Vanguard PAS AUM - should I quit?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Vanguard PAS AUM - should I quit?

Post by nyseeker »

I have been using Vanguard PAS for my after-tax account close to ten years now. The service has been what I expected with a relatively hands-off approach, both from a client relationship perspective and the use of the traditional buy-and-hold, indexing Vanguard strategy. The assets have grown over the years both due to my contributions and growth to close to $4M now. The issue is that, with the 0.3% AUM annual fee, this results in about a $10K fee a year. This seems rather excessive for the amount of work the account requires, especially given that it should not require that much more to maintain the account when it had $1M vs its current $4M worth. I do appreciate that TLH is enabled on the account, but with the longer tenure of funds in the account, this becomes a bit moot (obviously this will change if I add more to the account).

Additionally, I have an almost similar net worth in retirement accounts (401-Ks, IRA, NQDC between me and my spouse). These accounts are not under the PAS umbrella and need to be managed by me. I use them to tweak my asset allocation to be a bit less concentrated on international funds that Vanguard's recipe (which has a 60-40 domestic/ex-US mix for stocks).

Given this context, I have been thinking of discontinuing PAS. There are a couple of reasons that I haven't pulled the trigger yet:
  • I have been happy with my PAS advisor and would feel a bit guilty/disloyal abandoning him. I understand that this is irrational and should not be a consideration perhaps, but this does seem to contribute to my "stare decisis" posture
  • The fee, though not chump change, is still "only" 0.3%, regardless of the value it provides
  • A secondary consideration is contingency - if my spouse were to take care of our finances, something like PAS would be a big benefit since she is less cognizant of nuances in financial management (that being said, she can always turn on PAS at a future date)
Any thoughts on the above? I understand that this is a personal decision that I need to make - however, if you had any perspectives on the above or new ones that I haven't thought of, I would be happy to be educated. Thanks in advance!
User avatar
retired@50
Posts: 13947
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Vanguard PAS AUM - should I quit?

Post by retired@50 »

nyseeker wrote: Mon Jul 08, 2024 2:45 pm
[*]A secondary consideration is contingency - if my spouse were to take care of our finances, something like PAS would be a big benefit since she is less cognizant of nuances in financial management (that being said, she can always turn on PAS at a future date)
[/list]

Any thoughts on the above? I understand that this is a personal decision that I need to make - however, if you had any perspectives on the above or new ones that I haven't thought of, I would be happy to be educated. Thanks in advance!
I think the "spouse" angle is under-appreciated, especially for unknowing widows.

I seem to recall some horrible portfolios that the forum members have helped "unwind" after a widow was victimized shortly after the passing of a spouse. Edward Jones seems to always be lurking.

Depending on your current age, it may pay to stick with it, or get back involved with PAS later on, so the widow can avoid worry about finances.

Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
stan1
Posts: 14841
Joined: Mon Oct 08, 2007 4:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by stan1 »

Please forgive me for asking this in a direct manner, but how likely are you to pass away within the next 5 years? If you are young and healthy then managing it yourself seems reasonable. If your health declines then you can make preparations. While the worst can happen any day, part of risk is likelihood not just consequence. As you mention, your spouse could restart PAS if she wished to. On the other hand, if you are over 80 or have serious health issues then the likelihood of spouse needing assistance with the investments could be much greater.
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks, retired@50!
Depending on your current age, it may pay to stick with it, or get back involved with PAS later on, so the widow can avoid worry about finances.
Exactly this has been a part of my thinking and inertia as well. Even turning on PAS at a later date becomes an active decision, which may be somewhat of a burden, depending on what circumstances are (especially given the "lurkers" you mention :) )
retired@50 wrote: Mon Jul 08, 2024 2:52 pm
nyseeker wrote: Mon Jul 08, 2024 2:45 pm
[*]A secondary consideration is contingency - if my spouse were to take care of our finances, something like PAS would be a big benefit since she is less cognizant of nuances in financial management (that being said, she can always turn on PAS at a future date)
[/list]

Any thoughts on the above? I understand that this is a personal decision that I need to make - however, if you had any perspectives on the above or new ones that I haven't thought of, I would be happy to be educated. Thanks in advance!
I think the "spouse" angle is under-appreciated, especially for unknowing widows.

I seem to recall some horrible portfolios that the forum members have helped "unwind" after a widow was victimized shortly after the passing of a spouse. Edward Jones seems to always be lurking.

Depending on your current age, it may pay to stick with it, or get back involved with PAS later on, so the widow can avoid worry about finances.

Regards,
Tdubs
Posts: 1874
Joined: Tue Apr 24, 2018 7:50 pm

Re: Vanguard PAS AUM - should I quit?

Post by Tdubs »

retired@50 wrote: Mon Jul 08, 2024 2:52 pm
nyseeker wrote: Mon Jul 08, 2024 2:45 pm
[*]A secondary consideration is contingency - if my spouse were to take care of our finances, something like PAS would be a big benefit since she is less cognizant of nuances in financial management (that being said, she can always turn on PAS at a future date)
[/list]

Any thoughts on the above? I understand that this is a personal decision that I need to make - however, if you had any perspectives on the above or new ones that I haven't thought of, I would be happy to be educated. Thanks in advance!
I think the "spouse" angle is under-appreciated, especially for unknowing widows.

I seem to recall some horrible portfolios that the forum members have helped "unwind" after a widow was victimized shortly after the passing of a spouse. Edward Jones seems to always be lurking.

Depending on your current age, it may pay to stick with it, or get back involved with PAS later on, so the widow can avoid worry about finances.

Regards,
The spouse issue would be a big consideration for me.

BTW, I have a relative who has, maybe, 1/8 your portfolio and pays about the same $ amount in AUM fees. Vanguard is a good buy.
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks, stan1, for your comment!

