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What Does USAA’s Investment Business Sale Mean for You

USAA sold its investment businesses to Victory Capital and Schwab in July 2019 and is now a Victory Capital Investment Franchise. Here's how it affects you as a customer.
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USAA sold to Schwab

USAA’s investment management business recently changed ownership. USAA serves 13 million members, employs nearly 34,000 people, and has a net worth of $30 billion, so this was a significant transaction. Despite these big numbers, USAA was still considered small in the world of financial services companies. That, as much as anything, was a driving factor for the sale.

Here’s what you need to know about how that might affect your relationship with USAA.

When did USAA sell to Victory Capital?

USAA sold its investment businesses to Victory Capital and Schwab in July 2019 and is now a Victory Capital Investment Franchise. Under terms of the agreement, Victory Capital acquired USAA Asset Management Company for $850 million, plus the opportunity for additional contingent payments based on future business performance

Let’s analyze how that affects your plans for financial independence.

The sale of the Asset Management Company includes USAA’s mutual funds, exchange-traded funds, and 529 accounts. It closed in 2019 and Victory expects to finish moving the accounts over to their systems during 2020.

The Investment Management Company includes USAA’s brokerage and managed-portfolio accountsThe sale of USAA’s wealth-management business to Schwab is expected to close later in 2020.

Why would USAA sell these assets, why are these companies buying them, and what’s going to happen to your fund shares?

Consider this. USAA’s investment managers were competing with companies that manage at least 10x the clients and a thousand times as much money. USAA’s fixed expenses were spread over a much smaller base. For every $1 of fixed expenses that the gigantic corporations spent per client dollars, USAA was paying over $1000 of members’ money. Eventually (sooner rather than later) that was creating a business model that was unsustainable.

Over the years I’ve spoken with USAA’s managers about their investment business, and I’ve attended USAA’s annual influencer conferences since 2011.

I’ve also interviewed Matt Dennis, the Chief of Staff & Director of Investor Relations at Victory Capital.

When the Schwab sale completes its regulatory review then I’ll talk with them as well.

The Bottom Line:

Your shares in USAA-branded funds still belong to you, and now the funds are run by Victory Capital. If you’ve signed up for USAA’s wealth-management services, then Schwab will manage your investments for you.

Members do not need to take action on their accounts.

The new firms have much more experience (and size) than USAA would ever have achieved with lower expenses. After the transitions, Victory Capital and Schwab expect to handle these funds better than USAA. That’s a great financial deal for the account holders, although it might change your original reasons for investing with USAA.

USAA made an outstanding move for its members who use the company’s other products & services. After nearly four decades with them, I’m glad to see the new focus on its core insurance and banking. They have a long way to go (I’m lookin’ at you, banking) but the company is heading in a better direction.

All net proceeds from this transaction directly benefit members, not the bottom line. For example, after deal closing and account conversion, USAA improved the competitiveness of its banking and insurance products, and distributed an appropriate amount as part of the annual member distribution process in 2019.

This post will review who benefits, and then we’ll discuss your options.

USAA’s corporate policy

A good deal for the members!

A good deal for the members!

The company offers trust, consolidation, and convenience to its members– for life.

During the last 20 years, USAA has refined another financial core value:

Every product and service has to pay for itself.

This is very different from the rest of the financial industry.

USAA doesn’t use subsidies or loss leaders. They don’t run deficits to gain market share. If one of their divisions wants to boost its insurance program or a credit-card business, then it has to grow it from cashflow or spend its own funds (up front) to make it happen.

We members are paying only for the things we actually use, including prudent risk management. That keeps our premiums lower.

During the decade that I’ve attended USAA conferences, the company has piloted dozens of products and services… and killed off many of them. Even their research center has to make money for the company. (They license their patents.) A few new products were very popular with some of the members but they cost more than those members were paying for their benefits. The rest of us members would have had to subsidize those products or services with our higher fees.

USAA is a private company that doesn’t have to satisfy Wall Street institutions or retail investors. It serves its members, and we pay the operating expenses. I’m happy with USAA’s vehicle insurance because I know that I’m not paying extra to subsidize the launch of their latest life insurance policies… or their mutual funds.

I’m especially happy that USAA plans to “distribute an appropriate amount in the annual member distribution process.”

USAA’s motives for selling to Victory Capital and Schwab

USAA just couldn’t compete in the investment business. Believe it or not, they’re too small.

USAA has over 13 million members, and 1.5 million of them had invested billions of dollars in their fund shares.

That small minority of the members bought funds through USAA’s investment services. An even tinier fraction of the membership paid USAA’s wealth managers to handle their investments for them.

Meanwhile USAA was competing with companies who manage trillions of dollars for tens of millions of account owners. BlackRockVanguardFidelity, and Schwab aren’t just handling more members and assets than USAA. They’re orders of magnitude bigger.

USAA has struggled with this investment scale for years. In 2014, they hired National Financial Services to run their brokerage infrastructure. NFS is a subsidiary of Fidelity Investments. USAA was trying to minimize its fixed expenses (by outsourcing to a world-class back-office contractor) while boosting member services with its own world-class managers.

The business model was unsustainable. USAA could have invested additional hundreds of millions of our member dollars to boost their efficiency (and attract more investors), but it would have been a waste of money. USAA is one of America’s best insurance companies, but they couldn’t outspend (let alone outgrow) the investment industry’s behemoths.

I think USAA has burned through enough member money to find the solutions. It’s time for someone else to deal with the issues.

USAA could have shut down their accounts and funds and returned the cash to their owners. (The financial industry does this all the time with struggling mutual funds.) However, USAA had already spent hundreds of millions of dollars to build those divisions and could recover some of it for the members.

The value of USAA’s investment businesses

New ownership.

Victory Capital manages mutual funds. Over the last six years, they’ve bought the funds from 11 other small investment companies and they manage them for the investors who buy the fund shares.

VC won’t collect management fees from USAA– they earn them from the people who own the shares. Victory gets its owner’s profits from scale and efficiency. The company’s fixed expenses are spread out over many more investment funds, and Victory has paid for the enterprise-class systems to squeeze out the excess costs. In addition, the company consolidates their buy & sell orders for the assets in all of their funds. Their size means that they also get better prices on their trades in the actively-managed funds.

USAA’s mutual funds are tiny in comparison to the rest of the industry. That helps make them nimble, but it’s expensive. Actively-managed funds have much higher research & trading costs than index funds, and expense ratios of 0.5%-1.3% are all too common for an active fund. Meanwhile, passive index funds have expense ratios of 0.03%-0.20%.

As an example, USAA’s Cornerstone Aggressive fund (UCAGX) has an expense ratio of 1.21% to invest roughly $300M. If Victory Capital can reduce that to 1.00% then they’ll save 0.20%– over $600K per year. Some of the savings can go to the fund’s shareholders as a higher return, too.

USAA has 74 actively-managed funds. Every one of them has the same problem of small size and higher expenses.

Victory can solve these problems, and they’re big enough to do it well. You can read more at Victory Capital’s annual report.

The value of military clients

“Oh, you’re in the military?”

USAA’s members are also valuable to companies like Victory Capital and Schwab. Those firms want to attract more military clients.

America’s military population is over 60 million servicemembers, veterans, families, and immediate relatives. 13 million of those people are USAA members, yet only about 2.5 million of them own investment accounts through USAA. Nearly 11 million more USAA members could shop at Victory Capital and Schwab and then those companies could sell to millions more.

Victory will market USAA’s fund brand to another 58 million people with a military affiliation. If they attract just 2-3 million new shareholders then they’ll spread their fixed expenses among twice as many people.

What’s in it for you?

If you’ve bought shares in any USAA mutual funds or ETFs, you’re still the owner of those shares. If you have any investment accounts with USAA (including 529s, IRAs, and taxable brokerage accounts) then you’re still the owner of those accounts.

Let’s answer some of the other member questions.

The funds still have the same USAA brand name. (Victory Capital paid a high price for that brand and the shareholders.) Victory is just the new owner, and they have the tools to reduce the expenses for their clients.

If you’re using USAA’s brokerage, or if you’ve signed up for their portfolio management service, that will be handled by Schwab. You still own the accounts and the money in them, and Schwab has the scale and experience to reduce your expenses there too.

