To Use Vanguard PAS Or Not

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barrydmd1
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Joined: Thu Apr 23, 2015 7:42 am

To Use Vanguard PAS Or Not

Post by barrydmd1 » Sat Dec 10, 2016 3:44 pm

I am age 72 and retired. The only income my wife and I have is Social
Security. I have $295,000 in 21 Vanguard funds that were set up for me
by a friend of mine who is a certified financial planner. I want to simplify
the portfolio with three or four balanced funds at Vanguard.


I have a small monthly income from the sale of a small business which will give
me enough money that I will not have to start drawing down from my portfolio
until two and a half years from now.


I have learned a lot about investing over the past 4 years, but I am no expert.
I have an interview set up in January with Vanguard Personal Advisor Service.
From reading the posts on Bogleheads forum, it seems that for the most part,
the advisors seem to favor placing investors in the four total stock and total
bond funds. The forum posters seem to agree that if you are at least a
little knowledgeable about investing, you should be able to manage your own
portfolio with a little help from Bogleheads.


For instance, I could do a 50/50 split of Lifestrategy Moderate Growth and
Conservative Growth which would give me a 50/50 stock-bond allocation.
In a few years, if I need to be more conservative , I could move to 100%
Conservative Growth. I’m a little hesitant about the 40% international position, though.


What do you think?

tomd37
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Location: Middle Tennessee

Re: To Use Vanguard PAS Or Not

Post by tomd37 » Sat Dec 10, 2016 5:17 pm

"$295,000 in 21 Vanguard funds that were set up for me by a friend of mine who is a certified financial planner." And you are claiming him as "a friend"? :oops:
Tom D.

retire57
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Re: To Use Vanguard PAS Or Not

Post by retire57 » Sat Dec 10, 2016 5:32 pm

This is just my short-term personal opinion regarding the need for the PAS as we have only used V-guard's service for 19 months.

If your goal is to simplify your portfolio, you can do that yourself with due diligence and a few mouse clicks. (Well, in your case more than a few. Why so many funds?)

For us, the value of the PAS is in the distribution part of the equation. Throughout our working years, I loved the saving and investing part but, now that I'm retired, have no desire to "work" at the income- management part.

I hope others with experience will chime in with their perspectives on the PAS.

bayview
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Location: WNC

Re: To Use Vanguard PAS Or Not

Post by bayview » Sat Dec 10, 2016 7:37 pm

retire57 wrote:This is just my short-term personal opinion regarding the need for the PAS as we have only used V-guard's service for 19 months.

If your goal is to simplify your portfolio, you can do that yourself with due diligence and a few mouse clicks. (Well, in your case more than a few. Why so many funds?)

For us, the value of the PAS is in the distribution part of the equation. Throughout our working years, I loved the saving and investing part but, now that I'm retired, have no desire to "work" at the income- management part.

I hope others with experience will chime in with their perspectives on the PAS.

My husband's family is now dealing with a trust that is splintered in multiple investments, many undesirable. For this reason, they are considering PAS. So ignorant question here: can you tell your PAS rep what investments you want, and they are OK with it, and handle all the distribution issues? Are they appropriate for/ can they administer small-to-medium sized trusts?
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

retire57
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Re: To Use Vanguard PAS Or Not

Post by retire57 » Sat Dec 10, 2016 10:45 pm

bayview wrote:
retire57 wrote:This is just my short-term personal opinion regarding the need for the PAS as we have only used V-guard's service for 19 months.

If your goal is to simplify your portfolio, you can do that yourself with due diligence and a few mouse clicks. (Well, in your case more than a few. Why so many funds?)

For us, the value of the PAS is in the distribution part of the equation. Throughout our working years, I loved the saving and investing part but, now that I'm retired, have no desire to "work" at the income- management part.

I hope others with experience will chime in with their perspectives on the PAS.

