Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

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dave1054
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Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by dave1054 » Mon Jan 15, 2018 6:25 pm

I am 1-2 years away from retirement and fortunate to have 7 figure portfolio. I have been a long term fan of Vanguard and love the advise of Bogelheads so what I am asking may be heretical to some.

Vanguard PAS charges 0.30% up to 5 million. It drops to 0.20% at 5-10 million. Schwab charges 0.28% which is not much different but caps the fees at $900 per quarter which is a substantial savings to me.

Cost is not my primary concern. It is more personal and emotional. My wife who is intelligent and college grad just does not have interest in managing our assets in the event of my death. Don't take this comment as politically incorrect or sexist. It is just a fact in my life. Anyway, I think it may be helpful and comforting for her to be able to walk into a physical office and actually talk to someone in person.

I really love Vanguard and I just don't know what to do. I have heard positive comments about Schwab from others. Please help. All positive and negative comments welcomed.

dbr
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by dbr » Mon Jan 15, 2018 6:32 pm

There is a lot more to managing personal finance when the person that was doing it is gone than finding someone to talk to in an office about a bunch of mutual funds.

It might help your wife more to at least show her a list of the things you have that a person interacts with over the course of a year, or several years. Most of those don't have somebody in an office that takes care of them.

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walletless
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by walletless » Mon Jan 15, 2018 6:33 pm

I have not looked at Schwab Advisory much, but I was frankly underwhelmed with VPAS, especially for 0.30% AUM fees. As part of the service, they do not perform any Tax Loss Harvesting at all. Additionally, from the limited reading I did, you do not have a lot of flexibility in removing certain assets, such as International bonds. Most people are recommended a portfolio consisting of International bonds which I am not a huge fan of.

The only thing, IMO, in favor of Vanguard is that I have higher trust that if something were to happen to me, they are unlikely to recommend moving to active funds or high-cost funds to my surviving spouse. For that reason alone, I have recommended my wife to chose VPAS to look after the AA.

Besides that, I frankly expect more from VPAS for 0.30%.

Do you know if Schwab includes TLH and additional flexibility?

Vitalspark
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by Vitalspark » Mon Jan 15, 2018 6:43 pm

This was a decision for us 2 years ago. We too have a 7 figure portfolio. I thought the Vanguard PAS had one drawback - they invest every penny, you have to tell them you want a cash fund to draw on otherwise you would be asking your advisor every time you want money. He justifies it because they want ALL you money earning and the time horizon was 100 years!! We are mid 70's & don't even buy green bananas!!
So I took his advice with the fund allocation( no 0.3% fee), did it myself but have a cash fund the divi's/gains go into & my wife can easy peasy log on & transfer as she needs. She is not that computer literate & probably she will at some time appoint our Son with PoA. So the only downside is I have to re-balance & she would not do that but you know for our time horizon it might be the family that have to take care of that.
TLH I don't know at our marginal rate is it worth it? Wish you well in your decision, its not irreversible.

GmanJeff
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by GmanJeff » Mon Jan 15, 2018 8:32 pm

I am similarly situated, actually use PAS, and have been satisfied so far with the value proposition. I have no experience with Schwab. The absence of a nearby brick and mortar office doesn't seem like a disadvantage, as any communication required is easily handled via telephone, e-mail or even video teleconference if preferred. The important thing in your case, I'd suggest, is for your spouse to be aware of how the web site works so she knows how to add to or obtain funds from your portfolio, and how to contact your advisor with any questions or requests.

Dividends and interest need not be automatically invested and can be a source of cash without selling investments. When a sale is needed, that can be easily done on-line and PAS takes into consideration the tax implications when selecting the assets to sell. You can always just maintain cash outside PAS in any amount you like by either not investing it in the first place, or by selling assets to raise whatever cash position you want to maintain externally. You can do that on any schedule you like.

Nate79
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by Nate79 » Mon Jan 15, 2018 9:06 pm

Schwab Intelligent Portfolio is free. Considering Schwab excellent products, customer service, etc I would strongly consider them.

nasrullah
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by nasrullah » Mon Jan 15, 2018 11:24 pm

I'm in the same boat and have been talking with both VPAS and SIA. After the initial conversation with VPAS they will manage any AA that you decide. They'll try their best to save you from yourself, but ultimately will do what you want. Mostly this means that you will end up with additional Vanguard accounts managed by hand by your CFP vs their automated system. Automated TLH is available for accounts over $1M and it sounds like they are working on lowering the threshold to the lower tiers. I had a long conversation around emergency funds and CD ladders. While they cannot do it directly my CFP told me that he would help me plan, execute and track my ladders at Ally.

On the surface 0.30 vs 0.28 sounds like a difference, but we're only talking about $200/year with a $1M portfolio. Having access to Admiral shares and no trading fees into Vanguard funds will likely make up the difference and then some.

