About Vanguard advisors: opinions, thoughts?

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Bill1773
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About Vanguard advisors: opinions, thoughts?

Post by Bill1773 » Mon Sep 19, 2016 4:51 pm

This just happened today, and I could use some thoughts and input. Thanks!

Situation: A married couple in their mid 60s recently transfers $950K to from RBC (fees too high) to Vanguard. They try Vanguard advisor services and get a proposed portfolio, basically a 60/40 split between bonds and stocks. All looks fine to them except for a recommended investment in Vanguard Total International Stock Index Fund Admiral Shares (VGTSX). It would comprise 16% of their portfolio.

They tell the advisor they would prefer to stay out of international stocks and instead invest the 16% equally in Wellesley Admiral (VWIAX) and Wellington Admiral (VWENX). (That works out to a roughly 50/50 bond/stock split.)

The Vanguard advisor responds by saying he thinks they should still invest in VGTSX. The couple restates their objection. The advisor persists in selling the virtues of VGTSX. Then he tells the couple that if they insist on owning VWIAX and VWENX, they might have to do it on their own and "outside" of the portfolio. He also says that he will need to confer with his supervisor regarding any such change to the proposed portfolio.

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.

JoinToday
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Re: About Vanguard advisors: opinions, thoughts?

Post by JoinToday » Mon Sep 19, 2016 5:16 pm

Bill1773 wrote:....
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.


While there is no consensus on how much international to own (0% to 50%), I suspect a majority on this forum invest in international. "a lot" do not invest in international equity, but I suspect it is a lot less than 50% here.

I also believe Vanguard reps have guidelines to follow, and don't have the latitude to do whatever the client wants. Depending on the portfolio, can your friends just invest in Balanced Index for all the holdings? Not as tax efficient, but it doesn't get much easier than this. 60% US stock market index, 40% US bond market index

edited to add: I wouldn't invest in Wellesly or Wellington, even though they appear to be good funds.

Simplify, Simplify, Simplify. Read up on the 3 fund portfolio. Except make it 2 fund: total bond market, and total US stock market.
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goingup
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Re: About Vanguard advisors: opinions, thoughts?

Post by goingup » Mon Sep 19, 2016 5:23 pm

A number of people have posted here about their experience with the Vanguard PAS. The recommendation for % of international equity and bond seem pretty firm. My impression is that if you want your account to be managed by PAS, you must commit to their portfolio construction.

If you like the W funds, why not just manage the portfolio yourself? Of course, depending on your tax situation, the Ws may not be ideal for a taxable account.

RadAudit
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Re: About Vanguard advisors: opinions, thoughts?

Post by RadAudit » Mon Sep 19, 2016 5:24 pm

JoinToday wrote: What course of action should the couple take in order to maintain both advisory services and a portfolio at Vanguard?


It seems the couple and the advisor have a difference of opinion.

Why not have the couple invest their money as they wish? Very shortly, they can ask a Vanguard advisor if they have specific questions. At least according to https://investor.vanguard.com/investing ... ts/voyager and https://investor.vanguard.com/investing ... s/flagship
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Taylor Larimore
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Re: About Vanguard advisors: opinions, thoughts?

Post by Taylor Larimore » Mon Sep 19, 2016 5:29 pm

Bill1773:

I do not know what Vanguard advisors do when their recommendations are not accepted. Please let us know.

It also begs the question of why go to an advisor if you won't follow their advice?

Thank you and best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

dbr
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Re: About Vanguard advisors: opinions, thoughts?

Post by dbr » Mon Sep 19, 2016 5:45 pm

This is not a completely new question about PAS but is both detailed and explicit.

But I am confused about what is at issue. It would be routine that an advisor one hires makes a recommendation that the client disagrees with in some part. It would also be routine that the advisor might stick to his recommendation.

The question is so what? Anyone can invest in anything they want at Vanguard. Is someone suggesting that when you pay 0.3% for advice that you sign a contract to implement the advice and if you don't they cut you a check for your money and close your accounts?

Is the actual problem that Vanguard PAS won't perform investment management tasks such as rebalancing, distributing withdrawals, placing new money according to plan, etc. unless the client agrees to the recommended investments.

Maybe someone can clarify.

pinot3
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Re: About Vanguard advisors: opinions, thoughts?

Post by pinot3 » Mon Sep 19, 2016 6:04 pm

Here's the link to their services brochure. It's pretty specific about rights and obligations of both parties.

https://personal.vanguard.com/pdf/vpasag.pdf

It's better to post the entire doc so there's not any confusion.