All USAA members benefit from the sales to Victory and Schwab. By the end of 2020, USAA will have a new focus on insurance and banking– without trying to handle an investment branch. There might even be a little extra distribution in the Subscriber Accounts.

In March, Victory’s Investor Relations department reached out to me and I asked for an interview. On 13 April I spoke with Matt Dennis, the Chief of Staff & Director of Investor Relations.

He says that Victory’s CEO is moving the majority of the company’s staff to San Antonio. (USAA’s headquarters has been there for decades.) Their new office of 120 people will include about 50 of USAA’s member service representatives who moved over to Victory as part of the sale of the asset management company. Victory’s back-office operations will stay in Ohio (about 80 people), and another 160 employees are spread across the country in smaller franchise offices.

Victory is already reducing the expenses of USAA’s funds. They’re waiving fulcrum fees during the next year. However, there’s a long way to go on the high expense ratios of the actively-managed USAA funds.

Mr. Dennis says that Victory is also boosting customer service without passing on expenses to their clients. Investors in USAA funds can continue to invest through Victory (with direct sales of their funds) without having to open a brokerage account. All of Victory’s call-center employees are licensed representatives, and members can also ask to speak with a certified financial planner. (USAA has struggled for a few years with this part of member service.) Victory’s CFPs offer free reviews of clients’ accounts to recommend asset allocations and discuss other changes.

Both USAA and Victory are beefing up their website security with wider two-factor authentication and other new infrastructure. (Cyberattacks are a bigger concern than ever, and every major investment firm in the country is enhancing their security.) The cybersecurity branches of both companies are unlikely to let members log in to their accounts through each other’s servers.

Mr. Dennis quickly pointed out that you can always see your USAA fund shares by linking them to USAA’s website or Personal Capital or other financial dashboard aggregator apps. That keeps the “consolidation” benefit.

To manage those shares, however, USAA members who invest in USAA funds will eventually have to log in to a Victory Capital account or call USAA’s toll-free number to be connected with Victory’s call center (or call a Victory phone number directly). This reduces USAA’s “convenience” benefit.

Mr. Dennis promised that Victory Capital will continue to improve its client communications. The company was too quiet during the transition from USAA, and Victory is working harder on direct-mail and e-mail updates. He said they’re also coordinating with Schwab for USAA’s wealth-management clients who are moving over to Schwab’s systems. Victory already does this with Schwab clients for several other fund companies that Victory has acquired over the years.

Victory will continue its financial literacy programs. (They plan to donate $1M in grants to non-profit financial education groups, including military organizations.) Hopefully, they won’t create yet another financial literacy website, and I’ve encouraged them to reach out to military financial conferences and other groups. Victory can support more non-profits and counselors who are already helping military families pay off debt, boost their budgeting, and grow their wealth.

 Pros and Cons of USAA

The change in ownership has enhanced the user experience for USAA members. There continues to be a lot to like about a USAA membership for military personnel.

Pros

Founded 100 years ago by a group of Army officers to provide insurance services. Since that time, it has grown to become one of the top fully integrated financial services organizations in America, offering military members banking, car and homeowners insurance, purchase and refi mortgages, investment advice, credit card services, and a wide range of products and services.

Customer service is placed at a premium and this is reflected in consistently high customer service satisfaction.

For banking services, there are no monthly fee checking and savings accounts, no minimum balance requirements, and no overdraft transfer fees if you opt for overdraft protection.

Your first 10 withdrawals at any of the 60,000 USAA affiliated ATMs are free each month, and all transactions made with any of the 1,200 USAA branded ATMs are also free

USAA refunds up to $15 per month in other banks’ ATM usage fees for transactions at ATMs in the United States.

A highly-rated mobile app is available on Google Play (4.5 stars, 174,000+ ) and App Store (4.8 stars, 1.3 million ratings).

Cons

USAA’s banking is only available to those who have served in the military and their spouses and children. Civilians may take advantage of some of USAA’s insurance services.

Much of USAA’s service is virtual as evidenced by the fact that USAA only has five physical locations in the U.S. Customers needing support will generally have to get it online or over the phone.

Annual percentage yields on investments are competitive, but customers may do better elsewhere. For example, the basic USAA Savings Account has an APY of 0.03% and a minimum opening deposit of $25.

What if you’re unhappy about the sales?

USAA still offers trust, consolidation, and convenience for its members.

You can still trust the USAA brand name on the mutual funds and ETFs, but it’s clear that the majority of USAA members didn’t care about consolidating their investments for convenience.

I’ve heard from several friends and readers who are frustrated with Victory Capital’s transition and communication. (If you’re happy with the transition, then please leave a comment below or contact me!) Victory has committed to improving that.

If you feel that active investing is still the right strategy for your wealth, then give Victory Capital another year to show what it can do. You’ll know it’s working when they reduce the expense ratios of the actively-managed funds.

If you’d still rather pay someone to manage your wealth, then give Schwab a year to prove their skills. They offer world-class service to thousands of investment advisors across the country, and they’ll do the same with their new wealth-management clients from USAA.

If you don’t want to wait for the Schwab acquisition to close, then Schwab will pay you to make the transition on your own. It might seem unbelievable that Schwab will pay up to $500 for you to move now, but it’s a pittance against the total cost of moving over a million of USAA’s wealth-management clients. (Schwab will also recoup some of those payouts from Victory Capital and other fund companies who already pay a revenue share to market USAA funds on Schwab’s systems.) This is one more way to directly reduce your investing expenses.

My spouse and I invested in actively-managed mutual funds in the 1980s and 1990s, and we sure paid the fees for it. We finally recognized the problem at the turn of the century, and we’ve been very happy with index funds since 2004. If you’re no longer happy with active funds then consider USAA’s passively-managed index funds. One of my CFP friends (also a military retiree) likes the 500 Index Reward fund and the Extended Market Index fund.

I’m not going to rehash the perpetual debate of active management versus passive index funds, but I’ll point out that the passive funds will return more than 99% of their benchmark’s performance for extraordinarily low expenses and taxes… and far less of your effort at picking the funds or managers. They’re very cheap for Victory Capital to run, and they’ll probably reduce their expense ratios as they attract more military clients and grow the funds.

If you’re not happy with wealth management from Schwab after getting your $500 incentive then… that’s a tough problem to solve. Schwab has some of the biggest and best operations for the industry’s lowest fees, and if their wealth managers can’t keep you happy then it might be time to change your investment style.

You could search for fee-only advisors through NAPFA, the Garrett Network, or the XY Planning Network. Consider advisors who only charge for specific tasks or projects, with no commissions or other upsells. You can also read about Harry Sit’s advice-only search service to locate advisors who will help you set up your investments and let them run in autopilot. It’s a lot cheaper than typical wealth managers, and it might turn out that you don’t need as much of the management part.

If you’re curious about taking charge of your investments (and automating them) then you can learn more at the trustworthy and objective Bogleheads Wiki, or contact me with questions.

Your Call To Action

If you were a client with USAA investment funds or wealth management, then what’s your plan? Please use the comments to tell us what you’re going to do.

 Is USAA Still Good?

If anything, the change in ownership and commitment to enhancing services makes USAA an even better bet for many service members. It has always been a financial institution serving a transient population, so USAA has also always been on the cutting edge of financial technology, and this, teamed with legendary customer service, continues to make it an attractive choice for service members in many ways.

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About Doug Nordman

Doug Noordman is a United States Navy submarine force veteran with 20 years of service. Noordman retired in 2002 and wrote "The Military Guide to Financial Independence and Retirement" to share the stories of over 50 other financially independent servicemembers, veterans, and families. Noordman donates 100% of the revenue from his book sales to military-friendly charities.

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    These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

  1. George says

    This was awful. I only found out about this because I went into USAA and couldn’t find my old IRA account. I called and they couldn’t tell me what my new account number nor what company has it!!!. I called Schwab and they don’t have it. The VC website couldn’t find me via the “forgot your log in info link”. Have to call when they are open during business hours only of course. (don’t worry its not like people have to work or anything right?)

