Vanguard: "more expensive not to get financial advice"

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starboi
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Vanguard: "more expensive not to get financial advice"

Post by starboi »

Vanguard posted a video on Twitter featuring Tom Rampulla, managing director of Vanguard Financial Advisor Services. Tom claims that "it's more expensive not to get financial advice."

https://twitter.com/Vanguard_Group/stat ... 4995799040

This seems to contradict the Bogleheads® investment philosophy, which states:

"Successful investing is not a complicated process, and can be accomplished by anyone with a small amount of effort...there is no need to watch the markets or follow financial news."
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Re: Vanguard: "more expensive not to get financial advice"

Post by financeperchance »

I identify as a Boglehead not a Vanguardhead
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Re: Vanguard: "more expensive not to get financial advice"

Post by retired@50 »

It can be more expensive, if you panic sell during a downturn and realize major losses. Some investors never come back.

It's often said that investing is simple (use low cost index funds) but not easy (inability to stay the course).

Forum contributors are routinely talking people out of bad decisions, but being a Boglehead isn't right for everyone.

Regards,
This is one person's opinion. Nothing more.
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Re: Vanguard: "more expensive not to get financial advice"

Post by Minty »

I would say that Mr. Rampulla is correct, everyone starting out needs financial advice. But the best advice can be had for free in various places, such as right here on the Bogleheads forum/wiki.
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Re: Vanguard: "more expensive not to get financial advice"

Post by JoMoney »

Not surprising, I would have been surprised if the "managing director" of "Financial Advisor Services" had said he believed people didn't need their service.
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Re: Vanguard: "more expensive not to get financial advice"

Post by arcticpineapplecorp. »

they have a vested interest in saying that because they make money from their PAS.

but it's also true that for some people who are prone to panic selling, market timing, FOMO and general anxiety over volatility they probably would do better with an advisor because one boneheaded move can be much more costly than the 0.30% per year Vanguard charges for PAS.

I watched a coworker sell out of stocks in late 2008. She probably lost between 20%-30% of her net worth depending upon her stock allocation. That was just one boneheaded move in one year. Can you imagine the staggering amounts of lifetime losses she will incur if she keeps getting in and out of the market at the most inopportune times??

It takes a very long time to lose that kind of money paying 0.30% per year to Vanguard PAS. In fact it would have taken over 40 years of paying fees of 0.30% annually:

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Re: Vanguard: "more expensive not to get financial advice"

Post by delamer »

It’s true for a lot of people.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Re: Vanguard: "more expensive not to get financial advice"

Post by wesgreen »

Minty wrote: Wed Sep 21, 2022 7:49 pm I would say that Mr. Rampulla is correct, everyone starting out needs financial advice. But the best advice can be had for free in various places, such as right here on the Bogleheads forum/wiki.
Bingo!
Vanguard's investment advice cost me about 3 - 4 years of retirement. It would be more if I hadn't gone back to the Bogle portfolio after 20 years. I can't afford to follow Vanguard's advice.
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Re: Vanguard: "more expensive not to get financial advice"

Post by grok87 »

JoMoney wrote: Wed Sep 21, 2022 7:51 pm Not surprising, I would have been surprised if the "managing director" of "Financial Advisor Services" had said he believed people didn't need their service.
yep
https://www.goodreads.com/quotes/21810- ... -something
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Re: Vanguard: "more expensive not to get financial advice"

Post by abuss368 »

starboi wrote: Wed Sep 21, 2022 7:36 pm Vanguard posted a video on Twitter featuring Tom Rampulla, managing director of Vanguard Financial Advisor Services. Tom claims that "it's more expensive not to get financial advice."

https://twitter.com/Vanguard_Group/stat ... 4995799040

This seems to contradict the Bogleheads® investment philosophy, which states:

"Successful investing is not a complicated process, and can be accomplished by anyone with a small amount of effort...there is no need to watch the markets or follow financial news."
If implying from the aspect of making poor investment portfolio decisions I would agree. Sometimes advisors bring a lot more to the table and help us stay the course.

Best.
Tony
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Re: Vanguard: "more expensive not to get financial advice"

Post by Cheez-It Guy »

You know, it's almost as if there are more financial situations and aptitudes in this world than only self-directed Bogleheads, and that perhaps an investment company might occasionally speak to such people where they are.
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Re: Vanguard: "more expensive not to get financial advice"

Post by Minty »

arcticpineapplecorp. wrote: Wed Sep 21, 2022 7:52 pm but it's also true that for some people who are prone to panic selling, market timing, FOMO and general anxiety over volatility they probably would do better with an advisor because one boneheaded move can be much more costly than the 0.30% per year Vanguard charges for PAS.
I think you are quite right. But IMHO folks who are inclined to mistakes and errors in judgment in some area of life should first try to correct them them before resorting to more expensive options. For example, if someone is an unskilled, dangerous driver, that is a serious practical problem which every reasonable person would agree should be addressed. But I would recommend taking some driving lessons from a good instructor as a first step, rather than, say, giving up one's driver's license, and hiring a driver. Going to Edward James is hiring a driver; using Vanguard PAS is hiring one of the cheapest drivers available, but still hiring a driver. Vanguard PAS, like the high-fee advisors, teach investors nothing; that is, the business model rests on lifetime client ignorance. Of course, at the end of the day, some people are simply incapable of driving, investing for themselves, or whatever, but I believe that is a very small number.
Core Four w/ nominal bonds & TIPS. Refi Rampage: Purchase: 3.875% 30 -> R1 3% 20 -> R2 2.375% 15 -> R3 1.99% 15 -> R4 1.875% 15
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Re: Vanguard: "more expensive not to get financial advice"