No offense taken of course :D... I am close to 59 and relatively healthy with no metabolic disease, no cholesterol or heart-related issues, etc. So, I am hoping that there is a longer runway before things change (though who knows!)

The monetary "tax" of the fee is in and of itself not a concern. Just the fact that an AUM-style fee seems unwarranted for the approach Vanguard takes (which I happen to agree with). Of course, this is balanced by the "peace of mind" it provides...
stan1 wrote: Mon Jul 08, 2024 2:58 pm Please forgive me for asking this in a direct manner, but how likely are you to pass away within the next 5 years? If you are young and healthy then managing it yourself seems reasonable. If your health declines then you can make preparations. While the worst can happen any day, part of risk is likelihood not just consequence. As you mention, your spouse could restart PAS if she wished to. On the other hand, if you are over 80 or have serious health issues then the likelihood of spouse needing assistance with the investments could be much greater.
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks, Tdubs, for your perspective!

The fee is definitely much smaller compared to other institutions, as you mention. And, thankfully, VG doesn't do unnatural things like other providers to justify higher fees!
Tdubs wrote: Mon Jul 08, 2024 3:03 pm
retired@50 wrote: Mon Jul 08, 2024 2:52 pm
nyseeker wrote: Mon Jul 08, 2024 2:45 pm
[*]A secondary consideration is contingency - if my spouse were to take care of our finances, something like PAS would be a big benefit since she is less cognizant of nuances in financial management (that being said, she can always turn on PAS at a future date)
[/list]

Any thoughts on the above? I understand that this is a personal decision that I need to make - however, if you had any perspectives on the above or new ones that I haven't thought of, I would be happy to be educated. Thanks in advance!
I think the "spouse" angle is under-appreciated, especially for unknowing widows.

I seem to recall some horrible portfolios that the forum members have helped "unwind" after a widow was victimized shortly after the passing of a spouse. Edward Jones seems to always be lurking.

Depending on your current age, it may pay to stick with it, or get back involved with PAS later on, so the widow can avoid worry about finances.

Regards,
The spouse issue would be a big consideration for me.

BTW, I have a relative who has, maybe, 1/8 your portfolio and pays about the same $ amount in AUM fees. Vanguard is a good buy.
tibbitts
Posts: 24821
Joined: Tue Feb 27, 2007 5:50 pm

Re: Vanguard PAS AUM - should I quit?

Post by tibbitts »

It seems like PAS could have a fee schedule that more favors higher AUMs, but presumably you're subsidizing the masses who have less under management.
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks, tibbitts!

The fee does go down with AUM, but may be not fast enough to my liking :D! (0.3% up to $5M; 0.2% between $5M-$10M, etc.) The semi-robot style approach would allow VG, I imagine, to cap the fee beyond an AUM-level, I would have thought...
tibbitts wrote: Mon Jul 08, 2024 3:15 pm It seems like PAS could have a fee schedule that more favors higher AUMs, but presumably you're subsidizing the masses who have less under management.
Florida Orange
Posts: 1314
Joined: Thu Jun 16, 2022 2:22 pm

Re: Vanguard PAS AUM - should I quit?

Post by Florida Orange »

I was in a very similar situation at about your age. I enrolled in the Vanguard PAS for a few years and in the beginning it was very helpful. My advisor helped me make some changes that have been very beneficial. But eventually there wasn't much for my advisor to do. I told my advisor that I didn't think I needed the PAS anymore and she was very understanding and made no effort to talk me out of unenrolling. It was a very amicable parting and I am grateful for the help I received, but it just wasn't worth paying for anymore. The advisors have a lot of clients and I don't think they take it personally when someone leaves.
It sounds like you're young and healthy so it may not be worth paying for something for many years that you don't need just so you're enrolled as you approach life expectancy. As long as your wife knows about the PAS she could always sign up for the service herself when and if she thinks it would be helpful. The fee is very reasonable, but I didn't think it was worth paying for an occasional check-in with my advisor when there really wasn't anything for her to do. But it's a good service if you get something out of it. I don't think you'd be making a big mistake either way.
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks very much, Florida Orange, for your useful perspective!

Your experience seems to parallel mine quite closely. Glad to know that terminating PAS wasn't a painful experience - this is helpful. Your experience and decision also provide validation that my line of thinking is not unreasonable. Lastly, this in particular fully resonates with me:
The fee is very reasonable, but I didn't think it was worth paying for an occasional check-in with my advisor when there really wasn't anything for her to do.
Florida Orange wrote: Mon Jul 08, 2024 3:30 pm I was in a very similar situation at about your age. I enrolled in the Vanguard PAS for a few years and in the beginning it was very helpful. My advisor helped me make some changes that have been very beneficial. But eventually there wasn't much for my advisor to do. I told my advisor that I didn't think I needed the PAS anymore and she was very understanding and made no effort to talk me out of unenrolling. It was a very amicable parting and I am grateful for the help I received, but it just wasn't worth paying for anymore. The advisors have a lot of clients and I don't think they take it personally when someone leaves.
It sounds like you're young and healthy so it may not be worth paying for something for many years that you don't need just so you're enrolled as you approach life expectancy. As long as your wife knows about the PAS she could always sign up for the service herself when and if she thinks it would be helpful. The fee is very reasonable, but I didn't think it was worth paying for an occasional check-in with my advisor when there really wasn't anything for her to do. But it's a good service if you get something out of it. I don't think you'd be making a big mistake either way.
User avatar
HMSVictory
Posts: 1761
Joined: Sun Nov 01, 2020 6:02 am
Location: Lower Gun Deck

Re: Vanguard PAS AUM - should I quit?

