Vanguard Brokerage versus Mutual Fund Account Decision thread

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Oicuryy
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by Oicuryy »

zubinh wrote: Tue Nov 03, 2020 11:09 am I am employed by a brokerage firm. My employer only allows me to open Mutual Fund Only accounts outside of my employer. I have explained this to Vanguard 20 times and their response is "we no longer offer mutual fund only accounts and there is no paper application method".
The following is from the prospectus for the 500 Index Fund, emphasis added.
This section of the prospectus explains the basics of doing business with Vanguard. Vanguard fund shares can be held directly with Vanguard or indirectly through an intermediary, such as a bank, a broker, or an investment advisor. If you hold Vanguard fund shares directly with Vanguard, you should carefully read each topic within this section that pertains to your relationship with Vanguard. If you hold Vanguard fund shares indirectly through an intermediary (including shares held in a brokerage account through Vanguard Brokerage Services®), please see Investing With Vanguard Through Other Firms, and also refer to your account agreement with the intermediary for information about transacting in that account.
https://www.vanguard.com/pub/Pdf/p040.pdf

If you try again, ask the rep to read that paragraph on page 21 of the prospectus and say you want to hold fund shares directly with Vanguard.

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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by SmileyFace »

zubinh wrote: Tue Nov 03, 2020 11:09 am "The default account type is now Brokerage and while it may no longer be possible to open an account on the Mutual Fund Platform online; if you have a valid reason to open a Mutual Fund Account (regulatory) call vanguard - paper submitted applications will be necessary."

I am employed by a brokerage firm. My employer only allows me to open Mutual Fund Only accounts outside of my employer. I have explained this to Vanguard 20 times and their response is "we no longer offer mutual fund only accounts and there is no paper application method".
Thanks for the feedback. I've seen at least two individuals report they were able to open accounts. Perhaps they recently clamped down or it is simply a matter of who you get by phone or something. I will add an additional clarification based upon your feedback.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by rkhusky »

acljump wrote: Tue Nov 03, 2020 10:57 am
The balance for the new brokerage accounts seem to be in the correct amount. However, more disconcerting is that in the transaction history, for the transfer IN entry to the new brokerage account, there doesn't appear to be a dollar amount there. It just shows the number of shares transferred in with the amount listed as zero.
Don’t know if this pertains, but the last column in the transaction history (Amount) pertains to cash movements in and out of the sweep account, not your fund. The Shares and Share Price columns pertain to your fund.

If your shares are directly placed in the fund, without going through the sweep account, like might occur with a conversion, there should be no entry (or $0) in the last column.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by talzara »

palanzo wrote: Sun Nov 01, 2020 1:36 pm Thank you for the additional information about the other custodians.

What is the risk of the mutual fund failing? What scenarios are likely?
A software bug could cause the failure of a Vanguard mutual fund. A software bug destroyed Knight Capital in half an hour of trading.

This is less likely for Vanguard because of its lower trading volume. Although Vanguard funds have a lot of Assets Under Management, they do not trade as frequently as a market maker like Knight Capital. However, anything could happen with a software bug.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by abuss368 »

Looking back since I made the transition over a couple of weeks ago to the brokerage account, I am happy and satisfied. I continue to believe now (in hindsight) that this was not as a big of a deal as I first expected.

I also transitioned to ETFs and I like them.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by KyleAAA »

zubinh wrote: Tue Nov 03, 2020 11:09 am "The default account type is now Brokerage and while it may no longer be possible to open an account on the Mutual Fund Platform online; if you have a valid reason to open a Mutual Fund Account (regulatory) call vanguard - paper submitted applications will be necessary."

I am employed by a brokerage firm. My employer only allows me to open Mutual Fund Only accounts outside of my employer. I have explained this to Vanguard 20 times and their response is "we no longer offer mutual fund only accounts and there is no paper application method".
Can you buy the ETFs through your employer's brokerage?
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by acljump »

rkhusky wrote: Tue Nov 03, 2020 2:21 pm
acljump wrote: Tue Nov 03, 2020 10:57 am
The balance for the new brokerage accounts seem to be in the correct amount. However, more disconcerting is that in the transaction history, for the transfer IN entry to the new brokerage account, there doesn't appear to be a dollar amount there. It just shows the number of shares transferred in with the amount listed as zero.
Don’t know if this pertains, but the last column in the transaction history (Amount) pertains to cash movements in and out of the sweep account, not your fund. The Shares and Share Price columns pertain to your fund.

If your shares are directly placed in the fund, without going through the sweep account, like might occur with a conversion, there should be no entry (or $0) in the last column.
I think the shares were placed directly into the fund because I don't see a transaction entry that indicated they went into the sweep account.

The Share Price column is also blank for the share movement into the brokerage account. The only column that has a figure is the Shares column. Is this also normal?
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by rkhusky »

acljump wrote: Tue Nov 03, 2020 5:38 pm I think the shares were placed directly into the fund because I don't see a transaction entry that indicated they went into the sweep account.

The Share Price column is also blank for the share movement into the brokerage account. The only column that has a figure is the Shares column. Is this also normal?
I don't know about your particular transaction. When I get a dividend, the Quantity and Price are blank and the Amount is positive. When the dividend is reinvested, the Quantity and Price are positive and the Amount is negative. When I do a Roth conversion out of this account, the Quantity is negative, the Price is blank, and the Amount is negative.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by beyou »

KyleAAA wrote: Tue Nov 03, 2020 5:30 pm
zubinh wrote: Tue Nov 03, 2020 11:09 am "The default account type is now Brokerage and while it may no longer be possible to open an account on the Mutual Fund Platform online; if you have a valid reason to open a Mutual Fund Account (regulatory) call vanguard - paper submitted applications will be necessary."

I am employed by a brokerage firm. My employer only allows me to open Mutual Fund Only accounts outside of my employer. I have explained this to Vanguard 20 times and their response is "we no longer offer mutual fund only accounts and there is no paper application method".
Can you buy the ETFs through your employer's brokerage?
When employed by a broker yes one could buy an ETF, but usually with permission for each and every trade, and the trades/statements
being monitored by your employer's compliance dept. If one buys an open end fund directly from a company like Vanguard (old platform) no need for permission, no need to have employer monitor (privacy issue to me). So why the answer is yes it's yes with footnotes. I prefer to avoid the footnotes for myself, will transition either when FORCED to or when I retire and have no such restrictions. If I am forced to, my employer has recently made exceptions to allow having a Vanguard brokerage account (still subject to reporting and permission on trades) but in the past I would have had to transfer my account elsewhere to trade/own anything. Many are still in that boat, having to transfer out of Vanguard when/if the transition is forced upon us.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by KyleAAA »

beyou wrote: Sun Jan 17, 2021 2:14 pm
KyleAAA wrote: Tue Nov 03, 2020 5:30 pm
zubinh wrote: Tue Nov 03, 2020 11:09 am "The default account type is now Brokerage and while it may no longer be possible to open an account on the Mutual Fund Platform online; if you have a valid reason to open a Mutual Fund Account (regulatory) call vanguard - paper submitted applications will be necessary."

