Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

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DavidInMaryland
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Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by DavidInMaryland »

Has anyone else had difficulty getting Vanguard to transition an old-style mutual fund account to a brokerage account? They have been using carrots and now sticks, and I have finally attempted to take the plunge, but the online conversion fails and tells me to call. And when I called, they had difficulty for a long time, then put me on hold and left me there. I also tried sending a secure message, but they haven't responded.

The account in question is a joint non-retirement account. The error I get is that there is checkwriting, but that seems like it should be common and not an issue (though of course, as I know, the old checks will no longer be valid—I don't care). I do have an identially-registered brokerage account already—ideally I'd just merge them, but if I wind up with two, c'est la vie. I can't move the mutual funds into a brokerage account, or get rid of these funds (which supposedly are going to start charging me $25 a pop any day now) at all.

Anyone else in this same boat?
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arcticpineapplecorp.
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by arcticpineapplecorp. »

no, just had a retirement account. was easie peasy. give them a call and i'm sure they'll get it straightened out. after all they want to complete this transaction, right?
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dukeblue219
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by dukeblue219 »

You could always transfer to a more competent organization like Schwab or Fidelity.
Nowizard
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by Nowizard »

We have not transferred our account, have no need to do so, have not been hassled or even contacted in that regard. All funds are in retirement accounts other than MM if that makes a difference, and all are in mutual funds, Traditional and Roth accounts, no ETF's. Total invested amounts are significant.

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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by fsrph »

DavidInMaryland wrote: Tue Jun 06, 2023 9:03 pm Has anyone else had difficulty getting Vanguard to transition an old-style mutual fund account to a brokerage account? They have been using carrots and now sticks, and I have finally attempted to take the plunge, but the online conversion fails and tells me to call. And when I called, they had difficulty for a long time, then put me on hold and left me there. I also tried sending a secure message, but they haven't responded.

The account in question is a joint non-retirement account. The error I get is that there is checkwriting, but that seems like it should be common and not an issue (though of course, as I know, the old checks will no longer be valid—I don't care). I do have an identially-registered brokerage account already—ideally I'd just merge them, but if I wind up with two, c'est la vie. I can't move the mutual funds into a brokerage account, or get rid of these funds (which supposedly are going to start charging me $25 a pop any day now) at all.

Anyone else in this same boat?
Supposedly, the $25 fee doesn't start till September.

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asset_chaos
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by asset_chaos »

It's easy unless you have a few special---or even not so special---situations. I have a Roth account for which pushing the upgrade button converted that account with no problem whatsoever. On the other hand, my personal account was listed as ineligible to convert for reason(s) the website could not specify. It turned out---and thanks to the Boglehead who suggested this---that if you ever had direct deposit set up for any fund in your account that that halted the conversion. And I had to find where direct deposit is listed and manually remove the authority. But that did do the trick and made the upgrade button appear and the conversion went through. Be aware that if you have a bank account attached to your Vanguard account that conversion will sever the link and concel any auto transfers; it will take 4 or 5 days to relink the bank account, what with varifying the microdeposits and all.

If you have a brokerage account already as well as the mutual fund account, you'll probably end up with two brokerage accounts. That's what happened with me, but about half an hour on the phone with a Vanguard rep got those two brokerage accounts merged.

If someone on the account has a foreign address, you will have to jump through many, many hoops and conversations with Vanguard to convert that account.

There are probably many other situations that cause their conversion system indigestion that I haven't seen (yet). (I've still got a trust account to convert one day, but I've let that one be out of a vague feeling of dread.)