Post by HMSVictory »

My mother uses PAS services and very much likes her advisor. She has the capacity to handle her assets herself but enjoys having someone (other than me) to talk things over with. I pushed her to use them because I did not want to be the one handling her account (at Thanksgiving asking me why the market is dropping)! No thank you.

I agree they focus too much on international allocation but we may be wrong on that one. Who knows.

You can always dial back how much you have with them. Say $1M under management and pull $3M into self management. Then if you check out (and we are all checking out one day) your wife can roll everything into the managed account and the advisor is already setup. Now you are paying $3k per year instead of $12k. $12k is a LOT of fee only planning. I agree its too much if you aren't juggling a lot of things.

One final factor to consider is if your wife might feel more comfortable having the entire $4M under management? I can give you a real good example: I have been advising my mom to do Roth IRA conversions up to the 24% tax bracket. She didn't want too. Her advisor suggested it and guess what - now she's doing them. Sometimes people like to hear it from someone else (other than a family member).
Stay the course!
friar1610
Posts: 2357
Joined: Sat Nov 29, 2008 8:52 pm
Location: MA South Shore

Re: Vanguard PAS AUM - should I quit?

Post by friar1610 »

I recently signed up for PAS and am in the first several months of evaluating it. I’m 79. Spouse is 77. I did it for 2 reasons:

- spouse is not interested in “high finance” although she does a far better job than I ever would paying bills and tracking cash flow. I don’t want to leave her with the portfolio management task if I predecease her. If she decides down the road that she can handle it she’ll be free to do so.

- the older I get, the less interested I am in managing the portfolio myself.

About 1/3 of our assets remain outside of PAS - I Bonds, a few Treasuries, CDs, savings accounts. Over time, I hope to move some of those funds to VG and place them under PAS.

After a year I will decide if we will stay with PAS or not.

I’m not sure what I’d do in OP’s situation.
Friar1610 | 50-ish/50-ish
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks a bunch, HMSVictory, for the useful insights!
HMSVictory wrote: Mon Jul 08, 2024 4:04 pm My mother uses PAS services and very much likes her advisor. She has the capacity to handle her assets herself but enjoys having someone (other than me) to talk things over with. I pushed her to use them because I did not want to be the one handling her account (at Thanksgiving asking me why the market is dropping)! No thank you.

:D :D
You can always dial back how much you have with them. Say $1M under management and pull $3M into self management. Then if you check out (and we are all checking out one day) your wife can roll everything into the managed account and the advisor is already setup. Now you are paying $3k per year instead of $12k. $12k is a LOT of fee only planning. I agree its too much if you aren't juggling a lot of things.
This is an intriguing suggestion - will definitely noodle on this one. It may makes things a bit awkward, but it does make sense in terms of hedging things a bit with a small overhead (with a lesser AUM).
One final factor to consider is if your wife might feel more comfortable having the entire $4M under management? I can give you a real good example: I have been advising my mom to do Roth IRA conversions up to the 24% tax bracket. She didn't want too. Her advisor suggested it and guess what - now she's doing them. Sometimes people like to hear it from someone else (other than a family member).
Fair point. I don't think it will be an issue if I keep a smaller AUM in PAS as you suggest since extending the PAS umbrella to the rest of the holdings would not be an issue, I would think, both from the VG end and my wife's perspective.
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks, friar1610, for your feedback! PAS is definitely a good service - I think you will get value from it.

One thing that annoyed me is that it doesn't extend to retirement accounts (by law, I think). This presents challenges for me - e.g., I cannot use the same funds it uses in my other accounts to avoid wash-sales when they do TLH. Also, not having a single "holistic" management of all the assets instead of some funds being in PAS and others in various accounts that cannot be moved over (401-K, e.g.) isn't ideal, especially considering the $10K hit every year.

With a passive index-based investment approach, I think the management overhead for a DIY solution, is not very much, at least for me.
friar1610 wrote: Mon Jul 08, 2024 4:27 pm I recently signed up for PAS and am in the first several months of evaluating it. I’m 79. Spouse is 77. I did it for 2 reasons:

- spouse is not interested in “high finance” although she does a far better job than I ever would paying bills and tracking cash flow. I don’t want to leave her with the portfolio management task if I predecease her. If she decides down the road that she can handle it she’ll be free to do so.

- the older I get, the less interested I am in managing the portfolio myself.

About 1/3 of our assets remain outside of PAS - I Bonds, a few Treasuries, CDs, savings accounts. Over time, I hope to move some of those funds to VG and place them under PAS.

After a year I will decide if we will stay with PAS or not.

I’m not sure what I’d do in OP’s situation.
JoinToday
Posts: 1120
Joined: Sat Mar 10, 2007 8:59 pm

Re: Vanguard PAS AUM - should I quit?

Post by JoinToday »

One benefit of PAS is they will likely not make costly mistakes (sell low, buy high).

I manage my own money because I can't stomach the fees, just like many people mention. But I can't help but think that one bad decision could easily dwarf out 10 - 20 years of PAS fees. In my case (and perhaps your case), I feel like I am picking up $100 bills in front of the steam roller (better than picking up pennies in front of a steam roller, but still there is risk).

I would think yearly conversation along the lines of "what are you going to do if I loose my marbles or die?". If the answer is a consistent "call PAS at Vanguard", you are probably covered.
I wish I had learned about index funds 25 years ago
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks, JoinToday, for your insights!

