Vanguard Investment Advice

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bertilak
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Vanguard Investment Advice

Post by bertilak »

This is my second experience with getting investment advice from a Vanguard CFP. The advice comes in the form of a written asset allocation and recommended amounts for each asset class.

The allocation I was given is broken down into the following asset classes and percentages. The funds involved are given later in the document but are in the form of dollar amounts, not percentages.
  • 21% US Large Cap Stock
    09% US Mid/small Cap Stock
    20% International Stock
    14% US Short-term Bond
    14% US Intermediate-term Bonds
    07% US Long-term Bonds
    15% International Bonds
I'm sure those exact percentages were thought out carefully, but by some odd coincidence those percentages come out EXACTLY the same as contained in the total-market index funds: Stock, Bond, and the two International equivalents. A pretty simple portfolio but gussied up to look like some sophisticated, very precise, carefully devised, advice broken down to some decidedly NOT round numbers. It takes three full 8.5 x 11 pages to list.

Note that the 50/50 stock/bond split was MY INPUT that started this whole thing off AND I also said I wanted to include international in the allocation. The only things original are the US/International splits.

There are three more pages to identify which funds to put into which of my three accounts (Taxable, IRA, Inherited IRA) and specified by exact dollar mounts instead of percentages making the advice out-of-date the very next day. I had to calculate the percentages of each fund in each account as that was not listed anywhere.

It seemed deliberately designed to be complex and confusing to encourage further help from Vanguard using their Personal Advisor Service (PAS) for which they included a TWELVE PAGE sales pitch.

Once deciphered, the plan is a straight-forward four-fund portfolio, almost exactly what I would have done on my own. I expected this but simply wanted to hear it from someone else to make sure there weren't some clever things I hadn't thought of. What I didn't expect was the convoluted presentation.

Another thing I didn't expect: they did not offer to make the trades needed to implement this without my buying into the PAS. The last time I went to VG for similar advice they DID offer to implement the trades but there was a catch: the advice did not consider any assets not held by VG. Even if held by VG they needed to be VG funds or EFTs -- not any non-VG stuff in the accounts.

On a more positive note, there were some complex things to do involving individual bonds that their bond desk (and also their SENIOR bond desk) did do for me but that was quite independent of their free advice/planning service.
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123
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Re: Vanguard Investment Advice

Post by 123 »

Over the years I've used a lot of risk calculators at Vanguard, Fidelity, Schwab etc and the results I usually get come reasonable close to a suitable Target Retirement Fund or one of the LifeStrategy type funds (depending on how I tweak the question responses). So that tells me that their models are pretty consistent. Why fight it? Keep it simple.

Edited to add:
The 12-page sales pitch may be extraneous info to you, me, or most Bogleheads. But those 12 pages likely contain concepts that are new to many investors.
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Re: Vanguard Investment Advice

Post by livesoft »

Yes, people have reported on the forum an asset allocation of L% large-cap and MS% mid/small-cap listed by Vanguard, but then the Total Stock Market fund was used for both. The posters were somewhat confused by this.

The Vanguard Portfolio Watch tool will do something similar.

It is possible that Vanguard chose to do it this way if clients saw some breakdown of market-cap from other financial institutions, but who knows?
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Re: Vanguard Investment Advice

Post by mega317 »

Are you upset? You went to Vanguard for advice so you had to figure they were going to do something like a four fund portfolio. You gave them one constraint with the stock/bond ratio. So the only decisions left to make are the international proportions. I don't know if they were intending to make it look confusing, or if most of their clients need such specific advice as how many dollars in each fund.
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Re: Vanguard Investment Advice

Post by Dandy »

Vanguard's forte is providing low cost index and to some extent "active" mutual funds (that aren't overly pricey or active). To me that is basically it. They have a great reputation for what they do well. But, providing great low cost funds doesn't give them any edge or expertise in providing investment advice. When it comes to that while I would trust their integrity more than most firms - they have no special expertise.

