Vanguard vs Independent Certified Financial Planner

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aussiedog
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Joined: Sat Mar 21, 2009 5:16 pm

Vanguard vs Independent Certified Financial Planner

Post by aussiedog » Fri Apr 13, 2018 3:15 pm

With the help of all of you Bogleheads, I have been successfully self-managing our family finances for many years. With some recent changes to our situation I have decided that consultation with a certified financial planner would be helpful a a check to make sure things are on track and potentially catch things I haven't thought of.

I was initially searching for hourly fee certified financial planners in my area (Portland, OR), but became aware that we qualified for free sessions from a Vanguard CFP.

While I suppose there could be some concern that this planner could be biased because they work for Vanguard, they do have to follow the fiduciary rule and my bias is also towards Boglehead/Vanguard/low cost index fund philosophy.

What is the collective experience with Vanguard CFPs? Would anyone make the case that I should seek out a truly independent, hourly rate advisor? (and if so, any experiences with good advisors in Oregon?)

Thanks! Aussiedog (Editing post with portfolio below)

=======================================================

Emergency funds: 12 months of expenses
Debt: 350K rental property mortgage @ 4.5%
Tax Filing Status: Married Filing Jointly
Tax Rate: 33% Federal, 9% State
State of Residence:Oregon
Age:54
Desired Asset allocation: 50% stocks / 50% bonds
Desired International allocation: 20% of stocks

Total portfolio low seven-figures., approximately 15% taxable and 85% tax advantaged
529's established and funded for 2 kids

Current retirement assets

Taxable
1% cash
7% Vanguard Total Stock Market Admiral VTSAX
3% Vanguard Total International Stock Admiral VTIAX
3% Vanguard Intermediate-Term Tax-Exempt Fund VWITX

His 403b
11% Total Bond Market Index Fund Signal Shares VBTSX

His 457
5% Fidelity 500 FXSIX
3% Fidelity sm cap VSCIX
3% Fidelity mid cap VMCIX

His IAP (state 401k-like pension account)
8% (composed of 45% public equity, 15% private equity, 25% fixed income, 15% real estate per manager- managed by state)

His TSP
16% G fund


His Roth IRA at Vanguard
5% Vanguard FTSE VFSVX

Her 403b
12% FXSIX Fidelity 500 Index
4% VTSNX Vanguard total international stock
3% VBTIX Vanguard total bond fund

Her 457
3% Vanguard total bond VBTSX

Her Roth IRA at Vanguard
6% REIT VGSLX

Real estate: Rental property:
7% equity in rental (wasn't sure how to list this)


Contributions

New annual Contributions
$24,000 to his 457
$24,000 to his TSP + %5 match
$6500 to his backdoor Roth IRA
$6500 to her backdoor Roth IRA
$24,000 to her 403b
$24,000 to her 457

His State Pension
His Federal Pension
(currently 20 years of service at each)
Last edited by aussiedog on Fri Apr 13, 2018 5:09 pm, edited 1 time in total.

longleaf
Posts: 91
Joined: Sun Nov 26, 2017 4:13 pm

Re: Vanguard vs Independent Certified Financial Planner

Post by longleaf » Fri Apr 13, 2018 3:19 pm

Vanguard doesn't have an agenda...if you are a Vanguard client then you are a Vanguard owner. I don't really understand what kind of information you are seeking from a CFP.

If you really want to think outside of the box, Bogleheads.org is a great CFP. You not only get free advice, you get different perspectives and personal experience.
Frugality, indexing, time.

aussiedog
Posts: 33
Joined: Sat Mar 21, 2009 5:16 pm

Re: Vanguard vs Independent Certified Financial Planner

Post by aussiedog » Fri Apr 13, 2018 3:25 pm

Thanks Longleaf.

That was my sense about Vanguard, and in general I agree with your comment about bogleheads.org serving as a crowdsourced CFP.

With a recent change in our financial circumstances (recent inheritance, greater proportion of savings in taxable accounts) I feel like it could be helpful to have dedicated time with an expert (rather than a self-educated amateur, which is how I think of myself) who could spend a couple of hours reviewing and advising.

bloom2708
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Location: Fargo, ND

Re: Vanguard vs Independent Certified Financial Planner

Post by bloom2708 » Fri Apr 13, 2018 3:35 pm

Could you ask your question here? Lower cost.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

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mhc
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Location: NoCo

Re: Vanguard vs Independent Certified Financial Planner

Post by mhc » Fri Apr 13, 2018 3:38 pm

Give Vanguard a shot, and then let us know how it goes. If you are not satisfied with what Vanguard does, then give this site or a CFP a try. Or try all 3 and share the results.

stuper1
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Joined: Tue Apr 03, 2018 9:30 am

Re: Vanguard vs Independent Certified Financial Planner

Post by stuper1 » Fri Apr 13, 2018 3:54 pm

If you hire an expert, you are going to get his or her opinion on what you should do. I bet if you hired 9 more experts in succession, you would get 9 more opinions that would vary by a little or a lot from the first opinion. Then, you would take all that advice and decide which experts provided the best reasoning for their opinion, and who to trust the most, and your final decision would be some sort of weighted average of the 10 opinions that you received.

