About Vanguard advisors: opinions, thoughts?

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hale2
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Re: About Vanguard advisors: opinions, thoughts?

Post by hale2 » Sat Oct 14, 2017 1:56 pm

NYCguy wrote:
Sat Oct 14, 2017 1:03 pm
If you or a spouse need a financial advisor, my view is that you could do a lot worse than Vanguard. I suspect that most members on this forum do not believe they need a financial advisor.

I have told my spouse that should something happen to me prematurely, she should engage Vanguard.
You could definitely do worse than Vanguard. But you can also do better. As retiredjg said, PAS isn't much more than a robo advisor and is Vanguard's answer to that new competition. One size fits all may work for many people, but definitely not all. If you want customized advice you need to look elsewhere.

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Re: About Vanguard advisors: opinions, thoughts?

Post by Dandy » Sat Oct 14, 2017 3:52 pm

It also begs the question of why go to an advisor if you won't follow their advice?
reasonable point. When a doctor recommends surgery many advise getting a second opinion. Sometimes a doctor may suggest x is the best but the patient may want to live with some pain rather than having risky surgery or may want the risky surgery vs living with the pain. I see this as something similar with investing. VG might feel x level of international is a much better allocation --the client can understand the point but disagree.

I think the fiduciary responsibility from the VG advisor is covered when he/she suggests strongly that the client add a decent level of international equities. If the client chooses not to I think the VG recommendation could be noted in some detail and they could manage the assets according to the client's wishes. They could even have clients sign that they have turned down VG recommendation of at least X amount of international equities. I doubt if they would face any liability. It isn't as if the client's suggest wildly inappropriate investments.

Seems as if VG is kind of strong arming people to take on international equities and bonds to a high degree - often whether they like or not. (see TD and Life Strategy Funds) Especially strange since their founder was agnostic about international investing to say the least.

While there is some logic about diversification beyond the US VG's advisor allocation opinions are no better than any other investment advisor. I'm sure they are aware of all the latest studies and theories just like much of the competition.

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Re: About Vanguard advisors: opinions, thoughts?

Post by Philly_fan » Sat Oct 14, 2017 5:30 pm

Thanks for great replies!!

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Re: About Vanguard advisors: opinions, thoughts?

Post by FrugalInvestor » Sat Oct 14, 2017 5:45 pm

Maybe things have changed but a few years ago when I retired and received a couple of lump sums I asked Vanguard for a review of my investments and suggest adjustments due to new $$ and changing circumstances. They did recommend the their 'standard' funds which at that time were a bit different than today (recommendation included at least one actively managed stock fund) but they were also respectful of my preferences and mindful of tax consequences which resulted in a recommendation to keep a fund that would normally not be recommended. I thought the recommendations were very reasonable given the circumstances. I followed some and rejected others.
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Re: About Vanguard advisors: opinions, thoughts?

Post by Lexi » Sat Oct 14, 2017 7:09 pm

What the OP describes is not required to comply with fiduciary responsibility. A fiduciary can listen to the client and develop a plan consistent with the client's desires. If the client wants to invest in something that the adviser thinks is truly objectionable, the adviser can decline to include that in the managed assets. If the adviser may have an apparent conflict of interest with an investment the client wants to make, they can sign a statement that the client understands and wants it anyway. Other scenarios are also possible with a fiduciary. What the OP describes is simply corporate policy to allow the company to provide advisory services for cheap rates by using a one-size-fits-all approach.

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Re: About Vanguard advisors: opinions, thoughts?

Post by Oxybeles » Sat Oct 14, 2017 10:13 pm

Fortunately, my wife and I were able to retire a few years early. Prior to retiring, we paid a Fee-Only CFP to to develop a comprehensive plan to ascertain if we could indeed retire. The pan confirmed our calculations and we retired. The plan recommended a 65%/35% stock/bond asset allocation, moving all assets to Vanguard, and utilization of Index funds.

Moving ahead 2.5 years, with our accounts at Vanguard we utilized the service to obtain a free Financial Plan. The plan confirmed the results of the original plan. As such, the plan recommended a 65%/35% asset allocation, emphasizing a reduction of the international stock holdings and an increase of international bond. The plan allowed for the retention of PRIMECAP and Capital Opportunity, with the addition of positions in S&P 500 and the Value Index to offset the aggressive nature of these funds.

