Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

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Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

Post by LadyGeek » Mon May 14, 2018 4:06 pm

Erin Arvedlund, Philadelphia Inquirer Staff Writer, had an assignment when she attended the previous Philadelphia Bogleheads chapter meeting on February 10, 2018 - to give a presentation at the next meeting about Vanguard's Personal Advisor Service.

She gave her presentation to the Philadelphia chapter meeting on Saturday, May 12.

This is what she presented: Vanguard's hybrid robo-advisor creates Amazon-like fear among competitors; Bogleheads say robo can be great training
We asked financial analysts, Vanguard competitors, and Bogleheads — fans of Vanguard founder John Bogle — for their thoughts about the Vanguard Personal Advisor Services (PAS).

...PAS is “a lot like training wheels,” wrote one on Bogleheads.org, the website maintained by followers of Bogle.

...What Bogleheads don’t like about PAS? Being forced to sell their old funds to get into PAS’s new funds.
The last part of the quote was a major discussion point at the local meeting.

(The thread title is too long to fit. I took some creative liberties to shorten it.)
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Re: Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

Post by PFInterest » Mon May 14, 2018 4:46 pm

who is the training wheels quote attributed to? @retiredjg?

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Re: Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

Post by LadyGeek » Mon May 14, 2018 6:47 pm

There's no attribution, but I'd say it's from this post: Subject: Thanks! We just let our VG PAS advisor go...
retiredjg wrote:
Tue Dec 05, 2017 6:10 pm
I love the fact that Vanguard's PAS can be used as "training wheels" and you can transition to a DIY mode any time you want. I don't think it works that way at many of the other advisory services.
Also, lafder is quoted. I found the post here: Re: Use VG PAS for transfer from my current advisor?
Lafder wrote:
Wed Jan 24, 2018 10:17 am
Welcome here!

If you are comfortable posting here and entering orders on the Vanguard website (an advisor can talk you through it if you have questions), then you do not need to pay for PAS services.

PAS services are most useful if you really want to be a hands off investor. They will tell you what investments to make, and contact you when rebalancing is necessary to meet your set asset allocation.

If you write out an investment plan, folks here can help you do that, and help you make decisions on rebalancing.

As mentioned, you do not need PAS services to move your money. Vanguard's concierge service is glad to help you jump through any needed forms and signatures to get your money transferred to them.

It may be possible to transfer your taxable assets "in kind" so that no sales are made at the current brokerage. Then sales can be figured out over time. Sometimes it does make sense (least fees) to liquidate at your current brokerage and transfer cash. Due to capital gains taxes, sometimes it is worth holding onto a long held fund or stock rather than paying the taxes to change it. Or worth planning sales over several years. This is not an issue in retirement accounts, since changing holdings within the account is not a taxable event.

If you list your current taxable holdings in more detail, with the amount of gains or losses, we can talk more about it.

lafder
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Re: Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

Post by Miriam2 » Mon May 14, 2018 7:06 pm

LadyGeek wrote: This is what she presented: Vanguard's hybrid robo-advisor creates Amazon-like fear among competitors; Bogleheads say robo can be great training
We asked financial analysts, Vanguard competitors, and Bogleheads — fans of Vanguard founder John Bogle — for their thoughts about the Vanguard Personal Advisor Services (PAS).

...PAS is “a lot like training wheels,” wrote one on Bogleheads.org, the website maintained by followers of Bogle.

...What Bogleheads don’t like about PAS? Being forced to sell their old funds to get into PAS’s new funds.
The last part of the quote was a major discussion point at the local meeting.
I'm interested in what your local Bogleheads had to say about this :?:

At a South Florida local chapter meeting two years ago, we were fortunate to have a Vanguard PAS advisor come to our meeting and discuss what they do, and he engaged in a lively Q & A session with us. He said that he works with each client to create a portfolio for them, and that although Vanguard favors index funds, if the client owned actively managed funds - and we expressly discussed this in reference to Wellington and Wellesley - that the client wished to keep, the PAS would be able to fashion a portfolio around the client's interests, that PAS is not restricted to index funds.

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Re: Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

Post by retiredjg » Mon May 14, 2018 7:14 pm

Not me. :happy

I have certainly used the analogy several times, but I didn't think it up. Someone else did that, but I don't know who. I read it here somewhere awhile back.

