Vanguard said to offer Digital Advisory Service [Robo-Advisor]

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rkhusky
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Re: Vanguard Digital Advisor

Post by rkhusky » Fri May 15, 2020 7:52 pm

As I understand the digital robo-advisor, it would be like having a customized target date fund with auto rebalancing with 5% bands. The cost is about .06% higher than the TR funds.

So, targeted at those who like target date funds, but want some customization.

Outer Marker
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Re: Vanguard Digital Advisor

Post by Outer Marker » Fri May 15, 2020 7:59 pm

rkhusky wrote:
Fri May 15, 2020 7:52 pm
As I understand the digital robo-advisor, it would be like having a customized target date fund with auto rebalancing with 5% bands. The cost is about .06% higher than the TR funds.

So, targeted at those who like target date funds, but want some customization.
There are a lot of other factors that might go into a really good robo advisor. Current income and tax bracket, social security age and withdrawal strategy, kids in college, etc. etc.

I have no idea how sophisticated or comprehensive Vanguard’s model is. I’d just like to see it — since I paid for it!

rkhusky
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Re: Vanguard Digital Advisor

Post by rkhusky » Fri May 15, 2020 8:05 pm

Here are a few other posts about the subject, including personal experience:

viewtopic.php?f=10&t=290769&start=50#p5152080
viewtopic.php?f=1&t=314310
Last edited by rkhusky on Fri May 15, 2020 8:11 pm, edited 1 time in total.

retired@50
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Re: Vanguard Digital Advisor

Post by retired@50 » Fri May 15, 2020 8:05 pm

Outer Marker wrote:
Fri May 15, 2020 7:24 pm
retired@50 wrote:
Fri May 15, 2020 7:09 pm
Is there a question in there somewhere, or you just miffed?

Regards,
Haha. So, in Alex Trebec fashion, phrased in the form of a question:

- Is it worth it?

- Would you pay for it?

Not so much “miffed” but concerned about “style drift” at Vanguard in marketing AUM products, that, while lower in cost are no different in nature than those offered by other investment houses.
If one is subject to behavioral errors, is too busy or disinterested in finance, or simply cannot comprehend the three fund portfolio, then it's definitely worth it. This will make me sound older than I am, but in my day, people paid 50 or 100 basis points just for a mutual fund, let alone professional management that offered a low-cost, broadly diversified portfolio that isn't overly complex. The difference in "nature" is that the Vanguard advisor isn't out on a boat that you helped pay for every weekend.

Personally, I don't use PAS or the robo service, but I have a degree in finance and have read dozens of books about investing, retirement, behavioral finance, etc. I think dismissing the ad is annoying too, but it takes me more time to write this post than to dismiss 50 ads.

Regards,
This is one person's opinion. Nothing more.

corp_sharecropper
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Re: Vanguard Digital Advisor

Post by corp_sharecropper » Fri May 15, 2020 8:07 pm

Outer Marker wrote:
Fri May 15, 2020 6:34 pm
I was a bit troubled to get a Vanguard solicitation for their Digital Advisor service. Since Jack has passed, they seem to have lost their way and are pitching both Personal Advisor and Digital Advisor service. At fees of 0.3 and 0.15 percent, respectively. The cost for the Digital Advisor fee is five times the expense ratio of the TSM fund of 0.03 percent. And, the cost of maintaining TSM with constant trading must be far greater than providing canned advice on an already developed software platform.

I’d be curious to see what Vanguard’s model thinks of my portfolio, but I don’t really need it and I’m not about to pay $3,000 to see it.

Seems this should be offered for free to Vanguard investors. If the company is owned by its funds, and the funds are owned by its investors, why should we be charged for using the software program we paid to develop?