JoinToday wrote: Mon Jul 08, 2024 6:49 pm One benefit of PAS is they will likely not make costly mistakes (sell low, buy high).
This is 100% true and even more so in my case. During the pandemic, PAS didn't budge and kept steady, whereas, with the retirement accounts I managed, I went to cash, thinking that the pandemic was a black-swan event which transcended the buy-and-hold philosophy. Of course, I was wrong and lost some growth due to this market timing.
I am hoping that I will stay steadier the next time another "black swan" event happens!
I manage my own money because I can't stomach the fees, just like many people mention. But I can't help but think that one bad decision could easily dwarf out 10 - 20 years of PAS fees. In my case (and perhaps your case), I feel like I am picking up $100 bills in front of the steam roller (better than picking up pennies in front of a steam roller, but still there is risk).
Completely true, once again, and point well taken re: one rolling over wiping out the equivalent of decades of PAS fees. That being said, my engineering mindset revolts at the sub-optimality of throwing annual maintenance fees for something that barely requires any maintenance Y-o-Y...
I would think yearly conversation along the lines of "what are you going to do if I loose my marbles or die?". If the answer is a consistent "call PAS at Vanguard", you are probably covered.
User avatar
nedsaid
Posts: 19587
Joined: Fri Nov 23, 2012 11:33 am

Re: Vanguard PAS AUM - should I quit?

Post by nedsaid »

nyseeker wrote: Mon Jul 08, 2024 3:09 pm Thanks, stan1, for your comment!

No offense taken of course :D... I am close to 59 and relatively healthy with no metabolic disease, no cholesterol or heart-related issues, etc. So, I am hoping that there is a longer runway before things change (though who knows!)

The monetary "tax" of the fee is in and of itself not a concern. Just the fact that an AUM-style fee seems unwarranted for the approach Vanguard takes (which I happen to agree with). Of course, this is balanced by the "peace of mind" it provides...
stan1 wrote: Mon Jul 08, 2024 2:58 pm Please forgive me for asking this in a direct manner, but how likely are you to pass away within the next 5 years? If you are young and healthy then managing it yourself seems reasonable. If your health declines then you can make preparations. While the worst can happen any day, part of risk is likelihood not just consequence. As you mention, your spouse could restart PAS if she wished to. On the other hand, if you are over 80 or have serious health issues then the likelihood of spouse needing assistance with the investments could be much greater.
You are younger than I thought when read the original post in the thread. If you need permission to turn off Personal Advisor Service, by whatever little authority that has been granted me, I hereby give you permission. :wink: I think you are relatively young and still healthy, I don't see why you couldn't run the portfolio yourself, how hard is it to rebalance a handful of funds? Is there much for the Advisor to do for you? If you are well set up, you definitely could take a break from PAS.

I would suggest that as you approach seventy that you consider turning it on again for the sake of your spouse. Don't underestimate the lure of
Edward Jones, what I call catnip for seniors, particularly widows. It is almost irresistible, better to be prepared in advance.

What I tell people who use Advisory services is to get as much out of it as you can. Make all of the quarterly meetings with the Advisor, update him or her on your situation, take notes, view all of the free webinars that they offer, read the materials they give you, etc. Hopefully, you are getting Financial Planning with this. It is a matter for people to take this seriously, learn what you can, and asking lots of questions. In other words, you will get something out of this if you are willing to make the effort.

I suspect that you are at the point where you might feel that you are set up and that there isn't much more for the Advisor to do until you receive your next big life event. There all people whose personal and family lives just cruise along with not much change except that everyone gets older, others have a more volatile set of circumstances. I suspect you are in the first group and not the second.

In the final analysis, it is your money and I don't blame you for wanting to save $10K a year. That is not an insignificant amount of money.
A fool and his money are good for business.
tibbitts
Posts: 24821
Joined: Tue Feb 27, 2007 5:50 pm

Re: Vanguard PAS AUM - should I quit?

Post by tibbitts »

nyseeker wrote: Mon Jul 08, 2024 7:52 pm This is 100% true and even more so in my case. During the pandemic, PAS didn't budge and kept steady, whereas, with the retirement accounts I managed, I went to cash, thinking that the pandemic was a black-swan event which transcended the buy-and-hold philosophy. Of course, I was wrong and lost some growth due to this market timing.
I am hoping that I will stay steadier the next time another "black swan" event happens!
There was no guarantee that PAS would be proven correct. However it's true that in the end it's always easier to stay the course when it isn't your money. For all you know the PAS rep was hiding all his own money in his mattress at home.
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks, nedsaid, for your interesting observations!
nedsaid wrote: Mon Jul 08, 2024 8:14 pm You are younger than I thought when read the original post in the thread. If you need permission to turn off Personal Advisor Service, by whatever little authority that has been granted me, I hereby give you permission. :wink: I think you are relatively young and still healthy, I don't see why you couldn't run the portfolio yourself, how hard is it to rebalance a handful of funds? Is there much for the Advisor to do for you? If you are well set up, you definitely could take a break from PAS.
Whatever gave you that idea re: youth :D - heaven knows I feel old and decrepit when I wake up in the morning! Thanks for the "permission" (I mean this sincerely :happy)
It shouldn't be a huge lift to manage these on my own since I have been managing the retirement accounts on my own anyway. One thing that may be a bit of administrative hassle would be TLH, but as I had mentioned, given the maturity of holdings in my account this may not happen anyway.
I would suggest that as you approach seventy that you consider turning it on again for the sake of your spouse. Don't underestimate the lure of
Edward Jones, what I call catnip for seniors, particularly widows. It is almost irresistible, better to be prepared in advance.
We do have an EJ office barely half a mile away from where we live, so the siren song will definitely be strident! Walking past their nice office, even I am tempted to pop in and see what's what...
What I tell people who use Advisory services is to get as much out of it as you can. Make all of the quarterly meetings with the Advisor, update him or her on your situation, take notes, view all of the free webinars that they offer, read the materials they give you, etc. Hopefully, you are getting Financial Planning with this. It is a matter for people to take this seriously, learn what you can, and asking lots of questions. In other words, you will get something out of this if you are willing to make the effort.
I have been on this savings journey for well more than thirty years, starting off with an initial investment in VFINX in the early '90s, when indexing hadn't become mainstream. However, there is still a lot to learn, especially as retirement looms and things like Roth conversion, when to take SS, RMDs, etc., are on the horizon. I think the quarterly reviews have been generally useful and the webinars somewhat, though not necessarily anything more than the wealth of good information on the web and YouTube (assuming you get to the right sources).
I suspect that you are at the point where you might feel that you are set up and that there isn't much more for the Advisor to do until you receive your next big life event. There all people whose personal and family lives just cruise along with not much change except that everyone gets older, others have a more volatile set of circumstances. I suspect you are in the first group and not the second.
The volatility comment hits home since there have been enough of these in my life in the past (non-financial) - so, seeming steady-state conditions are definitely transitory.
In the final analysis, it is your money and I don't blame you for wanting to save $10K a year. That is not an insignificant amount of money.
Yeah, the $10K per se is not a large concern in the grand scheme of things, though it is not chump change either. However, it didn't seem like it is warranted, given where things are and not in proportion to the activity needed by the advisor to keep it going...
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks, tibbitts!
tibbitts wrote: Mon Jul 08, 2024 8:20 pm There was no guarantee that PAS would be proven correct. However it's true that in the end it's always easier to stay the course when it isn't your money. For all you know the PAS rep was hiding all his own money in his mattress at home.
:D I hope they practice what they preach! Having the "buffer" in the form of PAS between me and the funds does add some value, especially during periods with huge market volatility. In addition, I also appreciate the programmatic approach with minimal complexity that is aligned with Bogle/VG philosophy.
User avatar
bertilak
Posts: 11008
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Vanguard PAS AUM - should I quit?

