commission-free transactions for all your Vanguard investments.*
•   Increase your investment choices to include not only Vanguard mutual funds, but also ETFs (exchange-traded funds), stocks, bonds, CDs (certificates of deposit), and mutual funds and ETFs from other companies.
Take advantage of this offer by November 3 to enhance your investing experience at Vanguard!

 Get started now

*Trading limits, fund expenses, and minimum investments may apply. See the Vanguard Brokerage Services® commission and fee schedules for full details.
 
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You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free) or through another broker (which may charge commissions). See the Vanguard Brokerage Services® commission and fee schedules for limits. Vanguard ETF Shares aren't redeemable directly with the issuing fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you'll pay or receive the current market price, which may be more or less than net asset value.

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NotJen

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Re: Vanguard email to switch to a Brokerage Account - Can anyone shed light?
« Reply #1 on: September 28, 2017, 08:40:26 AM »
I got this email earlier this year.  My impression was that they are eventually going to switch everyone over to this type of account instead of offering brokerage and non-brokerage options.

I don't see any cons to switching.  I have a Roth, SEP, and taxable acct with Vanguard, and all switched over.  So far, my accounts operate the same as before - I can still directly buy shares using my linked checking account.  There is just a 'money market' section for each account that shows zero balance.  I suppose I now have more options (to buy ETFs, etc.), but I'm not planning on changing my investments at all because of this.

BTDretire

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Re: Vanguard email to switch to a Brokerage Account - Can anyone shed light?
« Reply #2 on: September 28, 2017, 09:00:26 AM »
I have 7 accounts at Vanguard, a mix of mine, hers, then IRAs, Roth IRAs, SEP-IRAs, a regular taxed account and the Brokerage account with $17 in it.
 I don't know why, but quite a while back, I was on the phone with Vanguard and it was like I didn't have a choice I had to open the Brokerage account.
  But now I'm contemplating buying some stock in my tax privileged accounts, so I do need the account but have no idea how to use it.
 What steps do I need to take to buy a stock in an IRA account when the brokerage account is a different account?

NotJen

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Re: Vanguard email to switch to a Brokerage Account - Can anyone shed light?
« Reply #3 on: September 28, 2017, 09:23:57 AM »
I haven't researched it fully, but it sounded like you can't have dividends deposited directly into your checking account if you make the switch to a brokerage account (the dividends will go into your settlement/money market account and I assumed you have to manually pull the money out).

Hopefully someone can prove me wrong :)

I'm still slightly confused on this, but I think you are right.

My accounts switched over at the end of June (after the last set of dividends paid out).  I got my September dividends last week, and they went directly to my checking account (and I could see online where my dividend elections were set to go to my checking account). 

But today, it seems like they will get deposited in my money market settlement account in the future, with no option to deposit to checking.

robartsd

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Re: Vanguard email to switch to a Brokerage Account - Can anyone shed light?
« Reply #4 on: September 28, 2017, 10:00:32 AM »
When we opened our Roth IRAs we openned non-brokerage accounts. That did not seem to be an option when we opened our Traditional IRAs later. I haven't noticed Vangaurd stating that they will be changing our Roth IRAs to brokerage accounts, but I can say that I use both accounts exactly the same way. In both accounts I hold Vangaurd Mutual Fund shares with automatic reinvesting. I don't see any reason to worry about your non-brokerage account being converted to a brokerage account.

Quint

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Re: Vanguard email to switch to a Brokerage Account - Can anyone shed light?
« Reply #5 on: September 28, 2017, 02:58:47 PM »
I came to ask this same question.  This answered all my questions, thanks.

secondcor521

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Re: Vanguard email to switch to a Brokerage Account - Can anyone shed light?
« Reply #6 on: September 28, 2017, 04:17:51 PM »
One minor thing to keep in mind is that if you switch a taxable account mid-year, you'll get two tax forms the following January:  one for the income in the non-brokerage account for the first part of the year, and a second for the income in the brokerage account for the second part of the year.

seattlecyclone

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Re: Vanguard email to switch to a Brokerage Account - Can anyone shed light?
« Reply #7 on: September 28, 2017, 08:46:17 PM »
They want to move everyone onto the new brokerage platform so that they can eventually phase out the old mutual fund only plan and have everyone using the same thing. Seems like a good idea to keep costs down in the long run, only having one system for everyone. The problem is that while the new brokerage accounts support most of the features available on the old platform, they don't quite do everything. Automatic dividend transfer was mentioned above as one example. I encountered another one when trying to do some obscure thing to make our mortgage underwriter happy when we bought a house earlier this year. We had actually switched to the brokerage platform already, so they had to create a new account on the old platform for me and I transferred our funds back to the old system.

At this point I won't be switching back to the new system until either they make me, or there's something I need to do that only the new platform supports.

DavidAnnArbor

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Re: Vanguard email to switch to a Brokerage Account - Can anyone shed light?
« Reply #8 on: September 28, 2017, 09:57:31 PM »
They should switch people in the evening of Dec. 31st so we don't have to deal with 2 1099-DIV forms.

NotJen

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Re: Vanguard email to switch to a Brokerage Account - Can anyone shed light?
« Reply #9 on: September 29, 2017, 07:48:57 AM »
They should switch people in the evening of Dec. 31st so we don't have to deal with 2 1099-DIV forms.

What's the downside of getting two forms?  As long as they are both generated and provided to me, it doesn't seem like a big deal, unless I'm missing something.

secondcor521

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Re: Vanguard email to switch to a Brokerage Account - Can anyone shed light?
« Reply #10 on: September 29, 2017, 12:07:45 PM »
They should switch people in the evening of Dec. 31st so we don't have to deal with 2 1099-DIV forms.

What's the downside of getting two forms?  As long as they are both generated and provided to me, it doesn't seem like a big deal, unless I'm missing something.

The only downside I see is if you're only expecting one form and generally don't double check the numbers to ensure accuracy, it is possible to file one's taxes before the second form arrives and then have to amend one's taxes.  This almost happened to me.