Vanguard's Impersonal Advisor Service

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Rick Ferri
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Vanguard's Impersonal Advisor Service

Post by Rick Ferri » Sun Oct 06, 2019 11:28 am

Vanguard's forthcoming all-digital advisor program will take their current PAS one-portfolio-fits-all strategy to a more impersonal level.

Vanguard's Impersonal Advisor Service

Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Cheez-It Guy
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Re: Vanguard's Impersonal Advisor Service

Post by Cheez-It Guy » Sun Oct 06, 2019 11:42 am

Ditto on the marketing. Enough is enough. Yes, I want to be informed of options. I'd also like to be able to acknowledge and permanently dismiss marketing on topics not of particular interest. On advice from another thread on this forum, I called Vanguard earlier in the week and requested settings changes to minimize marketing. It was a good conversation, and the rep further confirmed that this was not a user-accessible setting, but that there were changes they could implement on the back end. We'll see if any change is detectable over the coming months now that he's flipped the switches. As long as I keep reading Bogleheads, I have no concern about being left out of the loop on the latest and greatest offerings. Occasionally, it seems Bogleheads are ahead of the reps with regard to product rollout knowledge.

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Re: Vanguard's Impersonal Advisor Service

Post by nedsaid » Sun Oct 06, 2019 11:44 am

Hi Rick, I think the Robo-Advisors are a good thing but we have to realize the limitations of this approach. Pretty much, if you want to talk to a human it will cost you 0.30% a year, if you don't need a human but still want guidance, it will cost you 0.15% a year. If you do-it-yourself, it will cost you nothing except for the expense ratios of the funds. If you want to talk to Rick Ferri, he will charge by the hour. I just chalk this up to the markets trying to set the price on advice, this certainly isn't the last word here, there will be further twists in the market for advice. Pricing isn't perfect but the market is adjusting here.

To me, it just seems like adding an additional layer of fees to a Target Date Retirement Fund or to a LifeStrategy Fund. What makes this work is the comprehensive advice other than just setting an asset allocation.

But remember, the old saying that if you build a better mousetrap that the world will beat a path to your door just isn't true. No one will know about the mousetrap unless the word gets out, marketing and advertising helps this a lot. Even your business needs marketing, you put the word out here that you were back in the business, nothing wrong with that, it is just business.
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student
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Re: Vanguard's Impersonal Advisor Service

Post by student » Sun Oct 06, 2019 11:58 am

I really do not understand the appeal of robo advisors, especially the one from Vanguard, which from what I understand, gives really generic advice. I would save the money and go with a life strategy fund.
Last edited by student on Sun Oct 06, 2019 10:20 pm, edited 1 time in total.

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goingup
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Re: Vanguard's Impersonal Advisor Service

Post by goingup » Sun Oct 06, 2019 12:02 pm

My observation is that many younger people have no desire to speak on the phone. I posit that folks 65+ prefer face-to-face advisor interactions. Folks 40-65 prefer phone and on-line interface. Investors age 40 and younger can hardly imagine meeting face-to-face or having to discuss things on the phone. My guess is the 40 & under crowd is the target market.

If Vanguard's foray into robo-advising is specifically aimed at younger investors they are at a disadvantage in this area because their web-site design and tools have always been clunky.

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Re: Vanguard's Impersonal Advisor Service

Post by columbia » Sun Oct 06, 2019 12:07 pm

There’s clearly a market for self-defined Robo investing. It seems odd that they wouldn’t just do that (even if it were limited to Vanguard funds).

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Re: Vanguard's Impersonal Advisor Service

Post by dbr » Sun Oct 06, 2019 12:10 pm

Cheez-It Guy wrote:
Sun Oct 06, 2019 11:42 am
Ditto on the marketing. Enough is enough. Yes, I want to be informed of options. I'd also like to be able to acknowledge and permanently dismiss marketing on topics not of particular interest. On advice from another thread on this forum, I called Vanguard earlier in the week and requested settings changes to minimize marketing. It was a good conversation, and the rep further confirmed that this was not a user-accessible setting, but that there were changes they could implement on the back end. We'll see if any change is detectable over the coming months now that he's flipped the switches. As long as I keep reading Bogleheads, I have no concern about being left out of the loop on the latest and greatest offerings. Occasionally, it seems Bogleheads are ahead of the reps with regard to product rollout knowledge.
I don't think there is an online interaction anywhere that is free of marketing pitches. And if it isn't a marketing pitch its a request for "feedback" or to fill out a survey every time you transact business or attend an event.