Also, I would surmise that Vanguard keeps a rather tight rein on the advice given out - they have a certain corporate approach e.g. stressing international equities and bonds that probably have to be included in their recommendations. That isn't evil it is just necessary to not have their experts go rouge. If the Vanguard "experts" decide that commodities should be a mainstream investment you will probably see that included in their advice and in their TD and Life Strategy Funds. It does make some sense. But what you are not getting is someone starting with a clean sheet of paper and gearing your investments to your very individual risk tolerance, non vanguard holdings, etc.
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Re: Vanguard Investment Advice

Post by carolinaman »

It may have seemed unduly complex but for some it would be a revelation. Of course they are going to pitch their services. But in the end, their advice is very sound and has very low costs. Contrast that with some complex plan presented by many financial advisers that have 20, 30 or more investments with high fees plus advisory fees. These high cost plans present an aura of complexity that is unnecessary and confusing even to experienced investors, and do not serve the interests of investors very well.
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Re: Vanguard Investment Advice

Post by bertilak »

carolinaman wrote: Sat Dec 09, 2017 7:53 am It may have seemed unduly complex but for some it would be a revelation. Of course they are going to pitch their services. But in the end, their advice is very sound and has very low costs. Contrast that with some complex plan presented by many financial advisers that have 20, 30 or more investments with high fees plus advisory fees. These high cost plans present an aura of complexity that is unnecessary and confusing even to experienced investors, and do not serve the interests of investors very well.
I agree the advice itself is good and reasonable, but I was a put off by the obfuscated way they present it. 9% of this and 14% of that LOOKS highly personalized but it is just the fall-out of cap-weighted indexes. As customers add new money or re-balances, how are they to relate things back to the original recommendations? Do they need to increase small/mid-cap but not large-cap? I guess they DO need PAS to figure that all out!
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Re: Vanguard Investment Advice

Post by dbr »

I think we have discovered that the actual recommendation is to hold total US and ex-US stock and bond index funds. The breakout by size and duration is simply how those funds distribute and is not a calculation of what to hold by asset sub classes. The whole thing seems confusing and disingenuous. What they are trying to accomplish by that is beyond me.
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Re: Vanguard Investment Advice

Post by bertilak »

dbr wrote: Sat Dec 09, 2017 8:28 am I think we have discovered that the actual recommendation is to hold total US and ex-US stock and bond index funds. The breakout by size and duration is simply how those funds distribute and is not a calculation of what to hold by asset sub classes. The whole thing seems confusing and disingenuous. What they are trying to accomplish by that is beyond me.

I'm sure I don't know ether but I can give a couple of possibilities
:
  • They want people to take the advice seriously and believe (probably correctly) the general public needs to see something complex or it won't get any respect. It has to LOOK sophisticated.
  • Once people respect the plan many (most?) might be better off handing it over to the PAS instead of managing it themselves and remaining open to all the shysters out there who will be happy to show them a "better" plan. After all, those people are REALLY good at selling things.
The above thoughts are after reading some of the responses to my OP and looking at things with an open mind and an open heart. VG has mostly canned advice and it is aimed at those who haven't been following Bogleheads for a few years.

When I first talked to the CFP he tried to start a conversation about my signing up for PAS once we had settled on a plan. I told him if the plan was so complex I couldn't manage it myself I would consider it a failure of a plan.
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The Three-Fund Portfolio Makes Investing Simple

Post by Taylor Larimore »

I'm sure those exact percentages were thought out carefully, but by some odd coincidence those percentages come out EXACTLY the same as contained in the total-market index funds: Stock, Bond, and the two International equivalents. A pretty simple portfolio but gussied up to look like some sophisticated, very precise, carefully devised, advice broken down to some decidedly NOT round numbers. It takes three full 8.5 x 11 pages to list.
Bertilak:

Perhaps the simple Three-Fund Portfolio will solve your problem.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Vanguard Investment Advice

Post by afan »

I seems highly unlikely that many people would need help moving from a different allocation to the 4-found portfolio Vanguard recommends. For those who do, there is PAS.

