Ready for a Change? A Step-by-Step Guide to Switching from Vanguard to Fidelity
So, you've been investing with Vanguard, and for one reason or another, you're considering making the move to Fidelity. Maybe you're drawn to Fidelity's user-friendly interface, their competitive cash management account, or the wide array of investment options and research tools they offer. Whatever your motivation, transferring your assets from one brokerage to another is a significant financial decision.
But here's the good news: it's much easier than you might think. Gone are the days of endless paperwork and manual processes. Most of the heavy lifting is handled behind the scenes. The key is to be prepared and methodical. Are you ready to take control of your financial journey and explore what Fidelity has to offer? Let's get started.
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| How To Switch From Vanguard To Fidelity |
Step 1: Get Your Ducks in a Row (Preparation is Key!)
Before you initiate any transfer, you need to gather some essential information and make a few key decisions. This is the most important step to ensure a smooth, quick, and stress-free process.
Understand Your Account Type: What kind of account are you transferring? Is it a taxable brokerage account, a Roth IRA, a Traditional IRA, or a 401(k) from a former employer? The type of account dictates the transfer process.
Brokerage and IRA accounts typically involve a "Transfer of Assets" (TOA).
401(k) accounts from previous employers require a "rollover."
Gather Your Vanguard Account Information: You will need your Vanguard account number and a recent account statement. The statement is crucial as it provides a clear list of all your holdings and their associated details. It's best to have a statement from within the last 90 days.
Decide on a "Full" vs. "Partial" Transfer: Do you want to move everything from your Vanguard account to Fidelity, or just specific investments?
A full transfer is often simpler as it closes the account at Vanguard (which may or may not be what you want).
A partial transfer allows you to move select holdings while leaving others behind.
Choose Your Transfer Method: "In-Kind" vs. "In-Cash"
An in-kind transfer means you transfer your existing investments (stocks, ETFs, mutual funds) as they are, without selling them. This is the most common and recommended method, as it prevents any taxable events and keeps your money invested in the market.
An in-cash transfer means your investments are sold at Vanguard, converted to cash, and then the cash is transferred to Fidelity. This can trigger a taxable event if you have capital gains and leaves you out of the market during the transfer period. Only choose this if you plan to completely change your investment strategy at Fidelity.
A Critical Note on Vanguard Mutual Funds: Vanguard's mutual funds (like VTSAX) often come with fees or restrictions when held at other brokerages like Fidelity. To avoid this, many investors choose to convert their Vanguard mutual funds into their corresponding Vanguard ETFs (like VTI) before initiating the transfer. This can be done at Vanguard online or by calling them. This conversion is a non-taxable event and allows you to continue holding the same investment without additional fees at Fidelity.
Step 2: Open a Fidelity Account (or Select an Existing One)
You can't transfer assets to an account that doesn't exist. So, your next step is to either open a new Fidelity account or identify the existing one you'll be transferring into.
Open a New Account: If you don't have a Fidelity account, you can easily open one online. The process is straightforward and typically takes less than 10 minutes.
For a taxable brokerage account, open a Fidelity Brokerage Account.
For a retirement account, open a Rollover IRA, Traditional IRA, or Roth IRA, ensuring the account type matches what you are transferring from Vanguard.
Have the Account Information Ready: Once your new Fidelity account is open, have the account number and routing number on hand. If you're transferring into an existing account, just have the account number ready.
Step 3: Initiate the Transfer from Fidelity's Side
QuickTip: Stop and think when you learn something new.
This is a crucial point: you initiate the transfer from the receiving firm, which is Fidelity, not Vanguard. Fidelity will handle the communication and asset request with Vanguard, making the process much smoother for you.
Log in to Your Fidelity Account: Navigate to the "Transfers" or "Move Money" section on the Fidelity website.
Select "Transfer an Account to Fidelity": You'll be prompted to enter information about the external account you're transferring from.
Fill Out the Transfer Form:
Select Vanguard as the external firm.
Enter your Vanguard account number.
Specify whether it's a full or partial transfer.
Choose between in-kind or in-cash (remember the Vanguard mutual fund conversion!).