Having access to a local branch with Schwab does sound nice. Ultimately I'm looking at VPAS/SIA as an extra buffer to help save me from myself and stay the course with my investment plan. My feeling is that Vanguard will most likely be able to do that for me.
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

drzzzzz
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by drzzzzz » Mon Jan 15, 2018 11:34 pm

nasrullah wrote:
Mon Jan 15, 2018 11:24 pm
I'm in the same boat and have been talking with both VPAS and SIA. After the initial conversation with VPAS they will manage any AA that you decide. They'll try their best to save you from yourself, but ultimately will do what you want. Mostly this means that you will end up with additional Vanguard accounts managed by hand by your CFP vs their automated system. Automated TLH is available for accounts over $1M and it sounds like they are working on lowering the threshold to the lower tiers. I had a long conversation around emergency funds and CD ladders. While they cannot do it directly my CFP told me that he would help me plan, execute and track my ladders at Ally.


Did they explain how they plan to tax loss harvest since when we were using them a few months ago (and have since given up their service) they were only using average cost rather than specific ID for pricing which would make TLH difficult if not impossible if you have shares/stocks that were bought at different prices? Thanks

nasrullah
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by nasrullah » Tue Jan 16, 2018 10:20 am

I’ll get specifics on my next call.

I’m honestly not too concerned with TLH. Wealthfront has managed to generate paper losses for me over the last few years and I was surprised how little (only $3k) could be applied to my taxes.

Since I’m planning a move away from a robo. My goal is a calmer more directed portfolio strategy going forward. Which actually in part means to ignore my investment accounts as much as possible.

I’m going to use VPAS to manage the allocation of new monthly investment funds, rebalance when necessary, etc... I understand enough about myself that I need to not be peaking on a frequent basis.
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

Mors
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by Mors » Tue Jan 16, 2018 2:01 pm

Schwab allocates a part of your portfolio in cash, which creates a cash drag. This is their main way of revenue, it is poor value for customers.

VPAS is a good choice thanks to the reliability that vanguard provides about looking after your interests, as well as offering human interaction.

nasrullah
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by nasrullah » Tue Jan 16, 2018 2:32 pm

Mors wrote:
Tue Jan 16, 2018 2:01 pm
Schwab allocates a part of your portfolio in cash, which creates a cash drag. This is their main way of revenue, it is poor value for customers.
It's a pretty hefty percentage too from what I've read.

I should also say that I'm looking to leverage VPAS to unwind my holdings with Wealthfront into a streamlined four fund portfolio (if it was just me managing I'd go to three, but this is the compromise for the service).
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

dave1054
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by dave1054 » Tue Jan 16, 2018 2:40 pm

nasrullah wrote:
Mon Jan 15, 2018 11:24 pm
I'm in the same boat and have been talking with both VPAS and SIA. After the initial conversation with VPAS they will manage any AA that you decide. They'll try their best to save you from yourself, but ultimately will do what you want. Mostly this means that you will end up with additional Vanguard accounts managed by hand by your CFP vs their automated system. Automated TLH is available for accounts over $1M and it sounds like they are working on lowering the threshold to the lower tiers. I had a long conversation around emergency funds and CD ladders. While they cannot do it directly my CFP told me that he would help me plan, execute and track my ladders at Ally.

On the surface 0.30 vs 0.28 sounds like a difference, but we're only talking about $200/year with a $1M portfolio. Having access to Admiral shares and no trading fees into Vanguard funds will likely make up the difference and then some.

Having access to a local branch with Schwab does sound nice. Ultimately I'm looking at VPAS/SIA as an extra buffer to help save me from myself and stay the course with my investment plan. My feeling is that Vanguard will most likely be able to do that for me.
At 1 million, the fee differences are insignificant. What about when it appreciates to 5 million. That's $15000 in Vanguard and $3600 in Schwab.

Mors
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by Mors » Tue Jan 16, 2018 2:51 pm

dave1054 wrote:
Tue Jan 16, 2018 2:40 pm
nasrullah wrote:
Mon Jan 15, 2018 11:24 pm
I'm in the same boat and have been talking with both VPAS and SIA. After the initial conversation with VPAS they will manage any AA that you decide. They'll try their best to save you from yourself, but ultimately will do what you want. Mostly this means that you will end up with additional Vanguard accounts managed by hand by your CFP vs their automated system. Automated TLH is available for accounts over $1M and it sounds like they are working on lowering the threshold to the lower tiers. I had a long conversation around emergency funds and CD ladders. While they cannot do it directly my CFP told me that he would help me plan, execute and track my ladders at Ally.

On the surface 0.30 vs 0.28 sounds like a difference, but we're only talking about $200/year with a $1M portfolio. Having access to Admiral shares and no trading fees into Vanguard funds will likely make up the difference and then some.

Having access to a local branch with Schwab does sound nice. Ultimately I'm looking at VPAS/SIA as an extra buffer to help save me from myself and stay the course with my investment plan. My feeling is that Vanguard will most likely be able to do that for me.
At 1 million, the fee differences are insignificant. What about when it appreciates to 5 million. That's $15000 in Vanguard and $3600 in Schwab.
The true fee of the schwab robo advisor is much higher, since the cash allocation has a meager interest rate, while schwab profits from arbitrage and you lose the returns that a proper safe portfolio allocation generates.

It 's a trap. Good alternative to VPAS is Betterment and Wealthfront, but the first is more expensive with human advisory, and the latter does not offer human advisory.