I assume Vanguard did this consultation for free? Since it does cost them some money and staff time to collect the information and give feedback (the actual calculation of allocation is of course done automatically once given the inputs). There are two ways to collect money to cover these costs:
1. Expense ratios on the funds. But the ERs are so low that there is little profit.
2. Signing people up for PAS.

I assume showing the asset allocation is useful to clients who are thinking in those terms or comparing to recommendations from other advisors.

For those of us who have accepted market cap weighting the percent in large, mid and small caps is not particularly interesting. The cut points between these parts of the stock market are arbitrary. Change the definition of mid vs small and you change the percent allocation to each within Total Stock Market without changing the portfolio at all. But other advisors make a big deal out of this, so Vanguard provides the information.
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Re: Vanguard Investment Advice

Post by dbr »

The 9-box M* system of stock and bond styles is used by a lot of people. Vanguard publishes a version of that concept on many of its fund data pages. f they want people to know what they have, why not publish the style box rather. That would also include value as well as size and credit quality as well as duration. That would be informative compared to a listing that looks like a list of separate funds that may be tilted away from total market when in fact they are selling the investor a total market fund. Are they trying to imply, for example, that one service you are buying is rebalancing among those asset classes when in fact a single TSM fund automatically rebalances?
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Re: Vanguard Investment Advice

Post by tibbitts »

bertilak wrote: Fri Dec 08, 2017 5:19 pm This is my second experience with getting investment advice from a Vanguard CFP. The advice comes in the form of a written asset allocation and recommended amounts for each asset class.

The allocation I was given is broken down into the following asset classes and percentages. The funds involved are given later in the document but are in the form of dollar amounts, not percentages.
  • 21% US Large Cap Stock
    09% US Mid/small Cap Stock
    20% International Stock
    14% US Short-term Bond
    14% US Intermediate-term Bonds
    07% US Long-term Bonds
    15% International Bonds
I'm sure those exact percentages were thought out carefully, but by some odd coincidence those percentages come out EXACTLY the same as contained in the total-market index funds: Stock, Bond, and the two International equivalents. A pretty simple portfolio but gussied up to look like some sophisticated, very precise, carefully devised, advice broken down to some decidedly NOT round numbers. It takes three full 8.5 x 11 pages to list.

Note that the 50/50 stock/bond split was MY INPUT that started this whole thing off AND I also said I wanted to include international in the allocation. The only things original are the US/International splits.

There are three more pages to identify which funds to put into which of my three accounts (Taxable, IRA, Inherited IRA) and specified by exact dollar mounts instead of percentages making the advice out-of-date the very next day. I had to calculate the percentages of each fund in each account as that was not listed anywhere.

It seemed deliberately designed to be complex and confusing to encourage further help from Vanguard using their Personal Advisor Service (PAS) for which they included a TWELVE PAGE sales pitch.

Once deciphered, the plan is a straight-forward four-fund portfolio, almost exactly what I would have done on my own. I expected this but simply wanted to hear it from someone else to make sure there weren't some clever things I hadn't thought of. What I didn't expect was the convoluted presentation.

Another thing I didn't expect: they did not offer to make the trades needed to implement this without my buying into the PAS. The last time I went to VG for similar advice they DID offer to implement the trades but there was a catch: the advice did not consider any assets not held by VG. Even if held by VG they needed to be VG funds or EFTs -- not any non-VG stuff in the accounts.

On a more positive note, there were some complex things to do involving individual bonds that their bond desk (and also their SENIOR bond desk) did do for me but that was quite independent of their free advice/planning service.
Are you saying you have individual bonds that were (weren't) included in the recommendation? I'm confused.