I am employed by a brokerage firm. My employer only allows me to open Mutual Fund Only accounts outside of my employer. I have explained this to Vanguard 20 times and their response is "we no longer offer mutual fund only accounts and there is no paper application method".
Can you buy the ETFs through your employer's brokerage?
When employed by a broker yes one could buy an ETF, but usually with permission for each and every trade, and the trades/statements
being monitored by your employer's compliance dept. If one buys an open end fund directly from a company like Vanguard (old platform) no need for permission, no need to have employer monitor (privacy issue to me). So why the answer is yes it's yes with footnotes. I prefer to avoid the footnotes for myself, will transition either when FORCED to or when I retire and have no such restrictions. If I am forced to, my employer has recently made exceptions to allow having a Vanguard brokerage account (still subject to reporting and permission on trades) but in the past I would have had to transfer my account elsewhere to trade/own anything. Many are still in that boat, having to transfer out of Vanguard when/if the transition is forced upon us.
I mean sure, that sucks for the small minority of people impacted by this. But that's not a good reason to continue supporting it.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by beyou »

KyleAAA wrote: Tue Jan 19, 2021 1:09 pm
beyou wrote: Sun Jan 17, 2021 2:14 pm
KyleAAA wrote: Tue Nov 03, 2020 5:30 pm
zubinh wrote: Tue Nov 03, 2020 11:09 am "The default account type is now Brokerage and while it may no longer be possible to open an account on the Mutual Fund Platform online; if you have a valid reason to open a Mutual Fund Account (regulatory) call vanguard - paper submitted applications will be necessary."

I am employed by a brokerage firm. My employer only allows me to open Mutual Fund Only accounts outside of my employer. I have explained this to Vanguard 20 times and their response is "we no longer offer mutual fund only accounts and there is no paper application method".
Can you buy the ETFs through your employer's brokerage?
When employed by a broker yes one could buy an ETF, but usually with permission for each and every trade, and the trades/statements
being monitored by your employer's compliance dept. If one buys an open end fund directly from a company like Vanguard (old platform) no need for permission, no need to have employer monitor (privacy issue to me). So why the answer is yes it's yes with footnotes. I prefer to avoid the footnotes for myself, will transition either when FORCED to or when I retire and have no such restrictions. If I am forced to, my employer has recently made exceptions to allow having a Vanguard brokerage account (still subject to reporting and permission on trades) but in the past I would have had to transfer my account elsewhere to trade/own anything. Many are still in that boat, having to transfer out of Vanguard when/if the transition is forced upon us.
I mean sure, that sucks for the small minority of people impacted by this. But that's not a good reason to continue supporting it.
Not so small a minority. Look at the percentage of US equity indices in financial services. It is large, and some of the higher paid careers are in the two largest industries, tech and finance. We account for a non trivial number of accounts and size of accounts in the financial services industry.

Secondly, the best reason to continue with some fund-only platform, self interest of keeping Vanguard costs low, opposite of what they claim. Note they cannot legally take away shares you own and cannot legally force you to open a brokerage account. They have to service you somehow. That will cost $. They could go back to the old days of paper and snail mail. They could outsource service to another firm. I am willing to bet that keeping the website functionality as-is will be cheaper for Vanguard than the other 2 options. But if they choose one if the other 2, I’ll wait and see how bad it is if I am still employed in this industry. I hope to retire by then, we’ll see.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by KyleAAA »

beyou wrote: Tue Jan 19, 2021 1:31 pm
KyleAAA wrote: Tue Jan 19, 2021 1:09 pm
beyou wrote: Sun Jan 17, 2021 2:14 pm
KyleAAA wrote: Tue Nov 03, 2020 5:30 pm
zubinh wrote: Tue Nov 03, 2020 11:09 am "The default account type is now Brokerage and while it may no longer be possible to open an account on the Mutual Fund Platform online; if you have a valid reason to open a Mutual Fund Account (regulatory) call vanguard - paper submitted applications will be necessary."

I am employed by a brokerage firm. My employer only allows me to open Mutual Fund Only accounts outside of my employer. I have explained this to Vanguard 20 times and their response is "we no longer offer mutual fund only accounts and there is no paper application method".
Can you buy the ETFs through your employer's brokerage?
When employed by a broker yes one could buy an ETF, but usually with permission for each and every trade, and the trades/statements
being monitored by your employer's compliance dept. If one buys an open end fund directly from a company like Vanguard (old platform) no need for permission, no need to have employer monitor (privacy issue to me). So why the answer is yes it's yes with footnotes. I prefer to avoid the footnotes for myself, will transition either when FORCED to or when I retire and have no such restrictions. If I am forced to, my employer has recently made exceptions to allow having a Vanguard brokerage account (still subject to reporting and permission on trades) but in the past I would have had to transfer my account elsewhere to trade/own anything. Many are still in that boat, having to transfer out of Vanguard when/if the transition is forced upon us.
I mean sure, that sucks for the small minority of people impacted by this. But that's not a good reason to continue supporting it.
Not so small a minority. Look at the percentage of US equity indices in financial services. It is large, and some of the higher paid careers are in the two largest industries, tech and finance. We account for a non trivial number of accounts and size of accounts in the financial services industry.

Secondly, the best reason to continue with some fund-only platform, self interest of keeping Vanguard costs low, opposite of what they claim. Note they cannot legally take away shares you own and cannot legally force you to open a brokerage account. They have to service you somehow. That will cost $. They could go back to the old days of paper and snail mail. They could outsource service to another firm. I am willing to bet that keeping the website functionality as-is will be cheaper for Vanguard than the other 2 options. But if they choose one if the other 2, I’ll wait and see how bad it is if I am still employed in this industry. I hope to retire by then, we’ll see.
I work in tech and I've never had this issue. If it were actually a large minority, entities the size of Vanguard would support it out of self-interest. I'm quite certain maintaining the old platform would not be cheaper for them than deprecating it. I've led several such platform transitions. You're clearly and unambiguously incorrect based on my direct expert experience. If you actually want to make a monetary bet, I will take that bet all day long as would anybody else who's ever actually had to do what you propose Vanguard do. I'm not sure why somebody in the financial industry would think they understand the cost of tech initiatives like re-platforming and legacy support. Please leave it to us experts.