I'm guessing you don't want to spend the money for 10 different opinions. If it were me, I would just do as much research as I could, ask questions here and maybe other places, and come to my own conclusions.

hale2
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Re: Vanguard vs Independent Certified Financial Planner

Post by hale2 » Fri Apr 13, 2018 4:51 pm

Are you just looking for a CFP to do an asset management review? If so, then you're fine going with the free Vanguard option. I used the Vanguard CFP several years ago and was provided a good, solid asset allocation plan. But they are not able to do a full financial plan, which sounds like what you are looking for.

The value of a CFP is more than asset review. They should look to make sure you're on track for your various goals, and your insurance coverages and estate planning are appropriate. The asset allocation plan Vanguard will give you will be appropriate in general, but might not be the best for your particular situation. If you need those items reviewed you should hire an hourly planner to look over everything and come up with recommendations. Then you can decide which, if any, of those recommendations you want to follow. If you go the hourly planner route, make sure they are fee only, and don't sell products. Some will say they are fee "based" so they'll charge you an hourly fee then will also sell you products that happen to be part of their recommendations.

aussiedog
Posts: 33
Joined: Sat Mar 21, 2009 5:16 pm

Re: Vanguard vs Independent Certified Financial Planner

Post by aussiedog » Fri Apr 13, 2018 5:24 pm

Thanks to all who have responded. It has made me realize that my questions are a bit unfocused--it is really more how do I handle an inheritance coming into and expanding the taxable portion of my portfolio (now added above to original post). My specific questions are:

1. Inheritance is currently held at Edward Jones and mostly in dozens of individual stocks. I have heard that EJ charges fees to close each account, but I will find out more and Vanguard may be able to help. Should I sell everything and move it over all at once, or do it in blocks monthly, to avoid selling it all at the same point in time?

2. I have more space for bonds in my tax advantaged accounts, so my plan would be to mostly add index domestic and international index funds to the taxable account from the Edward Jones transfer, and rebalance my tax advantaged accounts to bond funds, and keep the Roth IRAs as is

3. With expanding size of portfolio and taxable portion in particular, would this prompt any different strategies, different asset classes (munis?), or overall approach, or things can just be infinitely scaled up with no change in approach? I have considered adding an additional rental property, but my maiden voyage into real estate investing has shown me that there is a relatively higher hassle factor, even with "turnkey" properties

With several different employers my accounts are already necessarily a little complex/fragmented so my goal would be to keep it as simple as possible.

Any and all advice welcomed!

aussiedog
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Joined: Sat Mar 21, 2009 5:16 pm

Re: Vanguard vs Independent Certified Financial Planner

Post by aussiedog » Fri Apr 13, 2018 5:26 pm

Thanks Hale, good points.
No insurance questions, and estate planning is all done.

It is more investment strategy and asset allocation advice that I am looking for.

JBTX
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Re: Vanguard vs Independent Certified Financial Planner

Post by JBTX » Fri Apr 13, 2018 5:37 pm

aussiedog wrote:
Fri Apr 13, 2018 5:24 pm
Thanks to all who have responded. It has made me realize that my questions are a bit unfocused--it is really more how do I handle an inheritance coming into and expanding the taxable portion of my portfolio (now added above to original post). My specific questions are:

1. Inheritance is currently held at Edward Jones and mostly in dozens of individual stocks. I have heard that EJ charges fees to close each account, but I will find out more and Vanguard may be able to help. Should I sell everything and move it over all at once, or do it in blocks monthly, to avoid selling it all at the same point in time?
Call vanguard and they will walk you through process. You likely don’t even need to deal with Edward Jones. There may be a closing fee, but it is much cheaper than years of mutual fund fees. You should be able to transfer the funds over to vanguard without actually selling them.

2. I have more space for bonds in my tax advantaged accounts, so my plan would be to mostly add index domestic and international index funds to the taxable account from the Edward Jones transfer, and rebalance my tax advantaged accounts to bond funds, and keep the Roth IRAs as is
What is your question? Most here generally prefer bonds in tax advantaged accounts, so your strategy sounds consistent with that.
3. With expanding size of portfolio and taxable portion in particular, would this prompt any different strategies, different asset classes (munis?), or overall approach, or things can just be infinitely scaled up with no change in approach? I have considered adding an additional rental property, but my maiden voyage into real estate investing has shown me that there is a relatively higher hassle factor, even with "turnkey" properties

With several different employers my accounts are already necessarily a little complex/fragmented so my goal would be to keep it as simple as possible.

Any and all advice welcomed!

You don’t have to have more complicated investments just because you have more money. Stick with a few low fee index funds and/or target date funds or life strategy funds. As to real estate, some here do it, but I’d only do that if you are ready and willing to accept the work and hassle of keeping a rental occupied and profitable.

