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  • Transferring to Vanguard

    So I am trying to help a friend out with their investments.  Fortunately I found WCI early in residency and was able to use Vanguard for low cost index funds for my Roth IRA and taxable accounts.  My friend has an adviser at Morgan Stanley, for taxable, roth ira, and ira.

    His IRA and Roth IRA have 18 funds each, with an ER close to 1%

    I want to find a way to transfer to Vanguard as inexpensively as possible.

    The problem is I believe there is a fee to sell non Vanguard funds at Vanguard, that could be 36 trades at a fee of $20-$50 could add up to a decent haircut.   He can contribute 50k to vanguard money market to get him to Voyager service, which I believe will lower the fee to $20

    Does anyone have experience or advice on how to do this?

    I was thinking option #1 would be to see if morgan stanley has fees to sell in his IRA, liquidate to cash and then transfer to Vanguard IRA.

    The taxable would just be to transfer in kind, or consider selling if there are not many capital gains.

    Open to any suggestions, and WCI does your Fire your financial adviser course have a section on how to end your relationship and transfer your money in less than ideal investments into something else?

    Thanks for any advice.

  • #2
    I agree with your advice to him. There is no harm in him calling Vanguard and asking for guidance with the transfer, in order to minimize his expenses.

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    • #3
      I called previously and ran through 5 of the 18 funds.  They all had up to a 50$ fee to sell, can transfer in kind and hold but I would prefer to be done with a unnecessarily complex portfolio.  I suspect the adviser put him in all these funds for that exact point of making it difficult to leave

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      • #4
        The total 'family' assets can be used to determine the Vanguard service level (in turn the discount for executing liquidation trades).  I would be a bit hesitant to liquidate and transfer unless there is a clear plans/asset allocation in place moving forward with Vanguard.  Though not a huge fan of risk assessments, I would have your friend do the one on Vanguards site to provide some sense of an asset allocation.

        Measure twice, cut once is applicable here.

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        • #5
          I was in a similar boat, but didn't have to pay more than $8 each to sell the funds.

           

          The best way is to sell them before transferring unless he plans to hold them.  Only the taxable account has consequences for selling, but in this case, there are likely bigger consequences to holding.

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          • #6




            I was in a similar boat, but didn’t have to pay more than $8 each to sell the funds.

             

            The best way is to sell them before transferring unless he plans to hold them.  Only the taxable account has consequences for selling, but in this case, there are likely bigger consequences to holding.
            Click to expand...


            This was my line of thinking as well, I guess he can call his FA and ask how much it is to sell each fund.  I was surprised there is a fee for selling funds because I am so used to using vanguard for vanguard funds.

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            • #7




              The total ‘family’ assets can be used to determine the Vanguard service level (in turn the discount for executing liquidation trades).  I would be a bit hesitant to liquidate and transfer unless there is a clear plans/asset allocation in place moving forward with Vanguard.  Though not a huge fan of risk assessments, I would have your friend do the one on Vanguards site to provide some sense of an asset allocation.

              Measure twice, cut once is applicable here.
              Click to expand...


              Yes already had that discussion.  He wants a simplified 3 fund portfolio, with 90% (2/3 US 1/3 intl) stock 10% bonds.  Have an investor policy statement made etc.  This is the last hurdle in how to do it cost effectively.

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              • #8
                I did the same thing recently.  I fired our financial advisor and then sold much of our IRA holdings in Schwab (they were 0 commission sales) and then purchased a few large chunks of Vanguard ETFs for $4.95 a trade.  Then when I transferred everything to Vanguard, we qualified for Flagship (because of new VG ETF holdings).  I have started selling any remaining dogs for free (25 free trades per year, per person).

                But I don't know about sales commissions for your friend's stuff in Morgan Stanley.

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                • #9




                  I did the same thing recently.  I fired our financial advisor and then sold much of our IRA holdings in Schwab (they were 0 commission sales) and then purchased a few large chunks of Vanguard ETFs for $4.95 a trade.  Then when I transferred everything to Vanguard, we qualified for Flagship (because of new VG ETF holdings).  I have started selling any remaining dogs for free (25 free trades per year, per person).

                  But I don’t know about sales commissions for your friend’s stuff in Morgan Stanley.
                  Click to expand...


                  Yea, we are not dealing with flagship numbers  .  But at least we can stop this while he is young with a relatively low balance and a long earning horizon.

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                  • #10
                    Then I would figure out where it's cheaper to sell:  Morgan Stanley vs Vanguard as Voyager client.  And there are some mutual funds that VG won't allow as transfers in kind (the VG transfer folks will go over this before the transfer).  If he has any of those, he must sell them in Morgan Stanley no matter what, if he's making a clean break.

                    At least the purchases of VG funds/ETFs in VG will be free.

                    I can attest that it feels great to get this done!

                    Comment


                    • #11




                      Then I would figure out where it’s cheaper to sell:  Morgan Stanley vs Vanguard as Voyager client.  And there are some mutual funds that VG won’t allow as transfers in kind (the VG transfer folks will go over this before the transfer).  If he has any of those, he must sell them in Morgan Stanley no matter what, if he’s making a clean break.

                      At least the purchases of VG funds/ETFs in VG will be free.

                      I can attest that it feels great to get this done!
                      Click to expand...


                      Thanks, that is what I am going to find out.  I think at worst will be a few hundred dollars in fees.  Sometimes learning a lesson the hard way is worth it, I guess

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                      • #12


                        I think at worst will be a few hundred dollars in fees. Sometimes learning a lesson the hard way is worth it, I guess
                        Click to expand...


                        The liquidation is likely the 'inexpensive' part.  Hopefully, it was not too expensive a lesson overall.  At least (I hope) no WL sales were involved in your friends 'lesson'.

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                        • #13
                          Exchange all funds to money market or settlement/cash funds in existing account. Initiate transfer in kind from existing account to Vanguard. Redeploy in Vanguard funds once transfer is complete. No fees or expenses.

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                          • #14
                            I recently moved my accounts from USAA to Vanguard. These include a Brokerage account, Traditional IRA (non-deductible), and a Roth IRA.  My Simple IRA account is already at Vanguard.  I want to simplify my accounts and lessen my fees. My accounts from USAA were complex with 8-9 different mutual funds within each account.  Now that I have moved the accounts to Vanguard I learned that there is a $50 fee to sell each mutual fund within the account.  Should I just bite the bullet and sell the USAA mutual funds at $50 each to invest in the lower cost Vanguard funds? Is this just an expensive lesson to learn?  Any other suggestions?

                            Thanks in advance for any advice that you have!

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