KSActuary
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by KSActuary » Tue Jan 16, 2018 5:21 pm

Find an advisor who will work on fixed fee and follow your advisory plan, not theirs. They are out there. We do it all of the time.

Dick D
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by Dick D » Tue Jan 16, 2018 5:36 pm

I retired 7 years ago. About 2 years ago I looked into an Advisory service. Rather than use a service, I decided to place all of my retirement IRA and Roth money into Vanguard Life Growth Conservative Fund. The cost is certainly less that paying an advisory service to handle the rebalancing, and I do not have to bother with rebalancing.

dbr
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by dbr » Tue Jan 16, 2018 6:00 pm

Also, investment management, which is where rebalancing falls, is not the same as investment advice. Management should not be very expensive.

Radd
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by Radd » Thu Feb 15, 2018 8:00 pm

I use both. The majority of my assets are with Vanguard but I plan to build up the Schwab account as well. VPAS is a very simple strategy with minimal funds but they do aggregate accounts and look at them from a tax efficient perspective. When talking to my advisor he in going to stay in his lane.

Schwab has far more holdings even on a small account. They do not aggregate across accounts when I originally talked to them so I only have a taxable account with them at this time. Yes expense ratios may be higher on some holdings but they do not charge the AUM fee. The financial planning software is excellent. I am not sure which platform it is but it is really nice.

The investment strategies are a little different. I don't like to keep all my eggs in one basket so I am happy to use both at this time.

UpperNwGuy
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by UpperNwGuy » Thu Feb 15, 2018 8:56 pm

As you get older, you need to simplify your portfolio to the point that your wife can manage it in your absence. I'm thinking no more than two or three funds, but possibly a single fund.

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in_reality
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by in_reality » Thu Feb 15, 2018 9:26 pm

dave1054 wrote:
Mon Jan 15, 2018 6:25 pm

Cost is not my primary concern. It is more personal and emotional. My wife who is intelligent and college grad just does not have interest in managing our assets in the event of my death. Don't take this comment as politically incorrect or sexist. It is just a fact in my life. Anyway, I think it may be helpful and comforting for her to be able to walk into a physical office and actually talk to someone in person.
My wife earns more than I and is certainly more intelligent but I worry she would sell out of everything were I not around.

I think I'd go with the SIA when I decide to really implement a plan. Being an expat now though, I don't think I qualify for the service.

In any case, I hold by choice many of the funds they use. If SIA is similar to SIP (the robo), it'll have somewhat of a small value tilt.

If you contact SIA, please post back what you find out. I set up a portfolio using their site (which is interesting and let's you model different scenarios - job loss, inflation etc), but unfortunately they restrict access after a certain amount of time unless you call for a consultation.

Whatever cash drag SIA has (and in fairness a zero duration bond isn't all bad and you do get some return - it's actually the characteristics of the portfolio as a whole such as overall duration, inflation protection --that matter), it's certainly less than my wife would hold if she were in charge.

Bozz
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by Bozz » Thu Feb 15, 2018 10:05 pm

Signed up for SIA just this past year, tried to have a relatively aggressive mix (30 yr time horizon), and cash is currently 7.6% of the portfolio. I’ve read the min with Schwab Intelligent Advisor is 6% cash

mpnret
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by mpnret » Sun May 20, 2018 10:32 am

I'm in the same boat as most on this thread trying to decide between Vanguard Personal Advisory Services, Schwab Intelligent Portfolios and Schwab Intelligent Advisory. I'm retired and rapidly approaching required minimum distribution age with my employer held 401K. The account has done very well over the years growing to a few mil with nice features like free Financial Engines robo advisor for all my accounts not just the employer held ones. I was also able to purchase Vanguard funds at an institutional rate lower than I could get them direct from Vanguard. Unfortunately my employer rules are that after my first RMD I must move on so here I am.
I have been looking at Schwab Intelligent Portifolio and also the Advisory service which uses Intelligent Portfolios with some human help and additional services. I fear the hidden costs in both of these. I built a number of Intelligent Portfolios on the Schwab website and found they all had a cash holding requirement of 8.5% to 12.5%. I understand from others it can go even higher or as low as 6%. If I use 1M as an account balance just for comparision my lowest 8.5% cash requirement becomes 85,000. Consider I'm losing almost 6% on that amount or around 5,000 being that it is held in a minimal interest cash account. So my free Schwab IP cost more than Vanguard PAS cost (3000) for the same account. But wait there's more. On the Schwab webite they have a comparision with 2 other advisory services (not Vanguard) and show the Schwab IP average expense ratio of .17% admitting that it is higher than the other 2 but the other 2 have an advisory fee which makes Schwab the better choice. I then checked Vanguard PAS and the expense ratio in their portfolios run from .04% to .14%. Also noticed tax loss harvesting is available with PAS if requested. It's not on automatically because they want you be be aware of possible negative consequences first. So I am leaning toward PAS or maybe even skip the PAS fee and pick my own Vanguard fund(s) like the Life Stragety fund or similiar which does auto rebalancing as part of the fund and has a .14% expense ratio. I'd love to hear any other views on this being I do like the Schwab local and banking services but in the interest of simplification will only pick one.
Interesting quote from Schwab website for both IP and IS when you click on how we make our money:
"Schwab Intelligent Advisory charges no commissions or account service fees. Schwab affiliates do earn revenue from the underlying assets in Schwab Intelligent Portfolios® accounts. This revenue comes from managing Schwab ETFs™ and providing services relating to certain third-party ETFs that can be selected for the portfolio, and from the cash feature on the accounts. Revenue may also be received from the market centers where ETF trade orders are routed for execution."
Last edited by mpnret on Sun May 20, 2018 1:46 pm, edited 1 time in total.

