Vanguard PAS vs. Schwab Intelligent Advisory service..

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Ykcor
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Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by Ykcor » Thu Jan 10, 2019 9:03 pm

Trying to decide. Both basically robo-advise with access to a personal financial advisor. Vanguard charges 0.3% with no cap whereas Schwab charges 0.28% with a $900 per quarter cap. To me it seems like a no-brainer.

afan
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Re: Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by afan » Fri Jan 11, 2019 10:18 am

It would be a no brainer if the fees were the only difference.

Schwab manages the portfolios the same way as it's free Intelligent Portfolio. It uses a large number of funds, most of which you don't need.

The expense ratios of the funds are ok overall, but the extraneous funds have fees higher than VTI.

Schwab forces you to keep a large cash allocation on which it pays low interest rates. The difference between this and keeping no cash in the managed account is effectively another cost, not included in the capped fee.

Schwab is up front about the fact that they do this to make a profit on the cash allocation.

You would have to look at the size of your portfolio is worth the cash drag. Depending on how much Schwab forced into cash you could be better off at Vanguard.

You need to look more closely at the two services to see which is the better fit for you.
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nedsaid
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Re: Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by nedsaid » Fri Jan 11, 2019 10:27 am

Vanguard will offer a relatively simpler portfolio, maybe 4-6 funds or so. Schwab will offer a relatively complex portfolio with maybe 15 funds and ETFs. Either would be a good option though most here would opt for simplicity.
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Topic Author
Ykcor
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Re: Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by Ykcor » Fri Jan 11, 2019 6:03 pm

Vanguard seems to use index funds and Schwab uses ETFs. Any advantage to either.

livesoft
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Re: Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by livesoft » Fri Jan 11, 2019 6:23 pm

ETFs are index funds -- they are just exchange traded.

There have been quite a number of posts on the forum with "I have too many ETFs [or stocks] because I followed a roboadvisor, how do I get out?" To my knowledge there have been no posts on the forum with "I have too few index funds, so how do I make it more complicated."
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Topic Author
Ykcor
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Re: Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by Ykcor » Sat Jan 26, 2019 6:24 pm

Update: I can't use either PAS or Schwab Intelligent Advisor because of ERISA rules. I'm still employed and much of my investments are in my Profit Sharing plan.

retiredjg
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Re: Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by retiredjg » Sat Jan 26, 2019 6:28 pm

Ykcor wrote:
Sat Jan 26, 2019 6:24 pm
Update: I can't use either PAS or Schwab Intelligent Advisor because of ERISA rules. I'm still employed and much of my investments are in my Profit Sharing plan.
Even when you get to the point you can invest with either Vanguard's PAS or Schwab Intelligent Advisory service, don't consider anything based on that difference in cost. The difference is a few cups of expensive coffee a year. And the "savings" will likely be lost to the large allocation that Schwab puts in cash/money market.

Nate79
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Re: Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by Nate79 » Sat Jan 26, 2019 6:31 pm

retiredjg wrote:
Sat Jan 26, 2019 6:28 pm
Ykcor wrote:
Sat Jan 26, 2019 6:24 pm
Update: I can't use either PAS or Schwab Intelligent Advisor because of ERISA rules. I'm still employed and much of my investments are in my Profit Sharing plan.
Even when you get to the point you can invest with either Vanguard's PAS or Schwab Intelligent Advisory service, don't consider anything based on that difference in cost. The difference is a few cups of expensive coffee a year. And the "savings" will likely be lost to the large allocation that Schwab puts in cash/money market.
Schwab matches cash with higher yielding yet riskier bonds. The end result is that the yield of the fixed income portion will be at or above the equivalent Vanguard portfolio of fixed income funds.

Nthomas
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Re: Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by Nthomas » Sat Jan 26, 2019 6:32 pm

retiredjg wrote:
Sat Jan 26, 2019 6:28 pm
Ykcor wrote:
Sat Jan 26, 2019 6:24 pm
Update: I can't use either PAS or Schwab Intelligent Advisor because of ERISA rules. I'm still employed and much of my investments are in my Profit Sharing plan.
Even when you get to the point you can invest with either Vanguard's PAS or Schwab Intelligent Advisory service, don't consider anything based on that difference in cost. The difference is a few cups of expensive coffee a year. And the "savings" will likely be lost to the large allocation that Schwab puts in cash/money market.
Schwab caps the fee at 1.4M. I guess it depends on how much you are going to invest on whether it’s a few cups of coffee difference.

retiredjg
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Re: Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by retiredjg » Sat Jan 26, 2019 7:12 pm

It's not that hard to spend $200 a year at Starbucks. :D

Nthomas
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Joined: Fri Jul 15, 2016 8:46 am

Re: Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by Nthomas » Sat Jan 26, 2019 7:23 pm

retiredjg wrote:
Sat Jan 26, 2019 7:12 pm
It's not that hard to spend $200 a year at Starbucks. :D
Very true, it's not! :sharebeer

However, at 2M
Schwab 900/quarter = 3600 max
PAS 0.3% x 2M = 6000 with no cap. 3k/yr/million

$2400 is a lot of lattes.

sharukh
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Re: Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by sharukh » Sat Jan 26, 2019 11:12 pm

3 fund etf portfolio at m1 finance

simas
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Re: Vanguard PAS vs. Schwab Intelligent Advisory service..

Post by simas » Sun Jan 27, 2019 8:19 am

I think you are comparing apples to oranges, focusing on things that are irrelevant and instead missing things that may be real...
These are completely different business offerings and different value offerings, advisor services (with asset allocation if you want it) vs robo advisor.
Nothing wrong with either, but they are not anywhere close to be the same.

things that are real
- value of being able to sit in front of the human in the 'branch'. how valuable is it to you? how close is Schwab branch to where you live/work?
- additional services, cash management, ability to go far beyond MF/etfs in trading (futures, options, etc), ability to work with Schwab outside of US . Again, a international broker dealer +bank combination vs US focused mutual fund company.
- the costs involved with 'cash drag', they would be 30 bps by itself. Schwab has deliberately designed it (and fully disclosed it) as company is (and will be ) making money on the spread which is how the business works.

if you want more services than Vanguard provides, want a branch -> Schwab is a good place to do in (same with Fidelity). Well run, good customer services, good/decent technology.
If you do not care about 'talking to human face to face' and want investments out of your investments, why deal with any organization that would ALWAYS have built in conflict of interest between serving you and serving its shareholders/owners?

We have money with both and I used to work for Schwab

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