Looking for serious opinions on what to go about Vanguard blocking and loudly disparaging Bitcoin ETFs and the whole Bitcoin space. Bitcoiners are understandably furious but I want to move past the "rage quit" stage and move on to the serious exploration of the option available for traditional investment accounts. Moving away from Vanguard has serious real world costs and I personally cannot decide what to do. Vanguard Key Pros: Lower fees - they have drastically lower fees than almost anyone of comparable products. Where fees are lower at a competitor its usually on an inferior product (e.g. Schwab has lower retirement date funds because they force a large portion into cash at zero interest so even if the fee is lower your net returns are still worse). If you assume you have a 401k/IRA balance of $100k and you plan to max out contributions and invest for 30 years even just 30 bps higher in fees would be roughly $150k over the life of that account. Are you seriously willing to "pay" $150k on principle to punish them for dunking on Bitcoin? Better security -Vanguard is the only major investment advisor I can find that supports FIDO keys for 2FA. Even Fidelity doesn't support them and forces you to use your phone number, leaving you vulnerable to SIM swap attacks. I think people underestimate this risk. My understanding is that Fidelity or another investment advisor does not legally have to make you whole if their system is not compromised, e.g. you get SIM swapped which they have no control over. Might they help make you whole anyway? Maybe, who knows. This is an known unknown that scares the heck out of me. No salespeople harassing you - most investment advisors are constantly trying to sell you bullshit investments based on what makes them the most money. It's like have a car dealer on speed dial 24/7. I cannot overstate how frustrating this was and how wonderful it was to move to Vanguard and have this disappear. Not ESG crazy - Unlike Blackrock they are truly more passive in their investments, and are not WEF crazy wackos trying to remake the world in their image. They mostly just want to passively invest at the lowest cost to benefit their customers unlike Larry Fink and Blackrock. There are others but I think these are most important.
Vanguard Key Cons: Trashing Bitcoin/Paternalistic attitude of management - This is really disappointing as they are one of the biggest asset managers and have massive influence. However for me personally this has zero direct effect. I hold everything in self custody and don't want to buy the Bitcoin ETFs anyway. Taxes - (not financial advice) my understanding is if you have taxable accounts and want to transfer you have to sell everything to do so. So you will have to realize any capital gains and take the tax hit if you want to move any assets in taxable accounts. HUGE downside to moving.
So I see the true tradeoff as: do I want to stand on principle to leave Vanguard because of this even knowing it comes at a huge personal financial cost and potential security risk?
My current response: I am going to wait and see. I have contacted Vanguard customer support to express my displeasure and explain I am considering eventually moving some or all assets if this is not reversed. I am hoping a public pressure campaign will solve this without individuals needing to take a personal financial hit. Frankly it is hard to me to take a big financial hit on principle that could be spent on stacking for self custody sats. I never wanted the ETF and don't really even care about it either way.
What are your thoughts? Any actual Vanguard customers want to share their approach?
this territory is moderated
You're basically correct. Moving will potentially be expensive if you have taxable accounts that have gains. But if you have non-tax accounts that can be rolled-over, then it's not really that bad (but there'll be paperwork...).
Of course, you could also have accounts at Vanguard you can't move, such as employer plans. In that case, you're just SOL. But in those accounts you're probably hosed anyway as you often can't choose much anyway.
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If the assets (stocks, etc) are in a Roth IRA at Vanguard, you can tell Vanguard to sell $XXXX and turn them into dollars. Those dollars will stay in the Roth. Then you can transfer those dollars from the Vanguard Roth to Fidelity Roth (or whoever). Then you use those dollars to buy ETFs in Fidelity. You can have accounts at both companies. Current rules state that gains in the Roth account will not be taxed when you start withdrawals, given you have reached the appropriate age.
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10 sats \ 2 replies \ @anon 25 Jan
The posts on potentially tax free transfers are totally fair, though I again want to stress they are limited depending on what the type of account is and what assets you are invested in. However my main concern by far for financial cost is the investment fee and thus net return for comparable funds at competitors. Even a few basis points in extra fees over 30 years could be tens or hundreds of thousands of dollars. Just 30 bps extra in fees on an average sized IRA (lets say thats $100k for easy round numbers) compounded for 30 years is just shy of $150k. This is a WAY bigger cost than a potential few thousand $ tax hit today.
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I agree. Fell into the NPC trap and have that money tied up in IRAs now. Been tough to pull the trigger on pulling out the cash and using it elsewhere...
This is what we are all sold - Give us your money. Number goes up with inflation. We'll take half. You'll be happy with that because you are ignorant.
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I forgot to spell out a key assumption, its $150k in extra fees/lost net returns assuming you max out your potential IRA contributions to that account every year for 30 years. Said differently you keep contributing to this account and don't just let it sit.
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25 sats \ 2 replies \ @Wumbo 25 Jan
I don't know what Tax farm you are on but I believe in the US you can do a transfer between brokage companies without selling.
What is an in-kind or ACAT transfer?
An in-kind or ACAT transfer allows you to transfer your investments between brokers as is, meaning you don't have to sell investments and transfer the cash proceeds — you can simply move your existing investments to the new broker.
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0 sats \ 1 reply \ @anon 25 Jan
You are correct. The big caveat as stated at this link is: "most stocks, bonds, options, exchange-traded funds and mutual funds can be transferred as is. Still, some investments — particularly those not offered or supported by the new broker — will need to be sold," Important - I am not an expert here, this is just my best pleb understanding. Maybe I'm a weird outlier but when looking at Vanguard versus a few other brokers, most of the Vanguard funds I'm using are not offered at competitors. Most investment advisors seem to want you in their funds and not in a competitor's fund, so they often refuse to offer them. If you just hold individual stocks, bonds, and non-Vanguard funds you may be okay to do an in kind transfer and avoid the tax hit. Also, some brokers do seem to offer some Vanguard funds so maybe it's more possible than I think. But it's at least daunting and a lot of work.
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According to my guy at Fidelity, they have all 11 ETFs available.
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I want to move past the "rage quit"
why?
it is hard to me to take a big financial hit on principle
oh... i get it...
i used to be a vanguard customer, index funds are socialism.
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You should check with a CPA. If you sell, move and rebuy within 30 days, maybe no tax implication.
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0 sats \ 0 replies \ @fm 25 Jan
What are your thoughts?
Not a Vanguard client, But i think its about exposure. Having Vanguard an 8% of Blackrock.. and how much % of the other competitors?
This way they will earn from both sides
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