Moving from Vanguard to Schwab

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Chan_va
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Moving from Vanguard to Schwab

Post by Chan_va »

Folks,

I think the time has finally come to get over my inertia and move platforms to Schwab after multiple decades as a Vanguard customer (for better customer service, technology and local presence). I think the steps are as follows. Can someone who has done this confirm that this is right?

1. Move from the old vanguard mutual fund platform to the new brokerage platform (I am still on the old platform)
2. Convert mutual funds to ETF's (majority of funds are in taxable account with significant capital gains)
3. Call Schwab to move over the ETF's in kind

Questions

1. Any Pros/cons I should know about Schwab? (I also have a Fidelity account, and I want to have a 2nd broker for redundancy and hence Schwab)
2. Do I need to convert to the new Vanguard brokerage platform before I make the move?
3. I would prefer to convert from mutual funds to ETF's. Should I do that before I transfer to Schwab or after?

Thanks,
runninginvestor
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Re: Moving from Vanguard to Schwab

Post by runninginvestor »

For (3) you can only convert, tax-free, from the mutual fund share class to the ETF share class at vanguard on the brokerage platform. So that would require you to convert to the brokerage platform (I believe, because I don't think the mutual fund platform can hold ETFs but I've never used it so I'm just basing that on the name).

So to the extent that you are able to do that, you will have to do that at vanguard before you move.

I think this is the list that has the ones eligible:
https://www.vanguard.com/pdf/etfpdf.pdf

The ones that you can't convert, just double check it Schwab that you won't hit any transaction fees for selling. You typically don't, but who knows. You will also have to check at Schwab whether or not you can transfer certain admiral share classes and funds into Schwab.
Fishing50
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Re: Moving from Vanguard to Schwab

Post by Fishing50 »

I moved Roth IRA account from Vanguard ETFs to Schwab last week. Worked great.

Only thing I would add: Schwab will match most advertised transfer bonuses. I’ll get $1.5K for moving $500K - $1M.
Retired Military Officer. 80% equites / 20% bonds for life, ZERO emergency fund, 100% taxable in equities (dividends in cash), 33% taxable, 30% Roth, 37% tax deferred. Gone Fishing At 52yrs old!
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galawdawg
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Re: Moving from Vanguard to Schwab

Post by galawdawg »

You may want to look at my Schwab Information and FAQ thread to find out about transfer bonuses, how to find and contact a Schwab financial consultant (if you have $250k or more) and other information about Schwab that may be helpful...

viewtopic.php?t=355173
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Chan_va
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Re: Moving from Vanguard to Schwab

Post by Chan_va »

Thanks to all who replied. Have more research to do on who offers the best transfer bonuses so that Schwab can match. Any quick tips on how best to determine who has the best bonuses?

Mods, may be better to merge this thread with the master thread referenced above.
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galawdawg
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Re: Moving from Vanguard to Schwab

Post by galawdawg »

Check current E*TRADE offers, they are often the best ones to match.
sycamore
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Re: Moving from Vanguard to Schwab

Post by sycamore »

Chan_va wrote: Mon Aug 08, 2022 11:50 am Thanks to all who replied. Have more research to do on who offers the best transfer bonuses so that Schwab can match. Any quick tips on how best to determine who has the best bonuses?
A couple of resources for brokerage bonuses:
1) Doctor of Credit website -- Best Brokerage Bonuses
2) Bogleheads -- The Final, Definitive Thread on Brokerage Transfer Bonuses. It's a very long thread. I'd start at the end of thread (follow the link) and read backward to see the latest.
MrCheapo
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Re: Moving from Vanguard to Schwab

Post by MrCheapo »

I get it that Vanguard isn't great and I get it that sometimes the way an employee behaves puts your back and you swear never to do business with them. But if what I bolded is correct, then you are paying a heft fee for your principles. And I don't think that Schwab will be all that better *overall*. I have Fidelity and Vanguard. To be sure they are different and better in some areas than others. But overall they are comparable.
Chan_va wrote: Mon Aug 08, 2022 10:42 am Folks,

I think the time has finally come to get over my inertia and move platforms to Schwab after multiple decades as a Vanguard customer (for better customer service, technology and local presence). I think the steps are as follows. Can someone who has done this confirm that this is right?