Post by bertilak »

nyseeker wrote: Mon Jul 08, 2024 2:45 pm
  • A secondary consideration is contingency - if my spouse were to take care of our finances, something like PAS would be a big benefit since she is less cognizant of nuances in financial management (that being said, she can always turn on PAS at a future date)
Any thoughts on the above? I understand that this is a personal decision that I need to make - however, if you had any perspectives on the above or new ones that I haven't thought of, I would be happy to be educated. Thanks in advance!
That's a PRIMARY consideration for me. Anything else I get out of PAS is just gravy.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks, bertilak!
bertilak wrote: Tue Jul 09, 2024 9:15 am That's a PRIMARY consideration for me. Anything else I get out of PAS is just gravy.
I perhaps undersold this consideration even from my perspective and it is a bit more than "secondary", as you have alluded to above.
EricGold
Posts: 844
Joined: Sat Mar 16, 2024 4:19 pm

Re: Vanguard PAS AUM - should I quit?

Post by EricGold »

HMSVictory wrote: Mon Jul 08, 2024 4:04 pm One final factor to consider is if your wife might feel more comfortable having the entire $4M under management? I can give you a real good example: I have been advising my mom to do Roth IRA conversions up to the 24% tax bracket. She didn't want too. Her advisor suggested it and guess what - now she's doing them. Sometimes people like to hear it from someone else (other than a family member).
Your mistake was in not charging your Mom going rate AUM fees

:smile:
EricGold
Posts: 844
Joined: Sat Mar 16, 2024 4:19 pm

Re: Vanguard PAS AUM - should I quit?

Post by EricGold »

nyseeker wrote: Mon Jul 08, 2024 2:45 pm Any thoughts on the above? I understand that this is a personal decision that I need to make - however, if you had any perspectives on the above or new ones that I haven't thought of, I would be happy to be educated. Thanks in advance!
My only thought is that the pre-tax account might benefit from paid for expertise more than the post-tax account. Not so much in terms of asset allocation, but from a Roth multi-year conversion strategy. I'm also by my choice the manager of our savings, and I've been truly impressed by the Roth conversion strategy value. I've been using the Projection Labs' Modeling software. Starting from a $5.5M tIRA, I'm seeing close to a $2.5M higher end balance value (excluding QCDs) with Roth after 20 years of modeling. I value a Roth $ at 1.0, a brokerage $ at 0.85, and a tIRA dollar at 0.6
Last edited by EricGold on Tue Jul 09, 2024 10:31 am, edited 1 time in total.
Steven28
Posts: 165
Joined: Thu Nov 06, 2014 1:47 pm

Re: Vanguard PAS AUM - should I quit?

Post by Steven28 »