However, the decision to utilize or not utilize the Vanguard PAS is not based o n the ability to manage the investment ourselves, as we are both in good health; but a rather unique situation. My wife believes it is possible to time the market. While not taking any interest in investing prior to retirement, she now has an increased interest in investing. While we have had discussions regarding the extremely minute possibility of successfully implementing a timing strategy, in which I utilized Bogleheads https://www.bogleheads.org/wiki/Taylor_ ... ing_quotes and https://www.bogleheads.org/blog/boglehe ... he-market/.

She was unpersuaded by the information and still considers market timing a viable strategy. The issue is one of emotion, for when the market enters a downturn, the behavior would lead to pulling the money from stock funds. While my wife trusts me in a few matters, when it comes to managing the investments she is not quite as comfortable, due to our disagreement on Market Timing.

However, she feels comfortable with Vanguard PAS managing the accounts, even though it would be contrary to timing the market.

Although the original plan was to self manage the accounts until I was unable to carry-on this function and then transition to Vanguard PAS. It appears that a decision needs to occur ahead of schedule.

As such, the .3% fee may prove beneficial for domestic tranquility!

NYCguy
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Re: About Vanguard advisors: opinions, thoughts?

Post by NYCguy » Sat Oct 14, 2017 10:37 pm

rkuklinski wrote:
Sat Oct 14, 2017 1:23 pm
Taylor Larimore wrote:
Mon Sep 19, 2016 5:29 pm
It also begs the question of why go to an advisor if you won't follow their advice?
Because a shocking number of investors are looking for an advisor to affirm a decision they have already made.
I have used the free consultation with both Vanguard advisers and Fidelity. Both have been educational experiences. I am not so much looking for affirmation as a critical analysis of my portfolio construction and financial plan. Both have provided valuable insights and I have made adjustments accordingly.
If your out-go is greater than your income, your upkeep will be your DOWNFALL.

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Re: About Vanguard advisors: opinions, thoughts?

Post by MrPotatoHead » Sat Oct 14, 2017 11:05 pm

Bill1773 wrote:
Mon Sep 19, 2016 4:51 pm
Questions: Is this normal behavior for a Vanguard financial advisor? Don't a lot of investors avoid foreign stocks, anyway? What course of action should the couple take in order to maintain both advisory services and a portfolio at Vanguard? Do Vanguard advisors now need to meet sales quotas?

Your thoughts, opinions and insights would be greatly appreciated. Many thanks.
I believe arrogant and condescending behavior toward their investors is the signature hallmark of Vanguard in general. I personally have never had a satisfactory interaction with any of their reps be it by telephone or e-mail. One of my misgiving is that I opened a fairly substantial taxable account with then (in terms of my assets) and would have to pay substantial capital gains to liquidate. My current plan is to convert what I can to ETFs and host them elsewhere.

A lot of investors do avoid foreign stocks for myriad of reasons. Jack Bogle himself, is not overly fond of international allocations.

I have no idea if Vanguard advisors have to maintain a sales quota, I would simply attempt remedy the situation by looking for another company to do business with. Schwab and Fidelity offer a far better customer service experience with advisers who will give you advice but do not insist you take it (I am speaking from personal experience).

Once again my bias is experienced based. Good luck, but I think you are dealing with the good ship arrogance when you work with Vanguard.

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Re: About Vanguard advisors: opinions, thoughts?

Post by gd » Sun Oct 15, 2017 7:08 am

Seems like the controversy comes down to semantics and implications about what "advice" means-- suggestion or mandatory. Perhaps they should have named it "Vanguard Personal Management Services".

I have the thought that the 16 page brochure posted is pretty dense, and the people likely using PAS are not going to be reading between lines to anticipate issues like whether Vanguard is going to mandate specific not-what-grandpa-invested-in stuff. If they've got explicit top-level mandates and constraints, and this brochure is the primary information source for clients, they need to make their writing way clearer and state what the investment boundaries are that clients are signing up to.

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Re: About Vanguard advisors: opinions, thoughts?

Post by GmanJeff » Sun Oct 15, 2017 8:56 am

As has been pointed out, PAS is a hybrid robo service and, as such, implements and maintains portfolios which Vanguard's models predict will provide the optimum outcome for an investor's risk tolerance, typically over a given investor's (or his/her spouse's) lifetime. If someone believes their different judgment will result in a better outcome and don't want to align their investments with the models, they probably ought not to be using the service.