Thanks for listening.
pinot3 / total expense ratio: .06%

drzzzzz
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Re: About Vanguard advisors: opinions, thoughts?

Post by drzzzzz » Mon Sep 19, 2016 8:14 pm

We have spoken to Vanguard advisory services in detail and our understanding is that the advisors have guidelines to follow and Vanguard feels like they have a fiduciary duty to include internation stocks in the construction of a portfolio - it was clear to me that if we didn't want international then they likely didnt want us as a client for these services. As an aside and as someone else has mentioned, why use an advisor and then not follow their advice - we ultimately decided on the lowest percentage of international and guess will know in the future whether this was the correct decision for us.

Naikansha
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Re: About Vanguard advisors: opinions, thoughts?

Post by Naikansha » Mon Sep 19, 2016 8:46 pm

Did your advisor explain why he didn't want you to invest in W and W? And WHY his recommendations were suitable for the type of account you wanted to open? It would seem that such explanations would help you understand the reasons for conflicts you are having with him. More discussion is needed.

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Re: About Vanguard advisors: opinions, thoughts?

Post by Dale_G » Tue Sep 20, 2016 12:11 am

drzzzzz wrote: ... snip ... we ultimately decided on the lowest percentage of international and guess will know in the future whether this was the correct decision for us.


Does this mean that PAS will let you choose the percentage of international? It sounds like they will accept some minimum percentage of the equity allocation. Same with the international bond allocation?

Dale
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Re: About Vanguard advisors: opinions, thoughts?

Post by SGM » Tue Sep 20, 2016 3:28 am

I believe that Vanguard's experts feel that international offers necessary diversification. They don't have quotas and they are concerned about fulfilling their fiduciary responsibility. If you don't want to accept their advice why pay the additional 0.3%?

Most of what I have read or heard about Vanguard's advice has been to use broad index funds and diversify with some portion in international. I would expect their advisory service would not stray from that. They don't recommend actively managed funds like the two you mention.

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in_reality
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Re: About Vanguard advisors: opinions, thoughts?

Post by in_reality » Tue Sep 20, 2016 5:07 am

Dale_G wrote:
drzzzzz wrote: ... snip ... we ultimately decided on the lowest percentage of international and guess will know in the future whether this was the correct decision for us.


Does this mean that PAS will let you choose the percentage of international? It sounds like they will accept some minimum percentage of the equity allocation. Same with the international bond allocation?

Dale


And ask them to explain the basis of their international bond allocation -- for instance why they claim an international bond with a negative 10 year yield will return the same as a 1.6% paying US one.

I understand there is a hedge return (basically currency return based on the one month interest rate difference between the US and wherever else) that gives the international bond additional yield, but such a differential generally leaves one from about .5% to 1.0% short of US 10 yr yield.

I assume that Vanguard is paying incentives to employees to increase PAS usage (just as they have incentives to hit lower costs), and I wonder if the international bonds is just like any other advisor adding complexity to justify their cost.

I could be misunderstanding the math on Vanguard's claims, but I've honestly read everything I could find by them about it, and don't believe they can accurately claim that an investor should be indifferent to International or US when it comes to bonds. They seem to be suggesting that there is no term premium for bonds. If that is the case, then yeah their hedge yield will make up the difference. I personally don't believe 120 one month bonds is going to equal the return from one 10 year one which is basically what they are suggesting.

And yes I understand there might be a benefit to international bonds if US rates spike and international bonds don't lose NAV. Shorter term US bonds would serve that function too though, and wouldn't be at inflation risk when rates rise internationally.

Schwab gets a lot of flack on this site for including a cash allocation (which they claim serves as a zero duration bonds and which they can profit on by lending out via their mortgage unit), but I am not so sure the drag from that can be expected to be any worse from what international bonds and their included hedge return at today rates yield (Schwab doesn't use them).

As for international stocks, they certainly would seem to have higher potential returns given their lower valuations (and often the lower valuation of the currency they are in which will probably appreciate), but honestly view my international holdings as more risky with higher potential at this time, but also possibly not ever able to reach their potential due to any number of challenging factors. It's difficult for me to agree that anyone should be taking more risk than they are comfortable with. OK pay a fee to get encouragement to take risks. I guess that's a valid thing if that's what the advisor really thinks the investor should be doing.