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nedsaid
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Re: Vanguard vs Independent Certified Financial Planner

Post by nedsaid » Fri Apr 13, 2018 11:09 pm

aussiedog wrote:
Fri Apr 13, 2018 3:25 pm
Thanks Longleaf.

That was my sense about Vanguard, and in general I agree with your comment about bogleheads.org serving as a crowdsourced CFP.

With a recent change in our financial circumstances (recent inheritance, greater proportion of savings in taxable accounts) I feel like it could be helpful to have dedicated time with an expert (rather than a self-educated amateur, which is how I think of myself) who could spend a couple of hours reviewing and advising.
I would say go for it. You are correct that an advisor can bring up things that perhaps you haven't thought about.

I would use the forum for input and feedback, but it is really difficult to do financial planning via an anonymous forum. For one thing, it is extremely time consuming to put out ALL of your relevant information on the forum. One key piece of information could completely change the advice given. Go to the advisor and you can discuss everything in some depth. What I am trying to say is that you can talk a lot faster than you can write. Another thing is that we posters have varying degrees of experience and knowledge.

Ultimately, the money is yours and you will have to make your own decisions. About all we can do is add clarity so that you are empowered. I have worked with Financial Advisors and Financial Planners and some were better than others. Nevertheless, I learned something each time.

An important point is that you want to be in alignment with the person you are getting advice from. If you have the Boglehead philosophy, you want to talk to an advisor with similar values. If someone wants advice on index funds, a stock broker is probably not the best choice. If you are interested in individual stocks, Vanguard can't help you. The Garrett Planning Network is a place to start, their philosophy is close to what is taught here.

As a local appliance and furniture pitchman used to say, "Free is a very good price." If you can get a free consultation with a Vanguard Certified Financial Planner, I would take advantage of the opportunity. If you want more in depth advice after that, you can hire a local planner.
A fool and his money are good for business.

MrPotatoHead
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Re: Vanguard vs Independent Certified Financial Planner

Post by MrPotatoHead » Sat Apr 14, 2018 3:40 am

Understand that a CFP and ChFC is more a total finance related quarterback than an investment specialist. In general they work with a large team of specialist they bring in to do specific analysis, for example estate planning, taxation, insurance etc. A CFP and ChFC is client facing with deep interpersonal skills. The reality is they spend most of their time in sales mode and most actually farm out the actual analytic work to back office support specialist.

Th point is, a CFP should be doing a lot more for you than looking at your asset allocation.

TwstdSista
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Re: Vanguard vs Independent Certified Financial Planner

Post by TwstdSista » Sat Apr 14, 2018 4:49 am

Re: Edward Jones -- keep in mind that there will likely be trade fees to get out of the funds that account is currently in. These fees may be higher or lower at EJ vs. VG (this requires some homework on your part).

Re: real estate -- you have a lot of exposure to real estate through your total stock holdings, your IAP, the REIT fund in her Roth, and your rental property. Consider how much real estate exposure you truly want. (not a judgment! I used to hold a REIT fund, too. But then realized that I own a home and my job is related to real estate. I do not need more exposure in my portfolio).

tibbitts
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Re: Vanguard vs Independent Certified Financial Planner

Post by tibbitts » Sat Apr 14, 2018 5:46 am

I can't keep up with the ever-changing Vanguard offerings but I thought the free CFP planning was a relic of the past and that now you get to ask a specific question of a CFP but that's all. I've never used that service so I don't know. Maybe it's based on asset level and whatever they call the new beyond-Flagship level gets a full CFP plan and dog-walking service thrown in.

carolinaman
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Location: North Carolina

Re: Vanguard vs Independent Certified Financial Planner

Post by carolinaman » Sat Apr 14, 2018 7:30 am

If you are looking at primarily investments and whether you are on track, Vanguard will do fine. However, if you are looking for more comprehensive advice and perhaps a full blown retirement plan, then I think a fee only CFP is best as from my experience, Vanguard will focus on investments.

aussiedog
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Joined: Sat Mar 21, 2009 5:16 pm

Re: Vanguard vs Independent Certified Financial Planner

Post by aussiedog » Sat Apr 14, 2018 4:08 pm

Thanks all, this has been very helpful as usual.

My takeaways for now are:
1. I will meet with the Vanguard CFP and I feel reasonably confident that they will be helpful with the mechanics of getting funds from Edward Jones to Vanguard, and in advising on investing and asset allocation

2. If I feel like there are gaps and I need more comprehensive services/overview, I will pursue a fee for service financial planner, possibly from the Garrett Planning network as recommended

3. I will reassess my exposure to real estate, and maybe get rid of the REIT in her Roth. There are probably existing threads about the best investments to hold in Roth IRAs that I will search out--presumably something that has high growth potential since it will be tax free down the line. I'd welcome suggestions for what to replace the Roth REIT with, if anyone has any, based on my portfolio listed in the original post.

I'll report back to the board after my first meeting with the Vanguard CFP next week and share my experience.

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