The role and value proposition of the advisor in PAS is to provide and periodically update a financial plan, answer questions, and to provide guidance for withdrawal strategies which are tax-efficient and which preserve an optimized asset allocation. They do not provide fully customized portfolios which deviate materially from the models. They will adjust asset allocations in conjunction with client changes in risk tolerance, to a point.

Apart from the issues around whether Vanguard's robo models can be applied to portfolios which are outside their design parameters (e.g., portfolios with no international component), I suspect that a portfolio with no allocation to international equities/bonds at all is considered by Vanguard to represent excessive risk, which cannot be fully offset by simply adjusting the equity/bond proportions in a purely domestic portfolio.

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Re: About Vanguard advisors: opinions, thoughts?

Post by LadyGeek » Sun Oct 15, 2017 11:29 am

This thread is now in the Personal Finance (Not Investing) forum (Investment adviser).

MrPotatoHead, Welcome!
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Re: About Vanguard advisors: opinions, thoughts?

Post by LadyGeek » Sun Oct 15, 2017 1:02 pm

After receiving a PM, this thread is now in the Investing - Theory, News & General forum (managing investments).
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Re: About Vanguard advisors: opinions, thoughts?

Post by friar1610 » Sun Oct 15, 2017 7:02 pm

vested1 wrote:
Sat Oct 14, 2017 10:27 am
Several replies point out that if you sign up for VG advisory service you should be expected to follow their advice, and also questioned why anyone would consider signing up.

When I was considering VG PAS recently and scheduled a discussion with one of their CFA's I was interested in only two aspects of their service, listed in priority:

1. An assurance that should I die, my wife, who is completely disinterested in our accounts could have a seamless transition of our portfolio and withdrawals which would be in her best interests.
2. My RMD's start in 5 years, and VG PAS offers assurance that they are handled correctly. I know that Vanguard will help in this regard if necessary, so it was a minor consideration.

I was turned off by the advisor's insistence that my international stock allocation was too low at 15%, that having no international bonds did not fit their investing philosophy, and that if I signed up for their service those positions would be adjusted. I had liquidated the 8% of international bonds that I held, reallocating them equally to Total US Bonds index and Intermediate Term Corp Bonds index prior to our conversation. The advisor also said they would likely buy some actively managed funds in our portfolio. He refused to consider my specific wishes to keep our investments as they were, at 60/40 with only four index funds, or to appreciate my willingness to pay a .3% AUM for the limited service I was looking for.

Since my primary reason for low cost portfolio management was for my wife in the eventuality of my death, I will look for an alternative solution. I can always suggest to her that she move everything over to VG PAS should I die, which wouldn't be a horrible decision in her case.
Your interest in PAS is exactly the same as mine (although my wife and I are already taking RMDs). With a 40/56/4 (equity/fixed/cash) allocation, about 25% of the equity and 0% of the fixed international, I'd just like to keep it that way and have someone manage the portfolio in the event of my demise. Complicating it a bit further is that our fixed includes I-Bonds and CDs in addition to VG Total Bond fund and I want to retain that. Like you, I've reluctantly concluded that VPAS is not the service I need.
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Philly_fan
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Re: About Vanguard advisors: opinions, thoughts?

Post by Philly_fan » Sun Oct 15, 2017 7:44 pm

So friar11610, what will you recommend your wife do if your demise is first?

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Re: About Vanguard advisors: opinions, thoughts?

Post by thelimocat » Mon Oct 16, 2017 8:32 am

I too am in the same frame of mind. I spoke to an advisor and sent a couple of line items that I considered important. Their general plan appears to be more leveraged toward your portfolio and not financial planning. I suspect if one is concerned about how things are going to run after ones demise a planner would be better suited. All this being said I do feel I did benefit from the call and discussion as I used their information to rework my portfolio.

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Re: About Vanguard advisors: opinions, thoughts?