    Right now, nobody knows where my IRA account is. Horrible!! I will be closing every account I have with USAA going forward. If VC can’t find my IRA account I will have to find me a lawyer and file a lawsuit. If anyone knows of one please let me know. What a horrible way of doing business!

  2. Larry R Phipps says

    Very dissatisfied with Victory Capitals’ acquisition and management of USAA Mutual Funds. Victory Capital has stopped distribution of monthly investment statements for my share purchases. Also Victory Capital continues to provide incomplete verification of periodic investment information USAA mutual Fund transaction confirmation statements. This is not consistent in the mutual fund industry and give investors concern regarding the accuracy and security of their investments.

  3. Ian Stewart says

    I know this comment is a bit late, but I just came across the article today.

    My biggest complain about the sale of USAA Investment Management Co to Victory and Schwab is the total lack of transparency. My wife and I (both USAA members) found out about the sale AFTER it was finalized! It came as a complete surprise to us and left us with a strong feeling of betrayal. Until the day we received the letter announcing the sale of IMCO, we had absolute trust in the organization and its management team.

    Regarding Victory, we too have had many issues with them and are very dissatisfied with their service. We’re looking at moving our accounts elsewhere.

  4. George C Brown says

    I cannot begin to express my frustration in dealing with VCM. I am the executor of my late mother’s estate and I have been trying to move her fixed USAA Mutual Fund into a USAA bank account since November 2020 and have encountered nothing but red tape and incompetence. Dealing with their Survivor Relations department by phone has been agonizing and regular mail has not been any better. I spent over one hour on the phone today with about 90% of that time spent on hold while simply trying to get them to agree to change the mailing address from my late mother’s former residence to mine (the Trustee) and without success. After having previously providing them with the required Letters of Administration, Trust documents, Death Certificate and other related paperwork, I have been told that they have no record that I am in fact the Trustee (it must be someone else who has my same name and address as is listed in the Trust document they have acknowledged receiving, but surely that could not me!) and therefore cannot change the address and will continue to mail monthly Account Statements to an address which will soon be no longer in the Estate. Hopefully, the forwarding order with the USPS will accomplish what could not be done via a phone call.

  5. Steve Kennedy says

    Due to family circumstances we have been caught unawares of the shift to Victory Capital until the arrival of a recent piece of snail mail. Moreover as a safety rule we prefer to do business any way EXCEPT the internet given the rather obvious lack of safety on the web these days; this made USAA attractive because they have catered to people with these preferences until recently. Financial institutions all over the world are leaking private data and not paying customers back. I am quite computer literate, responsible for maintaining some large industrial networks, and believe that the internet is dangerous. Period. Equifax anyone? The irony that this was a somewhat helpful website is not lost on me either.

    Making an essential change to the former USAA account now looms large as another doublespeak nightmare. USAA dropped the ball big time on this one. Keeping the brand name simply lends to the confusion which undoubtedly is percieved as ‘customer service’.

  6. JAMES says

    VCM is a nightmare. Horrible website. Long wait times to reach someone by phone, then the person can’t help with my problem. Worst of all, the fees they are charging aren’t clear. They have this fees in focus document that they don’t post on their website. So, to find the fees vcm charges I have to rely on other sites which say vcm charges 1% of your portfolio annually. This is in addition to normal fund management fees. This is ridiculous. If there is a lawsuit then sign me up. I’d also like to know how much the USAA decision makers were paid for this fiasco.

    • Doug Nordman says

      I’m sorry to read about the lack of communication with Victory Capital, Walter. December & January are traditionally busy months for financial companies, and perhaps even more so during a pandemic.

      If you haven’t been able to reach VC through your website account or e-mail then another letter (certified delivery?) seems like the best way to give them the new bank account number.

      And you’re right, another brokerage can arrange for a transfer of assets “in kind” to move the shares from VC to your new firm. You can do it all though the new brokerage and never need to discuss it with VC.

  7. walter phillips says

    I recently had to close my bank account to which Victory Capital had been making direct deposits monthly from my IRA. I have repeatedly tried to contact Victory Capital by phone and by mail to give them the new bank account numbers, to no avail. If the bank cannot communicate with their investors then it leaves me with no alternative but to transfer my account to another broker or bank.

    HELP!

  8. Jess D says

    I have contacted VC to request why my USCGX LT Capital Gains and ST Capital Gains are significantly lower (thousands) this December than last December. My assumption is due to the transition, but I can’t get a straight answer and have been transferred numerous times and sitting on hold for longer than my patience can handle. Is my assumption correct?

  9. Carlos Higgins (member for over 60 years) says

    What happened (happens) to the billion plus dollars USAA gained from the sale to Schwab and Victory? Were there any big commissions or bonuses involved?

  10. Paul Stevens says

    The first day that we could finally access our accounts at Victory, I registered my account as instructed and then tried to login. My credentials were correct but I was immediately locked out! Tried again with the same result. Spent two hours listening to music on hold waiting for them to pick up. Was told I just needed to wait a few days and things would sort out. They should have been better prepared for the launch.

    I have yet to be able to connect Victory with any aggregator site; if anyone else has had success, I’d love to hear your secret!

    Victory has no mobile app (at least for iPhone) and their website is not mobile-friendly.

    On a positive note, I must say that the few times I was able to get through to a live body by phone (other than the time I was locked out of my account), they were friendly and helpful and answered all of my questions.

    I’ve been contemplating moving the account to Schwab with my other USAA accounts, but I’ll give it a little time and see how they do.

  11. ApexNihon says

    “USAA will let you link your Victory Capital account.” This is a false statement. I have managed to link my Schwabb account with ease. However, I have had no such luck after searching through every option in my USAA dashboard in regards to linking my victory capital account.

  12. CHARLES BUTTS says

    Guess I’m an outlier. My wife and I have IRA’s & a mutual fund with USAA and now Victory Capital. (been a member of USAA since 1964) My wife passed in Oct and I visited the Vic website to find the forms I needed to deal with her IRA’s & the joint MF. Didn’t find them so left a message on the site on 11/24. Received a phone call from VC rep on 11/25. He spent almost an hour with me putting the needed forms in my doc list so I could down load them and then later upload the completed forms. He (maybe a former USAA employee?) explained everything. Did have one problem related to entering my saving bank account info. Would not recognize Chase and asked for a check image witch would not have the savings account number, of course. He suggested to upload a copy of the saving account statement and ask to have the info entered.

  13. Jeff says

    My wife and I have been USAA members for nearly 50 years. My wife’s IRA went to Schwab. Our joint brokerage account is at Schwab. My own IRA went to Victory. I’ve had nothing but frustration dealing with Victory. My like Ryan’s experience (Ryan’s comment 11/13) I spent more than 90 minutes on hold and then another hour talking with a VCM representative in an effort to access my on-line VCM account. And even then, neither I or the VCM rep could access my beneficiaries information. Then, when I sent an email to the person who 8 days earlier had told me she was my “primary point of contact”, I got an automated response saying she had “retired”. At that point, I had enough. Yesterday morning, I delivered the paperwork to Schwab necessary to transfer my IRA to Schwab. My wife’s transition to Schwab was seamless and Schwab’s website works well and without hiccups. I dad not have the same experience with Victory, and frankly I do not have the time or patience to see if VCM can get its act together. While USAA’s sale of its investment portfolio may have made economic/business sense, it’s left me more than a little let down.

  14. Ryan says

    So far i’ve been on hold with VC for 1 hr and 10 mins…and counting. I’m unable to sign up for a VC account because my USAA phone number transferred as all zeros. I’m at an international location which compounds my frustration. Any ideas on how I can contact someone at VC? I tried emailing them a few days ago and have not received a response. This service is terrible…no excuse!!! I WILL be transferring my money and WILL NOT be doing business with them. Not a good move USAA…you own part of my horrible experience.

    • Joanne Russell says

      Thank you Doug for the advice. I will try the app. I am horrified, despite all the notifications from USAA about the transition a shambles has been allowed to occur. We should have been warned and alerted that there could be problems with the transition especially if we are overseas. Sitting on their hands now with their fingers crossed just doesn’t cut it. They certainly aren’t answering phones and even if they do they don’t appear to have any guidance on how to advise us. We need to be able to access our accounts on the website as USAA emailed us we could on 28 October 2020. Victory Capital can send us the one time passcodes by email if we don’t have US mobile telephone numbers. It isn’t rocket science, USAA DO IT NOW anyway, I am surprised the transition team didn’t pick this up over the last 18 months. Just hoping our money is safe, it may not be millions but it really matters to us. I am worrying about end of year tax forms now too, how on earth will we pick them up? Thank you again Joanne.