My husband's family is now dealing with a trust that is splintered in multiple investments, many undesirable. For this reason, they are considering PAS. So ignorant question here: can you tell your PAS rep what investments you want, and they are OK with it, and handle all the distribution issues? Are they appropriate for/ can they administer small-to-medium sized trusts?


Not sure about the trust question. But yes - we retain control of the choices and the advisor handles the transactions. Our discussions consist of goals, income needs, tax ramifications, and progress analysis.

JW-Retired
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Re: To Use Vanguard PAS Or Not

Post by JW-Retired » Sat Dec 10, 2016 11:32 pm

barrydmd1 wrote:I am age 72 and retired. The only income my wife and I have is Social
Security. I have $295,000 in 21 Vanguard funds that were set up for me
by a friend of mine who is a certified financial planner. I want to simplify
the portfolio with three or four balanced funds at Vanguard.

What do you think?

How long have you held these 21 Vanguard funds. I assume some of the funds have capital gains? Just be wary of realizing too much in capital gains and owing large taxes. If you "simplify" the $295,000 portfolio all in one year that could be a big mistake. Try to only realize enough gains per year to still leave you in the 15% tax bracket, where capital gain tax is zero.
JW
Retired at Last

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BL
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Re: To Use Vanguard PAS Or Not

Post by BL » Sun Dec 11, 2016 1:06 am

For instance, I could do a 50/50 split of Lifestrategy Moderate Growth and
Conservative Growth which would give me a 50/50 stock-bond allocation.
In a few years, if I need to be more conservative , I could move to 100%
Conservative Growth. I’m a little hesitant about the 40% international position, though.

Perhaps you could consider the Balanced Fund instead of the LS Moderate one as they are both about 60/40 but Bal. Fund doesn't have the internationals, AFAIK. That would lower the international without changing the AA you chose.

I have seen threads here where they say the PAS has several bond funds instead of one, and don't like to change the suggested funds. No personal knowledge here. If you are certain about what you want, then no need to hire someone anyway.

Dandy
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Re: To Use Vanguard PAS Or Not

Post by Dandy » Sun Dec 11, 2016 8:30 am

I am not a fan of VG TD or Life Strategy fans because VG often changes their composition. You might want to consider Balanced Index fund and add enough Wellesley Income fund to bring your equity allocation down, if needed. Now that means you are basically ignoring international equities and bonds. I don't feel that is a major issue especially later in retirement. Many feel differently.

retiredjg
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Re: To Use Vanguard PAS Or Not

Post by retiredjg » Sun Dec 11, 2016 11:05 am

barrydmd1 wrote:I am age 72 and retired. The only income my wife and I have is Social
Security. I have $295,000 in 21 Vanguard funds that were set up for me
by a friend of mine who is a certified financial planner. I want to simplify
the portfolio with three or four balanced funds at Vanguard.

It is quite possible you can simplify and do it yourself. However, if some or all of this money is in a taxable account (something not an IRA, 401k, etc.) it could be complicated getting to a simpler portfolio without a large tax hit.

If all of this money is in an IRA, something very simple like the LifeStrategy fund combination would be a good solution. However, if the 40% of stocks in international is worrisome for you, a simple 3 fund portfolio might be better - Total Stock, Total International, Total Bond. This would have to be rebalanced occasionally.

FXDXontherun
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Joined: Tue Nov 01, 2016 12:51 pm

Re: To Use Vanguard PAS Or Not

Post by FXDXontherun » Sun Dec 11, 2016 11:19 am

For us, the value of the PAS is in the distribution part of the equation. Throughout our working years, I loved the saving and investing part but, now that I'm retired, have no desire to "work" at the income- management part.

I hope others with experience will chime in with their perspectives on the PAS.


I recently signed on to the PAS program and am just getting underway with it as it will allow my wife and I to simplify things and make it easier for my wife should I pass before her. I echo the sentiments above except over time as I educate myself on the management/draw-down part of this, I would like to handle it myself but for now, the PAS service makes sense. I'd be interested in others experiences with PAS that have been using it for a few years.