Post by arcticpineapplecorp. »

Minty wrote: Wed Sep 21, 2022 8:26 pm
arcticpineapplecorp. wrote: Wed Sep 21, 2022 7:52 pm but it's also true that for some people who are prone to panic selling, market timing, FOMO and general anxiety over volatility they probably would do better with an advisor because one boneheaded move can be much more costly than the 0.30% per year Vanguard charges for PAS.
I think you are quite right. But IMHO folks who are inclined to mistakes and errors in judgment in some area of life should first try to correct them them before resorting to more expensive options. For example, if someone is an unskilled, dangerous driver, that is a serious practical problem which every reasonable person would agree should be addressed. But I would recommend taking some driving lessons from a good instructor as a first step, rather than, say, giving up one's driver's license, and hiring a driver. Going to Edward James is hiring a driver; using Vanguard PAS is hiring one of the cheapest drivers available, but still hiring a driver. Vanguard PAS, like the high-fee advisors, teach investors nothing; that is, the business model rests on lifetime client ignorance. Of course, at the end of the day, some people are simply incapable of driving, investing for themselves, or whatever, but I believe that is a very small number.
that's not how Dr. Bernstein sees it:
William Bernstein is one of the foremost advocates for individual investors. When he talks about the dynamics of investing, I pay attention to what he says and most of the time I agree with him.

In Bernstein’s underrated book, The Investor’s Manifesto, he shares his thoughts on the difficulty of investing on your own (emphasis mine):

"Having emailed and spoken to thousands of investors over the years, I have come to the conclusion that only a tiny minority will ever succeed in managing their money even tolerably well.

Successful investors need four abilities. First they must possess an interest in the process. It is no different from carpentry, gardening, or parenting. If money management is not enjoyable, then a lousy job inevitably results, and, unfortunately, most people enjoy finance about as much as they do root canal work.

Second, investors need more than a bit of math horsepower, far beyond simple arithmetic and algebra, or even the ability to manipulate a spreadsheet. Mastering the basics of investment theory requires an understanding of the laws of probability and a working knowledge of statistics. Sadly, as one financial columnist explained to me more than a decade ago, fractions are a stretch for 90% of the population.

Third, investors need a firm grasp of financial history, from the South Sea Bubble to the Great Depression. Alas, this is something that even professionals have real trouble with.

Even if investors possess all three of these abilities, it will all be for naught if they do not have a fourth one: the emotional discipline to execute their planned strategy faithfully, come hell, high water, or the apparent end of capitalism as we know it. “Stay the course”: it sounds so easy when uttered at high tide. Unfortunately, when the water recedes, it is not.

I expect no more than 10% of the population passes muster on each of the above counts. This suggests that as few as one person in ten thousand (10% to the 4th power) has the full skill set."

So you’re telling me there’s a chance.

Bernstein is saying that roughly 0.01% of the investing public has the ability to put all of these factors together to be a successful investor.

source: https://awealthofcommonsense.com/2014/0 ... ting-hard/
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Re: Vanguard: "more expensive not to get financial advice"

Post by Cheez-It Guy »

But that doesn't fit this thread's intended narrative.
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Re: Vanguard: "more expensive not to get financial advice"

Post by Nate79 »

Of course he said it. It's a big money maker for them.
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Re: Vanguard: "more expensive not to get financial advice"

Post by starboi »

arcticpineapplecorp. wrote: Wed Sep 21, 2022 8:32 pm
Minty wrote: Wed Sep 21, 2022 8:26 pm
arcticpineapplecorp. wrote: Wed Sep 21, 2022 7:52 pm but it's also true that for some people who are prone to panic selling, market timing, FOMO and general anxiety over volatility they probably would do better with an advisor because one boneheaded move can be much more costly than the 0.30% per year Vanguard charges for PAS.
I think you are quite right. But IMHO folks who are inclined to mistakes and errors in judgment in some area of life should first try to correct them them before resorting to more expensive options. For example, if someone is an unskilled, dangerous driver, that is a serious practical problem which every reasonable person would agree should be addressed. But I would recommend taking some driving lessons from a good instructor as a first step, rather than, say, giving up one's driver's license, and hiring a driver. Going to Edward James is hiring a driver; using Vanguard PAS is hiring one of the cheapest drivers available, but still hiring a driver. Vanguard PAS, like the high-fee advisors, teach investors nothing; that is, the business model rests on lifetime client ignorance. Of course, at the end of the day, some people are simply incapable of driving, investing for themselves, or whatever, but I believe that is a very small number.
that's not how Dr. Bernstein sees it:
William Bernstein is one of the foremost advocates for individual investors. When he talks about the dynamics of investing, I pay attention to what he says and most of the time I agree with him.

In Bernstein’s underrated book, The Investor’s Manifesto, he shares his thoughts on the difficulty of investing on your own (emphasis mine):

"Having emailed and spoken to thousands of investors over the years, I have come to the conclusion that only a tiny minority will ever succeed in managing their money even tolerably well.

Successful investors need four abilities. First they must possess an interest in the process. It is no different from carpentry, gardening, or parenting. If money management is not enjoyable, then a lousy job inevitably results, and, unfortunately, most people enjoy finance about as much as they do root canal work.