  15. Michael says

    The website for Victory is confusing, non-intuitive, and a joke. I’m trying to access funds to pay for my daughter’s tuition and can’t figure it out for the life of me. I’ve been a USAA member for over 25 years and was happy having everything under one roof. Sent an email (still waiting) and can’t get through via phone. I absolutely can’t wait to transfer my 529 money out from Victory Capital to any bank with a shred of competence and customer service. What good is my 529 savings if I can’t access it? Epic fail. I’m assuming it will be a total hassle in getting my money out.

  16. J Russell says

    I have tried repeatedly to contact the telephone number with no answer. My emails have also not had any response. I am very concerned that we have no way of accessing or viewing our account after the transfer from USAA. I have no way of knowing whether my funds are secure, still available, nor do we have any account information as there’s been zero communication. This has caused undue and unnecessary distress and anxiety, we’re powerless as we have no information or an idea of when we will be responded to. I am overseas and staying on hold for hours is not only expensive but simply unacceptable. Please confirm our money is secure and what we need to do to access our account. I can’t believe this has been allowed to proceed without the necessary support available to your overseas clients. Please reply as soon as possible.

    • Shawn B says

      Thanks for the long response, Doug.

      I’m still wrapping my head around the 65 million eligible families you quoted, but i guess it adds up when you think about all those who served post 9/11.

      While I admit I was annoyed about the VC and Schwab deals, we should all probably feel more annoyed that we were paying too much for too long when USAA wasn’t really competitive with those financial services. (I moved to Fidelity after interviewing the local Schwab guys and being less than impressed, but that was what felt best for my family.)

      Agree about the online stuff and keeping costs low. I have a USAA credit card as my backup (to Costco) and I keep a bank account with USAA just because they are close and I hate change. But I agree that USAA will likely divest the banking soon too.

      Final comment: post covid, I assume they will sell off their building here in Colorado Springs, if somebody gives them a decent offer.

  17. Dave thompson says

    Been a member since 1979. Joined as a USAF brat. Fast forward one marriage, one child and two retirements and we had over 1.6 million in six accounts under three members. Then they started screwing up. Hired NFS. Website issues. Web messaging involved multiple respondees with no ownership taken. No continuity either. 20 to 30-minute hold times. Maddening ROBO screening on the calls. No follow through from seemingly powerless individuals. Poor financial products, no Chat option anymore, everything outsourced. A disaster in our transfers to Schwab. Nothing but apologies all they way up to the CEOs office. They became something of a hodgepodge of different companies and individuals with no solutions. It left us dismayed and astounded. I still keep two USAA credit cards. They still send a 1-page statement and 2 pages of an antique dispute form and the stupid Convenience Check with account info on it. Really? They do no favors to our Service folks or their stressed, constantly moving families. Almost tearful closing my history with this once great company.

  18. Theodore Richard Vogel, III says

    My comment is how do I access my account with Victory Capital. I called Victory Capital and was put on a long hold. They were supposed to call me back. I haven’t heard from them. In August 2020 I was told by USAA to call USAA after August 25, 2020 to get my account changed over to Victory Capital. After calling USAA 3 times and trying to deal with their robot answering service, I got hold of Madona (no last name) in Phoenix. After talking to her for several minutes, I asked her what to do and she said I should call Victory Capital and transferred me over. I still have no answers. What should I do? Thank you. I didn’t have any problems with transferring my other account to Charles Schwab because a USAA employee talked me through the process. Why can’t they do the same thing with Victory Capital?

    • Doug Nordman says

      I’m sorry to read about this, Jeannine, and it looks like you’re doing everything right.

      I’ve only seen a few cases of wire-transfer fraud, and it seems to take 6-8 weeks for the financial institutions (and their insurers) to make things right.

      It might help improve Schwab’s communications if you ask to be connected to their “Dispute Resolution” or “Client Advocacy” department. Most brokerages have someone at the business who can be assigned to follow through on more complex mistakes and make sure that the client is kept up to date.

      And if Schwab doesn’t do that, then it might be time for an asset transfer to Fidelity or Vanguard.

  19. jeannine says

    Nearly 4300 dollars disappeared via an unauthorized wire transfer (to a bank I don’t use, to a person I don’t know) from my brokerage sweep account that was transferred to Schwab from USAA. This happened within 2 months of the USAA transfer. It happened on Tuesday, July 28. .Schwab flagged it as suspicious on Wednesday, July 29th, The following Monday received a FORM letter via USPS saying my TRANSFER “had been completed.”. On that same Monday they decided to try to get the money back, AFTER 6 days.. Schwab never, ever contacted me about doing the initial transaction, or even later when they thought it to be fraudulent. I called them when I received the transaction letter. That happened a month ago, and I am still getting no answers from Schwab. No contact from them at all. Customers cannot speak to their fraud department, only “internal” e-mails can be sent. Three times e-mails have supposedly been sent asking the fraud department to contact me with an update, They have not.. I have been told by those in the ID Theft Team that it would be 5-7 days, or maybe 15-20 days to get my funds reinstated, but they have no way of knowing the status. IS THIS what I can expect from SCHWAB? WHO do I contact now, as this is stonewalling by Schwab, and the reps seem helpless or uncaring.. Their “guarantee” against this kind of loss does not seem to be more than words.

    • Doug Nordman says

      Your plan sounds good, Mark. Any of the big three financial corporations (Schwab, Fidelity, and Vanguard) can consolidate your accounts.

      They might charge a trading fee on some mutual funds from other companies (like your USAA funds) but they’ll usually hold them for free and only apply fees to new purchases.

  20. Mark Drew Wright says

    I was relatively happy with my mutual fund account, a brokerage account, and my wife’s IRA ALL at USAA,plus a healthy 401K At Fidelity that I don’t need to touch for now.

    I’m 62 in 2 months, retired for the last three years (second time) and doing well financially with my AF retirement/VA disability, and a little withdrawal from the mutual funds or brokerage account each quarter for “traveling” money.

    Now I Find myself with a Schwab Account for my brokerage account, and about to have a VC account for the USAA mutual funds and wife’s IRA, as well as continuing to manage the investments in the 401K.

    Looking ahead to when I might want to withdraw from my Fidelity 401K, I downloaded their disclosures and discovered my only options for withdrawals are a FULL withdrawal/rollover, or set up a Joint and Survivor annuity. I can’t take regular scheduled withdrawals.

    I’m not interested in an annuity, so I’m trying to decide where to rollover the 401K funds to an IRA.

    Thinking It makes sense to have Schwab set up an IRA for me and initiate the rollover from my Fidelity 401K, then have them initiate the move of the wife’s IRA and our mutual fund account from USAA/VC.

    I’m financially secure even without touching the 401K, and before I take Social Security, so I am still invested in a slightly more aggressive mix of investments than most retirees probably feel comfortable with.

    Advice on where to consolidate accounts in one place ?

    • Doug Nordman says

      I’m glad the move went well, Ben.

      Victory Capital says that they’re working with other fund companies to make USAA mutual funds available with no transaction fees. There’s no timeline for when that would occur, and VC would somehow have to compensate Schwab to waive their fees.

      Another option would be to compare Schwab’s no-transaction-fee funds to find a replacement for your USAA funds. You could hold the USAA fund shares as long as you want but your new shares would be Schwab funds that have the same asset mix and goals as your USAA fund. It’s also possible that the Schwab replacement fund would have a lower expense ratio.

  21. Ben Walker says

    So far, so good. My USAA investments have moved to Schwab and the experience has been pretty good.

    The only issue that I have with the move is that some of the USAA mutual funds that I was using under USAA are no longer available for automatic investing while others are still available. Only index funds from what I’ve seen so far are not available for auto investing. The reason that these are no longer available for automatic investing is that there is a transaction fee to purchase them through Schwab. Because of this, Schwab does not allow auto investing for these funds. According to a Schwab customer service rep, this may change in the future.

