Vanguard PAS and International Stock Allocation

[Allan Roth]

I've lately seen two Vanguard Personal Advisory Services portfolios that have a very large variation from Vanguard's position of the stock allocation of 60% US and 40% international. Neither of these two account owners requested to vary from this position nor did they have significant assets outside of Vanguard PAS that warranted such a large variation.

I may write about this and am soliciting any feedback from Bogleheads members who might have a PAS account opened in the last couple of years and asking for your breakdown of US vs. Int'l stock recommended by a Vanguard PAS advisor. Please let me know if you do and whether or not you requested a certain allocation between US vs. Int'l.

Thanks very much!

Allan

[arcticpineapplecorp.]

i don't, but may I ask what the range of percentages of international you've been seeing? Is it closer to 30% or 20% international? I wouldn't imagine Vanguard would want people overweighting to international (i.e., >40%) but could be if following Merriman's long held advice of 50/50 US/Int.

[Blue456]

Vanguard PAS doesn’t discuss any foreign or international allocations nor do they discuss any duration of their bonds. They simply put you in 60% US and 40% international. When asked whether one can deviate from this they will generally agree going down to 30% but no less.

[Allan Roth]

Vanguard PAS doesn’t discuss any foreign or international allocations nor do they discuss any duration of their bonds. They simply put you in 60% US and 40% international. When asked whether one can deviate from this they will generally agree going down to 30% but no less.

That is not consistent with the two cases I mentioned earlier where neither the client requested nor assets outside of Vanguard PAS argued for a different allocation.

[Allan Roth]

i don't, but may I ask what the range of percentages of international you've been seeing? Is it closer to 30% or 20% international? I wouldn't imagine Vanguard would want people overweighting to international (i.e., >40%) but could be if following Merriman's long held advice of 50/50 US/Int.

Significantly lower than 40% international.

[arcticpineapplecorp.]

i don't, but may I ask what the range of percentages of international you've been seeing? Is it closer to 30% or 20% international? I wouldn't imagine Vanguard would want people overweighting to international (i.e., >40%) but could be if following Merriman's long held advice of 50/50 US/Int.

Significantly lower than 40% international.

could it be because Jack Bogle advocated for anywhere from 0%-20%?

[Allan Roth]

i don't, but may I ask what the range of percentages of international you've been seeing? Is it closer to 30% or 20% international? I wouldn't imagine Vanguard would want people overweighting to international (i.e., >40%) but could be if following Merriman's long held advice of 50/50 US/Int.

Significantly lower than 40% international.

could it be because Jack Bogle advocated for anywhere from 0%-20%?

After all of these years, Vanguard is finally taking Jack's advice on some PAS accounts but not others such as target date funds?

[arcticpineapplecorp.]

i don't, but may I ask what the range of percentages of international you've been seeing? Is it closer to 30% or 20% international? I wouldn't imagine Vanguard would want people overweighting to international (i.e., >40%) but could be if following Merriman's long held advice of 50/50 US/Int.

Significantly lower than 40% international.

could it be because Jack Bogle advocated for anywhere from 0%-20%?

After all of these years, Vanguard is finally taking Jack's advice on some PAS accounts but not others such as target date funds?

point well taken. I assume it's the wishes of the account holders rather than a PAS recommendation, but I suppose we'll have to wait to see what you discover. Keep us posted if/when your article comes out after you solve the mystery!

[retiredjg]

Rogue advisors. Interesting. Looking forward to what you find out.

[Blue456]

i don't, but may I ask what the range of percentages of international you've been seeing? Is it closer to 30% or 20% international? I wouldn't imagine Vanguard would want people overweighting to international (i.e., >40%) but could be if following Merriman's long held advice of 50/50 US/Int.

Significantly lower than 40% international.

could it be because Jack Bogle advocated for anywhere from 0%-20%?

After all of these years, Vanguard is finally taking Jack's advice on some PAS accounts but not others such as target date funds?

point well taken. I assume it's the wishes of the account holders rather than a PAS recommendation, but I suppose we'll have to wait to see what you discover. Keep us posted if/when your article comes out after you solve the mystery!