I find the dollar-only recommendation a little unusual, but otherwise, given that you have both taxable and deferred accounts, what would be your recommendation if you had been Vanguard? I guess, as someone who holds about 50 funds from various providers, I don't find this complex. I do wonder what the exact fund recommendations were - I assume about 10-12 funds?
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Re: Vanguard Investment Advice

Post by bertilak »

tibbitts wrote: Sun Dec 10, 2017 8:50 am Are you saying you have individual bonds that were (weren't) included in the recommendation? I'm confused.
That is true. Perhaps the confusion has dissipated?

ACTUALLY, All my inherited assets WERE included in the recommendations -- recommended at ZERO percent. Mixed in with that long list were the recommended index funds with NON-ZERO percents. All were in dollars with only bottom lines (by sub-divided asset classes) given as those odd (eg 14%) percentages. NO bottom line by fund nor equivalent major asset class -- neither percents nor dollars.
I find the dollar-only recommendation a little unusual, but otherwise, given that you have both taxable and deferred accounts, what would be your recommendation if you had been Vanguard?
The recommendation would have been the same. The presentation different.
I guess, as someone who holds about 50 funds from various providers, I don't find this complex. I do wonder what the exact fund recommendations were - I assume about 10-12 funds?
Four index funds:
  1. Total US Stock
  2. Total International Stock
  3. Total US Bond
  4. Total International Bond
Split across three accounts:
  1. Individual taxable
  2. Traditional IRA
  3. Inherited IRA
Of the twelve (3x4=12) possibilities only six were used do to constraints on:
  • Tax efficiency
  • Total dollars in each of the two IRAs
I'd hate to scale this up from 4 to 50 funds!
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Re: Vanguard Investment Advice

Post by nedsaid »

123 wrote: Fri Dec 08, 2017 5:35 pm Over the years I've used a lot of risk calculators at Vanguard, Fidelity, Schwab etc and the results I usually get come reasonable close to a suitable Target Retirement Fund or one of the LifeStrategy type funds (depending on how I tweak the question responses). So that tells me that their models are pretty consistent. Why fight it? Keep it simple.

Edited to add:
The 12-page sales pitch may be extraneous info to you, me, or most Bogleheads. But those 12 pages likely contain concepts that are new to many investors.
This confirms my suspicion that Vanguard Advisory Service will put you into what amounts to a LifeStrategy or a Target Date Retirement Fund but charge you the extra 0.30%. A lot of folks could just go with the LifeStrategy or Target Date fund and save the advisory fee. In Bertilak's case, they did some individual bonds too.

The thing is, if you go to a firm for advice, you are going to have to eat their cooking. Vanguard is pretty strong on allocating stocks 60% US/40% International and bonds 70% US/30% International. They hire a whole team of experts to come up with model portfolios and it wouldn't make sense if their advisors could willy-nilly deviate from those models. If you order hamburgers from McDonald's, it doesn't make much sense to complain that they don't taste like Burger King. If you want Burger King, go to Burger King.

If you read my posts, I give pretty standard advice too. I advocate for anywhere from 20% to 50% of stocks being invested internationally and say that International Bonds are entirely optional. I have also advised investors to consult Target Date Portfolios for Vanguard, Fidelity, and T. Rowe Price for a guide to age appropriate asset allocation and as model portfolios. Pretty much, piggy back off the recommendations of experts and tweak a bit where you might want things a bit different. The thing is, my advice is pretty much eyeballing and educated guesses. The big fund companies have really smart experts and really powerful software and computer hardware cranking away 24-7.

I guess it comes down to ego. If I plunk down money, I want some attention and I want some customization. Doesn't hurt to tell me how brilliant and good looking I am. :wink: And to laugh at my jokes. :wink: The reality is, we all want to be special though cookie cutter portfolios are probably just as good as customized portfolios. So Bertilak got a cookie cutter portfolio but got special help with individual bonds. With Vanguard, that is probably as good as it is going to get.

So Bertilak, if it makes you feel good, I will say that you are just utterly brilliant. Haven't met you in person, but you are probably good looking too. Feel better now? I'll do that for free. You don't have to pay me 0.30% a year to say that. :wink:
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Re: Vanguard Investment Advice

Post by bertilak »

nedsaid wrote: Sun Dec 10, 2017 10:33 amSo Bertilak got a cookie cutter portfolio but got special help with individual bonds. With Vanguard, that is probably as good as it is going to get.

