Getting a Certified Financial Planner with Vanguard?

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webenterpreneur
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Getting a Certified Financial Planner with Vanguard?

Post by webenterpreneur » Fri Nov 16, 2012 12:54 pm

I was just on the phone with Vanguard for 2 hours yesterday regarding on moving forward with my investment with Vanguard Target Retirement Funds.

I was able to get good and sensible advice from the person I was with on the phone. He was very helpful and informative. They do not make any commissions, so that means he won't have a high level of bias on selling.

I am in a situation now of determining how much to begin with. Although I have 6 figures in my bank that I am planning to invest in, since this will be my first time investing, I wanted to take a slow and easy approach, just to make sure I am on the right track.

To begin with, I am deciding to start off dollar cost averaging with either $50k or $100k, and continually invest every month thereafter another $50k until I have invested my entire budget for investing.

Now if I invest either amount, I will be able speak to a Certified Financial Planner that will assist me on planning out my investments and my goals, on which investment to go with given my goals. This will just be to decide which investment is right for me. If I invest with a minimum of $100k, I will have a dedicated Senior Certified Financial Planner, who is more tenured and experienced. Would it make a big difference on having a Senior Certified Financial Planner?

Also, Vanguard also have a service which is an entire Financial Advising Plan, which costs $250. It is a consultation on a higher level of financial goals, such as my personal goals in life, what I want to achieve in life, where I want to live, etc. Anyone have any opinions on this service? Do you think this is right for me?

david99
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Re: Getting a Certified Financial Planner with Vanguard?

Post by david99 » Fri Nov 16, 2012 1:10 pm

It's probably a good idea to go with the Senior CFP.

The financil planning service that you pay for at Vanguard is also a good idea if you are investing 6 figures. I've heard that it is a "cookie cutter" service but I'm sure that they will design it to your particular needs and situation.
Last edited by david99 on Mon Nov 19, 2012 9:48 pm, edited 1 time in total.

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tfb
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Re: Getting a Certified Financial Planner with Vanguard?

Post by tfb » Fri Nov 16, 2012 3:57 pm

webenterpreneur wrote:Now if I invest either amount [$50k or $100k], I will be able speak to a Certified Financial Planner that will assist me on planning out my investments and my goals, on which investment to go with given my goals. This will just be to decide which investment is right for me. If I invest with a minimum of $100k, I will have a dedicated Senior Certified Financial Planner, who is more tenured and experienced.
How did you get this deal? I thought in order to get the "Ask a CFP" service you have to have $500k minimum.
Harry Sit, taking a break from the forums.

workless
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Re: Getting a Certified Financial Planner with Vanguard?

Post by workless » Sat Nov 17, 2012 6:58 pm

tfb wrote:
webenterpreneur wrote:Now if I invest either amount [$50k or $100k], I will be able speak to a Certified Financial Planner that will assist me on planning out my investments and my goals, on which investment to go with given my goals. This will just be to decide which investment is right for me. If I invest with a minimum of $100k, I will have a dedicated Senior Certified Financial Planner, who is more tenured and experienced.
How did you get this deal? I thought in order to get the "Ask a CFP" service you have to have $500k minimum.

OP said he has six figures which could well be over 500K.

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Re: Getting a Certified Financial Planner with Vanguard?

Post by noyopacific » Sat Nov 17, 2012 8:43 pm

david99 wrote:It's probably a good idea to go with the Senior CFP.

The financil planning service that you pay for at Vanguard is also a good idea if you are investing 6 figures. I've heard that it is a "cooky cutter" service but I'm sure that they will design it to your particular needs and situation.
We've used Vanguard's CFP service a couple of times. Prior to that, we had used an independent CFP and then a broker at Schwab. And while the Vanguard CFP's approach was somewhat "Cookie Cutter," I never believed that our situation was particularly unique. While I always encourage friends to take a simple index fund based approach and manage it themselves, my follow-up recommendations are getting advice at Bogleheads and/or from a Vanguard CFP.
I also try to stress the need to understand risk-tolerance and the importance of staying the course but until our endurance is put to the test, it is difficult to predict how we will react. When I was younger, I probably possessed less risk-tolerance than I believed but fortunately, was stubborn enough to hang on until things improved. Having survived, even prospered after a couple of "market corrections" I have less worry about short-term market risks.
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TheGreyingDuke
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Re: Getting a Certified Financial Planner with Vanguard?