They're a commercial entity and can do whatever they want. If you don't like it, move accounts to a brokerage that better meets your needs. There are dozens of viable competitors that are every bit as good at holding mutual funds. Vanguard has seemingly made it clear they won't miss you.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by beyou »

KyleAAA wrote: Tue Jan 19, 2021 2:35 pm
beyou wrote: Tue Jan 19, 2021 1:31 pm
KyleAAA wrote: Tue Jan 19, 2021 1:09 pm
beyou wrote: Sun Jan 17, 2021 2:14 pm
KyleAAA wrote: Tue Nov 03, 2020 5:30 pm

Can you buy the ETFs through your employer's brokerage?
When employed by a broker yes one could buy an ETF, but usually with permission for each and every trade, and the trades/statements
being monitored by your employer's compliance dept. If one buys an open end fund directly from a company like Vanguard (old platform) no need for permission, no need to have employer monitor (privacy issue to me). So why the answer is yes it's yes with footnotes. I prefer to avoid the footnotes for myself, will transition either when FORCED to or when I retire and have no such restrictions. If I am forced to, my employer has recently made exceptions to allow having a Vanguard brokerage account (still subject to reporting and permission on trades) but in the past I would have had to transfer my account elsewhere to trade/own anything. Many are still in that boat, having to transfer out of Vanguard when/if the transition is forced upon us.
I mean sure, that sucks for the small minority of people impacted by this. But that's not a good reason to continue supporting it.
Not so small a minority. Look at the percentage of US equity indices in financial services. It is large, and some of the higher paid careers are in the two largest industries, tech and finance. We account for a non trivial number of accounts and size of accounts in the financial services industry.

Secondly, the best reason to continue with some fund-only platform, self interest of keeping Vanguard costs low, opposite of what they claim. Note they cannot legally take away shares you own and cannot legally force you to open a brokerage account. They have to service you somehow. That will cost $. They could go back to the old days of paper and snail mail. They could outsource service to another firm. I am willing to bet that keeping the website functionality as-is will be cheaper for Vanguard than the other 2 options. But if they choose one if the other 2, I’ll wait and see how bad it is if I am still employed in this industry. I hope to retire by then, we’ll see.
I work in tech and I've never had this issue. If it were actually a large minority, entities the size of Vanguard would support it out of self-interest. I'm quite certain maintaining the old platform would not be cheaper for them than deprecating it. I've led several such platform transitions. You're clearly and unambiguously incorrect based on my direct expert experience. If you actually want to make a monetary bet, I will take that bet all day long as would anybody else who's ever actually had to do what you propose Vanguard do. I'm not sure why somebody in the financial industry would think they understand the cost of tech initiatives like re-platforming and legacy support. Please leave it to us experts.

They're a commercial entity and can do whatever they want. If you don't like it, move accounts to a brokerage that better meets your needs. There are dozens of viable competitors that are every bit as good at holding mutual funds. Vanguard has seemingly made it clear they won't miss you.
First, I work in tech at a competitor of Vanguard and have specifically work on dev and app support for these very types of applications. Second I worked at a senior enough level to understand all the legal and other non-technical issues. It is you who are “clearly and unambiguously incorrect”.

Note that if you buy a Vanguard fund, open end or ETF, the backend systems that keep track of the shareholders of each fund has to be one central application (or one for ETFs and one for open end funds). So if you buy a Vanguard fund at Fidelity, Schwab OR from Vanguard Brokerage, they all record such transactions in the same Vanguard back end fund shareholder record keeping system. This is an expensive and critical piece of infrastructure that simply wont go away retiring the old fund platform. All they can get rid of is the web front end that allows direct interface with that system. LEGALLY they can't toss out those clients. So when those clients want a withdrawal, you will have to call a rep, and they will login to the same backend system that the Vanguard and all other brokers interface with. So they still have the cost of STAFF to answer MORE phone calls, and still need to maintain some legacy front end to the old fund infrastructure. Fidelity or Vanguard Brokerage customers would have an automated interface to this back end but the legacy front end must at least be available to Vanguard customer service staff.

If Vanguard COULD get rid of those customers and convert all to brokerage accounts, they would have done so already. They simply cannot do so legally. They have allowed people to open new fund only accounts over the last year or two, all you do is call and tell them you work in the industry and they agree to new accounts on the old platform without argument. They have heard from MANY such clients even in the front line customer service workers since it's a common request. They have been VAGUE about what features they MAY remove. The reason they are vague are for the reasons I state.

Note I have seen many financial services executives without tech and ops experience make really dumb public decisions, and later backtrack on them when they finally learned what we all knew in tech and ops roles. I have been through this many times over my 3+ decades working in this industry for some of the largest and smaller fund managers/brokers.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by KyleAAA »

beyou wrote: Tue Jan 19, 2021 2:57 pm First, I work in tech at a competitor of Vanguard and have specifically work on dev and app support for these very types of applications. Second I worked at a senior enough level to understand all the legal and other non-technical issues. It is you who are “clearly and unambiguously incorrect”.
LOL no. I, too, understand all the non-technical issues. I'm not incorrect.
beyou wrote: Tue Jan 19, 2021 2:57 pm Note that if you buy a Vanguard fund, open end or ETF, the backend systems that keep track of the shareholders of each fund has to be one central application (or one for ETFs and one for open end funds).
Well no, it doesn't HAVE to be. It was likely implemented that way, but maybe not.
beyou wrote: Tue Jan 19, 2021 2:57 pm So if you buy a Vanguard fund at Fidelity, Schwab OR from Vanguard Brokerage, they all record such transactions in the same Vanguard back end fund shareholder record keeping system.
Maybe, maybe not.
beyou wrote: Tue Jan 19, 2021 2:57 pm All they can get rid of is the web front end that allows direct interface with that system.
I don't see how you can know this without direct knowledge of the system design. Even if the assumptions you made above are true, this piece doesn't necessarily hold (and almost certainly doesn't).
beyou wrote: Tue Jan 19, 2021 2:57 pm LEGALLY they can't toss out those clients. So when those clients want a withdrawal, you will have to call a rep, and they will login to the same backend system that the Vanguard and all other brokers interface with. So they still have the cost of STAFF to answer MORE phone calls, and still need to maintain some legacy front end to the old fund infrastructure. Fidelity or Vanguard Brokerage customers would have an automated interface to this back end but the legacy front end must at least be available to Vanguard customer service staff.
Maybe, but this is just speculation. There are plenty of different ways to handle this. And again, even if this is true there are still dramatic cost savings within easy reach.
beyou wrote: Tue Jan 19, 2021 2:57 pm If Vanguard COULD get rid of those customers and convert all to brokerage accounts, they would have done so already. They simply cannot do so legally.
Yes, everyone knows this.