***I'm asking not to dissuade people from using Vanguard's services, but rather to try to get an explanation on their claim. If it's accurate, they international bonds might be attractive to me too. From what they've stated though, it seems like they are ignoring the term premium that I'd argue is an important part of a bond's return.

dbr
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Re: About Vanguard advisors: opinions, thoughts?

Post by dbr » Tue Sep 20, 2016 7:02 am

Some people want to use PAS as an investment management service. Such individuals may not be interested in the advisory function of specifying an asset allocation and fund selection. Apparently they refuse to manage portfolios that do not fall within certain requirements that Vanguard feels is their fiduciary obligation to require. Apparently a minimal holding in international stock funds is required or they refuse to manage the portfolio.

The above is why someone might "seek advice" and disagree with it.

A service Vanguard does not offer without buying PAS is automatically maintaining and rebalancing an asset allocation except by the device of putting everything in a target retirement, lifestyle, or balanced fund.
Last edited by dbr on Tue Sep 20, 2016 7:55 am, edited 1 time in total.

Dandy
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Re: About Vanguard advisors: opinions, thoughts?

Post by Dandy » Tue Sep 20, 2016 7:46 am

Wow. I expected the advisors to pitch the Vanguard approach but not to club investors over the head with it. VG seems determined to get people into international investments for their own good whether they like or not or whether it is necessary or not. Kind of off putting especially since their founder feels international equities aren't necessary.

I doubt that most advisors would strong arm their potential clients after suggesting an investment several times and making their case if the client was uncomfortable with it. I would say thanks for your time and move on.

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Re: About Vanguard advisors: opinions, thoughts?

Post by Dandy » Tue Sep 20, 2016 7:56 am

It also begs the question of why go to an advisor if you won't follow their advice?


Some logic to that. I feel the advisor and client should be able to reach a mutually agreeable allocation. People get second and third opinions on medical issues even though they don't have the same knowledge as the first doctor they consult. Some respected advisors from this forum push High Yield allocations yet many would avoid that type of investment. I'd say talk to other advisors and if they all pitch international equities and are passionate about it then the buyer might be more comfortable with the idea.

carguyny
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Re: About Vanguard advisors: opinions, thoughts?

Post by carguyny » Tue Sep 20, 2016 8:03 am

You've hired someone to manage the money and they're doing it. I find it reassuring as someone that will leave a large trust behind that they won't let the beneficiaries dictate the asset allocation.

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Re: About Vanguard advisors: opinions, thoughts?

Post by fourwheelcycle » Tue Oct 04, 2016 5:02 pm

I read the PAS Service Agreement helpfully posted by pinot3. It seems clear Vanguard takes their fiduciary role very seriously and does not want to accept client requests to do things Vanguard honestly does not believe are in the client's best interest. I have experienced this in my own life, where my elderly father appointed me as his DPOA and then did not want to accept my advice on selling some of his 100% stock portfolio (!) in order to introduce a balance of Vanguard bond funds. I gave in, with the understanding that when he ultimately sold his house to move into a retirement community he would let me put 100% of the house proceeds into a combination of FDIC-insured savings and a Vanguard bond fund. That has now happened and he is much closer to a 70/30 split. My guess is that Vanguard would never have accepted my father as a PAS client. PS, neither his stock portfolio or his newly-added Vanguard bond fund include any international components.

I agree with dbr, there may be people who would like to have Vanguard do everything for them and just keep a nice living allowance in their settlement fund, but it seems clear Vanguard would not see this as fulfilling their fiduciary obligation to the client(s) if the clients wanted a zero percent of international funds.

For my own part, I am too cheap to pay anyone 1% or even .3% to manage my portfolio. I think .05% for VTSAX Admiral is about right. For Vanguard clients who are willing to manage their own accounts, like me, Vanguard offers a free annual portfolio review and consultation by the same people who do their PAS. I know this because the CFP who has done my last two annual reviews has invited me to become his PAS client. His main advice has always been to sell (tax exempt) bond funds in my taxable account and buy taxable bond funds in my IRA accounts. I finally did the math and I am currently making this adjustment. I have a very low percent of international stock and bond funds in my portfolio and he has never mentioned that, but it appears he would if I ever considered becoming a PAS client.
Last edited by fourwheelcycle on Tue Oct 04, 2016 6:21 pm, edited 1 time in total.

WhyNotUs
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Re: About Vanguard advisors: opinions, thoughts?