Freefun
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by Freefun » Sun May 20, 2018 11:00 am

I'm deciding as well. I have accounts with vanguard and Schwab. Leaning towards PAS or nothing at all (do 3 fund setup myself). It's only me so no spouse to consider.
Remember when you wanted what you currently have?

Nate79
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by Nate79 » Sun May 20, 2018 11:12 am

mpnret wrote:
Sun May 20, 2018 10:32 am
I'm in the same boat as most on this thread trying to decide between Vanguard Personal Advisory Services, Schwab Intelligent Portfolios and Schwab Intelligent Advisory. I'm retired and rapidly approaching required minimum distribution age with my employer held 401K. The account has done very well over the years growing to a few mil with nice features like free Financial Engines robo advisor for all my accounts not just the employer held ones. I was also able to purchase Vanguard funds at an institutional rate lower than I could get them direct from Vanguard. Unfortunately my employer rules are that after my first RMD I must move on so here I am.
I have been looking at Schwab Intelligent Portifolio and also the Advisory service which uses Intelligent Portfolios with some human help and additional services. I fear the hidden costs in both of these. I built a number of Intelligent Portfolios on the Schwab website and found they all had a cash holding requirement of 8.5% to 12.5%. I understand from others it can go even higher or as low as 6%. If I use 1M as an account balance just for comparision my lowest 8.5% cash requirement becomes 85,000. Consider I'm losing almost 6% on that amount or around 5,000 being that it is held in a minimal interest cash account. So my free Schwab IP cost more than Vanguard PAS cost (3000) for the same account. But wait there's more. On the Schwab webite they have a comparision with 2 other advisory services (not Vanguard) and show the Schwab IP average expense ratio of .17% admitting that it is higher than the other 2 but the other 2 have an advisory fee which makes Schwab the better choice. I then checked Vanguard PAS and the expense ratio in their portfolios run from .04% to .14%. Also noticed tax loss harvesting is available with PAS if requested. It's not on automatically because they want you be be aware of possible negative consequences first. So I am leaning toward PAS or maybe even skip the PAS fee and pick my own Vanguard fund(s) like the Life Stragety fund or similiar which does auto rebalancing as part of the fund and has a .14% expense ratio. I'd love to hear any other views on this being I do like the Schwab local and banking services but in the interest of simplification will only pick one.
Interesting quote from Schwab website for both IP and IS when you click on how we make our money:
"Schwab Intelligent Advisory charges no commissions or account service fees. Schwab affiliates do earn revenue from the underlying assets in Schwab Intelligent Portfolios® accounts. This revenue comes from managing Schwab ETFs™ and providing services relating to certain third-party ETFs that can be selected for the portfolio, and from the cash feature on the accounts. Revenue may also be received from the market centers where ETF trade orders are routed for execution."
The cash portion of the Schwab portfolio is offset by higher yielding bonds. You need to evaluate the entire portfolio risk profile and not just single out the cash portion.

codmaxkor
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by codmaxkor » Sun May 20, 2018 11:19 am

nasrullah wrote:
Tue Jan 16, 2018 2:32 pm
Mors wrote:
Tue Jan 16, 2018 2:01 pm
Schwab allocates a part of your portfolio in cash, which creates a cash drag. This is their main way of revenue, it is poor value for customers.
It's a pretty hefty percentage too from what I've read.

I should also say that I'm looking to leverage VPAS to unwind my holdings with Wealthfront into a streamlined four fund portfolio (if it was just me managing I'd go to three, but this is the compromise for the service).
Has anyone tried to negotiate the asset allocation with Schwab?

ofckrupke
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by ofckrupke » Sun May 20, 2018 11:32 am

codmaxkor wrote:
Sun May 20, 2018 11:19 am
nasrullah wrote:
Tue Jan 16, 2018 2:32 pm
Mors wrote:
Tue Jan 16, 2018 2:01 pm
Schwab allocates a part of your portfolio in cash, which creates a cash drag. This is their main way of revenue, it is poor value for customers.
It's a pretty hefty percentage too from what I've read.

I should also say that I'm looking to leverage VPAS to unwind my holdings with Wealthfront into a streamlined four fund portfolio (if it was just me managing I'd go to three, but this is the compromise for the service).
Has anyone tried to negotiate the asset allocation with Schwab?
I can tell you how that ends...