I have not used PAS because the dollar amount of the fee is too great relative to the service provided although the percentage is reasonable. My wife knows little about finance and has no interest nor capability. I am 70, in good but not perfect health and have tried to set the pretax and after tax portfolios on autopilot as much as possible. I am fairly knowledgeable but have tried to simplify holdings as much as possible. I have told my wife to never to move assets from Vanguard to another brokerage, and if she needs help, then consider PAS or perhaps just call them if she has a question. I wish Vanguard would offer a one time financial plan for a fee rather than the annual fee. I don't buy and sell much, just do reinvestments, and transfer cash out monthly.
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks, EricGold, for the additional perspective!
EricGold wrote: Tue Jul 09, 2024 9:55 am My only thought is that the pre-tax account might benefit from expertise more than the post-tax account. Not so much in terms of asset allocation, but from a Roth multi-year conversion strategy. I'm also by my choice the manager of our savings, and I've been truly impressed by the Roth conversion strategy value. I've been using the Projection Labs' Modeling software. Starting from a $5.5M tIRA, I'm seeing close to a $2.5M higher end balance value (excluding QCDs) with Roth after 20 years of modeling. I value a Roth $ at 1.0, a brokerage $ at 0.85, and a tIRA dollar at 0.6
This is something I need to dig into more and obviously a significant consideration. In my case, it is not only the 401-Ks and IRAs but also a NQDC plan that has grown significantly over the years due to aggressive contribution. Since all these were outside the scope of PAS (for now), it made the PAS fee a little bit more annoying since these complexities weren't factored in. The NQDC especially is a more short-term consideration in my view, to which the PAS is completely "blind" and has nothing to contribute to.
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Yhanks, Steven28, for sharing your thoughts!
Steven28 wrote: Tue Jul 09, 2024 10:16 am I have not used PAS because the dollar amount of the fee is too great relative to the service provided although the percentage is reasonable. My wife knows little about finance and has no interest nor capability. I am 70, in good but not perfect health and have tried to set the pretax and after tax portfolios on autopilot as much as possible. I am fairly knowledgeable but have tried to simplify holdings as much as possible. I have told my wife to never to move assets from Vanguard to another brokerage, and if she needs help, then consider PAS or perhaps just call them if she has a question. I wish Vanguard would offer a one time financial plan for a fee rather than the annual fee. I don't buy and sell much, just do reinvestments, and transfer cash out monthly.
This is my thinking as well ("...too great relative to the service provided...") Currently, a lot of complexity comes from retirement accounts for me and her being distributed across current 401-Ks for both, an IRA for her, NQDC for me, etc., in addition to a small HSA pool. Since the available investments are different in all of these, I need to use different funds/ETFs to get to the right asset allocation. Also, I try to avoid the ETFs VG PAS uses for TLH (I know that there are different opinions about wash sales encompassing retirement accounts, but I want to be conservative as far as the IRS is concerned). Hopefully, after we retire, I will be able to simplify this significantly by moving things to consolidated IRAs and systematically doing Roth conversions when it makes sense.
The clarity you suggest on the advice not to move away from VG is also good along with the suggestion of layering on PAS as needed. I will do the same...
User avatar
bertilak
Posts: 11008
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Vanguard PAS AUM - should I quit?

Post by bertilak »

Steven28 wrote: Tue Jul 09, 2024 10:16 am I have told my wife to never to move assets from Vanguard to another brokerage, and if she needs help, then consider PAS or perhaps just call them if she has a question.
My Investment Plan (mostly written for my wife and now that I have enrolled in PAS somewhat outdated) makes the same point:
  • Do not hire an advisor nor open an investment account at any institution other than Vanguard. That can be an unnecessary, and big, expense. It will also open you up to making mistakes. Call Vanguard for any help needed. Investment advice can also be asked for at https://www.bogleheads.org/forum.
I have since added:
  • Vanguard PAS will supply all the help you need.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
standard7
Posts: 184
Joined: Thu Jul 30, 2015 9:39 am

Re: Vanguard PAS AUM - should I quit?

Post by standard7 »

an IRA for her
As suggested earlier by another bh, you only need a couple accounts to meet the minimum. This is what I’ve done, I manage the bulk of the investments. This way you’d have PAS already setup, with an agreed upon investment approach. I am concerned about the poaching, errors and stress that might occur after I’m gone and it’s a minor cost to have created this path forward. My understanding is that our advisor with assist in many of the issues beyond portfolio management such as the spending account, the changes necessary to move the accounts to your spouse etc. Having PAS with some clear notes that everything is okay and there will be nothing to worry about… that’s my plan.
AppreciateSheepdogs
Posts: 7
Joined: Tue Jan 16, 2024 8:07 pm

Re: Vanguard PAS AUM - should I quit?

Post by AppreciateSheepdogs »

We ended our PAS services as of the end of June. I am 67, and my bride is 63. We signed up for PAS shortly after we retired in 2018. I, like you, was concerned about making sure that my wife was covered should I have met an untimely demise. As I look back at it, that really was a primary consideration. At the time we were dealing with four elderly parents, and time was a very precious commodity.

Fast forward five years …. Our world has changed quite a bit. We now have lots of free time, and I have been able to pay more attention to what has been happening with our PAS accounts.

First, while I was not unhappy with our returns with Vanguard, they were no better than what I had been achieving on my own. I also was uncomfortable with the relatively high allocations to foreign investments. The $12k per year in PAS fees was also on my mind…. I just did not feel that I was getting 12k worth of assistance.

Second, the Vanguard of even just five years ago is not the Vanguard of today. Before we retired, we dealt with Fidelity (my wife’s 401k), Vanguard (my 401k) and Schwab (our after-tax investments). We really loved both Schwab and Vanguard due to their personal and timely service, and Vanguard for their lower fee structure. Ultimately we chose to consolidate all of our assets at Vanguard, with the exception of ready cash and our checking account at Schwab. We have really noticed the service levels decline at Vanguard…. Getting appointments and a person on the line was a chore. At the same time, we continued to love the service received at Schwab. Ultimately the straw that broke the camel’s back for us was Vanguard’s stance to not allow beneficiaries on joint brokerage accounts. We reviewed all of our options and chose to move our investments to Schwab. They are now very competitive with fees and costs, and have superb customer service. For the time being I will be doing our investments once again. My wife is committed to spending more time learning, and our new Schwab advisor is going to help us as needed. Should something happen to me, my wife still has someone to turn to, and it will be her call if she wants to sign on for more services at Schwab.

Regarding your relationship with your PAS advisor, I felt exactly the same way. I felt really bad breaking the news to our advisor. However, I don’t feel that way today. A week after I ended our PAS service, there were unexpected fees assessed to all of our PAS accounts… something our advisor said would not happen. I have sent an email and left multiple voice mail messages to our former advisor, and have heard NOTHING back. I can only surmise that he can’t spare the time to talk to a former client. Needless to say, we won’t be using Vanguard again. I also manage multiple trusts at Vanguard, and as of tomorrow morning I will be starting the process to move them all to Schwab.
Steven28
Posts: 165
Joined: Thu Nov 06, 2014 1:47 pm

Re: Vanguard PAS AUM - should I quit?