Post by WhyNotUs » Tue Oct 04, 2016 5:31 pm

Questions: Is this normal behavior for a Vanguard financial advisor?
Yes, they are offering portfolio management and have accountability

Don't a lot of investors avoid foreign stocks, anyway?
Some avoid foreign stocks, personally I have my toe but not foot in

What course of action should the couple take in order to maintain both advisory services and a portfolio at Vanguard?
You have a couple good choices, 1.) invest your funds as per the info in your proposed fund with the changes to put the 16% in W/W instead and in a year, hopefully, your portfolio will be worth more than $1M and you will be able to get a free financial plan and go over things with an advisor without paying the management fee or doing what they say 2.) Put it all in VBIAX and forget about it

Do Vanguard advisors now need to meet sales quotas?
That is not my understanding, I enjoyed the process when I did my plan with a VG advisor (not PAS). I still have not matched that plan it has been a process but will be there soon.
I own the next hot stock- VTSAX

jalbert
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Re: About Vanguard advisors: opinions, thoughts?

Post by jalbert » Tue Oct 04, 2016 5:38 pm

Why would someone pay 30 bp/yr to Vanguard for the privilege of directing them on how to invest the funds, when Vanguard already offers that service for free?

smectym
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Re: About Vanguard advisors: opinions, thoughts?

Post by smectym » Tue Oct 04, 2016 6:19 pm

I use Vanguard Personal Advisor for a (relatively small) portion of the assets I hold at Vanguard. Of course, I let the advisor handle the AUM as he (i.e. Vanguard) sees fit. He also will offer suggestions and insights regarding the assets I still manage, and as far as those assets go we kick ideas around freely. He does indeed suggest I dispose of a large holding of Wellesley in taxable, for the perfectly valid reason that Wellesley holds a lot of bonds taxable as ordinary income. Despite my fondness for the fund I'm gradually taking that advice. I'm also being urged to up the allocation to international equities. Again, I'm slowly coming around, but at my own pace. I do anticipate turning more of the total portfolio over to Vanguard over time.

I guess my point is, if you want to give VPA a shot but aren't sure whether you want to go all in all at once--start with a portion of your assets.

fourwheelcycle
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Re: About Vanguard advisors: opinions, thoughts?

Post by fourwheelcycle » Tue Oct 04, 2016 6:38 pm

jalbert wrote:Why would someone pay 30 bp/yr to Vanguard for the privilege of directing them on how to invest the funds, when Vanguard already offers that service for free?


I know the answer to that question since I already asked it directly to my recent "free" Vanguard portfolio reviewer, who is also a PAS advisor. The problem is that we clients often do not follow our free portfolio reviewers' advice, like adding a percentage of international funds. Also, we often do things we say we will not do, like not rebalancing our portfolios to stay close to our AA targets, or selling in a down market after we have said in our risk assessment that we intend to hold in down markets. Vanguard's PAS advisors see a big part of their role as protecting us from our own worst enemy - ourselves.

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Re: About Vanguard advisors: opinions, thoughts?

Post by gwrvmd » Tue Oct 04, 2016 7:08 pm

I have been investing with Vanguard for 40 years. I believe Vanguard has gone overboard in its endorsement of the concept of diversification. It is true diversification is important, that is why most of us have stopped buying individual stocks and buy mutual funds and for more diversification, index funds.
However, when you extend the concept of diversification to requiring international diversification especially when it extends to international/emerging markets bonds that diversification becomes questionable. Some PAS advise seems to be dictatorial rather than advisory........Gordon
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dbr
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Re: About Vanguard advisors: opinions, thoughts?

Post by dbr » Tue Oct 04, 2016 7:52 pm

fourwheelcycle wrote:
jalbert wrote:Why would someone pay 30 bp/yr to Vanguard for the privilege of directing them on how to invest the funds, when Vanguard already offers that service for free?


I know the answer to that question since I already asked it directly to my recent "free" Vanguard portfolio reviewer, who is also a PAS advisor. The problem is that we clients often do not follow our free portfolio reviewers' advice, like adding a percentage of international funds. Also, we often do things we say we will not do, like not rebalancing our portfolios to stay close to our AA targets, or selling in a down market after we have said in our risk assessment that we intend to hold in down markets. Vanguard's PAS advisors see a big part of their role as protecting us from our own worst enemy - ourselves.


Never take advice from a mutual fund company.