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123
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by 123 » Sun May 20, 2018 11:59 am

An alternative to Vanguard PAS and the competing services is to find a fund-of-funds that will work for you as a complete portfolio strategy. I picked a Vanguard LifeStrategy fund and am converting assets to it in various accounts. My LifeStrategy fund pick was not perfect for us but it was close enough. There is no re-balancing needed and no issue of what fund to sell if you need cash. I regard the higher expense ratio of the LifeStrategy fund (about $1K per million) as the cost of "insurance" against a financial adviser after I'm gone, my spouse is not interested whatsoever in financial matters.
The closest helping hand is at the end of your own arm.

dave1054
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by dave1054 » Sun May 20, 2018 1:32 pm

123,

Sounds like a decent strategy. However, in the event you pass, how does your wife manage the cash.
Are dividends from Life Strategy reinvested or moved to money market? What about selling some losses
for tax writeoff? What about estate planning?
We are in a similar situation and I am concerned about the myriad what if questions. Is it worth saving
about 10-20 basis points to go with Life Strategy fund vs. PAS? Not a clear cut answer.

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BL
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by BL » Sun May 20, 2018 2:23 pm

dave1054 wrote:
Sun May 20, 2018 1:32 pm
123,

Sounds like a decent strategy. However, in the event you pass, how does your wife manage the cash.
Are dividends from Life Strategy reinvested or moved to money market? What about selling some losses
for tax writeoff? What about estate planning?
We are in a similar situation and I am concerned about the myriad what if questions. Is it worth saving
about 10-20 basis points to go with Life Strategy fund vs. PAS? Not a clear cut answer.
I also like the idea of LS fund (or other) to simplify. It is ok to concede some $ as a way of simplifying. Forgetting about tax loss harvesting in the future is ok as an alternative to paying high management fees. Estate planning should be done as early as possible, not late in retirement (as we are doing!). In retirement, if income is desired, dividends can be automatically sent to your checking account, as can RMDs. We have V calculate RMD, but take out for QCDs (and RMDs) as desired on our own. It would be simple to specify automatic RMDs if desired.

PAS also seems a good choice with someone to talk to and handle details. The system would be set up to continue if that person was not able to continue.

A fee-only adviser would be fine if one could find a suitable person, first, and then they would also have to outlast both of us before they retired, quit, or died! Not sure how that would turn out.

A 3-fund portfolio could do fine most years without rebalancing, but still some concerns. What to withdraw from in IRAs, unless designated, and seriously unbalanced.
Last edited by BL on Sun May 20, 2018 3:00 pm, edited 1 time in total.

123
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by 123 » Sun May 20, 2018 2:25 pm

dave1054 wrote:
Sun May 20, 2018 1:32 pm
123,

Sounds like a decent strategy. However, in the event you pass, how does your wife manage the cash.
Are dividends from Life Strategy reinvested or moved to money market? What about selling some losses
for tax writeoff? What about estate planning?
We are in a similar situation and I am concerned about the myriad what if questions. Is it worth saving
about 10-20 basis points to go with Life Strategy fund vs. PAS? Not a clear cut answer.
The first moves I made with LifeStrategy were involving IRA accounts so there were no tax consequence. LifeStrategy is set to reinvest all dividends. RMDs will be easy since what to sell is obvious.

Our IRA/tax deferred accounts account for over 50% of our portfolio so I'm getting a feel of how comfortable I am with LifeStrategy there for a while longer before I start adjusting taxable due to tax consequences. With LifeStrategy there is less opportunity (likely almost none) to tax loss harvest in taxable versus if you held individual fund positions. TLH would defeat the simple one fund strategy unless you're comfortable taking an alternative fund for 30 days. Like others on the board have said I'm not really liking the international bond component of the LifeStrategy but I don't think it does any harm.

I wasn't ready to pay the higher PAS expense so I went with LifeStrategy. After I'm gone LifeStrategy does present a simpler account to my spouse.
Last edited by 123 on Sun May 20, 2018 3:15 pm, edited 2 times in total.
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avoidingdumbmistakes
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by avoidingdumbmistakes » Sun May 20, 2018 3:11 pm

I'm testing Schwab's intelligent portfolio with one of my tax advantaged accounts (relatively small account). I set it up as the most aggressive option so it's 94% stocks and 6% cash. I'm going to compare the returns to my self managed equity portfolio and see if there is a notable difference in returns.

Being completely honest, I'm not a big fan of automated stuff. I guess I'm a control freak in some ways. I do like the diversification that the SIP puts in place except for the REIT allocation but I'm interested in performance over the next 2 years. If my self managed performs better then I'm firing the robot and taking over.

mpnret
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by mpnret » Sun May 20, 2018 3:33 pm

123,
I will be doing the same but I assume you meant there was no tax consequence with this statement: "The first moves I made with LifeStrategy were involving IRA accounts so there was tax consequence." Edit: Woops never mind I see you fixed it.
If I use LS my plan was to move my entire 401K into it without any tax consequences. Also there are some taxed contributions in there which I should be able to move into my Roth without tax consequence. Then I would set up a second (taxed) LS account. Vanguard would calculate RMD's and also move them from my tax defered account to my taxed as necessary along with a tax percentage that I decide. Tax gets paid on my RMD's as ordinary income. Then when/if I need cash I just transfer it from my LS taxed account to my checking acccount. I will owe taxes on any gains in this account which should be simple with a a Vanguard tax statement. Can't do tax loss harvesting but that is handled somewhat down at the fund level. My tax defered LS account will most likely be their LS growth fund being RMD's won't draw down my account until I reach 115 years old. My second LS account (taxed) will most likely be their LS income fund. Our Roth IRA's will also be at Vanguard which we can pull from tax free whenever or maybe never and they will be passed on. Other accounts like individulal stocks with a direct stock purchase firm, bank accounts, and I bonds should be pretty straightfoward. My wife with help from my son should have no problem. Plan is lots of lifetime giving then pass on what's left. Not to complicated. We could probably go it without a estate plan but may add one at sometime. Even if i decide to go with PAS instead of LS, I don't think they do estate planning. That would be handled separately.

