Vanguard PAS and International Stock Allocation

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Allan Roth
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Vanguard PAS and International Stock Allocation

Post by 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
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Re: Vanguard PAS and International Stock Allocation

Post by 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.
Last edited by arcticpineapplecorp. on Sat Mar 18, 2023 2:33 pm, edited 1 time in total.
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Re: Vanguard PAS and International Stock Allocation

Post by 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.
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Re: Vanguard PAS and International Stock Allocation

Post by Allan Roth »

Blue456 wrote: Sat Mar 18, 2023 2:33 pm 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.
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Re: Vanguard PAS and International Stock Allocation

Post by Allan Roth »

arcticpineapplecorp. wrote: Sat Mar 18, 2023 2:33 pm 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.
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Re: Vanguard PAS and International Stock Allocation

Post by arcticpineapplecorp. »

Allan Roth wrote: Sat Mar 18, 2023 2:51 pm
arcticpineapplecorp. wrote: Sat Mar 18, 2023 2:33 pm 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%?
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Re: Vanguard PAS and International Stock Allocation

Post by Allan Roth »

arcticpineapplecorp. wrote: Sat Mar 18, 2023 3:04 pm
Allan Roth wrote: Sat Mar 18, 2023 2:51 pm
arcticpineapplecorp. wrote: Sat Mar 18, 2023 2:33 pm 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?
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Re: Vanguard PAS and International Stock Allocation

Post by arcticpineapplecorp. »

Allan Roth wrote: Sat Mar 18, 2023 3:14 pm
arcticpineapplecorp. wrote: Sat Mar 18, 2023 3:04 pm
Allan Roth wrote: Sat Mar 18, 2023 2:51 pm
arcticpineapplecorp. wrote: Sat Mar 18, 2023 2:33 pm 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!
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Re: Vanguard PAS and International Stock Allocation

Post by retiredjg »

Rogue advisors. Interesting. Looking forward to what you find out.
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Re: Vanguard PAS and International Stock Allocation

Post by Blue456 »

arcticpineapplecorp. wrote: Sat Mar 18, 2023 3:20 pm
Allan Roth wrote: Sat Mar 18, 2023 3:14 pm
arcticpineapplecorp. wrote: Sat Mar 18, 2023 3:04 pm
Allan Roth wrote: Sat Mar 18, 2023 2:51 pm
arcticpineapplecorp. wrote: Sat Mar 18, 2023 2:33 pm 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.
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Re: Vanguard PAS and International Stock Allocation

Post by abuss368 »

Now this is interesting!

I am curious what exactly is going on here.

Best.
Tony
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Re: Vanguard PAS and International Stock Allocation

Post by plannerman »

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

plannerman
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Re: Vanguard PAS and International Stock Allocation

Post by Colorado Guy »

Blue456 wrote: Sat Mar 18, 2023 3:31 pm 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!
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Re: Vanguard PAS and International Stock Allocation

Post by 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%.
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Re: Vanguard PAS and International Stock Allocation

Post by 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
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Re: Vanguard PAS and International Stock Allocation

Post by nedsaid »

retiredjg wrote: Sat Mar 18, 2023 3:21 pm 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.
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Re: Vanguard PAS and International Stock Allocation

Post by 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!
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Re: Vanguard PAS and International Stock Allocation

Post by 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.
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Re: Vanguard PAS and International Stock Allocation

Post by 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
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Re: Vanguard PAS and International Stock Allocation

Post by 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.
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Re: Vanguard PAS and International Stock Allocation

Post by marcopolo »

Allan Roth wrote: Sat Mar 18, 2023 2:23 pm 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.
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Re: Vanguard PAS and International Stock Allocation

Post by 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.
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Re: Vanguard PAS and International Stock Allocation

Post by Allan Roth »

FreddieFIRE wrote: Sun Mar 19, 2023 12:35 pm 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!
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Re: Vanguard PAS and International Stock Allocation

Post by Allan Roth »

Florida Orange wrote: Sun Mar 19, 2023 1:15 pm 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.
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Re: Vanguard PAS and International Stock Allocation

Post by Allan Roth »

Colorado Guy wrote: Sun Mar 19, 2023 8:44 am
Blue456 wrote: Sat Mar 18, 2023 3:31 pm 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
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Re: Vanguard PAS and International Stock Allocation