Good luck. You'll get there in the end.
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DavidInMaryland
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by DavidInMaryland »

dukeblue219 wrote: Tue Jun 06, 2023 9:16 pm You could always transfer to a more competent organization like Schwab or Fidelity.
I'm really tempted—I also have a Fidelity account—but it's no longer even clear how to transfer funds out of a mutual fund account. And if I do, I'd like to convert them to ETFs first.
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DavidInMaryland
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by DavidInMaryland »

asset_chaos wrote: Tue Jun 06, 2023 10:06 pm It's easy unless you have a few special---or even not so special---situations. I have a Roth account for which pushing the upgrade button converted that account with no problem whatsoever. On the other hand, my personal account was listed as ineligible to convert for reason(s) the website could not specify. It turned out---and thanks to the Boglehead who suggested this---that if you ever had direct deposit set up for any fund in your account that that halted the conversion. And I had to find where direct deposit is listed and manually remove the authority. But that did do the trick and made the upgrade button appear and the conversion went through. Be aware that if you have a bank account attached to your Vanguard account that conversion will sever the link and concel any auto transfers; it will take 4 or 5 days to relink the bank account, what with varifying the microdeposits and all.
I think you solved it! The website had claimed that the problem was "Checkwriting," but the account also had a direct deposit set up (on Vanguard's end—the employer had already redirected the deposits elsewhere). Deactivating it allowed the transition request to go through online...

It hasn't converted yet, but I think it's on its way (and it does appear to have gained its own new, separate account number, but I'm not sure it really matters whether I have one or two accounts).

Thanks!
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Miriam2
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by Miriam2 »

asset_chaos wrote: Tue Jun 06, 2023 10:06 pm It's easy unless you have a few special---or even not so special---situations. . . . my personal account was listed as ineligible to convert for reason(s) the website could not specify. It turned out---and thanks to the Boglehead who suggested this---that if you ever had direct deposit set up for any fund in your account that that halted the conversion. And I had to find where direct deposit is listed and manually remove the authority. But that did do the trick and made the upgrade button appear and the conversion went through. Be aware that if you have a bank account attached to your Vanguard account that conversion will sever the link and cancel any auto transfers . . .

If someone on the account has a foreign address, you will have to jump through many, many hoops and conversations with Vanguard to convert that account.

There are probably many other situations that cause their conversion system indigestion that I haven't seen (yet).
Thank you asset_chaos for this list of "glitches" or "locks" impeding a smooth transition from a Vanguard mutual fund account to a brokerage account.

Yes there is another special situation we ran into -

The lock we experienced is the Total Stock Market Index Fund investor shares lock. If you ever owned the Total Stock Market Index Fund investor shares - not Admiral shares - in your account - even if you no longer own them and you now only have Total Stock Market Index Fund Admiral shares - there may be a lock on the ability to transition to a brokerage account. A Vanguard rep may need to unlock the fund - even though the old fund may be hidden from your view of your portfolio and you no longer own it, it may still be there in the system.

Vg Total Stock Market Index fund Investor shares = VTSMX, Vg fund # 0085
Vg Total Stock Market fund Admiral shares = VTSAX, Vg fund #0585

We had this in several accounts several years ago. The Vanguard rep would escalate the issue to their supervisor, who then unlocked the lock (took overnight to settle). Then the rep moved the mutual funds from the mutual fund platform to the brokerage platform (no tax consequences btw).

However, my daughter recently found that one Vanguard rep didn't know about these locks (the reps who have been around usually remember the locks or know how to find them). When she asked to have this escalated to their supervisor, the supervisor could not unlock the old fund and instead, simply opened a new brokerage account, then moved her funds over "manually."
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jeffyscott
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by jeffyscott »

DavidInMaryland wrote: Tue Jun 06, 2023 10:17 pm
dukeblue219 wrote: Tue Jun 06, 2023 9:16 pm You could always transfer to a more competent organization like Schwab or Fidelity.
I'm really tempted—I also have a Fidelity account—but it's no longer even clear how to transfer funds out of a mutual fund account. And if I do, I'd like to convert them to ETFs first.
It's really no different than transferring a brokerage account. IIRC, the only difference is that each fund has to be entered, rather than just saying "transfer entire brokerage account". Of course, this doesn't work if you want to convert to ETFs, that requires a brokerage account at Vanguard and then a phone call for the conversion.