Second, investors need more than a bit of math horsepower, far beyond simple arithmetic and algebra, or even the ability to manipulate a spreadsheet. Mastering the basics of investment theory requires an understanding of the laws of probability and a working knowledge of statistics. Sadly, as one financial columnist explained to me more than a decade ago, fractions are a stretch for 90% of the population.

Third, investors need a firm grasp of financial history, from the South Sea Bubble to the Great Depression. Alas, this is something that even professionals have real trouble with.

Even if investors possess all three of these abilities, it will all be for naught if they do not have a fourth one: the emotional discipline to execute their planned strategy faithfully, come hell, high water, or the apparent end of capitalism as we know it. “Stay the course”: it sounds so easy when uttered at high tide. Unfortunately, when the water recedes, it is not.

I expect no more than 10% of the population passes muster on each of the above counts. This suggests that as few as one person in ten thousand (10% to the 4th power) has the full skill set."

So you’re telling me there’s a chance.

Bernstein is saying that roughly 0.01% of the investing public has the ability to put all of these factors together to be a successful investor.

source: https://awealthofcommonsense.com/2014/0 ... ting-hard/
As Bogleheads author William Bernstein says in reference to the three fund portfolio: "Does this portfolio seem overly simplistic, even amateurish? Get over it. Over the next few decades, the overwhelming majority of all professional investors will not be able to beat it."

Source: https://www.bogleheads.org/wiki/Boglehe ... philosophy
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Re: Vanguard: "more expensive not to get financial advice"

Post by starboi »

Cheez-It Guy wrote: Wed Sep 21, 2022 8:42 pm But that doesn't fit this thread's intended narrative.
Bernstein advocated for a three fund portfolio, not active management.
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Re: Vanguard: "more expensive not to get financial advice"

Post by Minty »

arcticpineapplecorp. wrote: Wed Sep 21, 2022 8:32 pm
Minty wrote: Wed Sep 21, 2022 8:26 pm
arcticpineapplecorp. wrote: Wed Sep 21, 2022 7:52 pm but it's also true that for some people who are prone to panic selling, market timing, FOMO and general anxiety over volatility they probably would do better with an advisor because one boneheaded move can be much more costly than the 0.30% per year Vanguard charges for PAS.
I think you are quite right. But IMHO folks who are inclined to mistakes and errors in judgment in some area of life should first try to correct them them before resorting to more expensive options. For example, if someone is an unskilled, dangerous driver, that is a serious practical problem which every reasonable person would agree should be addressed. But I would recommend taking some driving lessons from a good instructor as a first step, rather than, say, giving up one's driver's license, and hiring a driver. Going to Edward James is hiring a driver; using Vanguard PAS is hiring one of the cheapest drivers available, but still hiring a driver. Vanguard PAS, like the high-fee advisors, teach investors nothing; that is, the business model rests on lifetime client ignorance. Of course, at the end of the day, some people are simply incapable of driving, investing for themselves, or whatever, but I believe that is a very small number.
that's not how Dr. Bernstein sees it:
William Bernstein is one of the foremost advocates for individual investors. When he talks about the dynamics of investing, I pay attention to what he says and most of the time I agree with him.

In Bernstein’s underrated book, The Investor’s Manifesto, he shares his thoughts on the difficulty of investing on your own (emphasis mine):

"Having emailed and spoken to thousands of investors over the years, I have come to the conclusion that only a tiny minority will ever succeed in managing their money even tolerably well.

Successful investors need four abilities. First they must possess an interest in the process. It is no different from carpentry, gardening, or parenting. If money management is not enjoyable, then a lousy job inevitably results, and, unfortunately, most people enjoy finance about as much as they do root canal work.

Second, investors need more than a bit of math horsepower, far beyond simple arithmetic and algebra, or even the ability to manipulate a spreadsheet. Mastering the basics of investment theory requires an understanding of the laws of probability and a working knowledge of statistics. Sadly, as one financial columnist explained to me more than a decade ago, fractions are a stretch for 90% of the population.

Third, investors need a firm grasp of financial history, from the South Sea Bubble to the Great Depression. Alas, this is something that even professionals have real trouble with.

Even if investors possess all three of these abilities, it will all be for naught if they do not have a fourth one: the emotional discipline to execute their planned strategy faithfully, come hell, high water, or the apparent end of capitalism as we know it. “Stay the course”: it sounds so easy when uttered at high tide. Unfortunately, when the water recedes, it is not.

I expect no more than 10% of the population passes muster on each of the above counts. This suggests that as few as one person in ten thousand (10% to the 4th power) has the full skill set."

So you’re telling me there’s a chance.

Bernstein is saying that roughly 0.01% of the investing public has the ability to put all of these factors together to be a successful investor.

source: https://awealthofcommonsense.com/2014/0 ... ting-hard/
Bernstein might be right if investors were required to derive investment methodologies from scratch. What if, though, what if an investor, entirely ignorant of statistics and the South Sea Bubble, is (1) nevertheless somehow convinced that Jack Bogle is right, and that a three-fund or other simple, low-cost portfolio is the vehicle available to that investor which is the most likely to offer the highest return over time, (2) sets their savings and employer retirement account to allocate, automatically, to some simple portfolio, and (3) is told that the research suggests that their best return will come if they leave that portfolio alone? I'll wager most of the time they will be pleased that they did not entrust their money to third parties for a fee. Put another way, while I may be wrong, I believe most people can learn things and take advice, can make plans and execute them.
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Re: Vanguard: "more expensive not to get financial advice"

Post by inverter »

arcticpineapplecorp. wrote: Wed Sep 21, 2022 7:52 pm Image
What is the source?
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Re: Vanguard: "more expensive not to get financial advice"