Post by Steven28 »

Sheepdogs - do you have to pay your Schwab advisor?
Thanks
AppreciateSheepdogs
Posts: 7
Joined: Tue Jan 16, 2024 8:07 pm

Re: Vanguard PAS AUM - should I quit?

Post by AppreciateSheepdogs »

Steven28 wrote: Tue Jul 09, 2024 6:33 pm Sheepdogs - do you have to pay your Schwab advisor?
Thanks
No.
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks, AppreciateSheepdogs, for the detailed and informative response - it is super useful!
AppreciateSheepdogs wrote: Tue Jul 09, 2024 6:27 pm We ended our PAS services as of the end of June. I am 67, and my bride is 63. We signed up for PAS shortly after we retired in 2018. I, like you, was concerned about making sure that my wife was covered should I have met an untimely demise. As I look back at it, that really was a primary consideration. At the time we were dealing with four elderly parents, and time was a very precious commodity.

Fast forward five years …. Our world has changed quite a bit. We now have lots of free time, and I have been able to pay more attention to what has been happening with our PAS accounts.
Yeah, this is sort of the path I have been on with PAS as well.
First, while I was not unhappy with our returns with Vanguard, they were no better than what I had been achieving on my own. I also was uncomfortable with the relatively high allocations to foreign investments. The $12k per year in PAS fees was also on my mind…. I just did not feel that I was getting 12k worth of assistance.
This is exactly my thinking too. Both the higher allocations to foreign investments and the higher than worth fees are things that somewhat irk me. I don't blame VG for the former, since this is their philosophy, though I do mitigate the concentration using a US-only lean on our retirement accounts that I manage to bring the US-international stock mix to 80-20.
Second, the Vanguard of even just five years ago is not the Vanguard of today. Before we retired, we dealt with Fidelity (my wife’s 401k), Vanguard (my 401k) and Schwab (our after-tax investments). We really loved both Schwab and Vanguard due to their personal and timely service, and Vanguard for their lower fee structure. Ultimately we chose to consolidate all of our assets at Vanguard, with the exception of ready cash and our checking account at Schwab. We have really noticed the service levels decline at Vanguard…. Getting appointments and a person on the line was a chore. At the same time, we continued to love the service received at Schwab. Ultimately the straw that broke the camel’s back for us was Vanguard’s stance to not allow beneficiaries on joint brokerage accounts. We reviewed all of our options and chose to move our investments to Schwab. They are now very competitive with fees and costs, and have superb customer service. For the time being I will be doing our investments once again. My wife is committed to spending more time learning, and our new Schwab advisor is going to help us as needed. Should something happen to me, my wife still has someone to turn to, and it will be her call if she wants to sign on for more services at Schwab.
This is interesting information. In my experience, my PAS advisor has always been super responsive when I try to connect or need something done. I don't deal with anyone else from VG though
Regarding your relationship with your PAS advisor, I felt exactly the same way. I felt really bad breaking the news to our advisor. However, I don’t feel that way today. A week after I ended our PAS service, there were unexpected fees assessed to all of our PAS accounts… something our advisor said would not happen. I have sent an email and left multiple voice mail messages to our former advisor, and have heard NOTHING back. I can only surmise that he can’t spare the time to talk to a former client. Needless to say, we won’t be using Vanguard again. I also manage multiple trusts at Vanguard, and as of tomorrow morning I will be starting the process to move them all to Schwab.
Thanks for this insight. Your experience seems really crummy, given the extent of your (former) holdings in PAS - I would expect a far higher level of courtesy than this. I guess it was strictly a business relationship for your rep - which would still not justify the ghosting!
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

Thanks for the feedback, standard7!
standard7 wrote: Tue Jul 09, 2024 5:39 pm
an IRA for her
As suggested earlier by another bh, you only need a couple accounts to meet the minimum. This is what I’ve done, I manage the bulk of the investments. This way you’d have PAS already setup, with an agreed upon investment approach. I am concerned about the poaching, errors and stress that might occur after I’m gone and it’s a minor cost to have created this path forward. My understanding is that our advisor with assist in many of the issues beyond portfolio management such as the spending account, the changes necessary to move the accounts to your spouse etc. Having PAS with some clear notes that everything is okay and there will be nothing to worry about… that’s my plan.
This makes sense - something I need to think about as an alternative to total divestment from PAS. I don't use the spending account currently since I found it to be a pain to deal with. Perhaps this may change after retirement.
standard7
Posts: 184
Joined: Thu Jul 30, 2015 9:39 am

Re: Vanguard PAS AUM - should I quit?

Post by standard7 »

I don't use the spending account currently since I found it to be a pain to deal with. Perhaps this may change after retirement
I haven’t used it, I mentioned it only as a future option. I’m curious, is it any different than an automatic withdrawal from a money market? Or did you need to create a new account just for the “spending account” and were you able to change the monthly amount without talking to the advisor?

Thank you
User avatar
nedsaid
Posts: 19587
Joined: Fri Nov 23, 2012 11:33 am

Re: Vanguard PAS AUM - should I quit?

Post by nedsaid »

nyseeker wrote: Tue Jul 09, 2024 8:25 am
I have been on this savings journey for well more than thirty years, starting off with an initial investment in VFINX in the early '90s, when indexing hadn't become mainstream. However, there is still a lot to learn, especially as retirement looms and things like Roth conversion, when to take SS, RMDs, etc., are on the horizon. I think the quarterly reviews have been generally useful and the webinars somewhat, though not necessarily anything more than the wealth of good information on the web and YouTube (assuming you get to the right sources).

The volatility comment hits home since there have been enough of these in my life in the past (non-financial) - so, seeming steady-state conditions are definitely transitory.