1. Move from the old vanguard mutual fund platform to the new brokerage platform (I am still on the old platform)
2. Convert mutual funds to ETF's (majority of funds are in taxable account with significant capital gains)
3. Call Schwab to move over the ETF's in kind

Questions

1. Any Pros/cons I should know about Schwab? (I also have a Fidelity account, and I want to have a 2nd broker for redundancy and hence Schwab)
2. Do I need to convert to the new Vanguard brokerage platform before I make the move?
3. I would prefer to convert from mutual funds to ETF's. Should I do that before I transfer to Schwab or after?

Thanks,
exodusNH
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Re: Moving from Vanguard to Schwab

Post by exodusNH »

MrCheapo wrote: Mon Aug 08, 2022 3:23 pm I get it that Vanguard isn't great and I get it that sometimes the way an employee behaves puts your back and you swear never to do business with them. But if what I bolded is correct, then you are paying a heft fee for your principles. And I don't think that Schwab will be all that better *overall*. I have Fidelity and Vanguard. To be sure they are different and better in some areas than others. But overall they are comparable.
Chan_va wrote: Mon Aug 08, 2022 10:42 am Folks,

I think the time has finally come to get over my inertia and move platforms to Schwab after multiple decades as a Vanguard customer (for better customer service, technology and local presence). I think the steps are as follows. Can someone who has done this confirm that this is right?

1. Move from the old vanguard mutual fund platform to the new brokerage platform (I am still on the old platform)
2. Convert mutual funds to ETF's (majority of funds are in taxable account with significant capital gains)
3. Call Schwab to move over the ETF's in kind

Questions

1. Any Pros/cons I should know about Schwab? (I also have a Fidelity account, and I want to have a 2nd broker for redundancy and hence Schwab)
2. Do I need to convert to the new Vanguard brokerage platform before I make the move?
3. I would prefer to convert from mutual funds to ETF's. Should I do that before I transfer to Schwab or after?

Thanks,
There wouldn't be a taxable event for Vanguard mutual funds that have an ETF share class, with the exception of a handful that can't be converted (e.g. VBTLX/BND.) And for the latter, depending on when they were bought, there might even be a loss that could be claimed by selling the fund and buying a similar (but not substantially identical) bond ETF.
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Monster99
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Re: Moving from Vanguard to Schwab

Post by Monster99 »

Vanguard MF can be converted to ETF with no tax issues at Vanguard. The only issue is that the have to have both MF and ETF class shares for the fund.
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galawdawg
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Re: Moving from Vanguard to Schwab

Post by galawdawg »

MrCheapo wrote: Mon Aug 08, 2022 3:23 pm I get it that Vanguard isn't great and I get it that sometimes the way an employee behaves puts your back and you swear never to do business with them. But if what I bolded is correct, then you are paying a heft fee for your principles. And I don't think that Schwab will be all that better *overall*. I have Fidelity and Vanguard. To be sure they are different and better in some areas than others. But overall they are comparable.
Chan_va wrote: Mon Aug 08, 2022 10:42 am Folks,

I think the time has finally come to get over my inertia and move platforms to Schwab after multiple decades as a Vanguard customer (for better customer service, technology and local presence). I think the steps are as follows. Can someone who has done this confirm that this is right?

1. Move from the old vanguard mutual fund platform to the new brokerage platform (I am still on the old platform)
2. Convert mutual funds to ETF's (majority of funds are in taxable account with significant capital gains)
3. Call Schwab to move over the ETF's in kind

Questions

1. Any Pros/cons I should know about Schwab? (I also have a Fidelity account, and I want to have a 2nd broker for redundancy and hence Schwab)
2. Do I need to convert to the new Vanguard brokerage platform before I make the move?
3. I would prefer to convert from mutual funds to ETF's. Should I do that before I transfer to Schwab or after?