Post by TheGreyingDuke » Sun Nov 18, 2012 4:16 am

I had my son, newly employed and married, speak with a CFP at Vanguard, just to get him and my daughter-in-law to explain their situation to someone other than me and do a bit of independent thinking. The review was professional and to the point, but there were two things that I thought needed tweaking.

In the account is a sizable amount of GNMA with some LTCG; I thought the recommendation to put the bond assets it Total Bond should have taken this into account, given TBM's 26% holding of similar assets.I thought that Intermediate Term Index made a better fit, given its lack of GNMA-like assets. But this is a small point.

The other tweaking was that when my son spoke with the CFP he told him that he was planning to buy a house in 6 months and was told to keep the money in the money market, this when he could buy a 6 month CD (at Vanguard) paying ten times the interest. Again, small change (about $750) but why leave it on the table?
"Every time I see an adult on a bicycle, I no longer despair for the future of the human race." H.G. Wells

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Re: Getting a Certified Financial Planner with Vanguard?

Post by 618744 » Sun Nov 18, 2012 5:43 pm

workless wrote:OP said he has six figures which could well be over 500K.
We signed up for the $250 financial plan, but upon hearing we were rolling over about $225k to Vanguard, they waived the fee. We spoke to one of their CFPs for about 1/2 hour regarding the plan
and our goals,investments, etc. He made basic recommendations regarding changes to AA, funds to choose and how to allocate our contributions going forward . They validated what we had planned to do anyway,
but our approach is to keep it simple. For us, I don't know what additional benefit a "Senior " CFP could have offered.

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Leif
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Re: Getting a Certified Financial Planner with Vanguard?

Post by Leif » Mon Nov 19, 2012 5:09 pm

In my experience the Vanguard service is not too valuable. I paid nothing for it, but I found it expensive.

In my experience what was recommnded was of course all Vanguard funds, plus 50% active and 50% index funds. They recommended selling all my non-Vanguard funds, reguardless of the tax consequences. Unfortunately, that before finding this site and getting an education here.

Now I have all index tax efficient funds. You can get a free valuable advice here, or go with an advisor that is not independent and get advice that may not be in your best interest. I think you will get far better advice here.

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Re: Getting a Certified Financial Planner with Vanguard?

Post by dbr » Mon Nov 19, 2012 5:25 pm

Leif Eriksen wrote: In my experience what was recommnded was of course all Vanguard funds, plus 50% active and 50% index funds. They recommended selling all my non-Vanguard funds, reguardless of the tax consequences. Unfortunately, that before finding this site and getting an education here.
It would be typical of a fund salesman to not provide tax advice, in fact a really bad idea for a fund salesman to attempt tax advice. But isn't a CFP supposed to be trained in tax planning and have a fiduciary responsibility not to favor in house funds to tax disadvantage of the investor? If the above was not confusion or some kind of miscommunication this is a very black mark on Vanguard. Note it might have been good advice to sell those funds in spite of rather than regardless of the tax consequences. That would not be a black mark on Vanguard.

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Re: Getting a Certified Financial Planner with Vanguard?

Post by Kuckie » Mon Nov 19, 2012 5:40 pm

Leif Eriksen wrote: In my experience what was recommended was of course all Vanguard funds, plus 50% active and 50% index funds. They recommended selling all my non-Vanguard funds, regardless of the tax consequences. Unfortunately, that before finding this site and getting an education here.
Without knowing the funds that were involved one cannot say whether the Vanguard adviser was right or wrong in telling you to sell non-Vanguard funds. Perhaps those funds had high expense ratios and he felt it would be better to bite the bullet now, before taxes rise, than continue to hold them and endure lower returns and/or higher risk year after year

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Leif
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Re: Getting a Certified Financial Planner with Vanguard?

Post by Leif » Mon Nov 19, 2012 7:12 pm

They recommended I buy Vanguard US Growth. When I question their choice of an active fund I was told I should have Active vs Index diversification. They call it diversifying by strategy.

Another question I had was a recommendation to sell my Vanguard Capital Opportunity fund. I said I would incur a charge for selling early (I don't recall the holding period required, perhaps 5 years). They did not change their recommendation. I've also question myself in accepting that recommendation and incurring the fee.

This was prepared in 2003 from Vanguard Personal Financial Planning Services.

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Kuckie
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Re: Getting a Certified Financial Planner with Vanguard?