Post by FreddieFIRE »

Allan Roth wrote: Tue Mar 21, 2023 1:44 pm
FreddieFIRE wrote: Sun Mar 19, 2023 12:35 pm 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.
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Re: Vanguard PAS and International Stock Allocation

Post by Florida Orange »

Allan Roth wrote: Tue Mar 21, 2023 1:45 pm
Florida Orange wrote: Sun Mar 19, 2023 1:15 pm 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.
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Re: Vanguard PAS and International Stock Allocation

Post by Colorado Guy »

Allan Roth wrote: Tue Mar 21, 2023 1:47 pm
Colorado Guy wrote: Sun Mar 19, 2023 8:44 am
Blue456 wrote: Sat Mar 18, 2023 3:31 pm 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.
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Re: Vanguard PAS and International Stock Allocation

Post by 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.
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Re: Vanguard PAS and International Stock Allocation

Post by 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.
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Re: Vanguard PAS and International Stock Allocation

Post by Florida Orange »

burritoLover wrote: Wed Mar 22, 2023 3:04 pm 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.
Nothing wrong with getting some professional advice. Advisors advise, but it's your money; you can do whatever you want with it.
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Re: Vanguard PAS and International Stock Allocation

Post by unwitting_gulag »

Vanguard publishes a quarterly "advisory letter" aimed at financial advisors... so, not retail clients themselves, but advisors. No FINRA registration or any other credentials are required. Somehow I got on the mailing list. So, every quarter there comes a glossy colorful PDF with Vanguard's 10-year forecasts on the whole litany of asset classes... US small cap, US large cap, foreign stocks of whatever flavor, bonds of whatever flavor... These forecasts were pretty consistent up through early 2022, and then turned more... optimistic. Why? Evidently the market selloff reset the starting point for the impending rolling 10-year period and its implied CAGR.

Based on these predictions, things for foreign stocks look rosier than for US stocks. they did so, prior to 2022... and they do so, now (writing in March 2023). One supposes that PAS advisors pay some attention to the advisory letter that Vanguard publishes openly. If they do, then it stands to reason, that they'd lean more heavily on foreign stocks.

By way of caution, we just had a foreign vs. domestic thread closed due to acrimony and circular arguing; hopefully this thread can avoid such fate.
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Re: Vanguard PAS and International Stock Allocation

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unwitting_gulag wrote: Wed Mar 22, 2023 9:36 pm Vanguard publishes a quarterly "advisory letter" aimed at financial advisors... so, not retail clients themselves, but advisors. No FINRA registration or any other credentials are required. Somehow I got on the mailing list. So, every quarter there comes a glossy colorful PDF with Vanguard's 10-year forecasts on the whole litany of asset classes... US small cap, US large cap, foreign stocks of whatever flavor, bonds of whatever flavor... These forecasts were pretty consistent up through early 2022, and then turned more... optimistic. Why? Evidently the market selloff reset the starting point for the impending rolling 10-year period and its implied CAGR.

Based on these predictions, things for foreign stocks look rosier than for US stocks. they did so, prior to 2022... and they do so, now (writing in March 2023). One supposes that PAS advisors pay some attention to the advisory letter that Vanguard publishes openly. If they do, then it stands to reason, that they'd lean more heavily on foreign stocks.

By way of caution, we just had a foreign vs. domestic thread closed due to acrimony and circular arguing; hopefully this thread can avoid such fate.
I doubt their 40% recommendation is based on recent valuations. That's what they use in their TDFs. Granted they've upped it over the years but their reasoning is as follows:
Vanguard wrote:In each market we examined, our analysis indicated that volatility was reduced most with an allocation to international equities of between 35% and 55%. While this observation may help investors determine the appropriate mix of domestic and international equities, volatility reduction is not the only factor to consider.
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Re: Vanguard PAS and International Stock Allocation

Post by burritoLover »

Florida Orange wrote: Wed Mar 22, 2023 8:48 pm
burritoLover wrote: Wed Mar 22, 2023 3:04 pm 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.
Nothing wrong with getting some professional advice. Advisors advise, but it's your money; you can do whatever you want with it.
But it is something you can easily duplicate and save the 0.2% or whatever per year. Besides the fact that the reasoning for wanting less international is usually dubious (ex. performance chasing).
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Re: Vanguard PAS and International Stock Allocation

Post by MikeG62 »

Allan Roth wrote: Sat Mar 18, 2023 2:23 pm 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
Back in 2019 I worked with my SIL to help her transfer her assets to VPAS. She was 53 (at the time) and the asset allocation that was agreed to was growth oriented with a 70/30 equity/fixed income split. Equities are allocated 75% domestic and 25% foreign. They originally proposed 60/40 on the domestic/foreign split, but after some discussion said they'd be comfortable with any domestic/foreign split between 80/20 and 60/40. She selected 75/25. Same options on the fixed income split.