    Has there been any discussion of removing the transaction fee for USAA members purchasing USAA (VC) funds through Schwab?

  22. Letitia Pepper says

    I inherited an account with Merrill Lynch, and while my dad adored Merrill Lynch, I’d say that ever since it was submerged into the Bank of America, things have gone downhill. I also am a USAA member, through my dad (a combat veteran of WW II and Korea, and a legal officer in Okinawa during the Vietnam war). What do I need to do if I decide I should move those investments from Merrill Lynch to Schwab or Victory Capital? To whom should I speak to make that decision and move?
    Thanks for all your articles and advice.

    • Doug Nordman says

      I certainly agree about the hassle, John, although USAA made a good business decision that should help our member expenses.

      You can take advantage of the change, too. One of VC’s selling points to USAA fund clients is that they can hold mutual funds at VC without having a brokerage account, yet you already have a Schwab brokerage account.

      Since you already have a Schwab brokerage account, you should be able to transfer your USAA shares to Schwab from VC by starting the transaction with Schwab. You could use this Schwab form to transfer your mutual fund company shares from VC “In Kind.”
      https://www.schwab.com/public/file/P-4636054/ST_Standard_fillable_ADA_TOA_IS_APP13017-25-ADA_FINAL.pdf
      VC will comply with Schwab’s request by sending the shares to your Schwab account, and you don’t have to talk with VC. Since moving shares “In kind” is just changing custodians (from VC to Schwab), there are no tax consequences to you and you don’t have to sell the fund shares.

      Once the shares of your USAA mutual funds are in your Schwab account, you could continue to hold them there. Most fund companies do that free of charge, although there may be fees for buying additional shares of USAA mutual funds.

      You could also take this opportunity to sell some shares of your USAA mutual funds (in a tax-efficient manner) and replace them with shares of Schwab funds which have equivalent holdings and lower expense ratios. Any sales fees that you’d have to pay for this transaction (and income taxes on the gains) could be compensated by the savings from the lower expense ratios.

  23. john breen says

    I am confused by the Schwab/Victory Capital split. I now have 2 accounts where 5 years ago I only had one.
    is there any way to transfer the 3 USAA mutual funds now held at victory to my new Schwab accouny? Do I have to sell the victory held funds and buy new ones at schwab?
    I have been a happy USAA customer since commisioning in 1953 and this recent change is an unwanted hassle.

    • Joe McMichael says

      I won’t pile on about poor service from USAA and VC. Nor, did I not see where the OP said he suffered a mid-year distribution, nor did he specify the funds he was invested in. However, research may show that those funds had a significant reduction in assets. A reduction due to market conditions does not generate recognized or distributed gains or losses, but a reduction from holders cashing out does. I believe this has been an issue for last two years. I have questioned VC and received no credible response. Sadly, having held steady in a fund for many years and accumulating significant cap gains, options are limited. BTW, I have a brokerage, non-tax deferred account.

  24. Randy says

    Did the transfer to VC create a large capital gain distribution (CGD)? My 1099s from USAA rarely had CGDs and I carried large unrealized gains for years that I had intended to carefully deal with as i sold mutual funds in later years. But after the VC transition I suddenly have large CGDs and a huge tax bill. And big losses (due to COVID). Was this foretold before the transition?

  25. Jim says

    I have a USAA IRA that holds a USAA mutual fund. It has gone to VCM. My wife had the same fund in a USAA brokerage account that is not an IRA. It went to CS. We like the fund a lot. Who’s going to pay more in fees? The information we’ve received so far is confusing. Thanks.

  26. Deserat says

    Sort of related – just went to my USAA account online and I can no longer download my banking account activity unless I use direct connect for Quicken as of 22 May. I was using the web connect with a download of a quicken format file which I then would import into MoneyDance. I received no notification from USAA that this functionality was going away. I’m assuming this functionality was part of this Schwab transition as well.

    I will be leaving USAA Banking services now. There have been a long string of issues I’ve had which have accelerated over the years. Their banking services used to be fairly convenient and easy to use. Now, not so much and one of the benefits of using a digital platform (ease of data transfer, i.e. no manual data entry) have been taken away.

    I will most probably keep their insurance. I’m hoping that doesn’t change too much as that was their core business until they branched out.

  27. William Fold says

    As of May 30, when I got the Schwab email directing me to set up an account with Schwab, I have been unable to make it work through the USAA website to-do list, as suggested in the same email. Anyone else having similar problems? This Schwab/VC move by USAA is a royal hassle.
    USAA ’74

  28. Matt says

    Well, that didn’t last long. Not all of my mutual funds (MF) were able to have automatic investments. I called Schwab to see how I could set up reoccurring purchases on some USAA MFs and some Vanguard MFs. So what it comes down to is that option is not available for those funds, requiring manual purchases each month, with a $49 fee per transaction! Makes no sense to purchase $100 worth of MFs a month with a $49 fee tacked on… All funds are now being transferred to another company..

    • Doug Nordman says

      It’s ironic that the various financial companies won’t sell each other’s mutual funds, Matt. Especially when the equivalent ETF (if there is one) would sell through their brokerages.

      If you can’t find a Schwab fund that’s an acceptable substitute for your USAA fund or your Vanguard fund then yeah, you’d move elsewhere.

      • James M says

        This is not a USAA problem. It is a Quicken issue. Quicken eliminated their direct transaction download capability in the Spring 2020 for those who own the software. The only way to download transactions electronically from any institution is via subscription for Quicken. You have to pay an annual fee. I heard this is because the Quicken platform was sold by Intuit to another company which made the change.

      • Doug Nordman says

        At over 56 years of USAA membership, Charles, I’d say that you’re definitely an outlier!

        As a blogger, I’ve noticed that very few readers comment when a transaction is handled without failures. Most of the discussion is an analysis of the problems and solutions.

  29. John says

    Well, here it is May 26 and Mr. Schwab now has my USAA portfolio. What it does not appear to have – at least not yet – is the cost basis information for these positions.

    Fortunately, I have that information but it would be nice to know that I am not going to have to manually edit the basis info at Schwab.

    Anyone have any idea if the basis info from USAA will eventually transfer to Schwab?

    • John says

      Found the answer to my own question on Schwab:

      “Current gain/loss information may not be available on Schwab.com until June 13 for any positions formerly held at USAA. You can still find past information on your prior USAA statement, which you can access after logging into USAA.com. ”

      Happily, it looks like all I need is a little patience.

  30. Deserat says

    Wow, Doug – another great in-depth write-up. I had moved all of my investments that were there (most are in VG or TSP) out of USAA several years ago. I do still have a checking account there, but am probably going to nix that soon, too. As for insurance, well, they aren’t what they were when I signed up (1985). I do see them focusing more on the younger set and have had to have a few long conversations with some of their staff about not forgetting us old folks. I have kept them here OCONUS for insurance and will probably keep them when I come back CONUS, however, I will not be expanding my interaction with them business-wise as I find they’ve lost their way. They used to be world class in my estimation but now they aren’t so much. When I’ve had to spend hours on the phone or their chat line to get assistance in transferring my car insurance and renters insurance while moving OCONUS (which is a standard situation for their targeted customer), I don’t see world-class or focus on key customer demographics being demonstrated. And my situation was not a complex one: sold car in US, bought car in Germany, sold house in US, rented house in Germany, no kids, and single.

    In any case, thanks for being the scout on all of this – so, ‘That’s what you do all day,’ 😉

    • Doug Nordman says

      Thanks, Deserat! I enjoyed writing it, even if it does take up a lot of time. I’m still doing as much surfing as I can handle…

      Maybe USAA was nicer to us newer members in the 1980s because we were younger then? USAA has pointed out before (at conferences) that younger members spend more on products & services, have fewer claims, have more lifetime value, and generally have fewer defaults or fraudulent behavior. And frankly, there are a lot more younger USAA members than older ones.

      I also think USAA is finding their way again by pruning business lines that now cost more money than we’re willing to pay. By the time USAA sold to Victory Capital and Schwab, fewer than 25% of USAA’s members were using those services. The investing industry has advanced beyond USAA’s ability to compete, let alone have those lines pay for themselves.