Post by friar1610 » Mon Oct 16, 2017 8:48 am

Philly_fan wrote:
Sun Oct 15, 2017 7:44 pm
So friar11610, what will you recommend your wife do if your demise is first?
That's a good question and a dilemma for me. I've written out a set of very specific directions for her to follow but I'm not totally sure that's sufficient. Ideally I'd like to find a local advisor/manager to manage withdrawals, rebalancing, etc. But with all the stories you hear about "advisors" putting widows in inappropriate, high cost vehicles, I'm reluctant there as well. I suppose VPAS will have to be the default for now unless a better solution presents itself. Any other thoughts that you might have run across?
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Re: About Vanguard advisors: opinions, thoughts?

Post by Philly_fan » Mon Oct 16, 2017 10:37 am

Thanks Friar1610. I have the EXACT same issue to deal with. My wife has no clue about investing and personal finance, and really has no desire to learn. (Although, she has been saying for years that she wants to learn, but has never made the time to learn from me.)

I don't want her using a regular advisor because of the 1% fee, and the possibility of him being unethical. So, like you, i have told her to hire Vanguard Personal Advisor Services and do whatever the advisor tells her. I wish vanguard pas was more flexible in their portfolios. I would like more of a tilt to small and value. But they won't do that apparently.

Any other ideas if the non-financial spouse survives the financial spouse?

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Re: About Vanguard advisors: opinions, thoughts?

Post by friar1610 » Mon Oct 16, 2017 10:45 am

Philly_fan wrote:
Mon Oct 16, 2017 10:37 am
Thanks Friar1610. I have the EXACT same issue to deal with. My wife has no clue about investing and personal finance, and really has no desire to learn. (Although, she has been saying for years that she wants to learn, but has never made the time to learn from me.)

I don't want her using a regular advisor because of the 1% fee, and the possibility of him being unethical. So, like you, i have told her to hire Vanguard Personal Advisor Services and do whatever the advisor tells her. I wish vanguard pas was more flexible in their portfolios. I would like more of a tilt to small and value. But they won't do that apparently.

Any other ideas if the non-financial spouse survives the financial spouse?
The only other obvious answer is to use asset allocation funds and/or annuities. With our current conservative AA and all of our (modest) IRAs in Total Bond Index, I might consider switching to one of the "set it and forget it" funds although that might boost the equity allocation more than I'd like. In the taxable account, which is mainly equities, I would take too big a tax hit if I were to switch to an AA fund, so that's a non-starter. I do have a Vanguard variable annuity (long story - don't ask) for which she is the beneficiary. I've told her to annuitize that once ownership transfers to her. Beyond that, I have no brilliant ideas.
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Re: About Vanguard advisors: opinions, thoughts?

Post by Philly_fan » Mon Oct 16, 2017 12:10 pm

Thanks

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Re: About Vanguard advisors: opinions, thoughts?

Post by Mountain Bayou » Mon Oct 16, 2017 12:19 pm

I can only relate my experience.

I transferred a low seven figure amount of funds to Vanguard and then started a discussion with a Vanguard Personal Advisor.

After I had made a decision on the mix of bonds and stocks, the Advisor made a comment, something like..."well, I think I'll do this and this"...and what he was going to do was not what I had decided. I was surprised and a bit shocked, thinking whose money is this, and that this individual would not listen/implement the desires of a client. I backed away from this financial advisor.

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Re: About Vanguard advisors: opinions, thoughts?

Post by jocdoc » Mon Oct 16, 2017 5:57 pm

I have spoken to two different VG advisors. Their advice was sound but limited in scope to the VG philosophy in asset allocation. People can save the advisory fees just by buying a VG target date or lifecycle fund. they don't give advise on non VG funds. Their advice seems to be limited in scope. 0.3% per annum is for hand holding.

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Re: About Vanguard advisors: opinions, thoughts?

Post by afan » Tue Oct 17, 2017 4:00 pm

I am not sure.what the 0.3% is for. They will institute a portfolio you could easily create for yourself, then do nothing else. Now this is exactly what you want. But you can do it for free.
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Re: About Vanguard advisors: opinions, thoughts?

Post by HawkDriver » Wed Oct 18, 2017 2:49 am

I just recently signed up for VPAS and turned my portfolio over to the advisor. Here are my thoughts:

- I know a pretty decent amount about academic finance and asset allocation. I also have some training in basic personal finance counseling (military command financial specialist). HOWEVER, I have been making a few significant behavioral errors with my portfolio, which I didn’t realize until the advisor pointed it out (ie creating mental “buckets” for uncertain goals). Additionally, I’ve become increasingly fearful of a significant market correction, which has led to an inefficient taxable savings/investing strategy. TBH, I’m not confident in my ability to keep my foot on the accelerator for the next 40 years. Knowing and implementing are not synonymous.

