Investment Workshop 51: Transfer-Palooza In Progress

Wanderer
Follow Me

Wanderer

The Wanderer retired from his engineering job at a major Silicon Valley semiconductor company at the age of 33. He now travels the world, seeking out knowledge from other wealthy people, so that he can teach people how to become Financially Independent themselves.
Wanderer
Follow Me

Hello again and welcome back to the Millennial Revolution Investment Workshop! New readers, please click here to start from the beginning.

Hi everyone!

Just wanted to provide an update as to what’s going on. Last week, we decided to transfer our workshop portfolios from TD Ameritrade to Vanguard because of the recent changes they’ve made to their fee schedule. Basically, they removed the low-cost Index ETFs we were using to invest from their commission-free ETF list, meaning that the sweet sweet zero-cost investing we’ve been doing is going away.

Note: After an outcry from not just us but EVERYONE, TD Ameritrade is delaying the implementation of the new fee schedule until January 19, 2018. So at least we have some time.

So basically, we’re transferring. Specifically, we’re going to do what’s known as an in-kind transfer so that we don’t have to sell any ETF units and possibly incur a taxable event. Only problem is, TD Ameritrade charges a fee for doing in-kind transfers out their account. Ugh, more fees! I’m starting to notice a trend here…

I Ain’t Paying No Stinkin’ Fees!

So here’s what we’re trying to do: You may have noticed up there that while a FULL account transfer costs $75, a PARTIAL account transfer is free. So it should be possible to get everything out of the account for free without incurring capital gains by exploiting.

First, recall that in our trading accounts, there’s obviously all our ETFs in there, but also a small amount of cash, either leftover from our buys or in income/dividends that are paid out over time.

So what we want to do is first, do a partial account transfer of all the ETF units, but leave the spare cash in the TDA account…

Because this isn’t transferring EVERYTHING out, we shouldn’t get charged that $75 fee. Then, we transfer out the cash into a regular checking account using an electronic fund transfer, called ACH or Automated Clearing House transfer. These should be free to/from our TD Ameritrade account.

Then, we do one more free ACH transfer of that cash into our Vanguard account.

And finally, we close down the empty TD Ameritrade account.

Now, I’m currently working with reader Alex, who has graciously offered to test this out. If it works and everything goes through without any fees charged, I’ll let everyone know and post a step-by-step guide on how exactly to do this. So this is what we’re trying to do, but don’t do it yet because we want to test it out first.

Stupid TD Ameritrade

Amusingly, the irritation at this change has not been limited to this blog. People have been bitching about it all over the place. Check it:

TD Ameritrade Eliminated Low Cost Commission Free Exchange Traded Funds

— Forbes

TD Ameritrade’s recent decision to overhaul its list of commission-free ETFs is just a sign of the times

— The Motley Fool

Some Advisors Frustrated, Disappointed with Changes to TD’s Commission-Free ETF Lineup

— Wealth Management.com

And further investigation by these outlets has revealed that TD Ameritrade basically told companies like Vanguard, iShares and others to pay up, or they’d be taken off the commission-free list. And Vanguard, in classic Vanguard fashion, refused their shakedown efforts believing that doing so would increase their ETF expenses, thereby destroying the very reason we use and love them.

Vanguard made a bet that investors would reward them by sticking with their funds in a different brokerage. TD Ameritrade made a bet that by exploiting people’s laziness they could monetize their commission-free ETF list. Time will tell who was right, but on our part we’re definitely going with Option #1.

Anyway, that’s it for today. We’ll keep pushing our transfer efforts through and once we know it works we will be sure to let everyone know with a step-by-step guide right here on Millennial-Revolution.com.

Lates!

 

 

WORKSHOP TOOLS:


How much does it cost to participate in this investment workshop? NOTHING. Because that's how we roll. All we ask is that you sign-up using the following affiliate links to keep it free forever:


For Canadians:
Questrade

For Americans:
1) TD Ameritrade
NOTE: Due to their recent changes for their commission-free ETF program, we can NO LONGER RECOMMEND TD Ameritrade. We are currently seeking out a new brokerage to partner with and will let you know when we find one.
2) Personal Capital


Disclaimer: The views expressed is provided as a general source of information only and should not be considered to be personal investment advice or solicitation to buy or sell securities. Investors considering any investment should consult with their investment advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decisions. The information contained in this blog was obtained from sources believe to be reliable, however, we cannot represent that it is accurate or complete.

18 thoughts on “Investment Workshop 51: Transfer-Palooza In Progress”

  1. Let me start off by saying, I am a dumb shit that doesn’t know anything.

    Are these fees really that big a deal though? The $75 transfer fee or $7 trading fee may add up to a couple hundred bucks but what about the big picture investment strategy? Your portfolio returned 7% this year? The US market is up 17%. That is way more money than all these fees. With your portfolio of $1.0mn that’s basically a rounding error. I get wanting to lower your costs but don’t you think getting the picture right is way more important?

    Again, I am an idiot and I raise the point because I wanted to understand your thought process.

