Vanguard sent out an email with some updates coming to their fee schedule, effective July 1, 2024. I’ll post the full email image at the end of this post and you can see the updated Vanguard fee schedule at this pdf.
Two things that jumped out, as pointed out by readers:
- Vanguard added a $100 Account closure and transfer fee: “A $100 processing fee may be charged for account closure or transfer of account assets to another firm.”
This can be very relevant for those of us who like to transfer brokerage funds to get brokerage bonuses. I’m not certain if the $100 (which “may be charged”) will apply when transferring out partial assets or a portion of one holding. Regardless, it’s a new thing to be worried about with Vanguard. Some people find Fidelity to be the best brokerage hub account.
2) Vanguard added a 1% fee on some foreign dividends: “Foreign securities and American Depositary Receipts (ADRs) dividends fee: A fee of 1% on the gross dividend amount will be charged when a dividend is paid on a foreign or ADR asset held in U.S. dollars.”
I haven’t fully wrapped my head around this yet, but this might substantially increase the overall expense ratio for foreign holdings. For example, I keep a chunk of my investments in VXUS which has an expense ratio of .08%. Let’s say that the stock gives around 3% in annual dividends annually. The expense ratio would end up being .11% instead of .08%. (For each $100 in VXUS holding, you’ll pay $.08 for the .08% expense ratio, plus you’ll pay $.03 for the 1% cost on the $3 of dividends paid. Total cost ends up $.11 per $100 for a total expense ratio of .11%.) Readers note that the 1% fee is only for stocks that trade on foreign exchanges, not funds like VXUS which trade on US exchanges.
3) $25 for broker-assisted trades: “A $25 broker-assisted commission will be charged for each Vanguard mutual fund1 and Vanguard ETF® (exchange-traded fund) trade placed over the phone and for closing transactions placed by Vanguard Brokerage Services® to cover a margin call or satisfy an outstanding debt owed in your brokerage account.”
The changes aren’t terrible overall, but I am weighing whether to switch from Vanguard to Fidelity or another brokerage. Feel free to share your analysis or thoughts about the various fee changes in the comments below.
Vanguard must have decided that Fidelity is the inferior brokerage for the consumer and that they will be targeting higher income clientele from now on. That always works out well for banks.
Meanwhile at Fidelity, I can get the lowest fee 500 fund on the market and not think about the market at all. Which of these companies sound closer to Bogle’s vision?
If you’re just investing in that one fund.
Which low fee Fidelity 500 fund are you referring to?
Question for the community about opening an account with Fidelity and then transferring from Vanguard.
Will Fidelity reimburse the $100 fee from Vanguard like other brokerages do?
If so, then there wouldn’t be a reason to do the transfer before July would there?
Generally, > 25k
Thanks
From my Fidelity account statement this cycle — In June 2024, Fidelity will implement a new service fee for some ETF and mutual fund purchases. This service fee will apply to a limited number of ETFs and mutual funds offered by providers that do not pay Fidelity a direct, asset-based fee to support their ETFs’ and/or mutual funds availability on our brokerage platform, including support for shareholder support services, the provision of calculation and analytical tools, and general investment research and education materials regarding ETFs and mutual funds. Customers purchasing these ETFs and mutual funds will be charged a service fee of up to $100. The applicable service fee will be shown on the trade verification page when placing an order for one of these ETFs or mutual funds. Please note that ETFs that are supported by their provider through an asset-based fee (and exempt from the service fee) will not be marginable for 30-days after purchase.
Unsure if Vanguard ETFs would fall under this fee or not.
It shouldn’t apply to Vanguard ETFs. It’s for some more obscure ETF providers that don’t pay anything to Fidelity for listing.
I doubt Vanguard pays anything to Fidelity..
Only applied to Simplify Asset Management, AXS Investments, Day Hagan, Sterling Capital,
Cambiar, Regents Park, Rayliant, Adaptive and Running Oak
Just had a convo with Vanguard about a couple of the fees that applied to me.
The 1% foreign fee does not apply to VWIGX or VXUS, I hold both. Designed for individual foreign equity holdings.
The $100 closure/transfer is for full outgoing ACATs.
$100 closure/transfer on regular taxable brokerage accts and on IRAs? Or just IRAs?
It was my understanding that it is all accounts, brokerage and retirement.