- I was initially turned off by the fact that VPAS would not tilt my portfolio to small and value, as I had been tilting for a number of years. However, I’ve rediscovered the beauty of the simplicity (and efficiency) of the market portfolio. The ONLY thing remaining to focus on is my savings rate...not factor loadings, not new factors, not correlations, not concerns with factor premia prevalence...truly simple. I’m happy that Vanguard remains steadfast in their market-matching methodology and will keep me from chasing the hot new factor or asset class (reinsurance, anyone?). The 30 bp may even be less than I’d pay if I was chasing factors.

- Contrary to many posts above, VPAS will absolutely build and adjust the plan to match personal circumstances, within their investment methodology. For example, my advisor and I had a great conversation on whether I wanted to use corporate bond funds for my Vanguard FI, since I had access to the G Fund in my TSP (I initiated the idea). Though I reconsidered that approach (after rereading Swensen) and decided to stick with Total Bond (and keep my TSP FI in G), my advisor was absolutely ready to rebuild my plan to adjust around me. What they won’t do is implement a plan they don’t agree with, but why should they? You are paying for an advisor, not a manager.

So far, I’ve been very pleased. There’s a certain amount of comfort in knowing your plan will be implemented correctly and consistently, and that they stand ready to readjust the plan should my circumstances change.

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Re: About Vanguard advisors: opinions, thoughts?

Post by DWesterb2iz2 » Wed Oct 18, 2017 12:59 pm

HawkDriver wrote:
Wed Oct 18, 2017 2:49 am

- Contrary to many posts above, VPAS will absolutely build and adjust the plan to match personal circumstances, within their investment methodology.
This was our experience too. We wanted 10% of the total in Vanguard FTSE Social Index Fund and our advisor did it. He wondered why we didn't just buy more of a larger index, but it wasn't a problem when we said we wanted the Social Index. Our current advisor recently wanted to change an allocation that I'd rather leave alone, and he was fine with that also. I would have changed it if he made a good case for it. He was fine with not doing it.

Our experience has also been good, overall. We have a Flasgship account and I mentioned to our admin that I was thinking of moving my mom to VG from a 1% AUM advisor, and they arranged to have our accounts more linked through the same administrator that we have, and a very good "permanent" advisor, even though she wasn't at the Flagship level, herself, she has the benefits by being linked to our account. This is a big help to me and to mom. It's also smart for VG, because it gives me more reason to stay with them. Mom is best off settled and with familiar people. Moving her again (even to a place in Vanguard where she had different contacts) would be a drag for her.

I like having familiar people too. And I will say that the one thing that is kind of a pain for us is that at the Flagship level you are supposed to have a dedicated advisor, same man or women every time. And that's true, except that VG, in our experience is going through huge turnover, and we've had three or four dedicated advisors since we started a couple of years ago. I'm not sure if that's a common experience, but I think we are on our 4th advisor. Our admin changed, too, but I think that's because he became a CFP and moved up. Anyway, overall, it's been good.

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Re: About Vanguard advisors: opinions, thoughts?

Post by friar1610 » Wed Oct 18, 2017 3:25 pm

HawkDriver wrote:
Wed Oct 18, 2017 2:49 am
I just recently signed up for VPAS and turned my portfolio over to the advisor. Here are my thoughts:....


- Contrary to many posts above, VPAS will absolutely build and adjust the plan to match personal circumstances, within their investment methodology. For example, my advisor and I had a great conversation on whether I wanted to use corporate bond funds for my Vanguard FI, since I had access to the G Fund in my TSP (I initiated the idea). Though I reconsidered that approach (after rereading Swensen) and decided to stick with Total Bond (and keep my TSP FI in G), my advisor was absolutely ready to rebuild my plan to adjust around me. they won’t do is implement a plan they don’t agree with, but why should they? You are paying for an advisor, not a manager.