      Member service is one of the hardest aspects of insurance to evaluate. Members seldom file claims, and we don’t work with enough insurance companies to know how they’re going to treat us. The most reliable way to assess our possible claims experience is to review the objective third-party ratings of an insurer’s member service.

      In other words, if USAA’s member services take hours of phone calls and chat lines… how does that compare to the other companies? We’d have to be members at those other companies before we really found out.

  31. Grumpus Maximus says

    Hi Doug!

    I concur with all the others who liked the depth and breadth of this article. Good job. I’m glad your interviews paid off.

    I’m an online brokerage client with USAA. Several years ago I used USAA to consolidate after I fired my “Wealth Advisor” and started doing it all for myself (again). I consolidated with them vice Vanguard, Schwab, TD Ameritrade, etc. for two reasons.

    First and foremost, they let me do it from overseas where I was stationed at the time. The others wouldn’t. Although, I think the only reason USAA let me do it is that I had an embassy mail box. I can’t recall the exact reason why it had to be an embassy address.

    That said, I almost got caught out with this current transition to Schwab. Now that I’m retired and living overseas, USAA sent me a note stating that I couldn’t transition to Schwab unless I had a CONUS address, which means I had to go into USAA’s system and change all my addresses back to a registered CONUS address. I’ll switch them again after the transfer to Schwab goes through. This may be an issue some others may run into as well.

    The second reason I went with USAA’s online brokerage is that they let me move over all my investments in situ. My ex-advisor had me invested in proprietary mutual funds. USAA’s flexibility meant I didn’t have to liquidate all my funds and take a large tax hit in my taxable account. A number of the brokerages told me that I would have to liquidate prior to transfer. By going with USAA, I was able to wind down from all but one mutual fund without incurring any excessive tax hits. I intended to sell off my final one this year since I’m no longer grossing 20 year active duty pay. Guess I should get on it prior to the Schwab move!

    Finally, what’s the referral code for the USAA to Schwab transition? I clicked on the link discussing the $500 payment for moving to Schwab, but without a referral code, it won’t work. I can’t find a referral code on USAA’s website either. In fact, I just read the latest Market Update from USAA, and they’re encouraging people to let USAA and Schwab sort it out the transfers for everyone, as opposed to doing it yourself. Possibly because it will save them money? Here’s their verbiage:

    “Can I or should I transfer now?” Bottom-line, let USAA do the transfer work for you, giving you peace of mind that your accounts will transition to Schwab securely and seamlessly on Tuesday, May 26, 2020.”

    Thanks again for sharing the knowledge.

    Regards,

    GM

    • Doug Nordman says

      Thanks, Grumpus, good point about having a U.S. address for the Schwab transfer.

      So far I don’t think there’s a referral code for the Schwab $500 transfer bonus. Just click through the process, and when the eligible transaction is complete then Schwab will cough up the bonus.

  32. SMB says

    I may end up regretting it, but I’ve gotten more and more disenchanted with USAA over the past 7 years. I live less than 2 miles from their Colorado Springs office, yet they won’t even allow face-to-face meetings with a wealth manager anymore. Sigh….

    I’m moving to Fidelity before the USAA-to-Schwab transition. And then I’ll liquidate any remaining USAA(VC) funds I have and buy lower-cost Fidelity or Vanguard funds.

  33. Parkman says

    Was led here by a little piece by another veteran/writer who said you helped him out.

    Am staying here because of the incredible depth you gave in this write up. Can’t believe I never heard of this site before.

  34. Andrew says

    I agree 100% with Tyler’s initial comment. I knew USAA’s investment services weren’t the best in the world but they were good enough for what I needed. I was okay with this because I valued the convenience of having everything “under one roof.”
    My initial brokerage account was with Scottrade, and then it shifted to TD Ameritrade when they merged. I was slowly shifting everything into USAA because I liked the 1-stop shop of USAA. Now I’ll have accounts with Schwab, TD, and USAA.
    Once the dust settles I’ll likely close all of them and shift everything to Vanguard since they’re the industry leader in low-cost indexing. The only thing that prevented me from doing this previously was the convenience factor.

    Appreciate you Doug; your article provided interesting insight.

  35. peter gregory says

    A most wise choice by USAA. As my most of my core Vanguard investments vehicles have a 0.03-0.11% expense ratio USAA was never competitive for my money or interest. No matter how many mailings and e mails sent my way on their investment products. If there is corporate lesson here its the timeless counsel in business. Chose a core line or product, do it better than any body else, and the business will take care of itself.

    For USAA that is car, home, life, auto insurance. They would be wise to stick to that. As in any great financial calamity, as is this time, when the water recedes some will be more exposed than others. And wisdom is to know when to exit the water.

    • Doug Nordman says

      Absolutely, Tyler, a lot of military families are still willing to pay more at USAA for that trust, consolidation, and convenience. That was especially true 30-40 years ago before the Web. Today we have better tools.

      Members complain a lot about the Super Bowl ads and other sports sponsorships without knowing the results. Bloggers like me have had several briefs at USAA conferences about those ads. The ads attract more new members (up 25% over the last five years) for life. They’re younger, they spend more money on USAA products & services, and they have better financial performance (fewer late payments or defaults) than us older members. When you see those ads, you can think of them as an investment that results in all of us paying lower insurance premiums. The ad spend is also far less expensive than the hundreds of millions of dollars that it’d take to build a brokerage that could compete with Victory Capital or one of the other recent Schwab acquisitions, let alone with the bigger firms that I mentioned in the post.

      Today I think it’s just as easy to use USAA for insurance, Fidelity/Schwab/Vanguard for finances, and NFCU for banking. USAA’s website can still show a consolidated view among all of the financial firms (or Personal Capital), and the finances can be handled by automatic payments or electronic fund transfers. Personal Capital, in particular, has an eye-opening feature that shows exactly how many dollars more we’d pay for a USAA fund’s expense ratio instead of a passively-managed index fund.

      I think USAA operates a world-class insurance business. They have the objective member-satisfaction survey data (and financial results) to prove it. Your policy being subbed to Nationwide was a cold-hearted risk-management decision to lay off that risk on Nationwide (who may or may not have made a smart decision to take it) while reducing the risk of your policy to the rest of the USAA members. You might have been better off going to Nationwide directly, but it’s hard to tell without quotes to compare the offers.

      USAA did not have world-class status in mutual funds or brokerage accounts. They’re still struggling to compete in mortgages, CDs, business checking, and other banking business. I would not be surprised to see them act on banking within the next decade. Since the new CEO came from the insurance side, maybe it won’t take a decade.

      • Tyler says

        All good points. I think you are right. Probably best to only use them for auto insurance going forward. That was what they were founded on and is their core business.

      • SMB says

        If you lived in Colorado Springs, you’d really be disgusted at the amount of advertising dollars USAA spends, especially at USAFA football/basketball games. Wasted IMHO.

        If they want to get the next generation, they can lock-in all the cadets without spending for radio and TV ads. If they want to keep my kids, they just need to boost the interest rate on Youth Accounts.

      • Doug Nordman says

        Thanks for the kind words, Art, and I’m glad it’s helping!

        (Full disclosure for readers: Art and I are shipmates from… way back… in the day.)

      • Doug Nordman says

        If it’s any consolation, SMB, USAA got a ton of complaints from that online-only policy with their CFPs. I’m sure it was the beginning of the process that resulted in selling the entire wealth-advisory business.

        Reducing your expense ratio is a huge win for future returns!

    • peter gregory says

      Knock on wood or Formica, I never really had to exercise the either the car or house portions of my USAA policies, and I am still living. So I assume life insurance still OK. In my post Navy career I did shop for what is called “Umbrella” type policies to insure against assets risk and litigation given what i did professionally. Spent much time on the phone with USAA in that process. Long story short they were not the most competitive and went with another vendor. I did not find their call center or person to person experience all that user friendly or all that responsive to be honest. USAA in terms of customer service and interaction far better in cyber or on line. Which is vast majority of how I interface with USAA anyway. Yes I do like the end of year check and do like the recent rate rebates on current auto polices. Amen. But again, never saw value or capital return in their other side ventures, be it banking, retail or investments. And I have been with them since day of OCS Newport in 1985. Have been witness to all of USAA since.