I thought it was a very good description of how Vanguard's PAS could be used if a person wanted to go that route. That's one of the things I like about the Vanguard program. If you decide to get out, you can just keep the good low cost portfolio and carry on.

We've seen how it works with some other advisors and fund companies - just a freaking mess that takes years and lots of tax dollars and unimaginable stress to get straight. Vanguard doesn't do that to people.

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Re: Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

Post by LadyGeek » Mon May 14, 2018 7:54 pm

Miriam2 wrote:
Mon May 14, 2018 7:06 pm
LadyGeek wrote: This is what she presented: Vanguard's hybrid robo-advisor creates Amazon-like fear among competitors; Bogleheads say robo can be great training
We asked financial analysts, Vanguard competitors, and Bogleheads — fans of Vanguard founder John Bogle — for their thoughts about the Vanguard Personal Advisor Services (PAS).

...PAS is “a lot like training wheels,” wrote one on Bogleheads.org, the website maintained by followers of Bogle.

...What Bogleheads don’t like about PAS? Being forced to sell their old funds to get into PAS’s new funds.
The last part of the quote was a major discussion point at the local meeting.
I'm interested in what your local Bogleheads had to say about this :?:

At a South Florida local chapter meeting two years ago, we were fortunate to have a Vanguard PAS advisor come to our meeting and discuss what they do, and he engaged in a lively Q & A session with us. He said that he works with each client to create a portfolio for them, and that although Vanguard favors index funds, if the client owned actively managed funds - and we expressly discussed this in reference to Wellington and Wellesley - that the client wished to keep, the PAS would be able to fashion a portfolio around the client's interests, that PAS is not restricted to index funds.
Are we talking about the same company? :) I hope I remember everything correctly. If not, anyone who attended the meeting is more than welcome to correct me.

First, there was a general consensus that Vanguard is going after the low-hanging fruit. IOW, anyone who's not a Boglehead.

If you have no idea what to do, it's a great solution. "Here Vanguard, I have no idea what to do, you just take care of it." Everyone is happy.

Vanguard is going to shoe-horn you into a 3-fund portfolio and rebalance quarterly. From a Boglehead perspective, why pay someone to do that?

Further, Vanguard will not invest in anything but a 3-fund portfolio. It's a cookie-cutter solution with no room for tweaking. Suppose I want a different fund? You're out of luck.

What if you have existing funds and want to use the PAS service? Sell your funds, which is a taxable event. Wait, what? Sell my funds? Yup. No transfer-in-kind. Are you kidding? No. Do other advisory services allow you to transfer funds? Yes (but I don't remember who).

There was a discussion about Betterment and Wealthfront. Both of these advisors provide Tax loss harvesting, but Vanguard does not. I brought up the point that tax loss harvesting has absolutely no - zero - effect on tax deferred (retirement) accounts. You can trade all day long from Fund A to Fund B in a retirement account, no taxes are paid on these transactions. In a taxable account, you need to be careful. Additionally, the theoretical benefits of tax loss harvesting may not be realized in practice.

There was also a discussion that you don't get your own personal advisor. You get whoever is available to help you at that time. (There was a discussion about getting a rep if you had Flagship status, but that's a customer rep - not an advisor.)
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Re: Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

Post by nisiprius » Tue May 15, 2018 8:34 am

LadyGeek wrote:
Mon May 14, 2018 7:54 pm
...Vanguard is going to shoe-horn you into a 3-fund portfolio and rebalance quarterly...
Nitpick: without actually dealing with them, I can't be sure what they would do, but I would be surprised if it is not a four-fund portfolio these days (i.e. Vanguard Total Bond Market Index Fund and Vanguard Total International Bond Index Fund), as in their LifeStrategy and later-retirement-date Target Retirement funds.
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Re: Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

Post by Barry Barnitz » Wed May 16, 2018 4:14 pm


First, there was a general consensus that Vanguard is going after the low-hanging fruit. IOW, anyone who's not a Boglehead.

If you have no idea what to do, it's a great solution. "Here Vanguard, I have no idea what to do, you just take care of it." Everyone is happy.


Perhaps. However objective information reveals that 90% of Vanguard PAS assets come from existing Vanguard investors.
"A growing number of our clients are entrusting their assets to PAS and benefiting from our high-tech, high-touch approach to advice," Vanguard spokesman Timothy Stokes told FinancialPlanning. "We believe our model, which integrates a robust online experience, advanced technology, and a human advisor, will continue to resonate with clients seeking comprehensive financial planning services to help them reach their goals and achieve financial peace of mind."