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Re: About Vanguard advisors: opinions, thoughts?

Post by jalbert » Tue Oct 04, 2016 10:18 pm

fourwheelcycle wrote:
jalbert wrote:Why would someone pay 30 bp/yr to Vanguard for the privilege of directing them on how to invest the funds, when Vanguard already offers that service for free?


I know the answer to that question since I already asked it directly to my recent "free" Vanguard portfolio reviewer, who is also a PAS advisor. The problem is that we clients often do not follow our free portfolio reviewers' advice, like adding a percentage of international funds. Also, we often do things we say we will not do, like not rebalancing our portfolios to stay close to our AA targets, or selling in a down market after we have said in our risk assessment that we intend to hold in down markets. Vanguard's PAS advisors see a big part of their role as protecting us from our own worst enemy - ourselves.


By free service, I meant if you want to direct your own investments, you don't need to pay for an advisor.

sawhorse
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Re: About Vanguard advisors: opinions, thoughts?

Post by sawhorse » Wed Oct 05, 2016 2:09 pm

I'm curious, the Vanguard advisory services, from the perspective of someone whose only exposure comes from a few threads here, sound like they're putting you in a target date or Lifestrategy fumd but doing it with individual component funds and an extra 0.30%.

What else do they do that I'm missing?

Bill773, did you point out that Jack Bogle doesn't hold international but does hold Wellington and Wellesley? What did the advisor say?

dbr
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Re: About Vanguard advisors: opinions, thoughts?

Post by dbr » Wed Oct 05, 2016 2:16 pm

sawhorse wrote:I'm curious, the Vanguard advisory services, from the perspective of someone whose only exposure comes from a few threads here, sound like they're putting you in a target date or Lifestrategy fumd but doing it with individual component funds and an extra 0.30%.

What else do they do that I'm missing?


Yes, it would be good if there is a list somewhere of exactly what the service is that one is paying for.

Here is a presentation: https://investor.vanguard.com/advice/personal-advisor

Two items I see are that they actually make the investments and rebalance the portfolio. I don't know what this means in terms of day to day operations of the account. They also have a picture that represents "minimize your taxes." I am dubious that is actually possible within the context.

dbr
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Re: About Vanguard advisors: opinions, thoughts?

Post by dbr » Wed Oct 05, 2016 2:23 pm

OK I found this, which is essentially a contract between Vanguard and the customer specifying what VPAS does. It is 15 detailed pages.

https://personal.vanguard.com/pdf/vpabroc.pdf

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Re: About Vanguard advisors: opinions, thoughts?

Post by sawhorse » Wed Oct 05, 2016 2:30 pm

dbr wrote:
sawhorse wrote:I'm curious, the Vanguard advisory services, from the perspective of someone whose only exposure comes from a few threads here, sound like they're putting you in a target date or Lifestrategy fumd but doing it with individual component funds and an extra 0.30%.

What else do they do that I'm missing?


Yes, it would be good if there is a list somewhere of exactly what the service is that one is paying for.

Here is a presentation: https://investor.vanguard.com/advice/personal-advisor

Two items I see are that they actually make the investments and rebalance the portfolio. I don't know what this means in terms of day to day operations of the account. They also have a picture that represents "minimize your taxes." I am dubious that is actually possible within the context.


Don't the all-in-one funds already rebalance automatically? They don't mention tax loss harvesting, so I assume they don't do that.

This seems to be similar to what Betterment does at half the fee (for >100k which the OP is, Betterment's fee is 0.15%), and Betterment also claims to do tax loss harvesting.

For the $950k the OP has, 0.30% is $2850. It's not clear to me what he's getting in return. Of course it's better than the 2% many advisors charge. On $950k that's $19,000!! But I think we can all agree that "better than the ripoff advisors" shouldn't be the standard of evaluation.

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Re: About Vanguard advisors: opinions, thoughts?

Post by retiredjg » Wed Oct 05, 2016 3:47 pm

Bill1773 wrote: Is this normal behavior for a Vanguard financial advisor?

It's an interesting question. Here's an opinion.

I think it is normal behavior for a Vanguard financial advisor because Vanguard is selling a service, not a product, and they are doing it at rock bottom prices.

Their service is to put you in the portfolio that Vanguard feels is best and manage it for you so you don't have to. Some people need this and .3% is really very little to pay for the service.