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JamesSFO
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by JamesSFO » Sun May 20, 2018 4:15 pm

Does Schwab have two similarly named offerings? The "Intelligent Portfolios" are $0 fee (https://intelligent.schwab.com/) and then "Intelligent Advisory" (https://www.schwab.com/public/schwab/in ... t_advisory) has a 0.28% AUM cap of $1.4M or so. Very similar names, but different services.

Do both have the "cash drag"?

avoidingdumbmistakes
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by avoidingdumbmistakes » Sun May 20, 2018 5:01 pm

JamesSFO wrote:
Sun May 20, 2018 4:15 pm
Does Schwab have two similarly named offerings? The "Intelligent Portfolios" are $0 fee (https://intelligent.schwab.com/) and then "Intelligent Advisory" (https://www.schwab.com/public/schwab/in ... t_advisory) has a 0.28% AUM cap of $1.4M or so. Very similar names, but different services.

Do both have the "cash drag"?
I'm *almost* 100% sure they both use use same robo program but the one with fees has an in house Schwab adviser for more in depth help for those that need it. The "free" service sets up your portfolio based on answers to a series of questions. It was simple to get set up honesltly. Took me less than 30 minutes. It will be a while before I have an opinion on the SIP program.

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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by mpnret » Sun May 20, 2018 5:34 pm

JamesSFO wrote:
Sun May 20, 2018 4:15 pm
Does Schwab have two similarly named offerings? The "Intelligent Portfolios" are $0 fee (https://intelligent.schwab.com/) and then "Intelligent Advisory" (https://www.schwab.com/public/schwab/in ... t_advisory) has a 0.28% AUM cap of $1.4M or so. Very similar names, but different services.

Do both have the "cash drag"?
Yes, they both have the cash drag. That's how they make their money on a free service and a .28% service. If you click on "how we make our money" link on their site they even admit to that.
Last edited by mpnret on Mon May 21, 2018 12:18 pm, edited 1 time in total.

afan
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by afan » Mon May 21, 2018 9:14 am

My spouse, although not obsessed with finance, is quite capable of managing our investments. When old age catches up, we have a younger generation with POA to take over. But if I did need my portfolio managed, I would convert to a balanced fund. This is the same thing that PAS or Intelligent Portfolio or Advisory provides, but without the fees.
I don't have Vanguard PAS. When I have tried out their "ask a CFP" option I found them to have little to say about any interesting questions. So the advice part is useless. Bogleheads is much better. I do not have experience with Schwab's advisors, so no comment on them.

Right now I manage my finances. 99.999% of the time this involves doing absolutely nothing at all. Occasionally, far less often than once per year, I might change the distribution of new money into the funds to nudge the holdings closer to the allocation I want. I don't do any major rebalancing since I figure that my desired allocation is no more than an educated wild guess in the first place. If I think I want 70% stock and it goes to 75%, I can either rebalance back to 70, or I can figure that I was never that sure it should have been 70 rather than 75 in the first place. If I decide I want the stock allocation closer to 70, then I increase the bond allocation and reduce the stock allocation for new money.

Then I go back to sleep. I do this for free.

I could pay someone to maintain tighter rebalancing bands, but I am not at all sure I want tighter bands. I am sure that the target allocation I have is just a guess. So I don't see the point in paying someone to do something and I certainly don't see the point in paying someone to do nothing.

If I wanted tight bands I would go to a balanced fund. Those are available at much lower prices than PAS or SIA.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by MikeG62 » Wed Jun 13, 2018 12:06 pm

afan wrote:
Mon May 21, 2018 9:14 am
...But if I did need my portfolio managed, I would convert to a balanced fund. This is the same thing that PAS or Intelligent Portfolio or Advisory provides, but without the fees.
It is the same thing afan (honest question, not trying to be argumentative)? Wouldn't PAS or Schwab IP lower the equity allocation overtime (on some sort of glide path) - much like would happen with a lifecycle fund?

Reason this interests me is my SIL (sister-in-law) is going through a divorce and her share of the liquid assets once the dust settles will likely be low 7 figures (split between a rollover IRA from her soon to be ex's 401k, a taxable brokerage and a bank account). She occasionally reaches out with questions and has made comments hoping I will help her manage her investments. Problem is I really don't want that kind of responsibility (mixing business with family rarely a good idea) so I have been thinking of suggesting she either consider something like Vanguard or Fidelity PAS, or Schwab IP or Fidelity Go as one set of options or otherwise maybe opt for the ultimate in simplicity - a lifecycle fund.