But, good for you for calling them about it and on it.

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Re: Vanguard's Impersonal Advisor Service

Post by Cheez-It Guy » Sun Oct 06, 2019 12:17 pm

That's true, and I don't begrudge them that. But in my case, I've seen the pitch, I'm not interested, and I don't need to keep seeing it. I'm the kind of person that the more I am bombarded with marketing beyond the initial product awareness campaign, the less interested I am, and may even refuse it on principle. I was just looking for an opt-out, and they gave one. Problem solved. I would prefer that the opt-out was easier / more transparent, but we can't have it all.

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Re: Vanguard's Impersonal Advisor Service

Post by nedsaid » Sun Oct 06, 2019 12:22 pm

goingup wrote:
Sun Oct 06, 2019 12:02 pm
My observation is that many younger people have no desire to speak on the phone. I posit that folks 65+ prefer face-to-face advisor interactions. Folks 40-65 prefer phone and on-line interface. Investors age 40 and younger can hardly imagine meeting face-to-face or having to discuss things on the phone. My guess is the 40 & under crowd is the target market.

If Vanguard's foray into robo-advising is specifically aimed at younger investors they are at a disadvantage in this area because their web-site design and tools have always been clunky.
At age 60, I am approaching old fogey status. I still find that I do most of my business by the internet and some by phone. I call my broker about once a month, American Century Investments maybe four times a year, and Fidelity maybe twice a year. I visit my bank branch a few times a year, have visited a Fidelity branch office just once, haven't seen my broker in person for over 20 years, and have never been to an American Century office. I am more like the younger folks than I think. I will say that I like to talk to a live person whenever there is a problem, I get annoyed with the robots.
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Cheez-It Guy
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Re: Vanguard's Impersonal Advisor Service

Post by Cheez-It Guy » Sun Oct 06, 2019 12:24 pm

What about when the live person IS the problem? Those are actually my most frustrating interactions.

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Re: Vanguard's Impersonal Advisor Service

Post by nedsaid » Sun Oct 06, 2019 12:25 pm

Cheez-It Guy wrote:
Sun Oct 06, 2019 12:24 pm
What about when the live person IS the problem? Those are actually my most frustrating interactions.
Well, you have a point there. You can swear at the robots.
A fool and his money are good for business.

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Re: Vanguard's Impersonal Advisor Service

Post by Rick Ferri » Sun Oct 06, 2019 9:22 pm

nedsaid wrote:
Sun Oct 06, 2019 11:44 am
Hi Rick, I think the Robo-Advisors are a good thing but we have to realize the limitations of this approach. Pretty much, if you want to talk to a human it will cost you 0.30% a year, if you don't need a human but still want guidance, it will cost you 0.15% a year. If you do-it-yourself, it will cost you nothing except for the expense ratios of the funds.
Simplicity is key. Keep your portfolio in a few good funds and you won't need a robot or a human adviser managing your money.

Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Taylor Larimore
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Re: Vanguard's Impersonal Advisor Service

Post by Taylor Larimore » Sun Oct 06, 2019 9:45 pm

Rick Ferri wrote:
Sun Oct 06, 2019 9:22 pm

Simplicity is key. Keep your portfolio in a few good funds and you won't need a robot or a human adviser managing your money.
Rick:

Nice post. There are not many independent advisors who would admit we might not need a "human adviser". Character counts!