beyou wrote: Tue Jan 19, 2021 2:57 pm Note I have seen many financial services executives without tech and ops experience make really dumb public decisions, and later backtrack on them when they finally learned what we all knew in tech and ops roles. I have been through this many times over my 3+ decades working in this industry for some of the largest and smaller fund managers/brokers.
Okay, but you're still clearly wrong in this case.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by beyou »

KyleAAA wrote: Tue Jan 19, 2021 3:54 pm
beyou wrote: Tue Jan 19, 2021 2:57 pm First, I work in tech at a competitor of Vanguard and have specifically work on dev and app support for these very types of applications. Second I worked at a senior enough level to understand all the legal and other non-technical issues. It is you who are “clearly and unambiguously incorrect”.
LOL no. I, too, understand all the non-technical issues. I'm not incorrect.
beyou wrote: Tue Jan 19, 2021 2:57 pm Note that if you buy a Vanguard fund, open end or ETF, the backend systems that keep track of the shareholders of each fund has to be one central application (or one for ETFs and one for open end funds).
Well no, it doesn't HAVE to be. It was likely implemented that way, but maybe not.
beyou wrote: Tue Jan 19, 2021 2:57 pm So if you buy a Vanguard fund at Fidelity, Schwab OR from Vanguard Brokerage, they all record such transactions in the same Vanguard back end fund shareholder record keeping system.
Maybe, maybe not.
beyou wrote: Tue Jan 19, 2021 2:57 pm All they can get rid of is the web front end that allows direct interface with that system.
I don't see how you can know this without direct knowledge of the system design. Even if the assumptions you made above are true, this piece doesn't necessarily hold (and almost certainly doesn't).
beyou wrote: Tue Jan 19, 2021 2:57 pm LEGALLY they can't toss out those clients. So when those clients want a withdrawal, you will have to call a rep, and they will login to the same backend system that the Vanguard and all other brokers interface with. So they still have the cost of STAFF to answer MORE phone calls, and still need to maintain some legacy front end to the old fund infrastructure. Fidelity or Vanguard Brokerage customers would have an automated interface to this back end but the legacy front end must at least be available to Vanguard customer service staff.
Maybe, but this is just speculation. There are plenty of different ways to handle this. And again, even if this is true there are still dramatic cost savings within easy reach.
beyou wrote: Tue Jan 19, 2021 2:57 pm If Vanguard COULD get rid of those customers and convert all to brokerage accounts, they would have done so already. They simply cannot do so legally.
Yes, everyone knows this.

beyou wrote: Tue Jan 19, 2021 2:57 pm Note I have seen many financial services executives without tech and ops experience make really dumb public decisions, and later backtrack on them when they finally learned what we all knew in tech and ops roles. I have been through this many times over my 3+ decades working in this industry for some of the largest and smaller fund managers/brokers.
Okay, but you're still clearly wrong.
Regarding the backend systems. yeah, maybe they will go to block chain to keep track of your shares, but in the end there needs to be some authoritative place to identify all the shareholders of a fund. If distributed there will be aggregation layers as well and redundant systems which is exactly what they seek to avoid here. No savings there. I have worked on the actual interface that brokers use to communicate with fund administrators. There has to be a record keeping system on the fund side and it wont have the same requirements as the broker platform they are pushing us towards.

If this was a profitable effort they might well have done it already. They have talked about this for years, and have not achieved much yet.

Your entitled to your opinion but you are clearly wrong. There are indeed offsetting costs to retiring the platform that are real.
They may stumble blindly along and find out later but my points that some costly infrastructure will always need to be in place for any fund manager to do shareholder record keeping. Most of their competitors outsource this function, which is very expensive for large fund managers. The very reasons they built this internally and the reasons they put a web front end to it simply do not go away because they want it to, not economically at least.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by KyleAAA »

beyou wrote: Tue Jan 19, 2021 4:08 pm
Your entitled to your opinion but you are clearly wrong.
No, I'm not.
beyou wrote: Tue Jan 19, 2021 4:08 pm There are indeed offsetting costs to retiring the platform that are real.
They may stumble blindly along and find out later but my points that some costly infrastructure will always need to be in place for any fund manager to do shareholder record keeping. Most of their competitors outsource this function, which is very expensive for large fund managers. The very reasons they built this internally and the reasons they put a web front end to it simply do not go away because they want it to, not economically at least.
Sure, they won't be able to eliminate all infrastructure. Nobody has argued otherwise. They don't need to in order to recognize massive cost savings. Even if no infrastructure whatsoever is eliminated and they ONLY need to maintain the same interface for support vs external users, that alone would lead to a huge cost saving.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by beyou »

KyleAAA wrote: Tue Jan 19, 2021 4:10 pm
beyou wrote: Tue Jan 19, 2021 4:08 pm
Your entitled to your opinion but you are clearly wrong.
No, I'm not.
beyou wrote: Tue Jan 19, 2021 4:08 pm There are indeed offsetting costs to retiring the platform that are real.
They may stumble blindly along and find out later but my points that some costly infrastructure will always need to be in place for any fund manager to do shareholder record keeping. Most of their competitors outsource this function, which is very expensive for large fund managers. The very reasons they built this internally and the reasons they put a web front end to it simply do not go away because they want it to, not economically at least.
Sure, they won't be able to eliminate all infrastructure. Nobody has argued otherwise. They don't need to in order to recognize massive cost savings. Even if no infrastructure whatsoever is eliminated and they ONLY need to maintain the same interface for support vs external users, that alone would lead to a huge cost saving.
Maybe you are right, you are NOT entitled to your opinion :-)

It wont be a massive cost savings, you and they are simply wrong.
Per the prospectus of their funds, they MUST provide certain shareholder services that do not require a brokerage account.
There will be a cost separate from the brokerage system to satisfy that OBLIGATION. They can leverage the cost they already bear,
or rebuild it. But they can't simply just get rid of it, per their own legal documents. They can do a lousy job to satisfy those requirements (as they often do now) but they have to provide for those requirements somehow. Maybe they will require in-person visits to deposit/withdraw for those stubborn clients who insist on enforcing the legal contract they made with us when we bought shares of their funds. That would save on the cost of the website...but where do they record such transactions ? Not in a brokerage system if you don't have a brokerage account.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by roth evangelist »

