New Brokerage Accounts [Vanguard converted to brokerage]

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Topic Author
Clinton
Posts: 2
Joined: Fri Sep 24, 2021 8:46 am

New Brokerage Accounts [Vanguard converted to brokerage]

Post by Clinton »

Greetings. In mid-August, Vanguard converted my portfolio of mutual funds from a traditional mutual fund account format into a new brokerage account. This occurred in my IRA and non-IRA investments. Under the older format, I made multiple investments in one mutual because the sources of the funds to make the investments came from different places and I had different objectives for each investment. As an example, I had three investments in VIMAX and two in VFIAX In my non-IRA account. I made similar investment decisions in my IRA. I created these investments so that I could 1) see similar investments side by side, 2) monitor performance easily, 3) track status on reaching objectives easily, and 4) make investment decisions. I call these four tasks the "benefits" of the older account format.

Soon after the conversion, I learned that Vanguard combined all similar investments under the new brokerage account format. So, my three investments in VIMAX were combined into one and my two investments in VFIAX were combined into one as well. The same occurred in my IRA. The end result was that I lost all the previously mentioned "benefits". I called Vanguard multiple times to undo this conversion. No luck. They said this was an unfortunate consequence. Their solution was to create separate brokerage accounts. So, I would end up having three brokerage accounts in my non-IRA and four brokerage accounts in my IRA. Even with this "solution", I will lose the previously mentioned "benefits". I would have to toggle in and out of brokerage accounts to see individual investments.

Frankly, I am stunned that Vanguard would make this decision knowing the intended consequence. This experience has been painful and saddening. Is anyone else experiencing this issue? Does anyone have a proposed solution? Is there anyone I can appeal to at Vanguard to reverse this conversion? Please help. Thank you.
Silk McCue
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Re: New Brokerage Accounts [Vanguard converted to brokerage]

Post by Silk McCue »

Welcome to Bogleheads!

I'm sorry to hear that the transition to brokerage resulted in these unexpected changes for you. Unfortunately there is nothing that you can do at this time. They aren't going to move you back as they are simply moving in a different direction.

Cheers
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SmileyFace
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Re: New Brokerage Accounts [Vanguard converted to brokerage]

Post by SmileyFace »

Are you sure if you have multiple brokerages they aren't all viewable from a single page?
Many of us have not converted from the Mutual Fund platform due to loss of other features (but not the one you mention). It's unfortunate Vanguard isn't warning people about what they might lose by doing a conversion - they simply tell you what they see as the benefits - It's very disappointing.
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Cheez-It Guy
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Re: New Brokerage Accounts [Vanguard converted to brokerage]

Post by Cheez-It Guy »

I am not understanding these benefits. Isn't that what cost basis is for? You want to be able to see the difference in performance among the same investment made at different times? I'm sorry you're displeased, but if I understand correctly, this isn't likely to be a very common need or desire. Most people prefer fewer accounts and fewer holdings, especially if they are identical.
sycamore
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Re: New Brokerage Accounts [Vanguard converted to brokerage]

Post by sycamore »

Clinton wrote: Fri Sep 24, 2021 9:59 am Greetings. In mid-August, Vanguard converted my portfolio of mutual funds from a traditional mutual fund account format into a new brokerage account. This occurred in my IRA and non-IRA investments. Under the older format, I made multiple investments in one mutual because the sources of the funds to make the investments came from different places and I had different objectives for each investment. As an example, I had three investments in VIMAX and two in VFIAX In my non-IRA account. I made similar investment decisions in my IRA. I created these investments so that I could 1) see similar investments side by side, 2) monitor performance easily, 3) track status on reaching objectives easily, and 4) make investment decisions. I call these four tasks the "benefits" of the older account format.

Soon after the conversion, I learned that Vanguard combined all similar investments under the new brokerage account format. So, my three investments in VIMAX were combined into one and my two investments in VFIAX were combined into one as well. The same occurred in my IRA. The end result was that I lost all the previously mentioned "benefits". I called Vanguard multiple times to undo this conversion. No luck. They said this was an unfortunate consequence. Their solution was to create separate brokerage accounts. So, I would end up having three brokerage accounts in my non-IRA and four brokerage accounts in my IRA. Even with this "solution", I will lose the previously mentioned "benefits". I would have to toggle in and out of brokerage accounts to see individual investments.

Frankly, I am stunned that Vanguard would make this decision knowing the intended consequence. This experience has been painful and saddening. Is anyone else experiencing this issue? Does anyone have a proposed solution? Is there anyone I can appeal to at Vanguard to reverse this conversion? Please help. Thank you.
Welcome to the forum Clinton!

To be clear, when you wrote "three investments in VIMAX" I assume that means you had three different accounts, each holding VIMAX? Under the old platform, each mutual fund was an "account" but I think you're saying you registered multiple accounts (presumably titled the same, but perhaps one was individual, another joint with spouse, etc.).

From that description, you were essentially treating each account as an "envelope" or "bucket" as some people like to call it. Others call it "mental accounting," which is accurate enough and not necessarily intended to be derogatory :)

You'll find plenty of people who will sympathize with you, and others who might simply say "brokerages are the way of the present & future, best to get on with it."