According to Stokes, 90% of the platform's $101 billion in assets under management as of the end of 2017 are from existing clients.
Read more: Vanguard's Digital Advice Platform Is First to Pass $100B in AUM | Investopedia

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Re: Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

Post by CollegePrudens » Wed May 16, 2018 4:20 pm

nisiprius wrote:
Tue May 15, 2018 8:34 am
LadyGeek wrote:
Mon May 14, 2018 7:54 pm
...Vanguard is going to shoe-horn you into a 3-fund portfolio and rebalance quarterly...
Nitpick: without actually dealing with them, I can't be sure what they would do, but I would be surprised if it is not a four-fund portfolio these days (i.e. Vanguard Total Bond Market Index Fund and Vanguard Total International Bond Index Fund), as in their LifeStrategy and later-retirement-date Target Retirement funds.
Add 529 balanced (target risk) funds to the list of 4-fund portfolio examples at Vanguard.
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Re: Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

Post by Miriam2 » Wed May 16, 2018 5:11 pm

LadyGeek wrote: ...What Bogleheads don’t like about PAS? Being forced to sell their old funds to get into PAS’s new funds.
The last part of the quote was a major discussion point at the local meeting.
Miriam2 wrote: I'm interested in what your local Bogleheads had to say about this :?:

At a South Florida local chapter meeting two years ago, we were fortunate to have a Vanguard PAS advisor come to our meeting and discuss what they do, and he engaged in a lively Q & A session with us. He said that he works with each client to create a portfolio for them, and that although Vanguard favors index funds, if the client owned actively managed funds - and we expressly discussed this in reference to Wellington and Wellesley - that the client wished to keep, the PAS would be able to fashion a portfolio around the client's interests, that PAS is not restricted to index funds.
LadyGeek wrote:Are we talking about the same company? :) I hope I remember everything correctly. If not, anyone who attended the meeting is more than welcome to correct me. . . .

Vanguard is going to shoe-horn you into a 3-fund portfolio and rebalance quarterly. From a Boglehead perspective, why pay someone to do that?

Further, Vanguard will not invest in anything but a 3-fund portfolio. It's a cookie-cutter solution with no room for tweaking. Suppose I want a different fund? You're out of luck.

What if you have existing funds and want to use the PAS service? Sell your funds, which is a taxable event. Wait, what? Sell my funds? Yup. No transfer-in-kind. Are you kidding? No. . . .

There was also a discussion that you don't get your own personal advisor. You get whoever is available to help you at that time. (There was a discussion about getting a rep if you had Flagship status, but that's a customer rep - not an advisor.)
I wonder if there is a difference in the suggested portfolio by Vanguard if one has an "advisor" via PAS as opposed to a "customer rep" with Flagship status? Our Vanguard representative, however, discussed the creation of personal portfolios on all levels of investment balances, not Flagship status alone.

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Re: Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

Post by Veritas Simplex » Wed May 16, 2018 8:25 pm

nisiprius wrote:
Tue May 15, 2018 8:34 am
Nitpick: without actually dealing with them, I can't be sure what they would do, but I would be surprised if it is not a four-fund portfolio these days (i.e. Vanguard Total Bond Market Index Fund and Vanguard Total International Bond Index Fund), as in their LifeStrategy and later-retirement-date Target Retirement funds.
[ quote formatted by admin LadyGeek]

This is correct, PAS utilizes the 4 fund portfolio and often adds the recommendation of Short-Term Investment Grade and Intermediate-Term Investment Grade funds.

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Re: Philly.com: Bogleheads say Vanguard's hybrid robo-advisor can be great training

Post by afan » Thu May 17, 2018 9:50 am

My understanding was that you DO get your own advisor if assets are >$500,000.

Not that having your own advisor is of any more value than having your own Flagship rep. You need advice from a competent person. It does not matter whether it is the same person every time. Probably better if it is not. Get more than one perspective. The advisors seem to have far too many clients to remember them or the details of their financial circumstances.

Disappointing that they have no plans to lower the cost. If they got it down to 0.1% or better then it might be of use to a boglehead for the convenience alone. 0.3% to do nothing 99.99% of the time is way too much.
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