They ended up using four ETF's in the investment plan.
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Re: Vanguard PAS and International Stock Allocation

Post by Florida Orange »

burritoLover wrote: Thu Mar 23, 2023 7:27 am
Florida Orange wrote: Wed Mar 22, 2023 8:48 pm
burritoLover wrote: Wed Mar 22, 2023 3:04 pm 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.
Nothing wrong with getting some professional advice. Advisors advise, but it's your money; you can do whatever you want with it.
But it is something you can easily duplicate and save the 0.2% or whatever per year. Besides the fact that the reasoning for wanting less international is usually dubious (ex. performance chasing).
I agree that the reason for wanting less international is usually something dubious like performance chasing. But not everybody can easily duplicate the advisor's advice. My advisor came up with a very good plan for me. At the time I was less knowledgeable about investing than I am now and it's very unlikely I would have come up with such a good plan on my own. Even now, it's as good if not better than anything I would likely come up with on my own. Sometimes advice is worth paying for even if you don't completely follow it. It can give you a helpful perspective that you wouldn't otherwise have.
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Re: Vanguard PAS and International Stock Allocation

Post by burritoLover »

Florida Orange wrote: Thu Mar 23, 2023 11:05 am
burritoLover wrote: Thu Mar 23, 2023 7:27 am
Florida Orange wrote: Wed Mar 22, 2023 8:48 pm
burritoLover wrote: Wed Mar 22, 2023 3:04 pm 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.
Nothing wrong with getting some professional advice. Advisors advise, but it's your money; you can do whatever you want with it.
But it is something you can easily duplicate and save the 0.2% or whatever per year. Besides the fact that the reasoning for wanting less international is usually dubious (ex. performance chasing).
I agree that the reason for wanting less international is usually something dubious like performance chasing. But not everybody can easily duplicate the advisor's advice. My advisor came up with a very good plan for me. At the time I was less knowledgeable about investing than I am now and it's very unlikely I would have come up with such a good plan on my own. Even now, it's as good if not better than anything I would likely come up with on my own. Sometimes advice is worth paying for even if you don't completely follow it. It can give you a helpful perspective that you wouldn't otherwise have.
What did they come up with?
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Re: Vanguard PAS and International Stock Allocation

Post by DesertGator »

Colorado Guy wrote: Sun Mar 19, 2023 8:44 am
Blue456 wrote: Sat Mar 18, 2023 3:31 pm 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!
This is a lazy, ineffectual and non-consultative response. The moment the paid “adviser” utters this phrase is the moment you fire them without a millisecond of delay.
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Re: Vanguard PAS and International Stock Allocation

Post by tibbitts »

DesertGator wrote: Thu Mar 23, 2023 12:25 pm
Colorado Guy wrote: Sun Mar 19, 2023 8:44 am
Blue456 wrote: Sat Mar 18, 2023 3:31 pm 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!
This is a lazy, ineffectual and non-consultative response. The moment the paid “adviser” utters this phrase is the moment you fire them without a millisecond of delay.
If you pay the adviser more (at a full-service brokerage for example), you'll probably get a kinder/gentler/more-time-consuming approach. You might still end up at the same place, of course.
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Re: Vanguard PAS and International Stock Allocation