I have a question. I want to open a Roth IRA soon for my wife at Vanguard and put her in their admiral shares mutual funds (almost have enough to meet the minimums). Do I need to know anything before opening the account about which platform to select? Will I even get an option?
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by KyleAAA »

beyou wrote: Tue Jan 19, 2021 4:33 pm
KyleAAA wrote: Tue Jan 19, 2021 4:10 pm
beyou wrote: Tue Jan 19, 2021 4:08 pm
Your entitled to your opinion but you are clearly wrong.
No, I'm not.
beyou wrote: Tue Jan 19, 2021 4:08 pm There are indeed offsetting costs to retiring the platform that are real.
They may stumble blindly along and find out later but my points that some costly infrastructure will always need to be in place for any fund manager to do shareholder record keeping. Most of their competitors outsource this function, which is very expensive for large fund managers. The very reasons they built this internally and the reasons they put a web front end to it simply do not go away because they want it to, not economically at least.
Sure, they won't be able to eliminate all infrastructure. Nobody has argued otherwise. They don't need to in order to recognize massive cost savings. Even if no infrastructure whatsoever is eliminated and they ONLY need to maintain the same interface for support vs external users, that alone would lead to a huge cost saving.
Maybe you are right, you are NOT entitled to your opinion :-)

It wont be a massive cost savings, you and they are simply wrong.
Per the prospectus of their funds, they MUST provide certain shareholder services that do not require a brokerage account.
There will be a cost separate from the brokerage system to satisfy that OBLIGATION. They can leverage the cost they already bear,
or rebuild it. But they can't simply just get rid of it, per their own legal documents. They can do a lousy job to satisfy those requirements (as they often do now) but they have to provide for those requirements somehow. Maybe they will require in-person visits to deposit/withdraw for those stubborn clients who insist on enforcing the legal contract they made with us when we bought shares of their funds. That would save on the cost of the website...but where do they record such transactions ? Not in a brokerage system if you don't have a brokerage account.
They don't need to get rid of it to realize large cost savings. Vanguard has more data than either of us, so it's unlikely that of the three of us, they are the ones who are wrong.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by Makefile »

roth evangelist wrote: Tue Jan 19, 2021 5:06 pm I have a question. I want to open a Roth IRA soon for my wife at Vanguard and put her in their admiral shares mutual funds (almost have enough to meet the minimums). Do I need to know anything before opening the account about which platform to select? Will I even get an option?
You won't get an option. It has been years since you had the choice when opening a new account.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by LadyGeek »

The discussion is starting to get a bit contentious. Please remove emotion from your posts and state your concerns in a civil, factual manner.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by roth evangelist »

Makefile wrote: Tue Jan 19, 2021 6:13 pm
roth evangelist wrote: Tue Jan 19, 2021 5:06 pm I have a question. I want to open a Roth IRA soon for my wife at Vanguard and put her in their admiral shares mutual funds (almost have enough to meet the minimums). Do I need to know anything before opening the account about which platform to select? Will I even get an option?
You won't get an option. It has been years since you had the choice when opening a new account.
Got it. One less thing to think about I suppose. But will I still be able to buy admiral shares or does this mean I have to buy ETFs?
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by SmileyFace »

roth evangelist wrote: Tue Jan 19, 2021 6:27 pm
Makefile wrote: Tue Jan 19, 2021 6:13 pm
roth evangelist wrote: Tue Jan 19, 2021 5:06 pm I have a question. I want to open a Roth IRA soon for my wife at Vanguard and put her in their admiral shares mutual funds (almost have enough to meet the minimums). Do I need to know anything before opening the account about which platform to select? Will I even get an option?
You won't get an option. It has been years since you had the choice when opening a new account.
Got it. One less thing to think about I suppose. But will I still be able to buy admiral shares or does this mean I have to buy ETFs?
Yes - you can still buy admiral share mutual funds in a brokerage account.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by JamesSFO »

Coming late to this thread and really appreciate it and wondered: if you want to have a mutual funds only account what would be your non-Vanguard choice(s)? [e.g. is there a reasonable major provider that would let you open a mutual fund only account and then hold the Vanguard mutual funds]
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by UpperNwGuy »

JamesSFO wrote: Tue Jun 08, 2021 8:09 pm Coming late to this thread and really appreciate it and wondered: if you want to have a mutual funds only account what would be your non-Vanguard choice(s)? [e.g. is there a reasonable major provider that would let you open a mutual fund only account and then hold the Vanguard mutual funds]
My understanding is that the "mutual fund account" is a concept that is unique to Vanguard. If you go elsewhere, you will have a brokerage account similar to the Vanguard brokerage account.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by nalor511 »

UpperNwGuy wrote: Tue Jun 08, 2021 8:14 pm
JamesSFO wrote: Tue Jun 08, 2021 8:09 pm Coming late to this thread and really appreciate it and wondered: if you want to have a mutual funds only account what would be your non-Vanguard choice(s)? [e.g. is there a reasonable major provider that would let you open a mutual fund only account and then hold the Vanguard mutual funds]
My understanding is that the "mutual fund account" is a concept that is unique to Vanguard. If you go elsewhere, you will have a brokerage account similar to the Vanguard brokerage account.
It's not unique to vg, and it's on the way out everywhere. Fido used to do it.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by Cheez-It Guy »

JamesSFO wrote: Tue Jun 08, 2021 8:09 pm Coming late to this thread and really appreciate it and wondered: if you want to have a mutual funds only account what would be your non-Vanguard choice(s)? [e.g. is there a reasonable major provider that would let you open a mutual fund only account and then hold the Vanguard mutual funds]
Maybe T. Rowe Price? I doubt they'd let you hold Vanguard funds fee-free, but you could probably hold T. Rowe Price funds. Note that I'm not recommending this, just trying to answer the question. This whole mutual fund versus brokerage account is really a non-issue for most people. Mutual funds in a brokerage account are fine.
Last edited by Cheez-It Guy on Wed Jun 09, 2021 5:21 am, edited 1 time in total.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by Makefile »