  36. Tyler says

    Doug- I’m not happy with the direction USAA is been going. The primary reason USAA works well is that they have everything under one roof (insurance, banking, investments, credit cards etc) and as a current US service member, it makes managing finances easy regardless of where I am in the world. This move will complicate things. I will now have to deal with three firms vice just one. USAA doesn’t do everything great, but good enough to make me not want to go elsewhere. Arguably, Navy Federal does banking better and GEICO and some others, in many cases have better insurance rates. On my last OCONUS tour they subbed one of my policies to Nationwide. Would I have been better of just going direct to Nationwide myself? This raised a flag. My observation, USAA is not as user friendly as it once was and becoming less so. Now may be the time to consider moving to other financial institutions. Cannot say that it feels right considering how long I have had USAA. Transitioning will not be easy. Maybe if they bought a few less ads during the superbowl and other sporting events they would have the capital to develop a sustainable brokerage for their members. What will they divest next, banking?

  37. Robert Shaye, CFP® says

    Great write-up, Doug! Glad to hear that Victory is committing $1M to financial literacy efforts. I echo your advice of using existing channels vice a new site. Also, always love seeing the plug for advice-only financial planning! Can be a great fit for many folks.

  38. Doug Nordman says

    Sorry to read about USAA’s website, William. I don’t have a diagnosis, but I suspect that over a million members are trying to use that part of the site during the same week.

    It might be less hassle to wait a few days and try again, especially on a weekday like Wednesday or Thursday. By then the tech staff of both companies should have worked out the bugs.

    The good news is that this one-time hassle should improve customer service and lower your fund expenses.

  39. Doug Nordman says

    Jim, Victory Capital might reduce the expense ratio of the USAA fund in your accounts during the next year or two. You’d see that lower expense in both your IRA and in her account.

    Schwab may charge you a fee to buy or sell shares of that USAA fund. It depends on whether VC is paying Schwab a placement fee (“soft dollars”) to list that fund on Schwab’s site. If you tinker with Schwab’s website to enter a buy/sell order on your USAA fund shares, they’ll show you their fees & commissions.

    You might be able to find an equivalent Schwab fund with a much lower expense ratio. You’d have to use a fund comparison tool to find one with similar goals and holdings.

  40. Doug Nordman says

    Randy, VC just took over the funds and operates them with the USAA brand. Transferring your shares from USAA to VC was done “in kind” and is not a taxable transaction.

    It’s possible that VC has done a lot of buying & selling of the stocks held by the funds, but that would be very unusual in such a short time. I’d be surprised to see a capital gains distribution in the middle of the year, too, unless there was some special shareholder event or the liquidation of a fund.

    I’m a little confused about how VC has simultaneously generated large capital gains distributions and large losses. Markets (and share prices) have been very volatile, but if you haven’t sold any shares and VC hasn’t turned over the whole fund for a bunch of new stocks, then the gains & losses are only on paper and unrealized, not taxable.

    It’s also possible that VC’s transfer from USAA has garbled the price history of your fund purchases. If you can share more info from your statements (or e-mail more info to NordsNords at Gmail) then maybe we can help sort out what happened.

  41. Doug Nordman says

    Great question, Letitia!

    The easiest solution is to contact Schwab about transferring your shares from your Merrill Lynch account. (Victory Capital can do this for mutual funds but might not be able to do this for shares of individual stocks or bonds.) You want to “transfer in kind” by having Schwab manage the transaction for you:
    https://www.schwab.com/public/file/P-4636054/ST_Standard_fillable_ADA_TOA_IS_APP13017-25-ADA_FINAL.pdf

    Schwab will contact Merrill on your behalf to arrange everything. Since the shares are changing brokers, not being sold, there are no tax implications. (Merrill might charge a fee for the transfer.) Since Schwab is handling the transfer, you’ll never have to discuss it with Merrill or their client retention center.

  42. Shawn B says

    And they spend way too much advertising on radio/TV and sponsoring sports. Why advertise to everyone instead of targeting the small portion of Americans who are eligible to join?

  43. Doug Nordman says

    Dave, Shawn, I appreciate that people want to vent about the way USAA used to be.

    I’ve been a member since 1981 and I’ve attended USAA conferences since 2011. For the benefit of the other readers of this post, let me share some perspective from the USAA execs I’ve interviewed.

    The company has spent over five years trying to improve their investment and wealth management business lines, and that’s why they sold them off. Now USAA can hold the line on our expenses for insurance & banking (if you still have those accounts) while you can move on with Schwab.

    USAA has about 13 million members out of a U.S. population of about 65 million eligible military families. The majority of the members are younger (20s-40s), spend more on insurance & banking products than the older members, and even have less claims fraud. They do 97% of USAA’s member services over the website, the app, e-mail, or text.

    If older members don’t adapt to newer tech then they’re going to get left behind. Maybe Armed Forces Insurance or one of the big “civilian” firms will still accommodate phone calls and postal mail, but they’re probably following USAA’s lead on tech as well.

    USAA spends less on marketing today than they did 20 years ago. They’ve devoted months of research to figuring out where the other 52 million eligible military families are spending their time, and it’s… radio, TV, and sports. The advertising is producing steady growth (those younger members again). It’s paying for itself and reducing our individual shares of USAA’s fixed expenses.

    While USAA is working on their banking, you could move online with their credit cards or move to Navy Federal Credit Union (the nation’s largest credit union) or another corporate bank. I have four credit cards (including one from USAA) and I haven’t seen a paper statement in over a decade. Frankly, with today’s tighter regulations and higher compliance costs, I’m not sure why USAA needs to continue with the banking, mortgage, and credit-card businesses. In the next five years we may see them sell off those lines as well.

    I’m happy to answer more questions, but I’d suggest that you take the venting to USAA’s Community Forum at https://communities.usaa.com/ .

  44. Kevin says

    I’m in the same boat and holding on the phone once again for hours. It may be time to think of a law suit.

  45. Doug Nordman says

    Sorry to read about the problem, J.

    Whether you’re referring to Schwab or to Victory Capital, if they’re not responding by phone then I’d try their website or their app. You might even get a human through their chat feature. If you’re not happy with what you’re learning from those channels then I’d ask to speak to their member advocacy team to figure out what went wrong and to fix it.

    Let me clarify our relationship with the companies that we mention in this post. You’ve written “Please confirm our money is secure and what we need to do to access our account. “ I know a number of people at USAA, and I’ve interviewed an exec at Victory Capital, but I’m not actually a representative for them or Schwab. I can’t access any of their account information and I don’t work for their customer service. Their website or their app seem like the best options until the transition is finished and the call volume subsides.

  46. Joanne Russell says

    I have now successfully completed my registration on the Victory website. I needed to actually speak to the International Department which of course meant a long wait on the telephone, however it was worth it and I am happy that this episode has been resolved. Thank you too, as it was comforting in an odd way to know that we weren’t alone. Communication wasn’t the best overall. Joanne.

  47. Nancy Olsen says

    I can’t get on the website even with their I.T. trying. Not going to do anything unless I can access my acct and make sure my money is secure. Been on hold for over an hour, and finally just hung up. I did get a ‘call back’ a few days ago, but as I said, the I.T. person couldn’t get me in. I can’t get the passcode to get on, and the website just locks me out for ’24 hours’… Something is not right here…

  48. Michael says

    I did get a callback a few hours later, multiple disconnects…but he did call me back immediately each time. He was a mutual fund guy, so couldn’t help me with my 529 plan, but transferred me to 529 department. I only have two questions: How do I pay for tuition with fund transfer or how do I get 529 checks to pay the University? Should be straightforward IMHO. I’ve now been on hold for over 2 hours. I can’t wait to move my money out of Victory Capital. If only I could reach someone to perform this task. Beyond frustrated now.

  49. Jenny says

    I had nearly the same problem. I tried to access my account, and the website won’t verify my address on the last step before I’m authorized to enter my account. The address I saw on screen was my address! But I called the phone number and after an irritating conversation with a breathless woman who kept inputting my information incorrectly, I was put on hold for an hour. This does not bode well for the future. I think I’ll be moving my money to a different company, possibly Schwab since that transfer was seamless and easy.