So Bertilak, if it makes you feel good, I will say that you are just utterly brilliant. Haven't met you in person, but you are probably good looking too. Feel better now? I'll do that for free. You don't have to pay me 0.30% a year to say that. :wink:
I have to agree with most of that. :sharebeer (Buy yourself a beer and put it on my tab.)

But a couple of misconceptions:

I did not pay a dime for any of the recommendations. It was a once-a-year (I think) free consultation. The .30% is what it would cost for PAS which am not enrolled in. I didn't go for their sales pitch. See my earlier comment: A plan I can't manage myself is a failed plan. (Now estate planning is different. I'm not there yet.)

I got no special help with the bonds. I paid the full sales commission which, for bonds, is steep -- at least the kinds I held. Six bonds totaled $233 in commissions, ranging from $10 to $50 each. The most expensive were the mortgage-backed bonds. I don't even know what the bid-ask spread was.
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Re: Vanguard Investment Advice

Post by John Laurens »

Yes PAS is basically a LS Fund with a 0.3% upcharge.

Regards,
John
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Re: Vanguard Investment Advice

Post by tibbitts »

bertilak wrote: Sun Dec 10, 2017 10:10 am
tibbitts wrote: Sun Dec 10, 2017 8:50 am Are you saying you have individual bonds that were (weren't) included in the recommendation? I'm confused.
That is true. Perhaps the confusion has dissipated?

ACTUALLY, All my inherited assets WERE included in the recommendations -- recommended at ZERO percent. Mixed in with that long list were the recommended index funds with NON-ZERO percents. All were in dollars with only bottom lines (by sub-divided asset classes) given as those odd (eg 14%) percentages. NO bottom line by fund nor equivalent major asset class -- neither percents nor dollars.
I find the dollar-only recommendation a little unusual, but otherwise, given that you have both taxable and deferred accounts, what would be your recommendation if you had been Vanguard?
The recommendation would have been the same. The presentation different.
I guess, as someone who holds about 50 funds from various providers, I don't find this complex. I do wonder what the exact fund recommendations were - I assume about 10-12 funds?
Four index funds:
  1. Total US Stock
  2. Total International Stock
  3. Total US Bond
  4. Total International Bond
Split across three accounts:
  1. Individual taxable
  2. Traditional IRA
  3. Inherited IRA
Of the twelve (3x4=12) possibilities only six were used do to constraints on:
  • Tax efficiency
  • Total dollars in each of the two IRAs
I'd hate to scale this up from 4 to 50 funds!
It surprises me they would use total bond at all. Generally you would want different bonds in taxable vs. deferred. Similarly with international you may have tax considerations in determining the placement.
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Re: Vanguard Investment Advice

Post by nedsaid »

bertilak wrote: Sun Dec 10, 2017 11:11 am
nedsaid wrote: Sun Dec 10, 2017 10:33 amSo Bertilak got a cookie cutter portfolio but got special help with individual bonds. With Vanguard, that is probably as good as it is going to get.

So Bertilak, if it makes you feel good, I will say that you are just utterly brilliant. Haven't met you in person, but you are probably good looking too. Feel better now? I'll do that for free. You don't have to pay me 0.30% a year to say that. :wink:
I have to agree with most of that. :sharebeer (Buy yourself a beer and put it on my tab.)

But a couple of misconceptions:

I did not pay a dime for any of the recommendations. It was a once-a-year (I think) free consultation. The .30% is what it would cost for PAS which am not enrolled in. I didn't go for their sales pitch. See my earlier comment: A plan I can't manage myself is a failed plan. (Now estate planning is different. I'm not there yet.)