Post by Florida Orange »

burritoLover wrote: Thu Mar 23, 2023 11:28 am
Florida Orange wrote: Thu Mar 23, 2023 11:05 am
burritoLover wrote: Thu Mar 23, 2023 7:27 am
Florida Orange wrote: Wed Mar 22, 2023 8:48 pm
burritoLover wrote: Wed Mar 22, 2023 3:04 pm 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.
Nothing wrong with getting some professional advice. Advisors advise, but it's your money; you can do whatever you want with it.
But it is something you can easily duplicate and save the 0.2% or whatever per year. Besides the fact that the reasoning for wanting less international is usually dubious (ex. performance chasing).
I agree that the reason for wanting less international is usually something dubious like performance chasing. But not everybody can easily duplicate the advisor's advice. My advisor came up with a very good plan for me. At the time I was less knowledgeable about investing than I am now and it's very unlikely I would have come up with such a good plan on my own. Even now, it's as good if not better than anything I would likely come up with on my own. Sometimes advice is worth paying for even if you don't completely follow it. It can give you a helpful perspective that you wouldn't otherwise have.
What did they come up with?
I had been investing for decades without knowing much about it or paying much attention. My asset allocation had become more than 90% stocks and I had a lot of money with another firm that charged a pretty high AUM fee. My Vanguard advisor got me into well diversified, low cost index funds with about half my money in bonds. I now have higher income, lower taxes and much less risk. It is clearly much more appropriate for my situation.

I've learned a lot since then, but my advisor got me to this point much sooner than I would have on my own. The more I learn, the more I realize how good her advice was. Basically, it's the global stock market but a little more complicated because I had been investing in an S&P 500 fund for a long time so I had a lot of unrealized capital gains, so I kept that and added some funds for broader stock market diversification. About half my portfolio is municipal bonds because I would have to pay a lot of taxes if the bond interest was taxable.

Frankly, I'm delighted with the plan and I'll probably stick with it for life.
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burritoLover
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Re: Vanguard PAS and International Stock Allocation

Post by burritoLover »

Florida Orange wrote: Thu Mar 23, 2023 1:01 pm
burritoLover wrote: Thu Mar 23, 2023 11:28 am
Florida Orange wrote: Thu Mar 23, 2023 11:05 am
burritoLover wrote: Thu Mar 23, 2023 7:27 am
Florida Orange wrote: Wed Mar 22, 2023 8:48 pm

Nothing wrong with getting some professional advice. Advisors advise, but it's your money; you can do whatever you want with it.
But it is something you can easily duplicate and save the 0.2% or whatever per year. Besides the fact that the reasoning for wanting less international is usually dubious (ex. performance chasing).
I agree that the reason for wanting less international is usually something dubious like performance chasing. But not everybody can easily duplicate the advisor's advice. My advisor came up with a very good plan for me. At the time I was less knowledgeable about investing than I am now and it's very unlikely I would have come up with such a good plan on my own. Even now, it's as good if not better than anything I would likely come up with on my own. Sometimes advice is worth paying for even if you don't completely follow it. It can give you a helpful perspective that you wouldn't otherwise have.
What did they come up with?
I had been investing for decades without knowing much about it or paying much attention. My asset allocation had become more than 90% stocks and I had a lot of money with another firm that charged a pretty high AUM fee. My Vanguard advisor got me into well diversified, low cost index funds with about half my money in bonds. I now have higher income, lower taxes and much less risk. It is clearly much more appropriate for my situation.

I've learned a lot since then, but my advisor got me to this point much sooner than I would have on my own. The more I learn, the more I realize how good her advice was. Basically, it's the global stock market but a little more complicated because I had been investing in an S&P 500 fund for a long time so I had a lot of unrealized capital gains, so I kept that and added some funds for broader stock market diversification. About half my portfolio is municipal bonds because I would have to pay a lot of taxes if the bond interest was taxable.

Frankly, I'm delighted with the plan and I'll probably stick with it for life.
Sounds like a good testimonial.
S_Track
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Re: Vanguard PAS and International Stock Allocation

Post by S_Track »

Florida Orange wrote: Wed Mar 22, 2023 10:48 am
Allan Roth wrote: Tue Mar 21, 2023 1:45 pm
Florida Orange wrote: Sun Mar 19, 2023 1:15 pm 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
Curious, when you are under PAS, can you log in yo your account and make changes or does everything have to be done by the advisor?
unwitting_gulag
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Re: Vanguard PAS and International Stock Allocation

Post by unwitting_gulag »

burritoLover wrote: Thu Mar 23, 2023 7:25 am ...their reasoning is as follows:
Vanguard wrote:In each market we examined, our analysis indicated that volatility was reduced most with an allocation to international equities of between 35% and 55%. While this observation may help investors determine the appropriate mix of domestic and international equities, volatility reduction is not the only factor to consider.
Without veering too far off topic, I wonder what historical-range was used to build this assessment. A period that's too short, wades into "recency bias". But one that's too long, risks drawing purportedly timeless conclusions that are swayed by conditions now probably obsolete. An example of the latter is that other perennial bugaboo, that of small-cap vs. large, the point being, that most of the outperformance by small-caps has been noted as having occurred many decades ago, and not since.