Upload your most recent Vanguard account statement. This is a mandatory step that helps Fidelity verify your holdings and account details.
Review and Submit: Carefully review all the information you have entered. Once you're sure everything is correct, electronically sign the transfer request and submit it.
Step 4: Monitor the Transfer and Stay Patient
Once you've submitted the request, the ball is in Fidelity and Vanguard's court. The process is now automated, but it's important to monitor its progress.
Track the Status: Fidelity has an online "Status Tracker" where you can monitor your transfer's progress. You will receive updates as your request moves through the different stages.
Transfer Timeframe: Most full transfers of assets (TOAs) take 5-7 business days to complete. Partial transfers may be quicker, often taking 3-5 business days. Rollovers from 401(k)s can take longer, sometimes up to a few weeks, as they often involve more steps and paperwork from your former employer's plan administrator.
Watch for Potential Delays: If there is a discrepancy in your name, address, or account type between the two firms, the transfer can be delayed. Make sure your personal information is identical on both accounts.
What if there's a fee? Vanguard may charge a transfer or account closure fee, often around $100. Many times, Fidelity will reimburse this fee if your account transfer meets a certain minimum value (e.g., $25,000). You'll likely need to submit a fee reimbursement request with proof of the charge.
Step 5: Re-invest and Settle in at Fidelity
Congratulations! Your assets have successfully been transferred to Fidelity. Now, it's time to get your portfolio settled.
Review Your Holdings: Log in to your Fidelity account and confirm that all your transferred assets are now visible.
Adjust Your Investments: If you transferred a mutual fund that Fidelity can't hold or can't add new funds to, you may want to sell it and purchase a comparable Fidelity fund (like FSKAX for VTSAX).
Consider Fidelity's Offerings: Now that you're a Fidelity client, explore their extensive selection of low-cost index funds, ETFs, and other investment products. Take advantage of their research tools and resources to align your portfolio with your financial goals.
10 Related FAQs: How-To Edition
Here are some quick answers to common questions about switching from Vanguard to Fidelity.
QuickTip: A careful read saves time later.
How to transfer an IRA from Vanguard to Fidelity?
Initiate a Transfer of Assets (TOA) from your Fidelity account, choosing to move your Vanguard IRA. Ensure the account types match (e.g., Roth IRA to Roth IRA, Traditional IRA to Traditional IRA).
How to rollover a 401(k) from Vanguard to Fidelity?
Open a Rollover IRA at Fidelity first, then contact your former employer's Vanguard 401(k) plan administrator to initiate a direct rollover. Fidelity can often provide a "Letter of Acceptance" to facilitate this.
How to handle Vanguard mutual funds during the transfer?
Before you transfer, consider converting your Vanguard mutual funds into their ETF equivalents at Vanguard. This allows you to hold them at Fidelity without potential fees or restrictions.
QuickTip: Reread tricky spots right away.
How to avoid being out of the market during the transfer?
Perform an "in-kind" transfer. This moves your holdings directly without selling them, keeping your investments in the market the entire time.
How to check the status of my transfer?
Log in to your Fidelity account and use their online "Status Tracker" tool to see the progress of your Transfer of Assets request.
How to get my transfer fees reimbursed?
After the transfer is complete and any fee is charged, log in to Fidelity and look for their fee reimbursement request form. You will need to provide proof of the fee charged by Vanguard.
How to ensure my personal information matches?
QuickTip: Pause when something feels important.
Before you begin the transfer, log in to both your Vanguard and Fidelity accounts and verify that your name, address, and Social Security Number are identical. Any discrepancy can cause delays.
How to transfer a joint account to Fidelity?
The process is similar to a single-owner account, but all account holders may need to provide signatures or verification during the transfer process to confirm the move.
How to transfer a partial account?
When you initiate the transfer from Fidelity, select the "partial transfer" option and specify the exact assets and share quantities you wish to move.
How to transfer a taxable account to Fidelity without a taxable event?
Choose an "in-kind" transfer. Since you are not selling any securities, no capital gains or losses are realized, and therefore, no taxable event is triggered.
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