Post by Kuckie » Mon Nov 19, 2012 7:45 pm

Leif Ericson wrote: They recommended I buy Vanguard US Growth. When I question their choice of an active fund I was told I should have Active vs Index diversification. They call it diversifying by strategy.
That sure seems like bad advice. Why would anyone want to buy an active fund like US Growth with an ER of 0.44% and total net assets of less than 4 billion when they can buy the tax efficient Total Stock Market Fund with an ER of 0.18 /(0.06% Admiral) and net assets of $200 billion or the Growth Index fund with ER of .24% /( .10% Admiral) and a net asset value of $24 billion.

Why would anyone want to buy any active fund if there is a comparable low cost index fund available? Hopefully that adviser is long gone and thankfully you got a second opinion.

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Re: Getting a Certified Financial Planner with Vanguard?

Post by LadyGeek » Mon Nov 19, 2012 7:53 pm

Ths thread is now in the Personal Finance (Not Investing) forum (financial planning).
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Leif
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Re: Getting a Certified Financial Planner with Vanguard?

Post by Leif » Mon Nov 19, 2012 7:59 pm

Kuckie wrote:
Leif Ericson wrote: They recommended I buy Vanguard US Growth. When I question their choice of an active fund I was told I should have Active vs Index diversification. They call it diversifying by strategy.
That sure seems like bad advice. Why would anyone want to buy an active fund like US Growth with an ER of 0.44% and total net assets of less than 4 billion when they can buy the tax efficient Total Stock Market Fund with an ER of 0.18 /(0.06% Admiral) and net assets of $200 billion or the Growth Index fund with ER of .24% /( .10% Admiral) and a net asset value of $24 billion.

Why would anyone want to buy any active fund if there is a comparable low cost index fund available? Hopefully that adviser is long gone and thankfully you got a second opinion.
The answer is very simply. No one would, if they knew. However, remember that Vanguard has BOTH active and index funds. If Vanguard planners only recommended index funds their active side of the house would have a riot. As always, follow the money.

I doubt that he was a rogue planner. Unfortunately I did not get a second opinion. Later, with the help of books from Bill and Larry and this site and the diehards, I developed a much better portfolio.

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Re: Getting a Certified Financial Planner with Vanguard?

Post by Kuckie » Mon Nov 19, 2012 9:03 pm

Leif Ericson wrote: I doubt that he was a rogue planner. Unfortunately I did not get a second opinion. Later, with the help of books from Bill and Larry and this site and the diehards, I developed a much better portfolio.
Vanguard was, IMO, at the peak of perfection when John Bogle was at the helm but after he was forced (by age policy) to give up the ship, not without a fight, the company has focused more on marketing and less on shareholder support. So that may be why you have received bad advice. BTW I have never used their planning services and, like you, have gotten all my advice from books by John Bogle and others listed here: http://www.bogleheads.org/readbooks.htm

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Re: Getting a Certified Financial Planner with Vanguard?

Post by Jerilynn » Mon Nov 19, 2012 9:46 pm

Leif Eriksen wrote:
In my experience what was recommnded was of course all Vanguard funds, plus 50% active and 50% index funds.
Interesting, I always wondered if they tried to push the active funds.
Cordially, Jeri . . . 100% all natural asset allocation. (no supernatural methods used)

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Re: Getting a Certified Financial Planner with Vanguard?

Post by JamesSFO » Mon Nov 19, 2012 10:13 pm

Jerilynn wrote:
Leif Eriksen wrote:
In my experience what was recommnded was of course all Vanguard funds, plus 50% active and 50% index funds.
Interesting, I always wondered if they tried to push the active funds.
I did ask a CFP earlier in 2012 and they recommended a 3 fund portfolio, TBM, TSM, TIntl. My sense was this was the software not the particular CFP, so not sure whether the CFPs can customize it for various reasons.

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Re: Getting a Certified Financial Planner with Vanguard?

Post by KyleAAA » Mon Nov 19, 2012 10:24 pm

Leif Eriksen wrote: The answer is very simply. No one would, if they knew. However, remember that Vanguard has BOTH active and index funds. If Vanguard planners only recommended index funds their active side of the house would have a riot. As always, follow the money.
Actually, I specifically recall seeing some academic research supporting a mostly-index-with-some-active approach in more than one place. I don't remember the details, but there is definitely an academic basis for such an approach. I believe Vanguard has published a similar paper in the past. Whether or not the research pans out is another question, but it's there.

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Re: Getting a Certified Financial Planner with Vanguard?