Post by mkc »

inverter wrote: Wed Sep 21, 2022 9:08 pm
arcticpineapplecorp. wrote: Wed Sep 21, 2022 7:52 pm Image
What is the source?
Vanguard itself, IIRC...
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Re: Vanguard: "more expensive not to get financial advice"

Post by PersonalFinanceJam »

Minty wrote: Wed Sep 21, 2022 8:58 pm ...
Bernstein might be right if investors were required to derive investment methodologies from scratch. What if, though, what if an investor, entirely ignorant of statistics and the South Sea Bubble, is (1) nevertheless somehow convinced that Jack Bogle is right, and that a three-fund or other simple, low-cost portfolio is the vehicle available to that investor which is the most likely to offer the highest return over time, (2) sets their savings and employer retirement account to allocate, automatically, to some simple portfolio, and (3) is told that the research suggests that their best return will come if they leave that portfolio alone? I'll wager most of the time they will be pleased that they did not entrust their money to third parties for a fee. Put another way, while I may be wrong, I believe most people can learn things and take advice, can make plans and execute them.
Totally agree. I think it is true based on the studies I've seen that it's more expensive for the average person not to get financial advice. However, that doesn't have to translate into ongoing AUM fee based advice. I doubt there is profit in anything else. No one is going to pay good money to be told to invest in a low cost target date fund in their 401k/IRA and keep doing that until retirement.
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Re: Vanguard: "more expensive not to get financial advice"

Post by neurosphere »

starboi wrote: Wed Sep 21, 2022 7:36 pm Vanguard posted a video on Twitter featuring Tom Rampulla, managing director of Vanguard Financial Advisor Services. Tom claims that "it's more expensive not to get financial advice."
I can't imagine there is a single person on BH who disagrees with this. Option 1) no advice; Option 2) Go to BH and get advice; Option 3) All other options.

I think it's indeed 100% true that it's more expensive to NOT get advice than to seek advice in some way. Then again, I can assume some sorts of advice will leave you poorer than if you did "nothing" at all or got "no" advice?
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Re: Vanguard: "more expensive not to get financial advice"

Post by starboi »

neurosphere wrote: Wed Sep 21, 2022 9:32 pm
starboi wrote: Wed Sep 21, 2022 7:36 pm Vanguard posted a video on Twitter featuring Tom Rampulla, managing director of Vanguard Financial Advisor Services. Tom claims that "it's more expensive not to get financial advice."
I can't imagine there is a single person on BH who disagrees with this. Option 1) no advice; Option 2) Go to BH and get advice; Option 3) All other options.

I think it's indeed 100% true that it's more expensive to NOT get advice than to seek advice in some way. Then again, I can assume some sorts of advice will leave you poorer than if you did "nothing" at all or got "no" advice?
Did you watch the video? It's clear he's talking about paid financial advice.
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Re: Vanguard: "more expensive not to get financial advice"

Post by neurosphere »

starboi wrote: Wed Sep 21, 2022 9:39 pm
neurosphere wrote: Wed Sep 21, 2022 9:32 pm
starboi wrote: Wed Sep 21, 2022 7:36 pm Vanguard posted a video on Twitter featuring Tom Rampulla, managing director of Vanguard Financial Advisor Services. Tom claims that "it's more expensive not to get financial advice."
I can't imagine there is a single person on BH who disagrees with this. Option 1) no advice; Option 2) Go to BH and get advice; Option 3) All other options.

I think it's indeed 100% true that it's more expensive to NOT get advice than to seek advice in some way. Then again, I can assume some sorts of advice will leave you poorer than if you did "nothing" at all or got "no" advice?
Did you watch the video? It's clear he's talking about paid financial advice.
I did not watch the video and sorry, but yes, I assumed he was talking about paid financial advice. I guess my point is that the person in the video is simply ignorant that one has access to equal quality advice that is NOT paid. :wink:
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Re: Vanguard: "more expensive not to get financial advice"

Post by Gaston »

financeperchance wrote: Wed Sep 21, 2022 7:44 pm I identify as a Boglehead not a Vanguardhead
Well said.
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Re: Vanguard: "more expensive not to get financial advice"

Post by arcticpineapplecorp. »

inverter wrote: Wed Sep 21, 2022 9:08 pm
arcticpineapplecorp. wrote: Wed Sep 21, 2022 7:52 pm Image
What is the source?
http://web.archive.org/web/201611100649 ... f-returns/

you can do a future value calculation with and without the fee to see the difference yourself if you know how to do a future value calculation.
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Re: Vanguard: "more expensive not to get financial advice"

Post by bertilak »

starboi wrote: Wed Sep 21, 2022 7:36 pm Vanguard posted a video on Twitter featuring Tom Rampulla, managing director of Vanguard Financial Advisor Services. Tom claims that "it's more expensive not to get financial advice."
I agree, but one can get good financial advice from Bogleheads. Depending on how much personal effort you want to put into things, then "Vanguard Financial Advisor Services" May be your best bet.
https://twitter.com/Vanguard_Group/stat ... 4995799040

This seems to contradict the Bogleheads® investment philosophy, which states:

"Successful investing is not a complicated process, and can be accomplished by anyone with a small amount of effort...there is no need to watch the markets or follow financial news."
That is an example of the good financial advice available here on Bogleheads.

I see no contradictions.
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Re: Vanguard: "more expensive not to get financial advice"

Post by galawdawg »

I noted in the video that when he says "it is more expensive not to get financial advice", he is actually referring to a "good advisor" taking the edge off and recommending that an investor stick with a plan rather than switching based upon emotion.

