Betterment to Vanguard: Detailed Transfer Process

Late last year I transferred a traditional IRA from Betterment to Vanguard. My Betterment account had a balance of $14,828.52 .

I decided to switch to Vanguard for more control over our investments, and I wanted to reduce fees as much as possible. I heard how popular Vanguard is, and how awesome their low-cost index funds were, I decided it was worth trying out.

This post is meant to detail how the process went and what I think about Vanguard.

Transferring from Betterment to Vanguard

The process of moving from Betterment to Vanguard involves these main steps:

  1. Going through the transfer or rollover process at Vanguard.
  2. Mail the paperwork.
  3. Wait!
  4. The funds will be deposit into a money market settlement fund in Vanguard.

Step 1: Start the Rollover Process

Head over to the open account page on Vanguard, and select the transfer or rollover option.

Vanguard transfer page.
Vanguard transfer page.

Depending on the type of account you are transferring (taxable or rollover), the process might be different. In my case, I was rolling over a traditional IRA from Betterment, which came from a previous employer’s 401k.

You will end up printing transfer paperwork from Vanguard, and they will guide you through the process. It seemed to be relatively simple, but I did have to run through a few verification steps to get my new Vanguard account setup.

Step 2: Mail the Paperwork

In addition to the transfer paperwork from Vanguard, you will also need the first page of your last statement from Betterment, which is outlined in the Betterment docs. If you want to speed up the process, you can mail it faster. But I opted for sending the letter by regular snail mail.

If you are transferring more than $250,000, the transfer paperwork will need to be medallion signature guaranteed. I didn’t have to go through this with my $14,828.52 transfer.

Step 3: Wait!

Waiting was the most frustrating part of the process. It took about a month for the funds to transfer from Betterment to Vanguard. The process was automated after I sent in the paperwork, but it seemed like it took forever for Vanguard to process everything.

Here is a rundown on the timeline for the whole process:

  1. 11/27/2019: Setup a new Vanguard account.
  2. 11/28/2019: Mail the required paperwork.
  3. 12/11/2019: Funds liquidated in Betterment.
  4. 12/22/2019: The money deposited into my Vanguard account settlement fund (money market account).
  5. 12/26/2019: The funds were available in Vanguard.
  6. 1/9/2019: I transferred the funds from the settlement account to VTSAX.

The timing of the process seemed to work in my favor — the Betterment funds sold during a time when things were going down. And I ended up buying into VTSAX at a lower point than they sold in Betterment. But I was frustrated about how long things took.

If things continued going into a death spiral this month, I would have held off on transferring from the money market account. But since it appears the dust has settled somewhat, I figured this was as good of a time as any without risking missing out if the market started shooting upwards.

Step 4: Settlement

Once the funds are in your settlement account, you are free to purchase other funds. One recent change Vanguard made was lowering the initial investment required to buy Admiral index fund shares to $3,000.

I opted for the Admiral shares of VTSAX. Since it isn’t a substantial balance, I dumped everything into this one fund. Since this is a traditional IRA, and since I have a 401K account with my employer, I probably won’t be adding to this fund. I’m just going to let it sit for at least a few decades and hope it picks up steam.

Vanguard Dashboard

I feel like the vanguard website came from the ’80s. Don’t get me wrong, I love the low-cost index fund options available at the company, but their site seemed to be lacking for a few reasons:

  • Their website design is not intuitive.
  • I noticed that sometimes the site wouldn’t load.
  • When it did load, it sometimes would be slow.
  • The available tools compared to other services seem lacking and out of date.

Comparing the features and info that Betterment provides, Vanguard doesn’t compare. However, all the information you need to see how your funds are performing for each account is there.

From my understanding, Vanguard is all about cutting costs so they can offer low fees. And these reductions become apparent in their dashboard.

Summary

The transfer process from Vanguard is slow, and their website is lacking a modern, user-friendly design. But where it lacks in features, it makes up for in low fees and a solid selection of low-cost index funds.

But I do miss the Betterment dashboard. The Betterment dashboard is nothing less than fantastic.

I’m going to continue using Vanguard for the time being, but I’m less confident now about using Vanguard over the long-term. I want to dive into the Boggleheads Forum and see how other people are managing their funds using Vanguard. One reason I switched was how much I could save on fees, especially as we ramp up our investing. But once I did the transfer and got some experience using their system, I’m now second guessing myself if this was a good move.

Do you use Vanguard or Betterment? Why did you choose that service and what do you recommend?

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Grokking Money
Guest

I did the exact same stuff around May 2018. Vanguard has since then worked a lot on their website. It seems a lot better now.

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[…] we will spend the money we are planning to invest every month. An option is to auto-invest into our Vanguard mutual fund on the 1st of every month. Of course, that doesn’t guarantee anything, but at least we are […]

Chris Bailey
Guest
Chris Bailey

It looks like it’s been about 11 months since you transferred to Vanguard. what is your opinion now for Vanguard over Betterment? I understand the cosmetics of the dashboard is certainly different, but I’m mostly worried about the growth of my investments.