nalor511 wrote: Tue Jun 08, 2021 8:18 pm
UpperNwGuy wrote: Tue Jun 08, 2021 8:14 pm
JamesSFO wrote: Tue Jun 08, 2021 8:09 pm Coming late to this thread and really appreciate it and wondered: if you want to have a mutual funds only account what would be your non-Vanguard choice(s)? [e.g. is there a reasonable major provider that would let you open a mutual fund only account and then hold the Vanguard mutual funds]
My understanding is that the "mutual fund account" is a concept that is unique to Vanguard. If you go elsewhere, you will have a brokerage account similar to the Vanguard brokerage account.
It's not unique to vg, and it's on the way out everywhere. Fido used to do it.
Fidelity actually has a form to downgrade from brokerage to mutual fund. I wonder what would happen if someone on here who really doesn't want a brokerage account were to try to downgrade theirs with the form. https://scs.fidelity.com/accounts/onlin ... AL&blank=Y
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by beyou »

nalor511 wrote: Tue Jun 08, 2021 8:18 pm
UpperNwGuy wrote: Tue Jun 08, 2021 8:14 pm
JamesSFO wrote: Tue Jun 08, 2021 8:09 pm Coming late to this thread and really appreciate it and wondered: if you want to have a mutual funds only account what would be your non-Vanguard choice(s)? [e.g. is there a reasonable major provider that would let you open a mutual fund only account and then hold the Vanguard mutual funds]
My understanding is that the "mutual fund account" is a concept that is unique to Vanguard. If you go elsewhere, you will have a brokerage account similar to the Vanguard brokerage account.
It's not unique to vg, and it's on the way out everywhere. Fido used to do it.
Actually ALL mutual fund companies had fund only platforms for decades now. It is actually the exception to also allow brokerage. The big fund companies have certainly moved in this direction to offer brokerage accounts but this was not their historical offering. Note the LARGEST asset manager in the world, BlackRock has been around since the 1980s with no retail brokerage accounts. They sell their funds via other brokers, as most small fund managers do.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by iceport »

SmileyFace wrote: Sun Nov 01, 2020 10:15 am
Cheez-It Guy wrote: Sun Nov 01, 2020 8:14 am Here is a PDF leaflet from Vanguard dated October 2019 that summarizes the differences before and after transition in a table at the end:

https://www.vanguard.com/pdf/vbafqm.pdf
Unfortunately this document fails to tell people what they will lose (example: ability to reinvest between different accounts).
It is obviously put together to convince people to switch.
My beef with the pamphlet is more serious: It misleads people about how their cost basis elections will be treated in the transition.

How does this read to you?
Vanguard wrote:Account history

How will the change affect my cost basis information?

The cost basis of your fund investments, including
your calculation method, will be the same once
transitioned to your identically registered Vanguard
Brokerage Account. However, there are a few important
considerations, depending on the calculation method
you’ve elected for sales of fund shares acquired on or
after January 1, 2012.
Sounds to me like they're on top of it, like they'll transfer over all your cost basis information and preserve your cost basis elections, right?

Wrong.

In the next two paragraphs, they go on to dispel that bit of misinformation. In fact, YOU, the individual investor, must act carefully and deliberately to change your cost basis elections on your own.

Almost everyone needs to make a cost basis election change. At least almost everyone with any shares purchased after 1-1-2012. Those with AvgCost need to act BEFORE the transition if they want to preserve the ability to elect a different method later. Those with FIFO or SpecID in general need to act AFTER the transition if they want to keep them.

This requirement is definitely downplayed in the pamphlet, and I just wanted to highlight that here.

Honestly, this just seem so important that I can't believe Vanguard actually makes people manually preserve their cost basis elections on their own like this. Why on earth couldn't Vanguard figure out how to preserve investors' cost basis elections through the transition without such an intervention that, frankly, most folks would never expect they would have to perform — especially after being told explicitly "your calculation method will be the same once transitioned."

(Yeah, sure it will. AS LONG AS YOU MAKE SURE IT HAPPENS!!!)

:annoyed
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by SmileyFace »

iceport wrote: Wed Jun 09, 2021 8:59 am
Honestly, this just seem so important that I can't believe Vanguard actually makes people manually preserve their cost basis elections on their own like this. Why on earth couldn't Vanguard figure out how to preserve investors' cost basis elections through the transition without such an intervention that, frankly, most folks would never expect they would have to perform — especially after being told explicitly "your calculation method will be the same once transitioned."
I see no reason why they can't preserve your election. It's either laziness or they prefer everyone use AvgCost so change the default on those not paying attention. Perhaps there is a regulatory reason we don't know about but wouldn't make sense to me.
I have continued to hold my funds in the Fund platform. I have started investing new funds at Fidelity (for multiple reasons including this one).
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by iceport »

SmileyFace wrote: Wed Jun 09, 2021 9:24 am
iceport wrote: Wed Jun 09, 2021 8:59 am
Honestly, this just seem so important that I can't believe Vanguard actually makes people manually preserve their cost basis elections on their own like this. Why on earth couldn't Vanguard figure out how to preserve investors' cost basis elections through the transition without such an intervention that, frankly, most folks would never expect they would have to perform — especially after being told explicitly "your calculation method will be the same once transitioned."
I see no reason why they can't preserve your election. It's either laziness or they prefer everyone use AvgCost so change the default on those not paying attention. Perhaps there is a regulatory reason we don't know about but wouldn't make sense to me.
I have continued to hold my funds in the Fund platform. I have started investing new funds at Fidelity (for multiple reasons including this one).
I'm still on the old platform for the taxable accounts only. This won't make me move to a different fund company, but it seems like a sloppy, unforced error by Vanguard.

Really, there's probably not too much harm done to folks using some variety of SpecID. There's no permanent damage done there. But those with AvgCost elections who don't act FIRST will be stuck with AvgCost for the transitioned shares forever — even after they might someday learn the benefits of using SpecID. Then they'll find out that because they didn't change their elections to SpecID before the transition, the option is no longer available to them afterwards. Wow. That just seems so... unfortunate and unnecessary.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by Electron »

Can anyone tell me if Vanguard Mutual Fund Dividends are paid out differently when in a Vanguard Brokerage Account?

Previously, Vanguard fund dividends would credit to my Vanguard Brokerage Settlement fund on the ex-dividend date. One of my funds went ex-dividend on Friday and nothing is showing in the account. However, I have the same fund in a Vanguard brokerage retirement account and dividends set up to reinvest are showing in that account.

I finally went ahead with the transition to the new platform a week ago. It was actually quite time consuming and it is not complete yet. I had to mail in a twelve page signed form to transition an Inherited IRA Mutual Fund Account.

I also had to set up checkwriting in the new brokerage account. That was done online but required that I attach an image file showing the signature. The new platform will meet my needs but I will miss the cumulative statements provided by the mutual fund accounts. In addition, Vanguard's Tele-Account Service does not work with a brokerage account. That was a very convenient service that I used quite frequently.