It’s about costs. Shareholder owned. Just leave it inactive
Thanks Jack
ADRs *do* trade on US exchanges, that’s what the ‘A’ literally means. One recently popular ADR share is ARM, which is a British company.
the enitre bogleheads forum must be pretty safe with their 5m in assets?
Can I transfer my VTI + VXUS out, but keep my Settlement Fund that is NOT invested in Money Market Fund? (it earns 5.3% APY still in settlement fund)
Of course. You can keep uninvested cash in a brokerage account…
Yes of course, just keep in mind that if you want to transfer it out after July it will cost you $100 to do so.
you can just withdraw down to zero? If it’s just in cash, there’s no transfer.
The terms say transfer of account assets. Cash is an asset. I talked to them about this last night. They told me yes there would be a fee.
with that logic, there’d be a fee for any withdrawals, including RMD?
It would seem so, yes. That’s why I’m moving my and p2 IRAs out of there.
No, that’s not how the fee works. It’s $100 account closure or transfer of assets to another firm.
most firms have a fee like that, albeit not as high but I wouldn’t be surprised if some follow suit and raise their closure/transfer fees.
How are you withdrawing it if you’re not transferring it? Does vanguard send you a check? I am not at the age of RMD so I don’t know what they do for that. I didn’t have any fee in mind when I bought CDs intending to hold to maturity then take the money elsewhere. Now part way thru holding them they spring this fee on me. I’m not going to hang around to see how that works out when they are telling me verbally there will be a fee and I can just go elsewhere.
I control my mother’s RMD, they used to sent a check but now is ACH.
I transfer money in and out of my brokerage account to my bank account all the time. No way they would start putting a fee on cash transfers like that. While I am not 100%, I’d be willing to bet a lot that the fee is only for full closure or transfer of assets to Merrill, Fidelity, etc.
Like I said I did call and ask them and that’s what they told me. Then when I asked how to sell my CDs because I don’t have the required minimum to sell them myself on the website, they tried to tell me the transfer fee is only if you call and have them make the transfer. However, that’s not what the document says and I only go by what’s in writing. I asked where that is in the document and they said it’s in the email. I pulled up the full document and didn’t find that in there either, it just states the same as what’s in the email. I would advise to not go by anything they tell you verbally, only what’s in the written document and that clearly says transfer of assets. It doesn’t state any exceptions. I’m not sticking around to find out what’s true or not. Good luck if you want to do that.
I do everything on the website so no broker-assisted fees for me. That $25 is probably the fee you’re stuck with then. There are no fees for in and out cash in my brokerage account or for RMD distribution. I’m good with that.
The fee is for a complete withdrawal, zeroing out. Taking an RMD etc. doesn’t empty you out, hence no fee.
I don’t think Fidelity has any fee like that but who knows what they will do. I’m sorry that I ever bothered with brokerage houses. They are a real pita.
Sort of a standard thing in financial life when building wealth. We all deal with aspects with don’t like with banks, brokerages, insurance, etc.
I don’t think withdrawal equates to transfer of asset. You aren’t transferring fund/cash to another institution
That’s not traditionally what account closure / full transfer means. If it does leave a dollar.
Vanguard has made it pretty clear over the past few years they’re no longer interested in being a brokerage to individuals. Seems to be strategic and intentional.
I only have IRAs at Vanguard.. Traditional and Roth.. Which brokerage do people here recommend transferring to? Fidelity? and is there any IRA bonus at Fidelity?
I already have a normal Fidelity brokerage account but I don’t have any IRA accounts open at Fidelity.
TIA!
I’m not aware of any bonus at Fidelity. E-trade and Schwab are also good brokerages that have a bonus for transferring in (not sure if both apply to IRAs though). But if you don’t plan to trade, anything really, go for some bonus from anyone.
I have a relationship manager at Fidelity because of the plan at work. He was able to find us a $500 bonus for transferring in $500k of external IRA last year. It’s not much, but there is something there.
Fidelity is good for a “hub” account. Personally I have consolidated my banking here (I use the brokerage sweep as primary checking – competitive interest and convenient for triggering direct deposit ) and will be moving some retirement out of vanguard shortly. Ironically their lack of a bonus is another reason to use them as a hub.. no yearly bonus to incentivize closing your account lmao
(Although, usually I just leave my portfolio at whatever brokerage is current/recently getting a brokerage bonus. Then I transfer to the next one, so 1-2 times per year. I see no reason to go back to a “hub” account really)
I use Merrill, to get the Preferred client bonus with BoA.