That portfolio happens to include international funds, both stock and bond. The only way for them to offer their rock bottom prices is for everyone to have essentially the same stuff, albeit in different stock to bond allocations. Remember, the PAS is sort of a humanized robo-advisor, not a concierge advisor which would cost a lot more (and likely "produce" less because of the higher fees).

If you really want some of the W funds, just hold them on the side, outside the PAS portfolio. If you hold a lot, be sure to adjust your stock to bond ratio inside the PAS portfolio to end up where you want to be.

I'm pretty sure if you went to any other robo-advisor platform, you'd find the same thing - "this is how we invest your money" rather than "how do you want to invest your money".

dbr
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Re: About Vanguard advisors: opinions, thoughts?

Post by dbr » Wed Oct 05, 2016 3:49 pm

People should read the fifteen page brochure I posted. The details may be helpful.


https://personal.vanguard.com/pdf/vpabroc.pdf

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Re: About Vanguard advisors: opinions, thoughts?

Post by jalbert » Wed Oct 05, 2016 6:22 pm

If Vanguard is managing the customer's fund choices, any value delivered by VCMM is probably defeated, but I'm not sure how much stock I would place in quantitative projections anyway.
The Vanguard Capital Markets Model (“VCMM”) is a proprietary, state-of-the-art, financial simulation tool developed and maintained by the Vanguard Investment Strategy Group. The VCMM uses a statistical analysis of historical data for interest rates, inflation, and other risk factors for global equities, fixed income, and commodity markets to generate forward-looking distributions of expected long-term returns. The asset return distributions used in the goals forecasting models are drawn from 10,000 VCMM simulations based on market data from 1926 for the equity markets and from 1960 for the fixed income markets through the most recent year- end. The forecast provided by the VCMM will be updated annually, though we may update the data more frequently in cases of major market events.
The VCMM is grounded on the empirical view that the returns of various asset classes reflect the compensation investors receive for bearing different types of systematic risk, a measure of the volatility of a security or a portfolio relative to a benchmark, also known as beta. Using a long span of historical monthly data, the VCMM estimates a dynamic statistical relationship among global risk factors and asset returns. Based on these calculations, the model uses regression-based Monte Carlo simulation methods to project relationships in the future. A regression-based Monte Carlo framework incorporates the uncertainty of any asset class that’s produced by basic Monte Carlo simulation and also captures the dynamic relationships among certain assets and risk factors. By incorporating a variety of macroeconomic and financial risk factors into the return-generating process, a regression-based Monte Carlo framework generates financial simulations that are responsive to changes in the economy. By explicitly accounting for important initial market conditions when generating its return distributions, the VCMM framework departs fundamentally from more basic Monte Carlo simulation techniques.
Asset allocation and return assumptions
VAI’s goals forecasting model uses index returns to represent asset classes. Index returns are reduced by 0.50% annually to account for hypothetical expenses and advisory fees. Inflation is modeled based on historical data from 1960 through the most recent year-end and simulated going forward.

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Re: About Vanguard advisors: opinions, thoughts?

Post by Dick D » Wed Oct 05, 2016 6:32 pm

You go to someone for advice. They give it to you. If you do not like the advice, you go to someone else for advice. Do you want advice, or do you want some one to affirm what you want to do? I think the Vanguarg advisers give good advice.

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Re: About Vanguard advisors: opinions, thoughts?

Post by SeeMoe » Thu Oct 06, 2016 12:49 pm

About 16 years ago, just before 911 , I had the same reservations regards international stocks even after a fee based one time Vanguard analysis. It was then recommended I consider just 20% of the folio be international stock. Since I was the final say, I only invested about 10%, but gradually understood their reasoning for making the transition into international for diversity and market safety in the AA and increased the figure to 20% international index stock funds.
A recent Vanguard CFP recommendation to 40% international was a shocker, but I am currently 38% international in the stock portion of the folio.....International Bonds was also hard to digest, but I'm at 22% now in the bond portion of the folio for the same reasons stated above.
SeeMoe.. 8-) (20+ years retired with a 45/55 AA @ Vanguard.)
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Re: About Vanguard advisors: opinions, thoughts?

Post by Miriam2 » Thu Oct 06, 2016 4:14 pm

Our local Boglehead chapter recently hosted a Vanguard Personal Adviser at one of our local chapter meetings. We had a two-hour Q & A session with him, which was very informative.

He explained he will structure a portfolio with funds, active or passive, that the customer feels comfortable with or has a personal reason to put into their portfolio. He noted the personal adviser is not limited to index funds. For example, in response to my question, he said Wellington or Wellesley could be structured into a portfolio.