I wonder how that works, practically speaking, when an investor who is anxious can't reach Vanguard when they call and don't receive a call back promptly when the market is dropping day after day?

Think about what a great resource this forum has been. For 0.30% less than the 0.30% AUM charged by VPAS, an investor can post on this forum 24/7/365 about whether to make changes to their portfolio due to market conditions, market timing, emotions, etc. and they will generally receive replies within moments from other Bogleheads who will work to "take the edge off" and recommend that an investor stick with a good plan rather than making changes based upon emotion.

As Jack Bogle often noted,
Investor emotions plus fund industry promotions equals trouble.
The video is just another fund industry promotion designed to take advantage of investor emotions during current market conditions. As far as I'm concerned it is nothing more than a sales pitch from a huckster trying to peddle VPAS to the masses in order to increase the wealth of the average investor executives and management at Vanguard.
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Re: Vanguard: "more expensive not to get financial advice"

Post by bertilak »

galawdawg wrote: Thu Sep 22, 2022 9:35 am The video is just another fund industry promotion designed to take advantage of investor emotions during current market conditions. As far as I'm concerned it is nothing more than a sales pitch from a huckster trying to peddle VPAS to the masses in order to increase the wealth of the average investor executives and management at Vanguard.
I don't begrudge people trying to sell a service. I believe that Vanguard believes they have a valuable service that fills a need at a reasonable price, and a price that makes it worth their trouble.
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Re: Vanguard: "more expensive not to get financial advice"

Post by AlwaysLearningMore »

starboi wrote: Wed Sep 21, 2022 7:36 pm Vanguard posted a video on Twitter featuring Tom Rampulla, managing director of Vanguard Financial Advisor Services. Tom claims that "it's more expensive not to get financial advice."

https://twitter.com/Vanguard_Group/stat ... 4995799040

This seems to contradict the Bogleheads® investment philosophy, which states:

"Successful investing is not a complicated process, and can be accomplished by anyone with a small amount of effort...there is no need to watch the markets or follow financial news."
I wonder if there's any tension at Vanguard between PAS and simply encouraging investors to invest in a Target Retirement fund, the Balanced Index Fund (or even the Wellington Fund)?
Retirement is best when you have a lot to live on, and a lot to live for. * None of what I post is investment advice.
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Re: Vanguard: "more expensive not to get financial advice"

Post by neurosphere »

galawdawg wrote: Thu Sep 22, 2022 9:35 am The video is just another fund industry promotion designed to take advantage of investor emotions during current market conditions. As far as I'm concerned it is nothing more than a sales pitch from a huckster trying to peddle VPAS to the masses in order to increase the wealth of the average investor executives and management at Vanguard.
If only BH head a national advertising budget to reach "the masses". The average person who turns to the internet to get free financial advice certainly does not find bogleheads, and instead may turn to tik tok videos where 20 and 30 something professionals are bashing 401k plans and pushing permanent life in irritatingly flashy and irreverent style.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes" (even in taxable accounts).
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Re: Vanguard: "more expensive not to get financial advice"

Post by the_wiki »

galawdawg wrote: Thu Sep 22, 2022 9:35 am I noted in the video that when he says "it is more expensive not to get financial advice", he is actually referring to a "good advisor" taking the edge off and recommending that an investor stick with a plan rather than switching based upon emotion.

I wonder how that works, practically speaking, when an investor who is anxious can't reach Vanguard when they call and don't receive a call back promptly when the market is dropping day after day?

Think about what a great resource this forum has been. For 0.30% less than the 0.30% AUM charged by VPAS, an investor can post on this forum 24/7/365 about whether to make changes to their portfolio due to market conditions, market timing, emotions, etc. and they will generally receive replies within moments from other Bogleheads who will work to "take the edge off" and recommend that an investor stick with a good plan rather than making changes based upon emotion.

Makes me think someone should start a 24/7 chat support where you give boring investing advice for $100. Seems like it could do well.

"Should I buy Microsoft or tesla today" Sell both and buy VOO and don't log into your broker for 5 years

There are fee-only advisors that seem like a good middle ground. They are not cheap, but better to pay $2000 for setup and $300/hr a couple times a year for advice, rather than letting someone skim what ends up being 10% of your earnings over time off the top.
Last edited by the_wiki on Thu Sep 22, 2022 9:54 am, edited 1 time in total.
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Re: Vanguard: "more expensive not to get financial advice"

Post by the_wiki »

AlwaysLearningMore wrote: Thu Sep 22, 2022 9:44 am
starboi wrote: Wed Sep 21, 2022 7:36 pm Vanguard posted a video on Twitter featuring Tom Rampulla, managing director of Vanguard Financial Advisor Services. Tom claims that "it's more expensive not to get financial advice."

https://twitter.com/Vanguard_Group/stat ... 4995799040

This seems to contradict the Bogleheads® investment philosophy, which states:

"Successful investing is not a complicated process, and can be accomplished by anyone with a small amount of effort...there is no need to watch the markets or follow financial news."
I wonder if there's any tension at Vanguard between PAS and simply encouraging investors to invest in a Target Retirement fund, the Balanced Index Fund (or even the Wellington Fund)?
It does seem odd that they would construct these great, cheap "portfolios in a box" and then also sell other people more expensive "portfolios in a box, but with a person to sell them to you"
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Re: Vanguard: "more expensive not to get financial advice"

Post by galawdawg »