Per Vanguard-
“ Digital Advisor targets an annual net advisory fee of 0.15% across your enrolled accounts**, although your actual fee will vary depending on the specific holdings in each enrolled account. That means you'll pay approximately $15 in fees each year for every $10,000 managed.
You win the prize for the most elaborate humble brag regarding your $2M account balance. :sharebeer

Outer Marker
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Re: Vanguard Digital Advisor

Post by Outer Marker » Fri May 15, 2020 8:24 pm

retired@50 wrote:
Fri May 15, 2020 8:05 pm

Personally, I don't use PAS or the robo service, but I have a degree in finance and have read dozens of books about investing, retirement, behavioral finance, etc. I think dismissing the ad is annoying too, but it takes me more time to write this post than to dismiss 50 ads.

Regards,
Me too. But it doesn't matter if I'm an MBA honors grad, have read the "big book" of Bill Bernstien's "Four Pillars" etc. What matters to me is that the company I trust, Vanguard, has drifted into a questionable area, of questionable value, and is providing this service for a fee that it is not offering to its owners that have paid for it.

Outer Marker
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Re: Vanguard Digital Advisor

Post by Outer Marker » Fri May 15, 2020 8:25 pm

corp_sharecropper wrote:
Fri May 15, 2020 8:07 pm
You win the prize for the most elaborate humble brag regarding your $2M account balance. :sharebeer
Actually, quite a bit more, but Vanguard only holds a part! :beer

retired@50
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Re: Vanguard Digital Advisor

Post by retired@50 » Fri May 15, 2020 8:27 pm

Outer Marker wrote:
Fri May 15, 2020 8:24 pm
retired@50 wrote:
Fri May 15, 2020 8:05 pm

Personally, I don't use PAS or the robo service, but I have a degree in finance and have read dozens of books about investing, retirement, behavioral finance, etc. I think dismissing the ad is annoying too, but it takes me more time to write this post than to dismiss 50 ads.

Regards,
Me too. But it doesn't matter if I'm an MBA honors grad, have read the "big book" of Bill Bernstien's "Four Pillars" etc. What matters to me is that the company I trust, Vanguard, has drifted into a questionable area, of questionable value, and is providing this service for a fee that it is not offering to its owners that have paid for it.
I disagree. People who don't need the help (like us) can invest for a few basis points. People who do need hand-holding have to pay extra. That's what the fee is for, the hand-holding, tax loss harvesting, avoiding behavioral errors, etc.

Regards,
This is one person's opinion. Nothing more.

rkhusky
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Re: Vanguard Digital Advisor

Post by rkhusky » Fri May 15, 2020 8:31 pm

Outer Marker wrote:
Fri May 15, 2020 8:24 pm
What matters to me is that the company I trust, Vanguard, has drifted into a questionable area, of questionable value, and is providing this service for a fee that it is not offering to its owners that have paid for it.
I expect those that use the service will pay for the development under Vanguard’s fee model.

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Re: Vanguard said to offer Digital Advisory Service [Robo-Advisor]

Post by LadyGeek » Fri May 15, 2020 8:35 pm

I merged Outer Marker's thread into a similar discussion.
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Silence Dogood
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Re: Vanguard said to offer Digital Advisory Service [Robo-Advisor]

Post by Silence Dogood » Fri May 15, 2020 8:49 pm

Perhaps this is an irrational concern... but aren't the LifeStrategy and Target Retirement funds, at least to some degree, competing against VPAS and VDAS?

If so, will that make Vanguard reluctant to lower the costs of these funds (for example, by investing in either the Admiral or ETF share classes for the underlying funds)?

How does Vanguard determine which share class to invest in within these funds?

How much do these fund-of-funds cost Vanguard to administer?

tj
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Re: Vanguard Digital Advisor

Post by tj » Fri May 22, 2020 9:41 am

rkhusky wrote:
Fri May 15, 2020 7:52 pm
As I understand the digital robo-advisor, it would be like having a customized target date fund with auto rebalancing with 5% bands. The cost is about .06% higher than the TR funds.

So, targeted at those who like target date funds, but want some customization.

Except it doesn't allow you to customize, you answer a questionnaire and they put on a glide path based on the answers.

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