Thanks,
Converting a mutual fund to its ETF counterpart (where available) does NOT result in any tax consequences whatsoever.

And most Vanguard mutual funds (index funds in particular) which don't have an ETF equivalent can be transferred "in-kind" to Schwab. Again, no tax consequences if the shares can be transferred "in-kind."

And the difference between the outstanding 24/7 customer service and the offerings at Schwab and the limited and less than responsive/competent service and offerings at Vanguard is like night and day. I was at Vanguard for nearly thirty (30) years before I moved it all out...lock, stock and barrel. So I speak from experience! :beer
MrCheapo
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Re: Moving from Vanguard to Schwab

Post by MrCheapo »

So the OP is wrong when he/she stated "Convert mutual funds to ETF's (majority of funds are in taxable account with significant capital gains"?
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retired@50
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Re: Moving from Vanguard to Schwab

Post by retired@50 »

MrCheapo wrote: Mon Aug 08, 2022 7:04 pm So the OP is wrong when he/she stated "Convert mutual funds to ETF's (majority of funds are in taxable account with significant capital gains"?
The OP is correct that the funds may have significant capital gains, but when you convert a Vanguard mutual fund to the "sister" ETF while at Vanguard, it's not a taxable event. The new ETF shares will also carry that significant capital gain.

Example: convert VTSAX to VTI. Same fund, two share classes, not taxable, cost basis remains the same as before the conversion.

So, the mistake is to think that converting a mutual fund to a sister ETF is a taxable event. I'm not sure who suspected that.

Regards,
Last edited by retired@50 on Mon Aug 08, 2022 7:16 pm, edited 1 time in total.
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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galawdawg
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Re: Moving from Vanguard to Schwab

Post by galawdawg »

MrCheapo wrote: Mon Aug 08, 2022 7:04 pm So the OP is wrong when he/she stated "Convert mutual funds to ETF's (majority of funds are in taxable account with significant capital gains"?
No. What was incorrect was your statement that "But if what I bolded is correct, then you are paying a heft fee for your principles."

There are no fees, tax liabilities or other costs associated with the conversion of a mutual fund to its ETF equivalent by Vanguard. Such a conversion is not a sale so his capital gains aren't a factor.
toddthebod
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Re: Moving from Vanguard to Schwab

Post by toddthebod »

MrCheapo wrote: Mon Aug 08, 2022 7:04 pm So the OP is wrong when he/she stated "Convert mutual funds to ETF's (majority of funds are in taxable account with significant capital gains"?
OP mentioned that because buying and selling Vanguard mutual funds at Schwab incurs fees, so by converting to the ETF before he moves, he can continue investing in the same funds at Schwab without worrying about future fees, and, once he moves, he would not be able to convert to an ETF without selling and buying, incurring capital gains.
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Chan_va
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Re: Moving from Vanguard to Schwab

Post by Chan_va »

toddthebod wrote: Mon Aug 08, 2022 8:05 pm
MrCheapo wrote: Mon Aug 08, 2022 7:04 pm So the OP is wrong when he/she stated "Convert mutual funds to ETF's (majority of funds are in taxable account with significant capital gains"?
OP mentioned that because buying and selling Vanguard mutual funds at Schwab incurs fees, so by converting to the ETF before he moves, he can continue investing in the same funds at Schwab without worrying about future fees, and, once he moves, he would not be able to convert to an ETF without selling and buying, incurring capital gains.
Thanks. That is correct. ETF’s also have a marginally lower expense ratios and the ability to trade intra day. Not that I plan to day trade index funds, but on the rare occasions I do trade I like to be able to view prices for my trade in real time.
manlymatt83
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Re: Moving from Vanguard to Schwab

Post by manlymatt83 »

Have you considered JP Morgan self directed? Free auto investment into vanguard funds.
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