AlwaysLearningMore wrote: Thu Sep 22, 2022 9:44 am
starboi wrote: Wed Sep 21, 2022 7:36 pm Vanguard posted a video on Twitter featuring Tom Rampulla, managing director of Vanguard Financial Advisor Services. Tom claims that "it's more expensive not to get financial advice."

https://twitter.com/Vanguard_Group/stat ... 4995799040

This seems to contradict the Bogleheads® investment philosophy, which states:

"Successful investing is not a complicated process, and can be accomplished by anyone with a small amount of effort...there is no need to watch the markets or follow financial news."
I wonder if there's any tension at Vanguard between PAS and simply encouraging investors to invest in a Target Retirement fund, the Balanced Index Fund (or even the Wellington Fund)?
There certainly appears to be. If you aren't already a VPAS investor, call and ask Vanguard for their recommendation of a balanced fund for you. You'll get a pitch for VPAS, not a recommendation. Vanguard advisors are compensated, in part, by how many investors set up consultations with VPAS and how many sign up for VPAS. Vanguard also runs referral programs which compensate others for referring investors to VPAS, including compensation when an appointment is scheduled with a VPAS advisor and compensation when an investor enrolls in VPAS. As Vanguard's disclosures note, this creates a financial incentive to recommend VPAS over other options.
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Re: Vanguard: "more expensive not to get financial advice"

Post by galawdawg »

neurosphere wrote: Thu Sep 22, 2022 9:45 am If only BH head a national advertising budget to reach "the masses".
And just think...those who invest in Vanguard funds are paying for this advertising to convince investors to sign up for VPAS, the revenue from which does not return to those who invest in Vanguard funds (at least according to those financial disclosures and reports that Vanguard does release).

Almost like Coke shareholders paying for ads for Pepsi. Either way, not a good return on the investment! :sharebeer
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Re: Vanguard: "more expensive not to get financial advice"

Post by Kevin K »

IMHO the irritating thing about this self-serving ad is that he conflates getting financial advice, which as Dr. Bernstein says the vast majority of investors would benefit from, with paying a percentage of assets on an ongoing basis to an advisor, which is a betrayal of what Jack Bogle and Vanguard in its glory days stood for. If one needs hand-holding and periodic review it's easy enough to pay for a session with a competent Bogleheads school advisor like Rick Ferry or Jon Luskin, for example. But paying a percentage of assets on an ongoing basis to be put into the same 4 index funds Vanguard uses in its Target Date and LifeStrategy fund, while "enjoying" Vanguard's hours-long phone wait times and circa 1998 website experience.....no thanks.
Last edited by Kevin K on Thu Sep 22, 2022 10:18 am, edited 1 time in total.
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Re: Vanguard: "more expensive not to get financial advice"

Post by neurosphere »

the_wiki wrote: Thu Sep 22, 2022 9:52 am It does seem odd that they would construct these great, cheap "portfolios in a box" and then also sell other people more expensive "portfolios in a box, but with a person to sell them to you"
I'm conflicted because I know so many people that will never choose to handle their investments on their own (regardless of their skill, ability, time, etc) and are going to pay SOMEONE to help them.

Maybe Vanguard is like a bicycle shop that also starts selling low-cost fuel efficient cars to capture the market for those who can't get to work on a bicycle. :D But also maybe will put a bicycle in the trunk! :wink:
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes" (even in taxable accounts).
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Re: Vanguard: "more expensive not to get financial advice"

Post by Lionel Hutz »

I'm a boglehead, so I'm comfortable DIYing. However, most people are not bogleheads, and don't have the slightest inclination manage their investments themselves, and therefore benefit from solid financial advise and asset management with relatively low costs and a well disciplined well diversified portfolio.

I think this is one area where some bogleheads lack perspective. It doesn't matter what you believe or how easily you consider it to be to learn how to DIY your finances in the boglehead fashion. Others couldn't care less to learn this stuff.

Now, I think a conversation can certainly be had over the merits of a +1% traditional advisor, vs 0.3% VG PAS, vs 0.2% VG Digital Advisor, vs simply TDF 100%. And even then, frankly, everyone's needs and preferences are different. Sure, I personally think a traditional +1% advisor is the worst choice among them, but if someone would otherwise be in a beyond horrible Asset Allocation, and make poor choices around RMDs, Social Security, etc, isn't a 1% advisor better than them DIYing and getting it completely wrong?
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Re: Vanguard: "more expensive not to get financial advice"

Post by wolf359 »

The first thing that jumped out at me in that video was that it was titled "Financial Advice Misconeptions." It surprised me that a professionally produced video hadn't run spell check. (First frame of the video.)
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Re: Vanguard: "more expensive not to get financial advice"

Post by LilyFleur »

Back in the day, I worked in a public relations department for a Fortune 500. Employees were required to work through our public relations department when talking to reporters, or doing any outside communications (ie, a lecture at the Farnborough Air Show). The messaging was coordinated to support the company's mission and objectives and products.

I guess what bothers me the most is that his communication seems opportunistic, that he's manipulating people's fears in the face of negative financial news.

Is he a loose cannon, or is this now a part of the overall philosophy at Vanguard? (ie, was this public communication part of a disciplined corporate message, or did he go off on his own with this messaging?)

