Long foreshadowed, Vanguard is finally pulling the plug on the legacy mutual fund account platform that has served investors for decades.
The move isn’t surprising. Vanguard has been pushing customers to transition from the old system to its brokerage platform for a decade, sometimes with dollar incentives. In 2023, for instance, Vanguard added a $25 fee for each mutual fund account still held on the old system. (Investors with over $5 million were exempt.)
But Vanguard is finally done with the nudges and incentives. As they recently told one IVA reader via email:
You are receiving this notice because your Vanguard mutual fund account remains on our legacy investment platform, which will be retired for retail accounts by the end of 2025.
Going forward, our Vanguard Brokerage Account platform … will be the only way retail clients can invest directly with Vanguard.
Another Vanguard investor holding physical mutual fund shares was told to return them or his shares would not be eligible for “transition” to the new system.
Yes, you read that right. Vanguard’s aggressively preparing to shut down its mutual fund account platform by the end of 2025.
Vanguard may call it an “upgrade” on its transition website, but for anyone still holding on to a legacy mutual fund account or shares, this is an unwelcome change—and you don’t have a choice in the matter.
Or, I suppose you do have a few choices. You can do nothing, in which case, Vanguard will simply transition your account to its brokerage platform, whether you like it or not. You can take your money to a different provider—think, Fidelity, Schwab, E*TRADE, etc. Or, you can request a distribution—sell your shares and take the cash out. (Beware of the tax implications if you go the cash route.)
Assuming you want to keep your money invested at Vanguard, here’s what you need to be aware of: