JP Morgan Chase Core Portfolio vs. Vanguard

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Topic Author
Leonneillhorn
Posts: 4
Joined: Mon Jan 13, 2020 8:13 pm

JP Morgan Chase Core Portfolio vs. Vanguard

Post by Leonneillhorn » Mon Jan 13, 2020 8:27 pm

Hello everyone,

I’m new to this forum and have a quick question. When visiting my local Chase branch here in Los Angeles to put some money in a CD, I was approached by a Chase financial planner who told me I’d be better of talking to him than putting the money in a CD. I’m 31 and have around $100k of investable money (after setting up an emergency fund)

I then had a couple of meetings with the Chase financial planner and invested $80k into what’s called a JpMorgan Core investment portfolio. It’s completely liquid. (No IRA or anything like that) They set me up in a “moderately aggressive portfolio” 60/40 stocks to bonds ratio.
(I don’t foresee myself needing the money for at least 5-10 years and I’m willing to contribute at least $50k a year to my portfolio.)

Soon thereafter I quickly learned that their management fee of 1.45% is way too high and everybody on the internet seems to love Vanguard who offer the same service as Chase for only 0.3%. , that’s almost 5x less than Chase! I guess the only difference is that with Chase, I have a guy I can talk to in person, whereas Vanguard is more of a call center setup. But essentially they seem to provide very similar services in terms of setting up and managing my investment portfolio.

So, my question is: Is 1.45% justifiable at all? Is the personal advice from this Chase banker worth 5x more than what somebody with Vanguard would provide me over the phone?

Thanks everyone!

student
Posts: 4250
Joined: Fri Apr 03, 2015 6:58 am

Re: JP Morgan Chase Core Portfolio vs. Vanguard

Post by student » Mon Jan 13, 2020 8:58 pm

You can stay at Chase if you get good bank benefits but buy ETF yourself. You don't need to pay someone that much to manage your portfolio. You can even buy Vanguard funds at Chase with no cost.
Last edited by student on Mon Jan 13, 2020 9:16 pm, edited 1 time in total.

edge
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Location: NY

Re: JP Morgan Chase Core Portfolio vs. Vanguard

Post by edge » Mon Jan 13, 2020 9:04 pm

1.45% is not justified and the advice you get isn’t going to be better than VG.

Topic Author
Leonneillhorn
Posts: 4
Joined: Mon Jan 13, 2020 8:13 pm

Re: JP Morgan Chase Core Portfolio vs. Vanguard

Post by Leonneillhorn » Mon Jan 13, 2020 9:23 pm

edge wrote:
Mon Jan 13, 2020 9:04 pm
1.45% is not justified and the advice you get isn’t going to be better than VG.
Thanks! That’s what I thought. That being said, is starting an investment portfolio with Vanguard at a 0.3% fee a smarter decision than using a Roboadvisor such as M1, which charges no fee at all?

I’m a first time investor and I’m sort of familiar with stocks, bonds, Etfs etc., however, I’m not sure if I’ll be completely comfortable to just use M1 and do it all myself. I would like some guidance along the way, especially when the next recession hits.

MOST IMPORTANTLY, I don’t wanna regularly think and worry about my money. I wanna set up an investment portfolio and just let it sit and forget about it.
I do not enjoy reading financial news or wanna do research in forums like this. (As useful as it is)

I just wanna make sure I’m set up correctly from the get-go.

Also, Chase put me in a 60/40 stocks bonds ratio.

Vanguard advisor I spoke to said 90/10 would make more sense for me.

Thoughts?

And thanks again!

Grt2bOutdoors
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Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: JP Morgan Chase Core Portfolio vs. Vanguard

Post by Grt2bOutdoors » Mon Jan 13, 2020 9:43 pm

Leonneillhorn wrote:
Mon Jan 13, 2020 9:23 pm
edge wrote:
Mon Jan 13, 2020 9:04 pm
1.45% is not justified and the advice you get isn’t going to be better than VG.
Thanks! That’s what I thought. That being said, is starting an investment portfolio with Vanguard at a 0.3% fee a smarter decision than using a Roboadvisor such as M1, which charges no fee at all?

I’m a first time investor and I’m sort of familiar with stocks, bonds, Etfs etc., however, I’m not sure if I’ll be completely comfortable to just use M1 and do it all myself. I would like some guidance along the way, especially when the next recession hits.

MOST IMPORTANTLY, I don’t wanna regularly think and worry about my money. I wanna set up an investment portfolio and just let it sit and forget about it.
I do not enjoy reading financial news or wanna do research in forums like this. (As useful as it is)

I just wanna make sure I’m set up correctly from the get-go.

Also, Chase put me in a 60/40 stocks bonds ratio.

Vanguard advisor I spoke to said 90/10 would make more sense for me.

Thoughts?

And thanks again!
You indicated up above you started out with $100K and are willing to put in $50K annually. Let's assume that you do that for the next 20 years. You do not want to be paying out $15-$20K a year in expenses. If you go with Vanguard, they will manage it for you for 0.30% per year. You can use Vanguard to set you up and then you take over management of your portfolio. Management of your portfolio could take as little as 10 minutes or as much as 30 minutes. There aren't many jobs out there that pay $300 for 30 minutes work (the $300 is the effective annual management fee you would save if you took over managing it).

Asset allocation - you determine what asset allocation you are comfortable with based on your ability, need and willingness to take risk. Read the wiki for examples of an Investment Policy Statement, then you can understand how an asset allocation can be generated. https://www.bogleheads.org/wiki/Boglehe ... art-up_kit
Why did the Vanguard advisor recommend a 90/10 portfolio? You should always ask - why? if you don't understand how the recommendation could be so different than what you chose or thought it should be.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Topic Author
Leonneillhorn
Posts: 4
Joined: Mon Jan 13, 2020 8:13 pm

Re: JP Morgan Chase Core Portfolio vs. Vanguard

Post by Leonneillhorn » Mon Jan 13, 2020 9:59 pm

Grt2bOutdoors wrote:
Mon Jan 13, 2020 9:43 pm
Leonneillhorn wrote:
Mon Jan 13, 2020 9:23 pm
edge wrote:
Mon Jan 13, 2020 9:04 pm
1.45% is not justified and the advice you get isn’t going to be better than VG.
Thanks! That’s what I thought. That being said, is starting an investment portfolio with Vanguard at a 0.3% fee a smarter decision than using a Roboadvisor such as M1, which charges no fee at all?

I’m a first time investor and I’m sort of familiar with stocks, bonds, Etfs etc., however, I’m not sure if I’ll be completely comfortable to just use M1 and do it all myself. I would like some guidance along the way, especially when the next recession hits.

MOST IMPORTANTLY, I don’t wanna regularly think and worry about my money. I wanna set up an investment portfolio and just let it sit and forget about it.
I do not enjoy reading financial news or wanna do research in forums like this. (As useful as it is)

I just wanna make sure I’m set up correctly from the get-go.

Also, Chase put me in a 60/40 stocks bonds ratio.

Vanguard advisor I spoke to said 90/10 would make more sense for me.

Thoughts?

And thanks again!
You indicated up above you started out with $100K and are willing to put in $50K annually. Let's assume that you do that for the next 20 years. You do not want to be paying out $15-$20K a year in expenses. If you go with Vanguard, they will manage it for you for 0.30% per year. You can use Vanguard to set you up and then you take over management of your portfolio. Management of your portfolio could take as little as 10 minutes or as much as 30 minutes. There aren't many jobs out there that pay $300 for 30 minutes work (the $300 is the effective annual management fee you would save if you took over managing it).

Asset allocation - you determine what asset allocation you are comfortable with based on your ability, need and willingness to take risk. Read the wiki for examples of an Investment Policy Statement, then you can understand how an asset allocation can be generated. https://www.bogleheads.org/wiki/Boglehe ... art-up_kit
Why did the Vanguard advisor recommend a 90/10 portfolio? You should always ask - why? if you don't understand how the recommendation could be so different than what you chose or thought it should be.

Thanks! I will make sure to ask them Why next time I talk to VG.

Also, just to clarify once more, the 1.45% management fee JP Morgan charges is completely unjustified and pretty insane? Right?

Just make me wonder how they get away with charging so much and who actually signs up for that long term...

fwellimort
Posts: 129
Joined: Tue Feb 12, 2019 9:41 am

Re: JP Morgan Chase Core Portfolio vs. Vanguard

Post by fwellimort » Mon Jan 13, 2020 10:18 pm

You are paying for laziness and to not worry as a 'professional' is managing your own money.
Same as how most computer fixes cost $0 and 2~3 min of actual 'fix' but the service is charged $80~320.
(You are paying for ease of access and not having to spend a significant portion of your own time to study another field. It's just a trade in service. Why go out to restaurants for an avocado toast for $22 when you can make it at home for less than a $1? Same idea.)

Same with having a savings/checkings account at Bank of America, Chase, Wells Fargo, etc.
While online savings account like Marcus (Goldman Sachs) has a no penalty CD for 2.00% APY, Chase' savings account has fees if certain conditions are not met and has a great rate of 0.01% APY.

Anyways, management in investing is generally not worth it financially for most individuals.
More than likely, your Vanguard advisor will recommend you an asset allocation similar to Vanguard's target date fund.

Target date funds are generally used for retirement but can be used for any real "target date".
If you plan to need the money in 5~10 years, if more conservative (5 years), Vanguard Target Retirement 2025 Fund, if more aggressive (10 years), Vanguard Target Retirement 2030 Fund.

These target date funds tend to be diversified and re-balances for you annually.
For instance (2030 Fund currently): https://investor.vanguard.com/mutual-fu ... olio/vthrx
Vanguard Total Stock Market Index Fund Investor Shares 40.90%
Vanguard Total International Stock Index Fund Investor Shares 27.50%
Vanguard Total Bond Market II Index Fund Investor Shares** 22.50%
Vanguard Total International Bond Index Fund Investor Shares 9.10%
And as time approaches closer and closer, you will see more bonds and less stocks in the target date fund (automatic rebalancing).
Now, if you were to purchase those individual funds yourself (in admiral shares) and rebalance yourself with your own future income, then you can even lower that fee 'a bit more' (not really worth fuzzing about and more than likely, you will probably do a lot worse with re-balancing than target date funds -hence defeating the purpose of 'lower cost'-).

Having said that, a financial planner in Vanguard might be worthwhile if you don't want to spend your one Saturday figuring tax efficiencies with bonds (e.g. municipal bond vs total market bond vs treasury bond, etc.).


But yes, 1.45% is pretty much theft in today's market. In fact, if you are willing to do some research yourself, you might come to the belief that financial advisors are not really a necessity in most cases.
As for roboadvisor, depends. At the end of day, most do the same services. Just ensure your roboadvisor isn't allocating a portion of your money in cash on purpose (Schwab's roboadvisors) and your roboadvisor understands tax efficiency. Other than that, you are paying a "bit less" for not having an actual human being on call when you need to know what's going on with your investments.

Also, just understand ahead of time target date funds are not as tax efficient as DIY but will still be lower costs overall than investing with an advisor/robo-advisor.
(Hence why) I'm just throwing out the option as an alternative to investment advisors.
Last edited by fwellimort on Mon Jan 13, 2020 10:36 pm, edited 8 times in total.

Grt2bOutdoors
Posts: 21725
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: JP Morgan Chase Core Portfolio vs. Vanguard

Post by Grt2bOutdoors » Mon Jan 13, 2020 10:28 pm

Leonneillhorn wrote:
Mon Jan 13, 2020 9:59 pm
Grt2bOutdoors wrote:
Mon Jan 13, 2020 9:43 pm
Leonneillhorn wrote:
Mon Jan 13, 2020 9:23 pm
edge wrote:
Mon Jan 13, 2020 9:04 pm
1.45% is not justified and the advice you get isn’t going to be better than VG.
Thanks! That’s what I thought. That being said, is starting an investment portfolio with Vanguard at a 0.3% fee a smarter decision than using a Roboadvisor such as M1, which charges no fee at all?

I’m a first time investor and I’m sort of familiar with stocks, bonds, Etfs etc., however, I’m not sure if I’ll be completely comfortable to just use M1 and do it all myself. I would like some guidance along the way, especially when the next recession hits.

MOST IMPORTANTLY, I don’t wanna regularly think and worry about my money. I wanna set up an investment portfolio and just let it sit and forget about it.
I do not enjoy reading financial news or wanna do research in forums like this. (As useful as it is)

I just wanna make sure I’m set up correctly from the get-go.

Also, Chase put me in a 60/40 stocks bonds ratio.

Vanguard advisor I spoke to said 90/10 would make more sense for me.

Thoughts?

And thanks again!
You indicated up above you started out with $100K and are willing to put in $50K annually. Let's assume that you do that for the next 20 years. You do not want to be paying out $15-$20K a year in expenses. If you go with Vanguard, they will manage it for you for 0.30% per year. You can use Vanguard to set you up and then you take over management of your portfolio. Management of your portfolio could take as little as 10 minutes or as much as 30 minutes. There aren't many jobs out there that pay $300 for 30 minutes work (the $300 is the effective annual management fee you would save if you took over managing it).

Asset allocation - you determine what asset allocation you are comfortable with based on your ability, need and willingness to take risk. Read the wiki for examples of an Investment Policy Statement, then you can understand how an asset allocation can be generated. https://www.bogleheads.org/wiki/Boglehe ... art-up_kit
Why did the Vanguard advisor recommend a 90/10 portfolio? You should always ask - why? if you don't understand how the recommendation could be so different than what you chose or thought it should be.

Thanks! I will make sure to ask them Why next time I talk to VG.

Also, just to clarify once more, the 1.45% management fee JP Morgan charges is completely unjustified and pretty insane? Right?
Yes. Unjustified? Well, they have to pay the employees they employ - contrary to public opinion, banks can not legally print money, so they get it by charging fees. There are some clients where 1.45% is too little, yes some clients should be charged much more for the level of work they require. 99% of the time though, no it's not justified. Shareholders need to be paid too!
Just make me wonder how they get away with charging so much and who actually signs up for that long term...
Behavioral issues such as "the thought of money, handling it or being responsible for it makes me nervous. I have a guy over at XYZ firm, he does a great job, sends me a fruitcake for the holidays and a handwritten card" or "I can't be bothered reading a book, my time is valuable" - if they ever sat down to see how much it was really costing them, there are few jobs that pay so well for so little actual work" or "I met a nice man at the bank, he called me by my first name, smiled, was easy on the eyes, gave me a cup of coffee, put me in some great investments with no sales charge and my portfolio is doing great!" The customer never read the prospectus, doesn't know the difference between a 12-b1 fee and a load, all they know is the value of their account is growing, that "someone" is watching their account for them and is available to take their call anytime.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Topic Author
Leonneillhorn
Posts: 4
Joined: Mon Jan 13, 2020 8:13 pm

Re: JP Morgan Chase Core Portfolio vs. Vanguard

Post by Leonneillhorn » Mon Jan 13, 2020 10:40 pm

Thanks so much everyone!

What a great forum. Definitely brought me some clarity.

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