I got no special help with the bonds. I paid the full sales commission which, for bonds, is steep -- at least the kinds I held. Six bonds totaled $233 in commissions, ranging from $10 to $50 each. The most expensive were the mortgage-backed bonds. I don't even know what the bid-ask spread was.
I was having a little fun over this. The Vanguard CFP made some recommendations and now you can make an informed decision. The thing is, many of us here are seasoned investors and what seems elementary to many of us might be a revelation to others. You got a good but standard portfolio recommendation and you can feel good that a second set of eyes took a look at what you are doing. Sounds to me like you are doing just fine.
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Re: Vanguard Investment Advice

Post by bertilak »

nedsaid wrote: Sun Dec 10, 2017 4:52 pm a second set of eyes took a look at what you are doing.
A second set of eyes is what I was after; just in case I was wearing blinkers and forgot to take them off!
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Re: Vanguard Investment Advice

Post by hale2 »

bertilak wrote: Sat Dec 09, 2017 8:49 pm
dbr wrote: Sat Dec 09, 2017 8:28 am I think we have discovered that the actual recommendation is to hold total US and ex-US stock and bond index funds. The breakout by size and duration is simply how those funds distribute and is not a calculation of what to hold by asset sub classes. The whole thing seems confusing and disingenuous. What they are trying to accomplish by that is beyond me.

I'm sure I don't know ether but I can give a couple of possibilities
:
  • They want people to take the advice seriously and believe (probably correctly) the general public needs to see something complex or it won't get any respect. It has to LOOK sophisticated.
  • Once people respect the plan many (most?) might be better off handing it over to the PAS instead of managing it themselves and remaining open to all the shysters out there who will be happy to show them a "better" plan. After all, those people are REALLY good at selling things.
The above thoughts are after reading some of the responses to my OP and looking at things with an open mind and an open heart. VG has mostly canned advice and it is aimed at those who haven't been following Bogleheads for a few years.

When I first talked to the CFP he tried to start a conversation about my signing up for PAS once we had settled on a plan. I told him if the plan was so complex I couldn't manage it myself I would consider it a failure of a plan.
Looks like Vanguard PAS is just like other companies that sell AUM, give a cookie cutter portfolio that appears to be too complex for someone to do on their own. I guess they figure if this type of thing helps sales and other firms, Vanguard may as well profit using the same technique.
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Re: Vanguard Investment Advice

Post by dbr »

hale2 wrote: Mon Dec 11, 2017 9:24 am

Looks like Vanguard PAS is just like other companies that sell AUM, give a cookie cutter portfolio that appears to be too complex for someone to do on their own. I guess they figure if this type of thing helps sales and other firms, Vanguard may as well profit using the same technique.
As a person who gets just really angry at investors being ripped off by AUM investments, I am almost even ready to admit that, once the cost is down to 0.3% and the funds are Vanguard funds, that some people could be helped by using VPAS. A hope is that they wean themselves of this and save the cost. I agree Vanguard probably sees this as a needed venture to keep people coming to Vanguard funds.
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Re: Vanguard Investment Advice

Post by bertilak »

hale2 wrote: Mon Dec 11, 2017 9:24 am Looks like Vanguard PAS is just like other companies that sell AUM, give a cookie cutter portfolio that appears to be too complex for someone to do on their own. I guess they figure if this type of thing helps sales and other firms, Vanguard may as well profit using the same technique.
True but VGs PAS does recommend a simple mix of nice low-cost index funds (as some others also do) and their service is reasonably priced.

Added:
dbr wrote: Mon Dec 11, 2017 9:30 am AI am almost even ready to admit that, once the cost is down to 0.3% and the funds are Vanguard funds, that some people could be helped by using VPAS.
Agreed. I am still thinking about estate planing that includes some trusts with gifted money. The catch is I want to retain some control over how the trust is administered and my lawyer says I cannot be the executor of such a trust or it won't count as a gift.