Vanguard and probably also their main rival, Fidelity, really really "like" international stocks. Those of us who have followed this advice in the past two decades, are nursing serious wounds. Is this merely recency bias? I hope so, but am unconvinced.
Florida Orange
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Re: Vanguard PAS and International Stock Allocation

Post by Florida Orange »

S_Track wrote: Thu Mar 23, 2023 1:27 pm Curious, when you are under PAS, can you log in yo your account and make changes or does everything have to be done by the advisor?
When you're enrolled in the PAS only your advisor can make changes to your account.
tibbitts
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Re: Vanguard PAS and International Stock Allocation

Post by tibbitts »

unwitting_gulag wrote: Thu Mar 23, 2023 3:47 pm
burritoLover wrote: Thu Mar 23, 2023 7:25 am ...their reasoning is as follows:
Vanguard wrote:In each market we examined, our analysis indicated that volatility was reduced most with an allocation to international equities of between 35% and 55%. While this observation may help investors determine the appropriate mix of domestic and international equities, volatility reduction is not the only factor to consider.
Without veering too far off topic, I wonder what historical-range was used to build this assessment. A period that's too short, wades into "recency bias". But one that's too long, risks drawing purportedly timeless conclusions that are swayed by conditions now probably obsolete. An example of the latter is that other perennial bugaboo, that of small-cap vs. large, the point being, that most of the outperformance by small-caps has been noted as having occurred many decades ago, and not since.

Vanguard and probably also their main rival, Fidelity, really really "like" international stocks. Those of us who have followed this advice in the past two decades, are nursing serious wounds. Is this merely recency bias? I hope so, but am unconvinced.
I agree with your point about how long you should or should consider historical data relevant, and don't have an answer either. However when you say you're not convinced, would anything other than actual international outperformance, maybe at least to the point of catching up to the shortfall in the somewhat recent past, convince you?
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Re: Vanguard PAS and International Stock Allocation

Post by Clarky »

For our managed accounts in total, pas has us at 59/41 domestic/international stocks, 65/35 bonds. They slice and dice it in interesting ways, though… for instance, 92% international stock allocation to a Roth, with 100% domestic stock in TIRA.
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Re: Vanguard PAS and International Stock Allocation

Post by arcticpineapplecorp. »

Clarky wrote: Thu Mar 23, 2023 7:07 pm For our managed accounts in total, pas has us at 59/41 domestic/international stocks, 65/35 bonds. They slice and dice it in interesting ways, though… for instance, 92% international stock allocation to a Roth, with 100% domestic stock in TIRA.
do you know what the rationale was for putting international in Roth and domestic in TIRA?

Also, if you have to withdraw from TIRA but not Roth, won't the allocation of domestic/international get off kilter at some point as you draw down TIRA but not Roth?
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Re: Vanguard PAS and International Stock Allocation

Post by Miriam2 »

Allan Roth wrote: Sat Mar 18, 2023 2:23 pm 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
Here is my experience -

We have invested with Vanguard since 1994, self-managing our accounts the Bogle way. Our international stock allocation was zero, and I wanted to leave it at zero.

We signed up for PAS in 2020. Before signing up, I scheduled a specific hour-long meeting with the PAS advisor where each of us would present our case for and against international stock 8-)

At the end of our meeting, we agreed on 20% international stock, for a stock allocation (for the entire portfolio) of 80% US and 20% international, Total Int'l Stock Fund.

My opinion was that at our older age (70's), with all expenses fully covered by two pensions and two social security incomes, and with high equity in our nice suburban home, and a non-spender lifestyle - we do not need to touch our Vanguard investments, we can leave them for good elder care when we need it, grandchildren's college expenses, etc, and leave the rest to the kids. So I saw no great benefit to adding international stock for diversification sometime in the future when we can have a very comfortable and financially successful modest-size investment portfolio at Vanguard without ever adding international stock. Plus, we do own Wellington and PrimeCap at Vanguard and they both have a small % of international.