Interesting. My pass advisor was very strict, “we may not be a good fit” if you don’t agree with their recommendations.

[abuss368]

Now this is interesting!

I am curious what exactly is going on here.

Best.
Tony

[plannerman]

In a recent portfolio transferred to PAS, the International allocation went from 18% pre PAS to 25% post PAS.

plannerman

[Colorado Guy]

Interesting. My pass advisor was very strict, “we may not be a good fit” if you don’t agree with their recommendations.

Ha! That is exactly what my PAS advisor said when I wanted to change my international exposure!

[burritoLover]

If these are taxable accounts, I doubt when transitioning to PAS, Vanguard would liquidate US stocks and generate a big taxable event just to get international to 40%.

[abuss368]

Vanguard PAS advisors, which typically have the designation of CFP, must have discretion when building an investment portfolio that a client will be able to stay the course with in all markets. A portfolio that is best allocated for the clients timeframe, goals, and tolerance for risk.

I can not see Vanguard intentionally lowering the recommend range of international equity and bond allocations.

Best.
Tony

[nedsaid]

Rogue advisors. Interesting. Looking forward to what you find out.

Or it could be that Vanguard Advisors are bending under customer pressure, particularly those customers who are reading John Bogle's books! Bogle, as we all know, was not enthusiastic about International investing and recommended a maximum allocation of 20% to International Stocks within an equity portfolio. I don't agree with Bogle on this one but this might be a reason.

[Wannaretireearly]

I don’t think each advisor has a playbook to follow to the T.
At least that’s my experience with Fido advisors, so far. All kinds of different advice!

[retiredjg]

I think there is definitely a playbook at Vanguard.

Since people under a certain amount of assets are assigned to a pool of advisors rather than a specific advisor, there would have to be some kind of playbook to provide continuity.

Maybe those folks who have enough money to be assigned to a specific advisor are able to get more flexibility in how their money is invested?

Actually, I don't know for sure about this "pool" vs an assigned advisor, but that is how I interpret what I have read hear from other posters.

[abuss368]

I would agree there is a recommended range of allocations with Vanguard.

If Vanguard deviated too far from the LifeStrategy and Target funds, I would expect that could potentially blow back and give rise to questions.

Best.
Tony

[FreddieFIRE]

Not an answer to Allen's OP, but perhaps an interesting data point. Fidelity's planning tool currently forces 30% of equities into foreign stocks.

[marcopolo]

I've lately seen two Vanguard Personal Advisory Services portfolios that have a very large variation from Vanguard's position of the stock allocation of 60% US and 40% international. Neither of these two account owners requested to vary from this position nor did they have significant assets outside of Vanguard PAS that warranted such a large variation.

I may write about this and am soliciting any feedback from Bogleheads members who might have a PAS account opened in the last couple of years and asking for your breakdown of US vs. Int'l stock recommended by a Vanguard PAS advisor. Please let me know if you do and whether or not you requested a certain allocation between US vs. Int'l.

Thanks very much!

Allan

What were their allocations prior to engaging PAS?

I can envision two possibilities

1) There were large unrealized gains in taxable account that would make re-allocating an expensive endeavor.

2) A prior low allocation is viewed as a client preference, and so the recommended allocation is set to lower end of their acceptable range.

[Florida Orange]

I am no longer enrolled in the Vanguard Personal Advisor Service but I was a few years ago. For my stocks, my advisor recommended 60% U.S., 40% International. I discussed with her the possibility of making significant changes to those percentages as well as other aspects of the plan and she was fine with it. I got the impression she would let me do anything I wanted within reason. When I asked, just out of curiosity, about some fairly extreme asset allocations, she told me it was a bad idea, but she didn't say I couldn't do it.

In the end, after much discussion, I accepted her plan in toto and I've stuck with it ever since.

[Allan Roth]

Not an answer to Allen's OP, but perhaps an interesting data point. Fidelity's planning tool currently forces 30% of equities into foreign stocks.