My very vague idea so far is to have VG's trust department administer it using their PAS. Still waiting for a call-back on the feasibility of this. The problem might be that the trusts will be too small to qualify for VG's trust service.
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Re: Vanguard Investment Advice

Post by statman »

Well, let me briefly record recommendations from a Vanguard CFP (apparently a senior manager based on my portfolio size and the fact that I am considering VPAS for my wife after my demise). I completed the VPAS data form and gave some added information about my situation. He had clearly become familiar with what I submitted. I would stress is that these appear to be individual recommendations for my personal situation, NOT a hidden target-date fund as some posters have asserted. He did say that VPAS "would make" these moves, over time because of tax issues. That concerns me,as I'd like more input.

1. I hold 50/50 domestic/international equities. He says VG recommends a max of 40% international because there is little diversification benefit from a higher %. I agreed to move to 60/40. He pointed out a specific single exchange that would accomplish this and also move my international AA close to Total International Stock (see 2 below). He had done his homework.

2. I tilt toward small and value. He says VG believes that total market funds are preferred. No more than 10% above total market weight for small value. I am still pondering this.

3. I am entirely in tax-exempt bond funds. He agreed with this because of tax bracket. Hence, for example, no international or corporate bonds are recommended for me.

4. I am roughly 2/3 IT and 1/3 ST bonds. He suggested Limited Term in place of Short Term and adding some Long Term (all muni funds). I disagree with this, at least when the yield curve is as flat as now.
mega317
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Re: Vanguard Investment Advice

Post by mega317 »

statman wrote: Mon Dec 11, 2017 6:25 pm 3. I am entirely in tax-exempt bond funds. He agreed with this because of tax bracket. Hence, for example, no international or corporate bonds are recommended for me.
Do you have any tax-advantaged accounts at all?
Finridge
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Re: Vanguard Investment Advice

Post by Finridge »

bertilak wrote: Fri Dec 08, 2017 5:19 pm This is my second experience with getting investment advice from a Vanguard CFP. The advice comes in the form of a written asset allocation and recommended amounts for each asset class.

The allocation I was given is broken down into the following asset classes and percentages. The funds involved are given later in the document but are in the form of dollar amounts, not percentages.
  • 21% US Large Cap Stock
    09% US Mid/small Cap Stock
    20% International Stock
    14% US Short-term Bond
    14% US Intermediate-term Bonds
    07% US Long-term Bonds
    15% International Bonds
Did he explain why he's recommending two different domestic stock funds instead of the Total Stock Market Fund? Or why he's recommending three different domestic bond funds instead of the Total Mond Market Fund?
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Re: Vanguard Investment Advice

Post by Finridge »

A 0.3% asset-based fee for VPAS might sound inexpensive, and it is inexpensive compared to Well Fargo or Merrill Lynch. And it's probably not a bad idea for novices just starting out with small (dollar size) portfolios.

But if you think about, if you are following the Boglehead approach, it really isn't more work to come up with a plan for a large dollar size portfolio. If you're getting a fee consultation with a Vanguard CFP without paying for VPAS, I expect you have at least $1 million at Vanguard, correct? Congratulations. However, with a portfolio of this size, if you need a CFP that you can consult with, it might be less expensive to find a good fee-only CFP that you pay per hour, rather then paying the asset-based fee.
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bertilak
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Re: Vanguard Investment Advice

Post by bertilak »

Finridge wrote: Tue Dec 12, 2017 12:09 am
Did he explain why he's recommending two different domestic stock funds instead of the Total Stock Market Fund? Or why he's recommending three different domestic bond funds instead of the Total Mond Market Fund?
You've made my point about obfuscation. That is NOT a list of recommended funds but a list of asset classes. He only recommended four funds: US and International versions of total stock and total bond. As I have been trying to say, I have no problem with what was recommended, just the confusing way it was presented.