However, I assume he meant that the personal advisers can do this; I didn't take this to mean that a Vanguard adviser would or should put funds into a portfolio against the adviser's professional opinion, simply because the customer wanted it.

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Re: About Vanguard advisors: opinions, thoughts?

Post by retiredjg » Thu Oct 06, 2016 4:46 pm

Miriam2 wrote:Our local Boglehead chapter recently hosted a Vanguard Personal Adviser at one of our local chapter meetings. We had a two-hour Q & A session with him, which was very informative.

He explained he will structure a portfolio with funds, active or passive, that the customer feels comfortable with or has a personal reason to put into their portfolio. He noted the personal adviser is not limited to index funds. For example, in response to my question, he said Wellington or Wellesley could be structured into a portfolio.

However, I assume he meant that the personal advisers can do this; I didn't take this to mean that a Vanguard adviser would or should put funds into a portfolio against the adviser's professional opinion, simply because the customer wanted it.

This is interesting and seems different from what I think we have heard from customers.

I wonder if he meant they can and do use actively managed funds when they are giving a "point in time" portfolio suggestion that is implemented and maintained by the customer. I don't recall any AUM program customers saying they have been "allowed" to do that with the assets under management.

It's getting a little confusing, isn't it?

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Re: About Vanguard advisors: opinions, thoughts?

Post by dbr » Thu Oct 06, 2016 4:52 pm

The brochure says:

Reasonable restrictions
When requesting a Financial Plan or enrolling in the
Ongoing Service, you’ll have the ability to impose
reasonable restrictions on the investments recommended
or chosen for the Portfolio. Specifically, you may be able
to request that certain non-Vanguard securities be held as
part of the Portfolio, provided that those securities meet
certain standards imposed by VAI. Certain investments
that you may request be held as part of the Portfolio, such
as individual stocks and bonds, stock-sector funds, and
other non-Vanguard funds, may not offer the same degree
of diversification, liquidity, or performance consistency
that may be available with the Vanguard Funds we
normally recommend.
If you request that such securities remain in the Financial
Plan or the Portfolio, VAI will analyze whether such
securities may fit into the overall stock or bond allocations
recommended for the Financial Plan or the Portfolio. When
analyzing securities, VAI will rely upon Vanguard’s asset
classification assessment based on information received
from third-party data providers in order to categorize these
investments. The Ongoing Service may retain such securities
upon your request as long as the resulting Portfolio meets
our standards of portfolio diversification.

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Re: About Vanguard advisors: opinions, thoughts?

Post by friar1610 » Thu Oct 06, 2016 7:04 pm

drzzzzz wrote:....we ultimately decided on the lowest percentage of international and guess will know in the future whether this was the correct decision for us.


If this was subsequently mentioned in this thread, I missed it. Would you mind sharing what that lowest percentage of international is? I'd be interested in both stock and bond percentages. (I am inferring that you meant the lowest percentage acceptable to Vanguard.)

Thank you.
Friar1610

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Re: About Vanguard advisors: opinions, thoughts?

Post by Philly_fan » Fri Oct 13, 2017 3:04 pm

It sounds like Vanguard Personal Advisor Service recommends mainly total us stock fund, total international stock fund, total us bond fund and total international bond fund. Do you know if they are also willing to offer a Swedroe/Merriman type portfolio including specific index funds related to small, value and emerging markets?

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Re: About Vanguard advisors: opinions, thoughts?

Post by retiredjg » Fri Oct 13, 2017 4:27 pm

Vanguard's PAS suggestion is not tilted to small caps or value. It is strictly whole market. Small, value, and emerging markets are all in there....at their market weights.

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Re: About Vanguard advisors: opinions, thoughts?

Post by dbr » Fri Oct 13, 2017 4:54 pm

retiredjg wrote:
Fri Oct 13, 2017 4:27 pm
Vanguard's PAS suggestion is not tilted to small caps or value. It is strictly whole market. Small, value, and emerging markets are all in there....at their market weights.
If memory serves there were one or two posts here reporting (claiming?) that Vanguard would not accept a customer for a PAS account that did not accept their standard asset recommendation. I don't know that to be true, but I don't think anyone has reported them actually recommending anything different.

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Re: About Vanguard advisors: opinions, thoughts?