Seems a lifecycle fund would largely get to the same place as either of the PAS options (as well as the SIP or FG), but would be simpler and likely cheaper. No need for me to weigh in on her asset allocation as time goes by. It all happens within the fund.

Any thoughts?
Real Knowledge Comes Only From Experience

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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by dbr » Wed Jun 13, 2018 1:47 pm

MikeG62 wrote:
Wed Jun 13, 2018 12:06 pm
afan wrote:
Mon May 21, 2018 9:14 am
...But if I did need my portfolio managed, I would convert to a balanced fund. This is the same thing that PAS or Intelligent Portfolio or Advisory provides, but without the fees.
It is the same thing afan (honest question, not trying to be argumentative)? Wouldn't PAS or Schwab IP lower the equity allocation overtime (on some sort of glide path) - much like would happen with a lifecycle fund?

Reason this interests me is my SIL (sister-in-law) is going through a divorce and her share of the liquid assets once the dust settles will likely be low 7 figures (split between a rollover IRA from her soon to be ex's 401k, a taxable brokerage and a bank account). She occasionally reaches out with questions and has made comments hoping I will help her manage her investments. Problem is I really don't want that kind of responsibility (mixing business with family rarely a good idea) so I have been thinking of suggesting she either consider something like Vanguard or Fidelity PAS, or Schwab IP or Fidelity Go as one set of options or otherwise maybe opt for the ultimate in simplicity - a lifecycle fund.

Seems a lifecycle fund would largely get to the same place as either of the PAS options (as well as the SIP or FG), but would be simpler and likely cheaper. No need for me to weigh in on her asset allocation as time goes by. It all happens within the fund.

Any thoughts?
I agree that VPAS sets people up in pretty much what those people would do for themselves. An advantage of doing it themselves is they would know what they have and why and what to expect (or would they?).

It is a valid discussion what it is exactly that a person would be advised to use VPAS to do. One compelling concern is what happens when people become less competent or suddenly widowed or divorced. The counter to that is that people in such situations have a lot more to take care of than just the little bit that VPAS does with their investments.

smectym
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by smectym » Wed Jun 13, 2018 7:12 pm

Mors wrote:
Tue Jan 16, 2018 2:01 pm
Schwab allocates a part of your portfolio in cash, which creates a cash drag. This is their main way of revenue, it is poor value for customers.

VPAS is a good choice thanks to the reliability that vanguard provides about looking after your interests, as well as offering human interaction.
Not only does Schwab allocate a part of the portfolio to cash, if you're in retirement with a conservative portfolio the cash allocation will be LARGE.

But that's not the worst of it. A year, 18 months ago, when market interest rates were quite low, the fact that Schwab insists on sticking the cash allocation, not into a bona fide money market fund, but into a so-called "bank money market" account which earns 0.18% wasn't as big a deal.

Now, with competitive money market fund rates pushing 2%, it's approaching the level of a deal-killer. You have to do the math but as short-term rates continue to rise I doubt Schwab will continue to be able to get away with it.

Smectym

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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by Nate79 » Wed Jun 13, 2018 8:10 pm

smectym wrote:
Wed Jun 13, 2018 7:12 pm
Mors wrote:
Tue Jan 16, 2018 2:01 pm
Schwab allocates a part of your portfolio in cash, which creates a cash drag. This is their main way of revenue, it is poor value for customers.

VPAS is a good choice thanks to the reliability that vanguard provides about looking after your interests, as well as offering human interaction.
Not only does Schwab allocate a part of the portfolio to cash, if you're in retirement with a conservative portfolio the cash allocation will be LARGE.

But that's not the worst of it. A year, 18 months ago, when market interest rates were quite low, the fact that Schwab insists on sticking the cash allocation, not into a bona fide money market fund, but into a so-called "bank money market" account which earns 0.18% wasn't as big a deal.

Now, with competitive money market fund rates pushing 2%, it's approaching the level of a deal-killer. You have to do the math but as short-term rates continue to rise I doubt Schwab will continue to be able to get away with it.

Smectym
As I have posted in other threads to debunk this claimed cash drag the SIP fixed income allocation is actually higher yielding than the corresponding same percentage in Vanguard total bond market. The SIP uses a number of higher yielding and thus higher risk fixed income funds which are offset by lower yielding yet safer FDIC cash.

smectym
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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by smectym » Wed Jun 13, 2018 11:35 pm

Nate79 wrote:
Wed Jun 13, 2018 8:10 pm
smectym wrote:
Wed Jun 13, 2018 7:12 pm
Mors wrote:
Tue Jan 16, 2018 2:01 pm
Schwab allocates a part of your portfolio in cash, which creates a cash drag. This is their main way of revenue, it is poor value for customers.

VPAS is a good choice thanks to the reliability that vanguard provides about looking after your interests, as well as offering human interaction.
Not only does Schwab allocate a part of the portfolio to cash, if you're in retirement with a conservative portfolio the cash allocation will be LARGE.