So let me UN-obfuscate that list:
  • A. 21% US Large Cap Stock
    A. 09% US Mid/small Cap Stock

    B. 20% International Stock

    C. 14% US Short-term Bond
    C. 14% US Intermediate-term Bonds
    C. 07% US Long-term Bonds

    D. 15% International Bonds
A, B, C, and D are the four funds:
  1. is VTSAX (Total US Stock)
  2. is VTIAX (Total International Stock)
  3. is VBTLX (Total US Bond)
  4. is VTABX (Total International Bond)
The percentage breakdowns of funds A and C are simply what you get when you use those funds. That part is UNPLANNED. The ACTUAL plan is to use cap-weighted, total market, index funds. Those (impressively precise) percentages just happen to be how the sub-classes of those total indexes are (somewhat arbitrarily) defined. They are NOT the CFP's carefully researched, personal allocations just for me.

To drive that in: The recommendation for US bonds is not 14%+14%+7%. It is simply a recommendation for 30% VBTLX. The 14/14/7 breakdown is the inherent makeup of a 30% VBTLX allocation.

I guess I have put the lie to my signature because I have had to say the same thing many times in this thread!
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
dbr
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Re: Vanguard Investment Advice

Post by dbr »

Why the obfuscation is the question on this thread. We don't know why. This is the second thread I can remember recently involving the same issue.
Finridge
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Re: Vanguard Investment Advice

Post by Finridge »

Sorry, I misunderstood the first time. Thanks for the additional explanation.

Looks to me like he's trying to justify his job by making it look like it is harder and take more work then it actually does.

I don't care what the stated corporate philosophy of Vanguard is. When they start a service like the (for pay) VPAS, it creates its own perverse incentives, financial and otherwise. I've noticed that since they've started this "service" the reps that I speak to have become a lot less helpful than they have been in the past, and have spent a lot more time trying to steer me towards paying for VPAS.
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Taylor Larimore
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Re: Vanguard Investment Advice

Post by Taylor Larimore »

Finridge wrote: Tue Dec 12, 2017 2:41 pm
Looks to me like he's trying to justify his job by making it look like it is harder and take more work then it actually does.
Finridge:

Bertilak has clearified his opening post:
He (the Vanguard advisor) only recommended four funds: US and International versions of total stock and total bond.
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Vanguard Investment Advice

Post by bertilak »

Taylor Larimore wrote: Tue Dec 12, 2017 3:05 pm Bertilak has clearified his opening post:
He (the Vanguard advisor) only recommended four funds: US and International versions of total stock and total bond.
Or as I like to put it, four of the three funds in the three-fund portfolio! :happy

Taylor, I'm with you in spirit but took one step over the line!
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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Taylor Larimore
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Re: Vanguard Investment Advice

Post by Taylor Larimore »

bertilak wrote: Tue Dec 12, 2017 3:39 pm
Taylor Larimore wrote: Tue Dec 12, 2017 3:05 pm Bertilak has clearified his opening post:
He (the Vanguard advisor) only recommended four funds: US and International versions of total stock and total bond.
Or as I like to put it, four of the three funds in the three-fund portfolio!

Taylor, I'm with you in spirit but took one step over the line!
bertilak:

One step is allowed if you don't mind the additional cost, complexity (and maybe less tax-efficiency).
Read my "Simplicity" link below.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: Vanguard Investment Advice

Post by Dead Man Walking »

I have no faith in the "experts" at Vanguard let alone any advisors they employ. I simply appreciate that they provide many low cost mutual funds. Their choice of indices and asset allocation for many of their balanced funds is suspect. Caveat emptor applies to Vanguard as well as any purchase a consumer may make.

DMW
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Re: Vanguard Investment Advice

Post by drzzzzz »

The comments are sounding much like 6 of this or half a dozen of that. From what I have seen Vanguard personal services sticks very closely to their formula with a few exceptions since they are trying to produce a consistent plan and maintain fiduciary responsibility to their clients - it just so happens that their formula is close to a three (or four) fund portfolio - the question for most is really whether their expenses are reasonable for what you want them to do (tax efficiency, rebalancing, asset allocation, holding your hand, someone to discuss ideas with, maybe tax loss harvesting, etc) and what they are willing to do - from a former personal services client.
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