  50. JERRY FORK says

    I am having the same expeiance, hope vanguard can get the roll over ira transferred. usaa did not do us any favors.

  51. Shawn M Brennan says

    You are correct that transfers from your 529 should be straightforward. Given how unhappy you are, I would quickly set up a 529 elsewhere and tell VC to transfer all of your funds there.

    Personally, my 529s are with CollegeInvest because it is in my home state of Colorado. As I recall, the USAA 529 was based in Nevada, so I could not get a CO state tax break for investing in that one.

    (Requests for checks from CollegeInvest to my kids’ universities can be done easily online, though it takes 7 to 10 business days so I have missed tuition deadlines at least twice. Mostly my fault, but I think colorado state schools have some unreasonably quick turnarounds in order to make extra fees of the 1% fee.)

  52. Mark Drew Wright says

    Multiple problems with their web site just trying to check on my wife’s IRA.

    Called and got put on hold, and a recording said it would be 90 minutes .

    Finally hung up, called Schwab, got a answer right away and they sent me the form to initiate transfer of the IRA.

  53. Mark Drew Wright says

    Had the same problems, with web site and phone contacts, for my wife’s IRA that was moved to VC. We Sent transfer paperwork to Schwab on Nov 13th, confirmed yesterday the transfer is being processed.

    Done with everything at USAA except insurance. Been a member for 40 years and was relatively happy with them for a long time until this BS started, transferring their investment business lines to multiple companies.

    I didn’t want to have to look 4 different places for full status on banking, brokerage, mutual funds and my wife’s IRA.

    I have a 401K at Fidelity that is well managed and I expect no need to make withdrawals until I have to take RMDs, so it will stay there. I have linked this account to my Schwab account, so I can see the status on the Fidelity 401K there also. Complete picture of my assets in one place.

  54. Jack Anderson says

    Yes, same experience, totally ridiculous, 1 hour and ten minutes and a rep that knew nothing and had to put me on additional wait, then I called again 4 days later, finally hung up after 20 minutes. The phone “on-hold’ music does not even tell you how long to expect to wait….like they have no clue what’s going on. I got two calls in next day after I complained online and he left a msg with his direct extension, which I had no way to plug in on their phone tree. Maybe USAA did the right thing by selling the accounts, but Victory is pathetic, sending my money to Vanguard and Ameritrade. Horrible!!!! USAA did everyone a huge disservice with Victory, sad.

  55. Doug Nordman says

    Carlos, in the USAA announcement linked up above:
    https://communities.usaa.com/t5/Press-Releases/More-Choices-and-Competitive-Investment-Products-with-Charles/ba-p/214745
    USAA wrote “Net proceeds from this transaction will be used to further benefit the USAA membership. For example, USAA will invest appropriately to improve the competitiveness of its banking and insurance products, as well as look to distribute an appropriate amount in the annual member distribution process.”

    USAA hasn’t commented publicly on employee commissions or bonuses. Even if/when they do, those would not necessarily be linked specifically to the revenue received from Schwab or VC.

    The annual member distributions are only made when USAA determines that they already have enough reserve funds to pay insurance claims (and run the business). In the past those distributions have not been specifically linked to company events– only to the amount of revenue. It’ll be interesting to read USAA’s comments for this year’s distributions.

  56. Shawn says

    We received our annual subscribers savings check/deposit about 2 weeks ago. Seemed about the same as the past few years. I was surprised we didn’t see a bump-up due to the sale(s), but I haven’t looked for a note from the CEO yet.

  57. Doug Nordman says

    Here’s USAA’s text from the credit to our account:

    “This is money that USAA gives back to our members if and when the board of directors decides to do this. The amount you receive is based upon multiple factors: How long you’ve been a member, how much you’ve paid for insurance over the years, and how many claims USAA has paid out over the past year. For example, years with multiple natural disasters may reduce the amount that members received.”

    There’s more in the FAQ for the subscriber’s account distribution:
    https://www.usaa.com/inet/wc/faq_PC_Subscribers_Account_Distribution_index

    USAA hasn’t released any info that I could find on the finances of the sale or USAA’s other property & casualty insurance losses in 2020.

  58. Doug Nordman says

    That’s one possibility, Jess, but there could be other reasons.

    The fund could have traded less (and had less in capital gains), or it could have harvested a bunch of capital losses to offset capital gains, or it could simply be smaller.

    You could get more insight from the annual report, which might not be released for a few months.

  59. charles gregg says

    I just wanted to obtain my annual statements online and I have been on hold for over 58 minutes now with the flute music, I will just transfer my investments to another company rather than to keep waiting for someone to pick up the phone to respond,

  60. CHARLES D BUTTS says

    Use the message center to request what you want. I get 1-2 day response that way. (I don’t want to chew up cell minutes on hold!) But year end statements may not have been prepared yet and so wouldn’t be on line.

  61. Doug Nordman says

    Well, Steve, you’re somewhat welcome for your somewhat helpful compliment.

    Victory Capital has licensed the USAA brand name on the mutual funds, which will keep a little income flowing into USAA (and our membership Subscriber Accounts).

  62. Doug Nordman says

    George, I agree that the best solution is to forward your mother’s mail from her address to your address (or to a P.O. box) for another year.

    That’s especially helpful if (in 2022) you’ll be getting income-tax documents related to her estate assets.

  63. Walter F says

    I’ve had the same issues. No one at Victory Capital is properly trained. They put my money in a proprietary fund – and theirs will not allow a transfer into another IRA – I have to liquidate and get taxed! Wild stuff – so predatory.

  64. Joe McMichael says

    Forgive me if this is wrong, but Survivor Relations surely sounds like a USAA group. If so, they are not VCM. Perhaps they would assist you with the VCM account, but not certain they can.. Legally, they are two different entities. Having provided your credentials to USAA may have nothing to do with VCM. I believe you are desiring VCM to take action. If so, then they need your credentials (unless USAA somehow did it for you).

  65. Doug Nordman says

    I’m sorry to hear about your problems with VC, Walter.

    If it’s any consolation, you can cash out of the proprietary fund and roll it over to another IRA account with another financial company like Vanguard, Fidelity, or Schwab. Since it’s in an IRA, there are no income taxes for cashing out and having the IRA moved by direct transfer.

    Better yet, you can contact your new financial company and ask them to arrange the entire IRA direct transfer… they’ll work with VC and you won’t have to talk with VC again.

  66. Ian Stewart says

    Larry,
    My wife and are also very dissatisfied with VCM and are in the process of transferring our USAA investments to Vanguard where we will convert them to Vanguard equivalent funds….and save the brokerage fees 😉

  67. Jamie L. says

    When I spoke with Survivor Relations at Victory Capital today, I specifically asked if I was speaking with a Victory Capital Employee or a USAA Employee. I was told they are Victory Capital Employees.

  68. Blackie says

    I cannot get my money out of VC, I had to make 15 withdrawals for one account and not they have locked me out of my IRA. I have complained to FINRA, SEC, BBB the Attorney General but all this takes time. What is a 92 year old veteran to do, they have locked my retirement account???

  69. Ian Stewart says

    Hi Blackie,
    My wife and I moved our investments to Vanguard like you’re trying to do. Since VC has locked you out of your account, you might consider talking to a Vanguard customer service person (Note: they are available M – F 8A – 7P (Eastern). Don’t try to reach them on a Mon or Fri, you’ll spend a lot of time on hold). Even though VC has a lock on your IRA, you may be able to do a transfer to Vanguard through Vanguard’s “open a new account” process. You’ll have to talk to a Vanguard rep to see if that workaround will work. Another note: you’ll have to get used to the way Vanguard does things. It usually takes about a week for transactions (moving funds, buying or selling shares, etc.) to appear on one’s account. The transactions are executed reasonably quickly, it just takes a little for them to appear on your account. Also, to keep costs down (thus saving you money), you’re encouraged to do most common transactions on-line, yourself. This will require you to familiarize yourself with the Vanguard website. It takes some getting used to, but once you understand how things work, it’s pretty efficient. If you prefer to have a CS rep help you with a transaction, a fee (~$50) may be charged.

    Best of luck,

    Ian
    (US Army, retired)

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