    Thanks

    1. Why would you want to pay $75 bucks if you dont have to?????? Especially since the “trick ” around not paying transfer fees seem simple enough. Time will tell but to answer your question yes, $75 is a big deal, to me. That could nab me a few pairs of wool socks for winter. For the longest while I’ve been meaning to get some 100% wool socks, I hear they actually keep your feet warm !

  2. Hi Wanderer,

    I wish you all the best in your progress for the transfer. This shows the benefit of flexibility by exploring new avenues when the existing plan starts to show signs of not working in our favour.

    Ben

  3. I’m not sure why you’re taking this so personally. What’s TD Ameritrade’s incentive for offering free trades on products that don’t pay them trailer fees? It’s your right to shop for the lowest provider of services. It’s their right to discontinue products and services that don’t generate profit. You didn’t retire early by offering services for free did you?

    1. They do generate profit… just not as much as they want. TD isn’t exactly hurting for money.

      And yes… DO take it personally… and DO leave when a company offers something and then takes it back. Don’t just ACCEPT fees, actively reward companies that loyally stick to what they offer and use some of your precious time to do whatever you can to punish those that do not.

      Otherwise, you are giving license to these profit-machines to suck more money out of your pocket in future.

      It used to be that banks offered included basic services for the privilege of keeping your money ( which they re-invest and make money off of)… and now very few do because people, over time, came to accept that they should pay fees.

    2. I admit I am a little annoyed that they pulled a bait-and-switch on us, but you’re right. It’s within their right to try to make money, but it’s within my right to take my money and run, and so should you.

  4. Have you checked with Vanguard to see if they will reimburse your transfer fees? This summer I transferred my SEP-IRA and Roth IRA from Scottrade to Charles Schwab to take advantage of Schwab’s offer of free trades for the Roth for as many years as a person had been with Scottrade. (I’m good until 2031!). There were transfer fees for both accounts that appeared on my Schwab transaction list, but Schwab paid them and my accounts were not charged. Ironically, I transferred out of Scottrade because they were bought by TD Ameritrade and I didn’t want TD Ameritrade to be my brokerage firm based on a past experience with them where I was unhappy with their fees!

    1. Oddly enough, Vanguard doesn’t have a reimbursement program. Most other brokerages do since you want to remove as many barriers to switching as possible, but Vanguard doesn’t. It’s strange.

  5. Hello! I am a 42 year old Gen Xer who loves to read your blog. I am also an RIA with TD. I read this blog post and thought you might be missing something and causing a lot of work for you and your readers to switch from TD. When they made the change, I moved from Vanguard ETF’s to State Street which now have LOWER fees than Vanguard!

    For Example:

    SPTM 0.03% .vs VTI 0.04% – Total Us Stock Market
    SPDW 0.04% .vs VEA 0.07% – International Ex-US
    SPAB 0.04% .vs BND 0.05% – Total Bond Market

    There are many more! I would encourage you give an update to your blog to tell people to STOP THE TRANSFERS! Use the new commission-free ETF’s that are also LESS than Vanguard.

    1. I don’t trust them, quite frankly. State Street is now having to pay TD some undisclosed amount of money every month to be listed as part of their commission-free ETF list, so that cost is going to be built into their MERs going forward. Those fees may be low now but I’m willing to bet they’re going to start rising soon.

      And besides, swapping ETFs would be a taxable event, while transferring would not.

  6. Hello Wanderer,

    I’ve been a following your investment workshops now throughout the year and currently have two separate Ameritrade accounts, one Roth and one regular one. Do you recommend that I transfer both accounts to Vanguard? Love your blog and am following the investment exercises religiously! I can’t thank you both enough on what I’ve learned through your blog! Please don’t stop! 🙂

  7. This was such a lame move by TD Ameritrade. I made sure to do my part with an email to them, and I did not realize they delayed the change, I no longer see vanguard options on there? What are your thoughts of the SPDR funds?

    1. Vanguard refused to pay a listing fee and were delisted. Therefore, that means SPDR ended up paying. I’d expect that move would increase their MERs over time, so I’m still going to stick with Vanguard.

    2. As a manager of a public fund, it is rare that a fee goes up for these types of products. It usually requires a board meeting and there needs to be justification for higher fees. The SEC is always interested in the why as well. We lowered our fund fees 26 bps and STILL had to get it approved and file a public disclosure. Raising fees is harder than one on the outside could imagine. With all the new DOL rules, fee compression is the direction of this industry, not expansion.

      If you weren’t feeling burned by TD at the moment, and had no skin in the game, and went to the TD site and found the low cost, commission free etfs, you would think it’s a great deal! Until they are higher than Vanguard, I view this as a great thing for investors. Wanderer has a point to not switch and create a taxable event, but for new money, why not use the lower SPDR commission free etfs, all else being equal?

  8. Did Ameritrade really postpone the new commission free ETFs? I don’t see any of the vanguard ones under their commission free ETFs list. I never received that email, either, saying they were postponing it until January 2018.

Leave a Reply

Your email address will not be published. Required fields are marked *

Social Media Auto Publish Powered By : XYZScripts.com