Vanguard Personal Advisor Services vs Roboadvisors

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Godzilla
Posts: 75
Joined: Sun May 13, 2012 2:28 pm

Vanguard Personal Advisor Services vs Roboadvisors

Post by Godzilla »

Hi,

This is a general question to clear up confusion on my part:

I have used Vanguard Personal Advisor Services (VPAS) in the past. I decided to simply handle rebalancing myself after about a year with their service. I haven't used a roboadvisor from other companies. How do roboadvisors compare to VPAS? Are they less expensive? (VPAS charged 0.3% of assets under management per year).

Any hidden fees with roboadvisors in general?

I just could not see the need to pay VPAS 0.3% simply to rebalance....

Thanks all.
livesoft
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Re: Vanguard Personal Advisor Services vs Roboadvisors

Post by livesoft »

You want the short answer: Roboadvisors are different from Vanguard in that you cannot call up a real person and talk to them about your personal portfolio. I also think that Roboadvisors have a long-term business plan of selling themselves to a large financial firm.

Long answer is in this article by Kitces: https://www.kitces.com/blog/robo-adviso ... ion-costs/
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kenner
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Re: Vanguard Personal Advisor Services vs Roboadvisors

Post by kenner »

Godzilla wrote: I have used Vanguard Personal Advisor Services (VPAS) in the past. I decided to simply handle rebalancing myself after about a year with their service.
If you already have a solid investment portfolio that will suit your financial needs for the long term (with the exception of occasional re-balancing), you may not need to pay an advisor at all.
azanon
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Re: Vanguard Personal Advisor Services vs Roboadvisors

Post by azanon »

I can speak from the perspective of Betterment since I was with them. They charge 0.15% for AUM if you have a portfolio north of 100K (no other hidden fees). They differ from VPAS in that the way their system is designed, it's not really designed for human interaction. They have a goal-based system where you fill out the menus (time horizon, purpose of the money, etc), and then a portfolio is recommended for you that you can deviate to varying degrees. Depending on what you're comparing their portfolio to - let's say a Vanguard Lifestrategy fund - that 0.15% could actually be even less since Betterment uses low-cost (mostly) vanguard ETFs, which are generally cheaper than the "investor" shares used by Lifestrategy. In short, vs. lifestrategy, you're less than 10 basis points difference.

Betterment's biggest appeal would likely be to an all taxable account. Their Tax-loss harvesting+ is a pretty nifty feature.

They have some other cool tools like Retireguide that help show you if you're on track for retirement (taking into consideration Pensions, SS, etc). It's not all that different from what some other calculators can do, like the one built into Quicken software.

This all being said, give the 3-fund portfolio a try. It's super cheap, and just adjust the % bonds to your risk/time horizon profile.
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GerryL
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Re: Vanguard Personal Advisor Services vs Roboadvisors

Post by GerryL »

During a Vanguard webinar, one of the panelists said that a key service the PAS provides is to help people stay on track with their plan when economic and business news is making them nervous. In other words, hand holding. This type of service -- helping you avoid reacting to short-term events -- can be worth the money for people who need that kind of support. I don't think roboadvisors can do that -- at least not at this time. So up to you to decide if that is important to you.
livesoft
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Re: Vanguard Personal Advisor Services vs Roboadvisors

Post by livesoft »

GerryL wrote: This type of service -- helping you avoid reacting to short-term events -- can be worth the money for people who need that kind of support. I don't think roboadvisors can do that -- at least not at this time. So up to you to decide if that is important to you.
Actually, roboadvisors could prevent you from logging in and changing your investments. Treasury Direct already locks people out of their accounts routinely, so this would not be unprecedented.
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Crisium
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Re: Vanguard Personal Advisor Services vs Roboadvisors

Post by Crisium »

^Betterment took some heat for a temporary pause during the Brexit vote aftermath.

https://www.google.com/webhp?#q=betterment+brexit
Topic Author
Godzilla
Posts: 75
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Re: Vanguard Personal Advisor Services vs Roboadvisors

Post by Godzilla »

Thanks all. Mr. Kitces' article was great by the way.

Yeah, I sussed out that what VPAS was offering was really hand holding services. I think I am more likely to benefit from having my hand held by Bogleheads rather than VPAS - if I felt that VPAS would offer a material advantage in hand holding I would have remained with them.

I use the funds and portfolio construction that VPAS worked up for me initially for my ongoing financial plan. It simply duplicated a target date portfolio though so I got the strong impression that behind the curtain a computer program was in charge at VPAS.

I will look into Betterment just to satisfy my curiosity.

All replies were great and answered my questions. This forum is invaluable to me.

Thanks everybody.
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