But that's not the worst of it. A year, 18 months ago, when market interest rates were quite low, the fact that Schwab insists on sticking the cash allocation, not into a bona fide money market fund, but into a so-called "bank money market" account which earns 0.18% wasn't as big a deal.

Now, with competitive money market fund rates pushing 2%, it's approaching the level of a deal-killer. You have to do the math but as short-term rates continue to rise I doubt Schwab will continue to be able to get away with it.

Smectym
As I have posted in other threads to debunk this claimed cash drag the SIP fixed income allocation is actually higher yielding than the corresponding same percentage in Vanguard total bond market. The SIP uses a number of higher yielding and thus higher risk fixed income funds which are offset by lower yielding yet safer FDIC cash.
Nate79, you make an interesting point. But I’m not sure how relevant it is to drag fixed income return history into a discussion of Schwab IP’s mandated allocation of client funds into a non-competitive “bank money market” product.

Also, If I take your point, Schwab clients should breathe a sigh of relief at being allocated so heavily into ultra-low-yielding cash, since that “offsets” the high risk profile of Schwab’s fixed income plays. Presumably Vanguard doesn’t need to force clients into low-yielding cash because Vanguard’s bond allocation isn’t quite so risky?

Smectym

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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by Nate79 » Wed Jun 13, 2018 11:47 pm

smectym wrote:
Wed Jun 13, 2018 11:35 pm
Nate79 wrote:
Wed Jun 13, 2018 8:10 pm
smectym wrote:
Wed Jun 13, 2018 7:12 pm
Mors wrote:
Tue Jan 16, 2018 2:01 pm
Schwab allocates a part of your portfolio in cash, which creates a cash drag. This is their main way of revenue, it is poor value for customers.

VPAS is a good choice thanks to the reliability that vanguard provides about looking after your interests, as well as offering human interaction.
Not only does Schwab allocate a part of the portfolio to cash, if you're in retirement with a conservative portfolio the cash allocation will be LARGE.

But that's not the worst of it. A year, 18 months ago, when market interest rates were quite low, the fact that Schwab insists on sticking the cash allocation, not into a bona fide money market fund, but into a so-called "bank money market" account which earns 0.18% wasn't as big a deal.

Now, with competitive money market fund rates pushing 2%, it's approaching the level of a deal-killer. You have to do the math but as short-term rates continue to rise I doubt Schwab will continue to be able to get away with it.

Smectym
As I have posted in other threads to debunk this claimed cash drag the SIP fixed income allocation is actually higher yielding than the corresponding same percentage in Vanguard total bond market. The SIP uses a number of higher yielding and thus higher risk fixed income funds which are offset by lower yielding yet safer FDIC cash.
Nate79, you make an interesting point. But I’m not sure how relevant it is to drag fixed income return history into a discussion of Schwab IP’s mandated allocation of client funds into a non-competitive “bank money market” product.

Also, If I take your point, Schwab clients should breathe a sigh of relief at being allocated so heavily into ultra-low-yielding cash, since that “offsets” the high risk profile of Schwab’s fixed income plays. Presumably Vanguard doesn’t need to force clients into low-yielding cash because Vanguard’s bond allocation isn’t quite so risky?

Smectym
I don't use SIP or Vanguard. SIP is truly a slice and dice portfolio for both the stock and the bond assets. On the fixed side they have all sorts of low risk and higher risk bonds (high yield, emerging markets, etc). They also have some other alternative asset classes. High yield and duration of fixed income is offset by lower duration bond and cash. Vanguard uses US total bond and probably also International bond. Basically two all in one funds

The SIP is just different, slicing up into smaller pieces (plus the alternatives). The fixed income yield is a little higher for SIP (I did the analysis using their stated funds and a 70:30 allocation). With slice and dice they have much more opportunity for TLH.

Point is there is no cash drag because you can't look at only one holding (cash) but need to look at the entire portfolio as a whole. The fixed income part as I said is actually higher yielding than Vanguard.

Whether that is good or not I don't know. And I don't know which is higher risk overall.

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Re: Vanguard Personal Advisory Services vs. Schwab Intelligent Advisory

Post by mpnret » Thu Jun 14, 2018 9:43 am

I also don't use SIA or Vanguard PAS but did evaluate both awhile back and found Schwab had hidden fees. Maybe I shouldn't call them hidden fees because thay are actually on the Schwab website for those who look. First one was the cash drag. My sample portfolio had a cash amount well into 6 figures which was non-negotiable. I was told if I need some cash I could take it out but it would automatically be replenished from my investments. Schwab does let you know they are making money from your cash with this quote from their website: "Schwab Intelligent Advisory charges no commissions or account service fees. Schwab affiliates do earn revenue from the underlying assets in Schwab Intelligent Portfolios® accounts. This revenue comes from managing Schwab ETFs™ and providing services relating to certain third-party ETFs that can be selected for the portfolio, and from the cash feature on the accounts. Revenue may also be received from the market centers where ETF trade orders are routed for execution."
Next fee was the higher expense ratio of the funds used by Schwab IAS. The Schwab website lists it as .17%. The expense ratio in Vanguard PAS portfolios run from .04% to .14% per the Vanguard website.
So for now I continue to evaluate services but still manage my own portfolio.

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