One disappointment was how Vanguard handled the mid-month dividends accrued in several Municipal Bond funds. Those dividends were set up to go to my brokerage settlement fund yet Vanguard wound up reinvesting relatively small amounts into each fund paying a dividend. The dividends are correctly shown as paying out to the settlement fund in the new account profile.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by beyou »

nalor511 wrote: Tue Jun 08, 2021 8:18 pm
UpperNwGuy wrote: Tue Jun 08, 2021 8:14 pm
JamesSFO wrote: Tue Jun 08, 2021 8:09 pm Coming late to this thread and really appreciate it and wondered: if you want to have a mutual funds only account what would be your non-Vanguard choice(s)? [e.g. is there a reasonable major provider that would let you open a mutual fund only account and then hold the Vanguard mutual funds]
My understanding is that the "mutual fund account" is a concept that is unique to Vanguard. If you go elsewhere, you will have a brokerage account similar to the Vanguard brokerage account.
It's not unique to vg, and it's on the way out everywhere. Fido used to do it.
There are hundreds of mutual fund companies and the vast majority do NOT have brokerage accounts but rather the fund-only accounts. Only a a few of the largest fund companies (namely Fidelity and Vanguard) have made such transition. And in fact the LARGEST asset manager in the world has fund-only, no brokerage.

https://www.blackrock.com/us/individual ... gistration

There are many brokerage firms that got into the mutual fund business later and always had brokerage style accounts (such as Schwab). But companies that started as fund managers, few have transitioned to be general purpose brokers. I think Fidelity was the pioneer and a handful followed.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by UpperNwGuy »

beyou wrote: Sun Jun 20, 2021 1:45 am And in fact the LARGEST asset manager in the world has fund-only, no brokerage.

https://www.blackrock.com/us/individual ... gistration
BlackRock has four times the number of ETFs as mutual funds, and they are the largest ETF provider out there. I don't think mutual fund accounts are any more safe in the long run at BlackRock than at Vanguard. Not having their own brokerage has not hurt the growth of their ETFs.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by House Blend »

Electron wrote: Sat Jun 19, 2021 9:44 pm Can anyone tell me if Vanguard Mutual Fund Dividends are paid out differently when in a Vanguard Brokerage Account?

Previously, Vanguard fund dividends would credit to my Vanguard Brokerage Settlement fund on the ex-dividend date. One of my funds went ex-dividend on Friday and nothing is showing in the account. However, I have the same fund in a Vanguard brokerage retirement account and dividends set up to reinvest are showing in that account.
If you auto-reinvest dividends, the brokerage and non-brokerage handling of VG mutual funds is the same.

If you direct dividends to the settlement account @ brokerage, yes, they do need to settle. Your non-brokerage account(s) have no settling or settlement fund, but have the feature that you can direct dividends from any fund to any other. (And there's nothing special about MMFs in this context.)

FWIW, I direct all dividends from my taxable accounts to my external bank account. My experience has been that the timing of those transactions are the same for brokerage and non-brokerage: if the declaration date is Day 0, and the re-invest date is Day 1, then the funds are credited to my bank account in the early hours of Day 3. In the case of (muni) bond funds, the declaration and re-invest dates are both on Day 0, and those show up in my bank account on Day 2. (YMMV if you use a different bank.)
One disappointment was how Vanguard handled the mid-month dividends accrued in several Municipal Bond funds. Those dividends were set up to go to my brokerage settlement fund yet Vanguard wound up reinvesting relatively small amounts into each fund paying a dividend. The dividends are correctly shown as paying out to the settlement fund in the new account profile.
When you transfer or sell 100% of the holdings in a mutual fund, the accrued dividends (if any) have to go somewhere. Leaving them behind in an account that no longer exists is not an option. From the perspective of the new brokerage account these incoming dividends are not dividends earned within the account.

FWIW, when I converted, it would have been theoretically possible to distribute my accrued muni dividends to my bank account, since that is how my non-brokerage account was configured. But they were shipped to the new fund holding in the brokerage acct, same as yours.

One thing to watch for is that the tracking of distributed dividends from your muni funds will be slightly different. In a non-brokerage account, your statements will show running totals of dividends distributed from January onwards. And the December statement will agree with what is shown on the 1099. However, in a brokerage account a distributed (not auto re-invested) bond fund dividend is not credited until the next month, so the running totals on statements are totals from December of the previous year. However, tax law cares only about when the dividends are earned, not when they are distributed, so your 1099 will show a different number, for Jan to Dec.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by beyou »

UpperNwGuy wrote: Sun Jun 20, 2021 8:08 am
beyou wrote: Sun Jun 20, 2021 1:45 am And in fact the LARGEST asset manager in the world has fund-only, no brokerage.

https://www.blackrock.com/us/individual ... gistration
BlackRock has four times the number of ETFs as mutual funds, and they are the largest ETF provider out there. I don't think mutual fund accounts are any more safe in the long run at BlackRock than at Vanguard. Not having their own brokerage has not hurt the growth of their ETFs.
Most of their open end funds are SOLD by brokers with loads, and they depend on “advisors” to sell their product so the brokers are places like EJones, Raymond James. Yes you can buy them at Fido or Vanguard, but I’ll bet very little is sold without an advisor. No load funds from other shops like Janus Henderson give you the choice of a fund-only account (like “old” Vanguard accounts) or you can buy from another broker.

https://www.janushenderson.com/en-us/in ... account-2/

My point was not safety nor how well the business model serves sales of the asset manager. It was incorrectly asserted above :

My understanding is that the "mutual fund account" is a concept that is unique to Vanguard. If you go elsewhere, you will have a brokerage account similar to the Vanguard brokerage account.

This is absolutely untrue in the mutual fund business.
Fidelity and now Vanguard are in fact the exception and the old Vanguard platform is still the norm for direct sales of open end mutual funds. ETFs are the opposite, there are NO direct to consumer sales at all, only sold through brokerage accounts. I think this was the main driver of the Vanguard transition, to avoid losing direct contact with customers as they move to ETFs which were not possible to sell on the “old fund-only platform” (that and to compete with Fidelity). Ironic since the success of that strategy led to inability to answer phone calls, conversion of open end funds to ETFs sometimes driven by ease to move your assets away from Vanguard’s bad customer service.

Not arguing this is a good or bad strategy, but the old platform absolutely is not unique to Vanguard, and not dead but rather still quite heavily used in the dying open end fund business (dying due to ER of active funds, and move to index/ETFs, not due to their “old” platform since in theory you can buy them from most brokers but we simply are not).