We transferred our one mutual fund account with 4 mutual funds to Schwab, after last summer's fee announcement.
DavidInMaryland wrote: Tue Jun 06, 2023 9:03 pm I do have an identially-registered brokerage account already—ideally I'd just merge them, but if I wind up with two, c'est la vie. I can't move the mutual funds into a brokerage account...
I don't understand why you think you can not just transfer the mutual funds to the existing brokerage account? (or is it that Vanguard is not letting that happen, as well as the "transition process" not working?)
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by OhioGozaimas »

Asset_chaos wrote:

(I've still got a trust account to convert one day, but I've let that one be out of a vague feeling of dread.)
I transitioned an RLT Trust account from MF to Brokerage last July, in addition to a T-IRA and a Roth-IRA account.

Both IRA account transitions went through just about as VG had described the process.

Make certain to fully document MF account details before you start any transition.

The Trust account required more handling and more time.

After it “looked like” the Trust transition had been completed, there was a problem. The cost basis was perhaps missing or wrong -- I don’t now recall the specifics. When I called in to report it, I was transferred to a specialist/troubleshooter (my terms for his role). It took about three more weeks for this person to correct the problem.

IIRC, VG never informs you directly when they are “done” with an account transition. Just keep checking the web site until you are satisfied. (The old MF account(s) will still show there, but will be “empty.”)

Good luck!
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by LadyGeek »

This thread is now in the Personal Investments forum (account help).

(Thanks to the member who reported the post and explained what's wrong.)
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by mkc »

jeffyscott wrote: Wed Jun 07, 2023 7:06 am
DavidInMaryland wrote: Tue Jun 06, 2023 9:03 pm I do have an identially-registered brokerage account already—ideally I'd just merge them, but if I wind up with two, c'est la vie. I can't move the mutual funds into a brokerage account...
I don't understand why you think you can not just transfer the mutual funds to the existing brokerage account? (or is it that Vanguard is not letting that happen, as well as the "transition process" not working?)
Based on prior communications with Vanguard, it is possible to transfer existing MF's into existing identically-registered brokerage, but it cannot be done via the online "transition this account". This can only be done over the phone with a rep assisting.

One thing to pay close attention to with a transition is the agent access/authorizations on accounts - if any have Full Agent authorization, you'd be wise to enlist a rep to assist with the transition vs. using the online method. A number of us have encountered issues with agent authorities being lost due to the transition. Not a big deal for most of the access levels since most can be done online, but losing Full Agent will require new, notarized paperwork.
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by jac »

I just read an article about transitioning an account to brokerage and saw this statement :


"Its very important to know that this transition may well have tax consequences if you move your mutual funds over to the brokerage accounts.
In particular, your funds will be locked into whatever they were on the date of transfer. So anything you had, say, in average cost tax basis will be stuck in that.
They say no tax consequences and that all of your historic information switches to the new platform, but that is a misrepresentation and could cost you thousands of dollars because you will be giving up the ability to manage your cost basis on shares you transfer over."
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Re: Difficulty converting Vanguard mutual fund accounts to brokerage accounts?

Post by cas »

jac wrote: Fri Jul 07, 2023 10:49 pm I just read an article about transitioning an account to brokerage and saw this statement :

I recommend Vanguard's FAQ on the transition to get this type of info directly from the source: Moving Your Vanguard Funds to a Vanguard Brokerage Account (version: updated 6/2023)

For example, here's what it says on the above topic:
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 any identically registered brokerage accounts.
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.

If you are currently using the average cost method
(AvgCost):

When you consent to move your mutual fund assets,
you’ll need to instruct Vanguard to temporarily switch
your cost basis method to first in, first out (FIFO). For
any shares that are not already locked into the average
cost method by a sale, transfer, partial conversion or
other disposition, this switch will preserve your
flexibility to choose different cost basis methods for
these shares in the future. Once the fund assets are in
your brokerage account, they’ll be defaulted back to
AvgCost. Please note: This will all happen in our
systems automatically, so nothing changes from your
perspective.

If you're currently using the FIFO or specific
identification (SpecID) method:


When you consent to move your assets, you’ll need to
instruct Vanguard to continue to apply the FIFO or
SpecID election to any sales of your fund investments
after they’re transferred to your brokerage account. This
will ensure that your cost basis method doesn’t default to AvgCost.
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