Your benefits aren't completely lost. Each of your separate purchases are recorded as separate "lots". In the Vanguard website, you can expand your holdings of VIMAX, and it should display each separate lot and each one's gain/loss. Of course, there's no designation as to which lot was associated with your old account but perhaps you can determine it based on either the purchase date or purchase amount?

The two possible solutions I can think of are:
1) If you're handy with spreadsheets you can recreate those benefits. Enter each lot on a row, with columns for 1) purchase details; 2) designation of the purpose it's for; 3) current value & %gain/loss; 4) target/objective value; 5) whatever else you want. At the end of the month (or however often you want to track), update the current share price for each fund. Your column for each lot's current value should reference that one cell with the current share price so you only have to make an update in one place.

I suspect there might be a spreadsheet out there somewhere for people who like to "bucket." Maybe others here will chime in.

2) Go with Vanguard's proposed solution of separate brokerage accounts. That's basically what you used to have under the old platform so it's not entirely unreasonable. This solution would entail (1) registering new accounts (of the same type) and (2) selectively transferring (in-kind) only the lots you want to the appropriate new account. Sounds like a lot of work to me.

Side note: In terms of being more user friendly, I can see how it would be beneficial for the "bucketers" out there if brokerages would provide a "bucket view" of the holdings and/or purchase lots. Maybe there are some brokerages that provide the feature. I mean, it's just software, right? :)
PaunchyPirate
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Re: New Brokerage Accounts [Vanguard converted to brokerage]

Post by PaunchyPirate »

As SmileyFace indicates, I think that if you chose to go down the path of creating multiple IRA accounts, multiple Roth accounts, and/or multiple taxable brokerage accounts, they would all be shown on the single main Account holdings page when you sign in and access it. I have 1 of each account and they all show up one after the other on the page. Each account shows all the individual holdings for that account. So I can see every single investment that I have in one page. I would have to believe that if you added a second or third of any of these accounts to your brokerage login that they would just be stacked on one page. I don't have personal proof of that, but it seems logical. The online brokerage login is an umbrella to ALL your accounts.

Having said all this, I would not suggest you actually do it. I think the benefits of having all your investments in a single account outweigh the merits. But to each his own, I suppose. I'm sorry you aren't happy with the brokerage accounts approach. I never had them the old way, so I can't personally compare. But I do find the current method is perfectly fine. It's how other brokers do it.
stan1
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Joined: Mon Oct 08, 2007 4:35 pm

Re: New Brokerage Accounts [Vanguard converted to brokerage]

Post by stan1 »

I think my understanding is that you were doing some level of "envelope budgeting" within your stock mutual fund investing accounts such as a separate holding for "charity", "gift to children", and "my retirement"? Or maybe "new car" and "kitchen remodel" if you were investing some money with capital appreciation in mind to be able to make a purchase in the future?

I'd probably recommend a spreadsheet for doing that separation which would give you more control over how you want to make the division (and would let you change it over time). With the holdings aggregated you'll get the benefit of simpler selection of lots when you do choose to sell holdings. This will make it easier to figure out the most tax efficient holdings to sell (or gift). I'd add that I don't think of my investing and retirement accounts this way; they are all just assets with varying amounts of unrealized capital gains and if I need to withdraw some I'll do so in the most tax efficient way at the time of need while also preserving my asset allocation.
alex_686
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Re: New Brokerage Accounts [Vanguard converted to brokerage]

Post by alex_686 »

Clinton,

Welcome to the forum!

For context, I used to work back office brokerage.

There has been a hard push to eliminate such "features". They add complexity to a already complex system. It greatly increases time spent on expensive live customer support. People are expensive. And the benefits are slight - see below.
Cheez-It Guy wrote: Fri Sep 24, 2021 11:24 am I am not understanding these benefits. Isn't that what cost basis is for? You want to be able to see the difference in performance among the same investment made at different times? I'm sorry you're displeased, but if I understand correctly, this isn't likely to be a very common need or desire. Most people prefer fewer accounts and fewer holdings, especially if they are identical.
I believe that the formal term that the OP is looking for is "Mental Accounting". This is a cognitive error in the "Cognitive Load" class. i.e., people take a complex question and break it down into simpler problems. i.e., one buck for retirement, one bucket for travel. etc.

https://www.investopedia.com/terms/m/me ... unting.asp

The problem is that when you break things down the math is no longer coherent. There will be internal contractions. Give me a set of goals, market expectations, and risk parameters and I can always build a better portfolio by integrating everything into a single plan. After all, money is fungible.

The problem here is that people are not Homo Economics, a being of pure logic, always internally consistent, and have a unlimited time budget to think these things through.

As cognitive errors go this is considered to have a low impact and a high cost to address.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Topic Author
Clinton
Posts: 2
Joined: Fri Sep 24, 2021 8:46 am

Re: New Brokerage Accounts [Vanguard converted to brokerage]

Post by Clinton »

Thanks everyone. I really appreciate the solutions, recommendations and support.
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