Thanks

retiredjg
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Re: To Use Vanguard PAS Or Not

Post by retiredjg » Sun Dec 11, 2016 12:14 pm

FXDXontherun wrote: I'd be interested in others experiences with PAS that have been using it for a few years.

I don't think you'll get much useful information on that. Vanguard's Personal Advisor Service, in it's present AUM form, was launched about May 2015 - just a little over a year ago.

The service they had before they started this semi-robo AUM style was also called PAS so some answers you get are likely to be about more than just the current service model.

drzzzzz
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Re: To Use Vanguard PAS Or Not

Post by drzzzzz » Sun Dec 11, 2016 1:26 pm

We are using their service now for 4 months to manage part of our portfolio (both retirement which includes a traditional IRA, a small roth, and brokerage account). The account has more funds in it than I would have thought Vanguard would use (6 different bond funds in the IRA which allowed them to completely select how to allocate these funds (these include more corporate and international than I would have selected and I still don't appreciate why they were all selected especially since the percentages for each are different). Stocks are distributed across 5 funds in the brokerage account, plus another 5 that are in a self-managed brokerage account (the total of brokerage funds here might have been fewer if we allowed Vanguard more control here, but I didn't want to sell funds with embedded gains at this time). The representative has been attentive and these accounts were transferred from an outside institution so some of the decisions were about what to sell as much as what to buy and how to allocate. The spouse has no interest in managing funds so I was curious about how this will work as an alternative - having a contact person to answer questions and to manage the portfolio has been OK so far. The international exposure is where I have more mixed feelings, but deferred to the experts (why hire them and then tell them what to do, that would make less sense) and only the future will know if it is a good or bad decision. Their system also has what I view as some quirks such as using an average cost method or FIFO for reporting of basis on sales (they are discussing changing this) - I don't know yet how aggressively or when they tax loss harvest; and since it is a managed account I can't just go online and decide with a few clicks to transfer money between one mutual fund and another because stocks or bonds are going up today (so you have to be willing to give up some control and talk with your advisor, which is kinda the purpose behind having someone manage the account). Depending on your assets it might not have to be an all or none management by them - we left some things in a separate self-managed account (such as high yield bonds, some individual stocks, etc) since it didn't fit into their portfolio recommendation guidelines. It doesn't hurt to talk with them and see if they and you are on the same page. Good luck

RoboFan
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Re: To Use Vanguard PAS Or Not

Post by RoboFan » Sun Jun 18, 2017 5:58 pm

JW-Retired wrote:
barrydmd1 wrote:I am age 72 and retired. The only income my wife and I have is Social
Security. I have $295,000 in 21 Vanguard funds that were set up for me
by a friend of mine who is a certified financial planner. I want to simplify
the portfolio with three or four balanced funds at Vanguard.

What do you think?
How long have you held these 21 Vanguard funds. I assume some of the funds have capital gains? Just be wary of realizing too much in capital gains and owing large taxes. If you "simplify" the $295,000 portfolio all in one year that could be a big mistake. Try to only realize enough gains per year to still leave you in the 15% tax bracket, where capital gain tax is zero.
JW

I think I'm in agreement with the majority of Bogleheads in asserting that most individuals should - with a bit if forthought - be able manage their portfolios without PAS. I would hope the majority of posters would also agree with JW above comment related to taxes. I do not really understand the vehemence regarding too many funds. For various reasons, the number of funds in my portfolio has increased over the years. Started with everything in 2 equity funds - US and foreign. Got a bit older added US and foreign bonds. Overran my 401 added tax-free bonds. Later added some junk bonds just for funds. Changed jobs, with a roll-over at Vanguard (i,e. kept the funds I had) and choose similar, but not the same, funds at the new job. How am I hurting myself with too many funds? Vanguard's portfolio analyzer tracks everything flagging anything that's not in line with my target allocation. It's not that hard to maintain - the computer does all the work.

Taking a tax hit for no other reason than having a simpler portfolio makes no sense.

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