I have enough imagination to realize that not all folks are Bogleheads, and that it is much better to have an advisor and savings than to make egregious errors and lose one's savings, or worse yet, not to be saving at all. And perhaps Vanguard views the present economic situation as a way to increase their customer base by bringing in customers who need advisors.
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Re: Vanguard: "more expensive not to get financial advice"

Post by delamer »

Lionel Hutz wrote: Thu Sep 22, 2022 10:30 am I'm a boglehead, so I'm comfortable DIYing. However, most people are not bogleheads, and don't have the slightest inclination manage their investments themselves, and therefore benefit from solid financial advise and asset management with relatively low costs and a well disciplined well diversified portfolio.

I think this is one area where some bogleheads lack perspective. It doesn't matter what you believe or how easily you consider it to be to learn how to DIY your finances in the boglehead fashion. Others couldn't care less to learn this stuff.

Now, I think a conversation can certainly be had over the merits of a +1% traditional advisor, vs 0.3% VG PAS, vs 0.2% VG Digital Advisor, vs simply TDF 100%. And even then, frankly, everyone's needs and preferences are different. Sure, I personally think a traditional +1% advisor is the worst choice among them, but if someone would otherwise be in a beyond horrible Asset Allocation, and make poor choices around RMDs, Social Security, etc, isn't a 1% advisor better than them DIYing and getting it completely wrong?
Fair points.

The frustration that I have is that if you are intelligent enough and hardworking enough to accumulate a portfolio of several $100,000+ then self-managing a portfolio is well within your capacity. Especially since you can read “If You Can” and know all that you need to know. And save yourself several $1,000/year.

I’ve had friends who I intoduced to the Boglehead 3-fund portfolio. They are concerned about money in retirement. And yet, they continue to pay advisors who put them in god-knows-what.

Good thing I didn’t try to make a living in sales.

(Of course, not everyone who has a significant portfolio earned it. And some had a spouse who took care of everything — maybe well, maybe badly.)
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Re: Vanguard: "more expensive not to get financial advice"

Post by Big Dog »

he's right. And it is 100% correct for all people.

That said, just reading BH is a form of 'getting financial advice'. OTOH, many/most? folks sleep better at night with an Advisor.
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Re: Vanguard: "more expensive not to get financial advice"

Post by Minty »

Lionel Hutz wrote: Thu Sep 22, 2022 10:30 am I think this is one area where some bogleheads lack perspective. It doesn't matter what you believe or how easily you consider it to be to learn how to DIY your finances in the boglehead fashion. Others couldn't care less to learn this stuff.
Agreed. But I fear that many choose not to learn this stuff because they believe investment advisors have some special knowledge about the future of the market or what is good to invest in under current conditions. If their eyes are open and they understand, that as Jack Bogle said, the more you pay, the worse your returns, OK then. People are allowed to make that choice, and it may be right for some people. But I suspect many think they are being shrewd by having their money professionally managed--since they are paying, it must be that their returns will be superior to a TDF or simple portfolio. BTW, I accept that there might be some managers who have special insight and can beat the market. But just as sure as the Lord made little green applies, none of these wizards are going to manage my money for 1%. And I have no brief against advisors who teach the client how to set up a portfolio and charge a one-time fee, even a large one.
Core Four w/ nominal bonds & TIPS. Refi Rampage: Purchase: 3.875% 30 -> R1 3% 20 -> R2 2.375% 15 -> R3 1.99% 15 -> R4 1.875% 15
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Re: Vanguard: "more expensive not to get financial advice"

Post by Lionel Hutz »

delamer wrote: Thu Sep 22, 2022 10:47 am The frustration that I have is that if you are intelligent enough and hardworking enough to accumulate a portfolio of several $100,000+ then self-managing a portfolio is well within your capacity. Especially since you can read “If You Can” and know all that you need to know. And save yourself several $1,000/year.
No doubt I see your point. I think about how I know and care next to nothing about car maintenance. I want to pay my guy so that I don't have to deal with it. A boglehead comparison would be that I should learn to change my oil and everything else because those guys are robbing me blind. But that's the point, I don't want to learn. Now granted, I learned from my parents to find a guy who's a fair price and isn't gouging my eyes out every time I go for a check-up. I think that's the tough part about investing advice: where's the line for reasonably priced investment advice for a non-DIYer, versus getting ripped off?
I’ve had friends who I intoduced to the Boglehead 3-fund portfolio. They are concerned about money in retirement. And yet, they continue to pay advisors who put them in god-knows-what.
Yes good point. They may be due for reviewing this advisory relationship and seeing if they're getting value for the fees. While unlikely they'll go 100% DIY to 3 fund portfolio, maybe they'll find one of the VG services or Fidelity/Schwab. Still paying for advice, but lower cost and more appropriate AA.
Good thing I didn’t try to make a living in sales.
Likewise! :beer
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Re: Vanguard: "more expensive not to get financial advice"

Post by Mike Scott »

Very few people are interested in or care about or are capable of DIY investing. I have gotten my young adult children into target date funds in tax advantaged accounts. They are saving more or less 25% into retirement accounts and HSAs even though they really cannot imagine far enough into the future for retirement. I understand. It's better they do this than nothing. An advisor with fee is better than nothing. As for fee only advisors, they are pretty rare and difficult to find among the mass finance industry advertising.
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Re: Vanguard: "more expensive not to get financial advice"

Post by Lionel Hutz »