The PAS advisor understood, but pointed out that when we are leaving money to the next generation, we should be thinking about the long future, not just our future (which is short :annoyed ), and that would suggest adding international stock for the long haul. Plus - the simple fact is that Vanguard requires some % of international stock as part of their PAS portfolio.

Allan, regarding your two clients - the difference is that I did specifically request to lower the 40% international stock allocation and even argued for zero %. Perhaps what your two clients discussed with PAS would have meant reducing the international stock %, even though they didn't request it. Another possibility is that your clients owned other Vanguard funds that did have significant international holdings. Perhaps their PAS advisor simply could not fit more international stock into the portfolio without upsetting other fund placements or incurring taxes, or at least thought so. Perhaps your clients were in their 80's or 90's and not leaving their portfolio to the next generation.
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Re: Vanguard PAS and International Stock Allocation

Post by birdsong »

Allan, when I had a significant inheritance in 2018 from my 100 year old Dad, I decided to start using PAS as my taxable account was now really large. I talked to my Flagship rep. and he picked a PAS advisor out for me and I talked to that guy in December. If someone lives long enough and never spends their RMD's and they are reinvested in taxable, then the beneficiary inherits a large taxable account. Dad's taxable account was mostly in Wellington which is not tax friendly and so when it was officially mine, I sold it at a slight loss in Sept. 2018 and kept it in cash, anticipating I might do PAS. I talked to the recommended PAS advisor in early December and then he gave me his plan. Even though the questionnaire suggested 60% stock, 40% bonds, I told him I was interested more in preservation, not growth as I had adequate funds for my retirement (pensions and SS and my own retirement savings) and I was more comfortable with 50/50. When I worked, I always had a 70/30 portfolio with about 30% of stock as international. In the ensuing years with PAS, everything has always gone to international stocks or bonds, depending on the ratio each quarter. To counter the 40% international they recommend, I opened my own self controlled taxable account where I invest in TSM Index and Tax Managed Small Cap. I control my ROTH myself. I went with PAS (after being my own investor control totally since about 2009 (when I left my broker for Vanguard). Since I procrastinate and keep too much in the settlement accounts I knew PAS would do the right things (as agreed upon when I researched PAS and joined) and I would probably do better than controllingall accounts myself. So, they manage a taxable account, my IRA and two Inherited IRAs. I manage my ROTH and a small taxable account. I've been happy with the arrangement now since Jan. 2020. I think the small price I pay is worth it. My original advisor retired in 2021 as he was "financially independant" at that point, even though he was a young guy with a very young family. Big inheritance I figured. I really liked and trusted him. New guy is ok, does things a little differently but I'll stay with PAS. I can easily reduce the international myself with the taxable account I control. Allan, any PAS person can simply take taxable distributions and reinvest them themselves in a self managed taxable account as I do.

I'll add that I do not have children and what I leave will go (all IRAS) to charity. Taxable accounts have various human people named. I have about $200,000 in I-Bonds acquired from 2003-2013. EE bonds (my late husband bought with payroll deduction) maturing 3 times a year I cash in. So savings bonds alone are just icing on the cake and were meant to spend in retirement. I'm in my mid 70's now. Was suddenly widowed at age 53. I retired at my age 60. My CPA told me at 53 I could retire but I didn't want to leave my boss with having to adjust to someone new so when he retired, I retired.
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Re: Vanguard PAS and International Stock Allocation

Post by Clarky »

arcticpineapplecorp. wrote: Thu Mar 23, 2023 8:49 pm
Clarky wrote: Thu Mar 23, 2023 7:07 pm For our managed accounts in total, pas has us at 59/41 domestic/international stocks, 65/35 bonds. They slice and dice it in interesting ways, though… for instance, 92% international stock allocation to a Roth, with 100% domestic stock in TIRA.
do you know what the rationale was for putting international in Roth and domestic in TIRA?

Also, if you have to withdraw from TIRA but not Roth, won't the allocation of domestic/international get off kilter at some point as you draw down TIRA but not Roth?
I do not know the rationale, to be honest. But that account was on a tear since late last year, and I won’t be retiring for a little while yet, so it hasn’t been an issue in my mind. I will bring it up though, you bring up a good point. Maybe quarterly rebalancing will take care of it?
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