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Taylor
Jack Bogle's Wisdom:"Tens of millions of investors need personal guidance in allocating their assets and selecting funds. Other tens of millions do not."
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Re: Vanguard's Impersonal Advisor Service

Post by smectym » Mon Oct 07, 2019 12:09 am

Good posts above. As one who tried VPAS several years ago based on the fallacious “well, when I die, non-financially-engaged spouse will have a fall-back” rationale, I can affirm that the service adds no value. One might argue that the service prevents unstable people from doing self-destructive things with their portfolio; but since there is nothing to prevent such “unstable people” from simply discontinuing the advisory service as a marker of their instability, not sure how powerful that argument is. The advice generated is predictably, unvaryingly, universally, and without any exception at all, cookie-cutter, and amounts to the same thing you’d get by picking a LifeStrategy Fund. Which is fine...but, um, I wouldn’t pay more than the LifeStrategy ER for such advice.

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Re: Vanguard's Impersonal Advisor Service

Post by yogesh » Mon Oct 07, 2019 12:19 am

Vanguard should create taxable versions of Lifestrategy all in one funds and advise customers to use target duration and risk profile to choose 30/70, 40/60, 50/50, 60/40, 70/30, 80/20. Fidelity go robo does this for taxable or tax-advantage accounts.
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Re: Vanguard's Impersonal Advisor Service

Post by RickBoglehead » Mon Oct 07, 2019 5:11 am

smectym wrote:
Mon Oct 07, 2019 12:09 am
Good posts above. As one who tried VPAS several years ago based on the fallacious “well, when I die, non-financially-engaged spouse will have a fall-back” rationale, I can affirm that the service adds no value. One might argue that the service prevents unstable people from doing self-destructive things with their portfolio; but since there is nothing to prevent such “unstable people” from simply discontinuing the advisory service as a marker of their instability, not sure how powerful that argument is. The advice generated is predictably, unvaryingly, universally, and without any exception at all, cookie-cutter, and amounts to the same thing you’d get by picking a LifeStrategy Fund. Which is fine...but, um, I wouldn’t pay more than the LifeStrategy ER for such advice.
To me, that rationale is for my spouse to do AFTER I die. My instructions are to call Vanguard and get a meeting with the financial planner to discuss the portfolio, and whether PAS makes sense or simply touching base yearly to discuss which assets should be sold to pay living expenses IF the annual dividends, interest and capital gains don't meet her needs.
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Re: Vanguard's Impersonal Advisor Service

Post by eucalyptus » Mon Oct 07, 2019 6:48 am

RickBoglehead wrote:
Mon Oct 07, 2019 5:11 am

To me, that rationale is for my spouse to do AFTER I die. My instructions are to call Vanguard and get a meeting with the financial planner to discuss the portfolio, and whether PAS makes sense or simply touching base yearly to discuss which assets should be sold to pay living expenses IF the annual dividends, interest and capital gains don't meet her needs.

After you die, your spouse automatically loses her advisor and is forced to start the PAS process all over again as if she were a new client. Your spouse can call Vanguard all she wants, but there won’t be any advisor to talk to.

The idea that VG will be a compassionate, reliable advisor to a surviving spouse seems to be a common misconception here.

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Re: Vanguard's Impersonal Advisor Service

Post by Cheez-It Guy » Mon Oct 07, 2019 6:54 am

I think he's saying no PAS until he dies after which his wife should call and see whether PAS is right for her / establish service.

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Re: Vanguard's Impersonal Advisor Service

Post by RickBoglehead » Mon Oct 07, 2019 7:19 am

Cheez-It Guy wrote:
Mon Oct 07, 2019 6:54 am
I think he's saying no PAS until he dies after which his wife should call and see whether PAS is right for her / establish service.
Correct. I have no need to establish PAS today. Until I am unable to handle my own finances (hopefully far into the future), my plan is exactly what you state. To say that you should pay PAS for years when you don't yet need it is clearly a waste of 0.3% per year.
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Re: Vanguard's Impersonal Advisor Service

Post by nedsaid » Mon Oct 07, 2019 7:51 am

Rick Ferri wrote:
Sun Oct 06, 2019 9:22 pm
nedsaid wrote:
Sun Oct 06, 2019 11:44 am
Hi Rick, I think the Robo-Advisors are a good thing but we have to realize the limitations of this approach. Pretty much, if you want to talk to a human it will cost you 0.30% a year, if you don't need a human but still want guidance, it will cost you 0.15% a year. If you do-it-yourself, it will cost you nothing except for the expense ratios of the funds.
Simplicity is key. Keep your portfolio in a few good funds and you won't need a robot or a human adviser managing your money.