Yeah, the $10K per se is not a large concern in the grand scheme of things, though it is not chump change either. However, it didn't seem like it is warranted, given where things are and not in proportion to the activity needed by the advisor to keep it going...
Sounds to me like you still need some help if you are still trying to figure out what retirement and the vital decisions around retirement look like. The big question is if the financial planning that Vanguard does is comprehensive enough to meet your needs. $10,000 a year will pay for a whole lot of financial planning. If Vanguard is doing a great job with the planning, my feeling is that you stick with it. If the advice is good but not comprehensive enough, you could take control of the portfolio yourself and hire a planner by the hour if you really want to get into the weeds.

I am not you, don't know all the particulars of your situation, the decision is ultimately up to you. If you already have a good plan put together and all you are doing is a bit of tuning up here and there, I can see why you are getting a bit itchy to take back control. There are a lot of questions that can be answered on the forum. As you said, lots of good stuff on YouTube but you have to be a bit careful, there is a lot of junky advice out there as well.

What a good Advisor has that I don't have is the benefit of experience. They have talked to a lot of people, seen a lot of portfolios, know the dumb things that people do they they can help you avoid. They do this full-time. There is value to talking to a third party about your finances. On the other hand, you might have the skill to ride the bike yourself and thus the training wheels can come off. You have to decide if the $10,000 is worth what you are getting.

So if you have any questions for me, I can give you some ideas. Otherwise, I think you are plenty smart enough to figure out what is best for you.

Best wishes,

Ned
A fool and his money are good for business.
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

I tried to use it as a "cash account", but the low and high thresholds sort of kept getting in my way somewhat. Since I need a bank account in which I maintained a reasonably large balance to handle automatic payments of credit card bills, mortgage payments, utility bills, etc., this intermediate spending fund in VG didn't seem to make sense. When I transferred money in for investing, a portion of it would stay in the spending fund (the amount below the higher threshold), which is usually not what I wanted - I wanted all the money to be invested instead. I found it easier to keep a single buffer, i.e., my bank account, and close the spending fund out.
Perhaps I was not using it the right way, but it definitely wasn't for me.
standard7 wrote: Tue Jul 09, 2024 7:14 pm
I don't use the spending account currently since I found it to be a pain to deal with. Perhaps this may change after retirement
I haven’t used it, I mentioned it only as a future option. I’m curious, is it any different than an automatic withdrawal from a money market? Or did you need to create a new account just for the “spending account” and were you able to change the monthly amount without talking to the advisor?

Thank you
Topic Author
nyseeker
Posts: 52
Joined: Thu Sep 09, 2021 1:35 pm

Re: Vanguard PAS AUM - should I quit?

Post by nyseeker »

nedsaid wrote: Tue Jul 09, 2024 8:14 pm Sounds to me like you still need some help if you are still trying to figure out what retirement and the vital decisions around retirement look like. The big question is if the financial planning that Vanguard does is comprehensive enough to meet your needs. $10,000 a year will pay for a whole lot of financial planning. If Vanguard is doing a great job with the planning, my feeling is that you stick with it. If the advice is good but not comprehensive enough, you could take control of the portfolio yourself and hire a planner by the hour if you really want to get into the weeds.
My financial plan (drawn up by PAS) is fully executed and I am in a position to be able to pull the retirement trigger anytime, so I don't think there are any potentially "breaking" decisions to be made. I am figuring that I will continue to work as long as I enjoy it. There are things like Roth conversions, etc., that I need to sort out, but I am not worried about doing this on my own. I have a terminal degree in engineering and so digging into numbers and sorting out complicated things is something I like to do rather than a burden, so this may be an incentive for a DIY path as well :happy .
I am not you, don't know all the particulars of your situation, the decision is ultimately up to you. If you already have a good plan put together and all you are doing is a bit of tuning up here and there, I can see why you are getting a bit itchy to take back control. There are a lot of questions that can be answered on the forum. As you said, lots of good stuff on YouTube but you have to be a bit careful, there is a lot of junky advice out there as well.
Amen on the content quality - thanks for the heads up - I am very cognizant of the fonts of dubious information on the "tubes".
What a good Advisor has that I don't have is the benefit of experience. They have talked to a lot of people, seen a lot of portfolios, know the dumb things that people do they they can help you avoid. They do this full-time. There is value to talking to a third party about your finances. On the other hand, you might have the skill to ride the bike yourself and thus the training wheels can come off. You have to decide if the $10,000 is worth what you are getting.
I was thinking that I may engage a flat-fee advisor to do sanity checks, and these seem to run way lower than the $10K I spend annually. Of course, they won't do any execution, but this is not a big deal I think. Also, the advantage of a separate, comprehensive flat-fee engagement is that it can deal with all the assets rather than those in PAS only as it stands currently. Perhaps, this alone would be justification to change course.
So if you have any questions for me, I can give you some ideas. Otherwise, I think you are plenty smart enough to figure out what is best for you.
Thanks for the offer - it is more than kind - much appreciated!
Best wishes,

Ned
Cheers!
User avatar
HMSVictory
Posts: 1761
Joined: Sun Nov 01, 2020 6:02 am
Location: Lower Gun Deck

Re: Vanguard PAS AUM - should I quit?

Post by HMSVictory »

EricGold wrote: Tue Jul 09, 2024 9:37 am
HMSVictory wrote: Mon Jul 08, 2024 4:04 pm One final factor to consider is if your wife might feel more comfortable having the entire $4M under management? I can give you a real good example: I have been advising my mom to do Roth IRA conversions up to the 24% tax bracket. She didn't want too. Her advisor suggested it and guess what - now she's doing them. Sometimes people like to hear it from someone else (other than a family member).
Your mistake was in not charging your Mom going rate AUM fees

:smile:
2% all day for having to listen to the complaining! :shock:
Stay the course!
Post Reply