Post by retiredjg » Fri Oct 13, 2017 5:26 pm

I do recall one post saying their advisor (not sure it was a PAS account) had recommended something different - It was odd. I wondered if there might have been a misunderstanding or something because it was definitely different from what we ordinarily see.

But yes, we've had a few posts which said if they wanted to some something other than the standard fare, that part of the person's account would have to be outside the PAS.

I've never talked to them, just reporting what I remember and hope it is accurate.

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Re: About Vanguard advisors: opinions, thoughts?

Post by drzzzzz » Fri Oct 13, 2017 5:48 pm

We have talked with them and used them - from my multiple conversations with Vanguard Personal Advisor they have a basic formula that they use with some variation within ranges (it might also be somewhat different based upon assets that you have in a taxable versus non-taxable account). If you have assets that you are not interested in selling (because of imbedded capital gains for example), one work around is to keep those stocks or mutual funds in a self-managed account. Someone asked about international stocks, as I recall they recommend up to about 40-50% in international stocks and I think as low as 30%, maybe 25% - these are issues you can try to negotiate with them. The other percentage in stocks is total market (for the most part (we had Vanguard Wellington - VWENX for example and kept it, but figured what percentage of VWENX is bond related versus stock related when figuring out percentage allocations). If you want to tilt toward small cap or some other asset class, I don't think they would do that for you, but you should ask them, and you can always do that by keeping those stocks/mutual funds in a self-directed (ie non-managed account). At some point your decision is really how comfortable you are in their approach and asset allocation. It doesn't make sense to go them, ask for advice and tell them what you want them to do - kinda defeats the purpose of their advisor service. If you are interested, you should talk to them since that costs nothing as I recall.

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Re: About Vanguard advisors: opinions, thoughts?

Post by Philly_fan » Fri Oct 13, 2017 8:36 pm

Thank you drzzzzzz.

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Re: About Vanguard advisors: opinions, thoughts?

Post by vested1 » 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.

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Re: About Vanguard advisors: opinions, thoughts?

Post by Veritas Simplex » Sat Oct 14, 2017 12:42 pm

With Vanguard PAS, gathering AUM with the .3% fee is the objective. Advisors are expected to convert a certain percentage of clients they prepare plans for to the ongoing PAS management. Advisors who meet the goal are rewarded and those who don't will probably earn less.

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Re: About Vanguard advisors: opinions, thoughts?

Post by Sandtrap » Sat Oct 14, 2017 12:54 pm

retiredjg wrote:
Fri Oct 13, 2017 5:26 pm
I do recall one post saying their advisor (not sure it was a PAS account) had recommended something different - It was odd. I wondered if there might have been a misunderstanding or something because it was definitely different from what we ordinarily see.

But yes, we've had a few posts which said if they wanted to some something other than the standard fare, that part of the person's account would have to be outside the PAS.

I've never talked to them, just reporting what I remember and hope it is accurate.
Very true.
I wrongly "assumed" that as a client with substantial assets that the special advisors assigned to me would "listen" to my concerns and suggestions beyond the standard fare.

I conferenced with them several times and it was the same "drive through window" approach. Each time, the advisor was pressed for time. If I spoke too long or had too many questions I was to reschedule for another conference (within their busy schedule).
One of the advisors was quite obnoxious and condescending. She was the professional. I was to listen and obey. Not good.

At some point I realized the "rut in the road" or "groove in the record" was not going to change and gave up.
At least for me, Vanguard without the diminishing personal services is still the best out there.

Saved by the Bogleheads.
j :D

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Re: About Vanguard advisors: opinions, thoughts?

Post by retiredjg » Sat Oct 14, 2017 1:02 pm

I guess we have to keep in mind that Vanguard's PAS is actually a semi-robo investment model. The investments are robo. The human advisor makes it semi-robo. All in all, not a bad deal if you are satisfied with what they are offering.

If one is looking for a full service advisor with a cafeteria style selection of funds....it most likely will cost more than .3%. Maybe you can get close to that number if your accounts are quite large.

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Re: About Vanguard advisors: opinions, thoughts?

Post by NYCguy » 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.
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 Sandtrap » Sat Oct 14, 2017 1:06 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.
+1
I have this in my IPS folder, instructions to "successor trustee", etc. Vanguard PAS.

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Re: About Vanguard advisors: opinions, thoughts?

Post by rkuklinski » 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.
'Who controls the past' ran the Party slogan, 'controls the future: who controls the present controls the past.'"

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