Rick Ferri
This is why the hourly model is the future. Portfolios once set up don't needs lots of maintenance, you might rebalance once or twice a year. Hard to justify Assets Under Management fees year after year for rebalancing. There is more work if the client is on a glide path to become more conservative with age. Another possible reason for maintenance is a change in life situation.
A fool and his money are good for business.

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Re: Vanguard's Impersonal Advisor Service

Post by UpperNwGuy » Mon Oct 07, 2019 8:04 am

Rick Ferri wrote:
Sun Oct 06, 2019 9:22 pm
nedsaid wrote:
Sun Oct 06, 2019 11:44 am
Hi Rick, I think the Robo-Advisors are a good thing but we have to realize the limitations of this approach. Pretty much, if you want to talk to a human it will cost you 0.30% a year, if you don't need a human but still want guidance, it will cost you 0.15% a year. If you do-it-yourself, it will cost you nothing except for the expense ratios of the funds.
Simplicity is key. Keep your portfolio in a few good funds and you won't need a robot or a human adviser managing your money.

Rick Ferri
Yes! With my simple portfolio, I don't need any advice from either humans or robots. All I have to do is monitor the stock/bond ratio, the domestic/international ratio, and the total bond/municipal bond ratio.

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Re: Vanguard's Impersonal Advisor Service

Post by Silence Dogood » Mon Oct 07, 2019 12:37 pm

Cheez-It Guy wrote:
Sun Oct 06, 2019 12:17 pm
That's true, and I don't begrudge them that. But in my case, I've seen the pitch, I'm not interested, and I don't need to keep seeing it. I'm the kind of person that the more I am bombarded with marketing beyond the initial product awareness campaign, the less interested I am, and may even refuse it on principle. I was just looking for an opt-out, and they gave one. Problem solved. I would prefer that the opt-out was easier / more transparent, but we can't have it all.
I agree completely.

I don't mind that Vanguard offers this, but the marketing has been excessive. I called and asked Vanguard to stop, which they mostly have (I still get the pop-up and ad banner when I sign in, but I'm no longer getting postcards/emails).

As Rick Ferri noted above, if you have a simple portfolio, there is no need to pay for an advisor. I have an extremely simple portfolio (it's a one-fund portfolio) all in a tax advantaged account. Considering how much tax advantaged space I have available to me, I doubt I'll need to invest in a taxable account anytime soon. There is no need for me to pay for an advisor.

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Re: Vanguard's Impersonal Advisor Service

Post by FelixTheCat » Mon Oct 07, 2019 12:49 pm

Bogleheads tell you to invest in a three-fund portfolio (no international bond fund) vs PAS four-fund portfolio. Both groups believe in tax efficiency, low fees, the set-and-forget policy and rebalancing when targets get out of line.

It appears to me that Vanguard is taking on the Boglehead approach with their new marketing strategy.
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Re: Vanguard's Impersonal Advisor Service

Post by abuss368 » Mon Oct 07, 2019 7:37 pm

Rick Ferri wrote:
Sun Oct 06, 2019 9:22 pm
nedsaid wrote:
Sun Oct 06, 2019 11:44 am
Hi Rick, I think the Robo-Advisors are a good thing but we have to realize the limitations of this approach. Pretty much, if you want to talk to a human it will cost you 0.30% a year, if you don't need a human but still want guidance, it will cost you 0.15% a year. If you do-it-yourself, it will cost you nothing except for the expense ratios of the funds.
Simplicity is key. Keep your portfolio in a few good funds and you won't need a robot or a human adviser managing your money.

Rick Ferri
Excellent post Rick. Many investors may not realize this.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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