Hawk Driver,

I wonder if you could tell us a little bit about how VG dealt with the non-VG assets. You mention that you are in the TSP (which makes sense since it sounds like you are military). I know they are not managing assets such as those but I'm curious how they dealt with the fact that you have (perhaps substantial?) assets under a different umbrella with a given asset allocation, rate of continuing contribution, etc. In the big picture, this clearly has an impact on the way they would allocate your VG assets to arrive at your macro financial picture. Would you mind elaborating on that a bit?

Thank you.
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Re: About Vanguard advisors: opinions, thoughts?

Post by HawkDriver » Wed Oct 18, 2017 4:23 pm

friar1610 wrote:
Wed Oct 18, 2017 3:25 pm
Hawk Driver,

I wonder if you could tell us a little bit about how VG dealt with the non-VG assets. You mention that you are in the TSP (which makes sense since it sounds like you are military). I know they are not managing assets such as those but I'm curious how they dealt with the fact that you have (perhaps substantial?) assets under a different umbrella with a given asset allocation, rate of continuing contribution, etc. In the big picture, this clearly has an impact on the way they would allocate your VG assets to arrive at your macro financial picture. Would you mind elaborating on that a bit?

Thank you.
Sure! Since Vanguard cannot rebalance allocations in outside accounts, it has fully build out its asset allocation inside the accounts it manages. So, my 90/10 portfolio is managed at Vanguard, and the investment plan gives me the percentages to implement a 90/10 allocation in my outside accounts (38% U.S. large, 16% U.S. small/mid, 36% int'l, 10% bond). Thankfully, this is very easy due to whole-market index funds in my TSP and my wife's retirement plan, which each allow me to set percentages and rebalance with only a couple clicks. The advisor made a point of stating that getting the AA consistent across accounts was the main thing, and that I should choose the best funds available (i.e. passive, low cost) in each of the outside accounts to implement the AA. They're not terribly concerned about small differences (like lack of EM in TSP I Fund) and even encouraged me to keep my TSP FI in the G Fund.

Initially, I was disappointed that VG wouldn't design a strategy to hold my entire FI component in the G Fund, which I preferred to TBM. However, the advisor made a point that since they couldn't rebalance using it, they had to do it this way. Since rebalancing (especially when it would be behaviorally difficult) was one of the main reasons for signing up, this made a lot of sense. I'll still have to rebalance the outside accounts, but the fact that VG will automatically rebalance quarterly should be enough of a nudge to follow through (the advisor can see my outside account allocations and coach me if needed as well).

Their Monte Carlo analysis for projecting progress toward a goal is based on the account following the AA in each of your outside accounts. When you complete the Investor Profile, you tell your advisor how much you contribute to your outside accounts, and these numbers (along with current balances) are used to project your probability of success. Since each outside account is the same AA, changing contribution amounts should not affect the overall portfolio AA.

Overall, I feel that the discussions with the advisor and the investment plan adequately accounted for my total financial picture, including outside accounts and continuing contributions. However, if I had a 401k with very poor "3-Fund" options, I might feel differently about the strategy of replicating the entire AA in that account.

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Re: About Vanguard advisors: opinions, thoughts?

Post by friar1610 » Wed Oct 18, 2017 5:17 pm

HawkDriver,

Thank you.
Friar1610

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Re: About Vanguard advisors: opinions, thoughts?

Post by Jim Beaux » Wed Oct 18, 2017 6:52 pm

I turned my portfolio over to VPA in Nov last year. My advisor was patient, listened and then made a follow up appointment to review the plan. Ive held VHT (An ETF) for a while & still wanted to hold it. My advisor resisted and during the debate, asked my reasons for keeping it. After explaining my reasoning he offered a compromise - reduce the amount. I agreed & then we addressed some of my concerns (International) and his explanation convinced me.

My advisor was professional, listened well and explained. Entire experience was good and so far Im a fan.

Ive read most of the above thread and one thing no one really got into is the Monte Carlo Simulation that roots the VPS model. Google for a better explanation, but the key is the randomness. Once we start modifying the model, we start diminishing the randomness variables and that is an important component.

Im not a mathematician in any way, shape or form. Do not engage me on this subject! LOL

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Re: About Vanguard advisors: opinions, thoughts?

Post by LadyGeek » Wed Oct 18, 2017 9:58 pm

1210sda has a question which I've moved into a stand-alone thread: [If I die before my spouse, how to direct Vanguard advisors?]
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