Which planning tool is that? Thanks!

[Allan Roth]

I am no longer enrolled in the Vanguard Personal Advisor Service but I was a few years ago. For my stocks, my advisor recommended 60% U.S., 40% International. I discussed with her the possibility of making significant changes to those percentages as well as other aspects of the plan and she was fine with it. I got the impression she would let me do anything I wanted within reason. When I asked, just out of curiosity, about some fairly extreme asset allocations, she told me it was a bad idea, but she didn't say I couldn't do it.

In the end, after much discussion, I accepted her plan in toto and I've stuck with it ever since.

Roughly how long ago did you open the PAS account and get that 60/40 advice? Thanks.

[Allan Roth]

Interesting. My pass advisor was very strict, “we may not be a good fit” if you don’t agree with their recommendations.

Ha! That is exactly what my PAS advisor said when I wanted to change my international exposure!

Roughly how long ago was that? Thanks. Allan

[FreddieFIRE]

Not an answer to Allen's OP, but perhaps an interesting data point. Fidelity's planning tool currently forces 30% of equities into foreign stocks.

Which planning tool is that? Thanks!

Hi Allan. I appreciate your work. I have an assigned Fidelity advisor that I meet with about once a year. I don't pay them for any type of AUM management; it's just a free second set of eyes from an educated individual. They have an online tool that uses a person's current assets, asset allocations, pension/SS projections and spending to project current outcomes. I believe it uses Monte Carlo simulations to estimate good/bad/ugly outcomes. That tool only allows alternate allocations based upon certain preset values. Regardless of how much risk I input, it divides the equity allocation into 30% foreign / 70% domestic. That may be reasonable, but I've been a 100% US equities investor for many years. My fixed is also 100% TIPS, which doesn't really fit the TBM fixed allocations. It doesn't really matter, because regardless of simulated outcomes my plan has been and will continue to be stable. The retirement decision is way back in the rearview mirror and, at this point, the alternate outcomes should only impact heirs and charity.

[Florida Orange]

I am no longer enrolled in the Vanguard Personal Advisor Service but I was a few years ago. For my stocks, my advisor recommended 60% U.S., 40% International. I discussed with her the possibility of making significant changes to those percentages as well as other aspects of the plan and she was fine with it. I got the impression she would let me do anything I wanted within reason. When I asked, just out of curiosity, about some fairly extreme asset allocations, she told me it was a bad idea, but she didn't say I couldn't do it.

In the end, after much discussion, I accepted her plan in toto and I've stuck with it ever since.

Roughly how long ago did you open the PAS account and get that 60/40 advice? Thanks.

Early 2019

[Colorado Guy]

Interesting. My pass advisor was very strict, “we may not be a good fit” if you don’t agree with their recommendations.

Ha! That is exactly what my PAS advisor said when I wanted to change my international exposure!

Roughly how long ago was that? Thanks. Allan

Roughly, about 5 years ago. Initially it was a good and reasonable as I was completely ignorant about any type of investing, so PAS set it up in multiple accounts per their standard template. Then I discovered Bogleheads, and after a steep learning curve, started to look at my own investments. When I decided that for myself I was not interested in international, the PAS advisor argued that she could not represent me if I did so. Well, I did, and left the PAS.

I don't have bad feelings towards PAS, as they helped me consolidate various IRA investments in different companies into a single location I could more easily keep track of, and set up my investments in a way I would have taken a long time to figure out. At the time I didn't know where/how to start.

[Ham And Egger]

I transferred my accounts from another advisor to PAS about 4 months ago and am still with PAS. They have me in 60% US and 40% International. I have asked for the International to be brought down and my advisor and I agreed to 35%. I also have about 180k worth of individual stock that they are slowly selling to avoid large capital gains in one year.

It's alright so far, they have definitely help simplify my portfolio from the mess I had.

[burritoLover]

So a number of you go with an advisory service but then decide to override their recommendations - what's the point? Just DIY it yourself.