I will happily move to Vanguard Brokerage when it suits me, but their old style platform is in wide usage in the industry including by Vanguard customers. Not as easy to get rid of it as they would like, and not unique.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by Cheez-It Guy »

House Blend wrote: Sun Jun 20, 2021 8:41 am One thing to watch for is that the tracking of distributed dividends from your muni funds will be slightly different. In a non-brokerage account, your statements will show running totals of dividends distributed from January onwards. And the December statement will agree with what is shown on the 1099. However, in a brokerage account a distributed (not auto re-invested) bond fund dividend is not credited until the next month, so the running totals on statements are totals from December of the previous year. However, tax law cares only about when the dividends are earned, not when they are distributed, so your 1099 will show a different number, for Jan to Dec.
Thanks for this explanation. I've not previously read a concise summary of why the numbers differed, and didn't bother looking into it further, but this makes sense.
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by Electron »

House Blend - Thanks very much for the information. That clears up a number of important points.

The mutual fund dividends that were declared on Thursday are payable on Monday so hopefully they will show up in my account early next week. The slight delay compared with the previous account will not be a problem. It could be that Vanguard earns a little extra interest with the later payments.

In hindsight, I might have been better off not converting the mutual fund accounts. The email I received from Vanguard stated that my legacy brokerage platform would be retired by the end of the year. If I took no action by July 11, Vanguard Brokerage Services would have converted the legacy brokerage account to the new platform. My taxable mutual fund account would have remained leaving two separate taxable accounts. The legacy settlement fund (Vanguard Federal Money Market) would have remained with the mutual fund account and a new settlement fund would have been opened in the new brokerage account.

The email did encourage me to transition the mutual fund accounts but it was not mandatory. I will also note that the subject field of the email was "Action required: Transition your accounts today".

I will definitely miss the cumulative account statements provided by the mutual fund accounts. In addition, the transaction history available online had a much cleaner look without any negative numbers. The transaction history also showed the dollar balance at the beginning and end of the specified period.
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Vang MF vs Brokerage Acct—So What?

Post by tominsc »

[Thread merged into here --admin LadyGeek]

Asked and answered, I’m sure, but I’d like a refresher.

What really are the significant differences between Vang putting me in a mutual fund account or a brokerage account? Why should it matter to me at all? It seems from some of the msgs I read here that it matters a whole lot to some folks and I just don’t know why.

I switched a couple years ago. I still own the same mutual funds I always owned. I still rebalance from time to time like I used to. I still take some of my RMD as QCD using checkwriting like I always did. I still put the part of my RMD I don’t need to live on in our non-tax-adv mutual fund like I always did. I never buy/sell individual stocks or ETFs and I almost never exchange into or out of funds more than a couple rebalancing acts a year. So the issue of commissions is not important to me at all.

Frankly, it looks like six of one and a half dozen of the other to me. As near as I can tell, my portfolio just sits there and cooks like I want it to. Am I missing something? Should I be bent out of shape for having to switch to their brokerage account flavor?
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Re: Vang MF vs Brokerage Acct—So What?

Post by Squirrel208 »

A brokerage account is a particular type of investment container, as are IRA, Roth IRA, 401k, or TSP accounts.

Mutual funds are one type of investment that can be purchased and held in the above-mentioned accounts. Same for stocks, bonds, and bond funds etc.
Last edited by Squirrel208 on Sun Jul 25, 2021 12:28 pm, edited 2 times in total.
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Re: Vang MF vs Brokerage Acct—So What?

Post by tominsc »

No offense, but I knew that. I was asking why should I care what sort of wrapper Vanguard uses?
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Re: Vang MF vs Brokerage Acct—So What?

Post by livesoft »

I don't know for sure, but I think one cannot have dividends from a mutual fund AUTOMATICALLY reinvested in a different mutual fund with the brokerage account as one could do with the old mutual fund account.

We still have an old legacy mutual fund account and do have the mutual fund dividends automatically sent to our external checking account.
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Re: Vang MF vs Brokerage Acct—So What?

Post by RickBoglehead »

If you read the many threads, you should see an enumeration of the differences. Those may not affect you, but do others.

But since you moved your accounts already, it is a moot point and waste of time to discuss.
Last edited by RickBoglehead on Sun Jul 25, 2021 12:56 pm, edited 1 time in total.
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tominsc
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Re: Vang MF vs Brokerage Acct—So What?

Post by tominsc »

OK, livesoft. Thx. That’s one diff I didn’t know about.

As for being a waste of time, no learning exercise is a waste of time IMO!
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Re: Vang MF vs Brokerage Acct—So What?

Post by livesoft »

Also, in the early days of these changes, Vanguard did beta testing on their clients (and maybe even alpha testing), so that a number of things didn't really work. But they have addressed most of the issues.

A couple of things that folks probably still need to check are
1. Are beneficiaries still as desired, and
2. Is cost basis method still as desired.

There may be other things to double-check, too.
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Re: Vang MF vs Brokerage Acct—So What?

Post by Squirrel208 »

tominsc wrote: Sun Jul 25, 2021 12:24 pm No offense, but I knew that. I was asking why should I care what sort of wrapper Vanguard uses?
A brokerage account can hold multiple security types with the diversification and asset allocation determined by you. I.e. you can hold a mix of mutual funds, bonds, bond funds, individual stocks and money market funds all within one account.
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Re: Vang MF vs Brokerage Acct—So What?

Post by tominsc »

Thx squirrel.. that does explain it
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Re: Vang MF vs Brokerage Acct—So What?

Post by jeffyscott »

tominsc wrote: Sun Jul 25, 2021 12:01 pmShould I be bent out of shape for having to switch to their brokerage account flavor?
You didn't have to, you chose to. Others have chosen not to.

Like you, the differences would be pretty minimal for the MF account we have, but my conclusion has been why bother changing if I have no interest in buying ETFs, stocks, etc? All I want in the account are vanguard mutual funds and so have no reason to "transition" something that is working fine for us as is.

Is there a reason why you chose to make a change, given that you seem to also have no interest in the additional investments that are available to brokerage accounts?
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Re: Vanguard Brokerage versus Mutual Fund Account Decision thread

Post by LadyGeek »

I merged tominsc's thread into an ongoing discussion.

We also have: Vanguard Brokerage Account Misinformation Correction Thread, but it's from a different perspective and should probably be kept separate.

(Thanks to the member who reported the post and provided links to both threads.)
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