Post by Leif » Mon Nov 19, 2012 10:55 pm

KyleAAA wrote:
Leif Eriksen wrote: The answer is very simply. No one would, if they knew. However, remember that Vanguard has BOTH active and index funds. If Vanguard planners only recommended index funds their active side of the house would have a riot. As always, follow the money.
Actually, I specifically recall seeing some academic research supporting a mostly-index-with-some-active approach in more than one place. I don't remember the details, but there is definitely an academic basis for such an approach. I believe Vanguard has published a similar paper in the past. Whether or not the research pans out is another question, but it's there.
I always wanted to ask Jack what he thought about that. I would expect he would say you are paying extra for active, with no extra expected return.

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Leif
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Re: Getting a Certified Financial Planner with Vanguard?

Post by Leif » Mon Nov 19, 2012 10:59 pm

KyleAAA wrote:
Leif Eriksen wrote: The answer is very simply. No one would, if they knew. However, remember that Vanguard has BOTH active and index funds. If Vanguard planners only recommended index funds their active side of the house would have a riot. As always, follow the money.
Actually, I specifically recall seeing some academic research supporting a mostly-index-with-some-active approach in more than one place. I don't remember the details, but there is definitely an academic basis for such an approach. I believe Vanguard has published a similar paper in the past. Whether or not the research pans out is another question, but it's there.
It is true that sometimes active will outperform. However, like picking a winning fund, the odds (expenses, turn-over) are against you.

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Re: Getting a Certified Financial Planner with Vanguard?

Post by stlutz » Mon Nov 19, 2012 11:18 pm

I would note that Leif's plan was prepared in 2003. I think VG's approach has changed since then to move toward 3 fund portfolios (kind of like they did with the Life Strategy funds).

Back to the original question, I would go for the $250 plan from VG. I think everyone here agrees that a plan from VG may not be perfect (but then again we all disagree on what perfect looks like), but it's going to be far, far better than what you'll get from 97% of the planners/advisors out there. The plan will be somewhat cookie-cutter, but in reality all plans are, and in fact, they should be. If person A and person B are of the same age, have similar assets and incomes, and have the same number of children, their plans should be basically the same.

Finally, the cost is one-time. So, the worst that can happen is that you'll get done and decide you've wasted $250. Not good, but one doesn't have to look far to find other ways that similar amounts have been wasted.

If you need $100K invested to get advice from a "senior" planner, I would invest enough to get that level of support. If you have $500K with VG, you can get the plan for free.

If you do go for the plan, please report back and let us know how it goes!

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Re: Getting a Certified Financial Planner with Vanguard?

Post by Mr Grumpy » Tue Nov 20, 2012 8:34 am

I had them do a plan a year before I retired. From some of the comments on previous posts, I wasn't sure of the quality and customization of the CFPs, but came away from the process impressed. I laid down certain markers when I started the process - AA, index funds only. I gave them my current portfolio info they knew (mostly Vanguard Funds) and some they didn't, (there was no pressure to move the Dodge & Cox fund into Vanguard.)

We talked on the phone, they mailed me the plan and then we did a follow-up call. As I recall, the Planner answered my questions in a professional manner with no sense of the clock.

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Re: Getting a Certified Financial Planner with Vanguard?

Post by FabLab » Tue Nov 20, 2012 9:40 am

Mr Grumpy wrote:I had them do a plan a year before I retired. From some of the comments on previous posts, I wasn't sure of the quality and customization of the CFPs, but came away from the process impressed. I laid down certain markers when I started the process - AA, index funds only. I gave them my current portfolio info they knew (mostly Vanguard Funds) and some they didn't, (there was no pressure to move the Dodge & Cox fund into Vanguard.)
Per the bold portion above, my experience tells me this approach works best. Frankly, I'm often surprised at some of the reactions from those who go through the VG planning process. I do one most years and never has VG suggested I invest in one of its actively managed funds or, for that matter, sector funds (years ago, when I held the REIT index VG rather politely recommended me away from its continued inclusion and towards a portfolio of only total-market, inexpensive, broadly diversified index choices). Any dimes I have in other investments outside of VG (which I make quite clear at the outset) have never become a source of pressure during these discussions.
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Leif
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Re: Getting a Certified Financial Planner with Vanguard?

Post by Leif » Tue Nov 20, 2012 10:29 am

stlutz wrote:I would note that Leif's plan was prepared in 2003. I think VG's approach has changed since then to move toward 3 fund portfolios (kind of like they did with the Life Strategy funds).
If they have changed I'm glad to hear that. Although we don't all agree on asset allocations, I still believe the advice given here, at Bogleheads, cannot be beat. At least forewarned is forearmed.

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