Minty wrote: Thu Sep 22, 2022 11:00 am
Lionel Hutz wrote: Thu Sep 22, 2022 10:30 am I think this is one area where some bogleheads lack perspective. It doesn't matter what you believe or how easily you consider it to be to learn how to DIY your finances in the boglehead fashion. Others couldn't care less to learn this stuff.
Agreed. But I fear that many choose not to learn this stuff because they believe investment advisors have some special knowledge about the future of the market or what is good to invest in under current conditions. If their eyes are open and they understand, that as Jack Bogle said, the more you pay, the worse your returns, OK then. People are allowed to make that choice, and it may be right for some people. But I suspect many think they are being shrewd by having their money professionally managed--since they are paying, it must be that their returns will be superior to a TDF or simple portfolio. BTW, I accept that there might be some managers who have special insight and can beat the market. But just as sure as the Lord made little green applies, none of these wizards are going to manage my money for 1%. And I have no brief against advisors who teach the client how to set up a portfolio and charge a one-time fee, even a large one.
Agree 100% there. Nothing makes my blood boil more than an advisor who misrepresents what they'll be doing and why the customer should be with them. An advisor worth their salt should tell people essentially what bogleheads say: "no one knows what the markets will do, we'll get you set up in a well diversified portfolio, we'll keep your costs low, and I'm mostly here to keep you on the right path, and provide guidance on life events like rollovers,RMDs, taxes, when spouse dies. Oh and here's how I'm compensated, and I'm a fiduciary. Do you think you want/need someone like me or would you rather manage it yourself?"
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Re: Vanguard: "more expensive not to get financial advice"

Post by protagonist »

starboi wrote: Wed Sep 21, 2022 7:36 pm Vanguard posted a video on Twitter featuring Tom Rampulla, managing director of Vanguard Financial Advisor Services. Tom claims that "it's more expensive not to get financial advice."

https://twitter.com/Vanguard_Group/stat ... 4995799040

This seems to contradict the Bogleheads® investment philosophy, which states:

"Successful investing is not a complicated process, and can be accomplished by anyone with a small amount of effort...there is no need to watch the markets or follow financial news."
Consider Vanguard's statement the same way you would consider any other ad by a company clamoring for your business. Tom's wealth is dependent on selling stuff to you.
We on Bogleheads have no incentive to push products. We are just here to help each other.
The more you learn on your own, the more you will be able to sift through advice and figure out what makes sense to you (regardless of whether or not you hire others, or follow the "Bogleheads approach").
Given that you are dealing with your life's savings, I think learning how to manage it is critical, so even if you hire others you can evaluate their advice critically. So many people spend more time deliberating over what pair of shoes to buy on Amazon than what to do with their entire nest egg. IMHO, nobody should just trust strangers blindly with their finances, even if finance bores you . In my case I find many other things much more interesting, but I also realize how important this is.
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Re: Vanguard: "more expensive not to get financial advice"

Post by afan »

Minty wrote: Wed Sep 21, 2022 8:26 pm
arcticpineapplecorp. wrote: Wed Sep 21, 2022 7:52 pm but it's also true that for some people who are prone to panic selling, market timing, FOMO and general anxiety over volatility they probably would do better with an advisor because one boneheaded move can be much more costly than the 0.30% per year Vanguard charges for PAS.
I think you are quite right. But IMHO folks who are inclined to mistakes and errors in judgment in some area of life should first try to correct them them before resorting to more expensive options. For example, if someone is an unskilled, dangerous driver, that is a serious practical problem which every reasonable person would agree should be addressed. But I would recommend taking some driving lessons from a good instructor as a first step, rather than, say, giving up one's driver's license, and hiring a driver. Going to Edward James is hiring a driver; using Vanguard PAS is hiring one of the cheapest drivers available, but still hiring a driver. Vanguard PAS, like the high-fee advisors, teach investors nothing; that is, the business model rests on lifetime client ignorance. Of course, at the end of the day, some people are simply incapable of driving, investing for themselves, or whatever, but I believe that is a very small number.
I view it as getting the right kind of help.

If someone is prone to making hasty decisions in a panic, then they should see a psychologist, not hire an AUM investment advisor. The psychologist is an expert in managing panic disorders and charges far less than an AUM manager. And the AUM manager has no professional qualifications for managing the psychological problems. PAS would charge $3,000 to manage a $1M portfolio. That would pay for a lot of time with a high quality shrink. With therapy delivered by a qualified person, to the problem at hand.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
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Re: Vanguard: "more expensive not to get financial advice"

Post by Mitchell777 »

It depends on the quality of the advise and the cost. Years ago, I went with my mother to see a financial advisor who her colleagues were using. She was told "it does not cost you anything". The first thing he did was show us a client list incl people my mother worked with. She found later those people did not authorize their names being on the list. He wanted to put her in a balanced fund, similar to Wellington, with a 1.75% ER (Class C shares). When I called later and told him we were going in a different direction, he became quite nasty and hung up on me when, in response, I told him I felt he was ripping off the elderly. His clients told my mother that every year he takes them out for a steak dinner. They had no idea that dinner was costing them thousands of dollars. I live in a low to medium COL area and he has a $1M+ home so he's doing well. So, I'm not against advise but buyer beware.
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Re: Vanguard: "more expensive not to get financial advice"

Post by Lionel Hutz »

afan wrote: Thu Sep 22, 2022 4:37 pm If someone is prone to making hasty decisions in a panic, then they should see a psychologist, not hire an AUM investment advisor. The psychologist is an expert in managing panic disorders and charges far less than an AUM manager. And the AUM manager has no professional qualifications for managing the psychological problems. PAS would charge $3,000 to manage a $1M portfolio. That would pay for a lot of time with a high quality shrink. With therapy delivered by a qualified person, to the problem at hand.
See a psychologist for panic selling when they see their account down 20 or 40%? Come on man.
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