Author Topic: Is Vanguard Personal Advisor Service fee (0.30%) reasonable?  (Read 5715 times)

meteor

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Is Vanguard Personal Advisor Service fee (0.30%) reasonable?
« on: January 27, 2014, 04:24:10 PM »
I just had an appointment with Vanguard advisor who wrote a 25 page report on how I might change and manage my portfolio for early retirement.  I went through it line by line and was really impressed with their suggestions.  They claim they adjust it over time to meet my needs but it appear they charge "30 basis points (0.30%) annually."  I'm not quite sure if that is reasonable or not.  I usually manage my own and avoid fees for advice, but after reading this report, I learned a lot and think he could probably do better than me.

Here is what the brochure says:
"Annual service fee. In consideration for VAI’s services under this Agreement, you’ll pay
VAI a 30-basis-point (0.30%) annual service fee. The fee will be calculated quarterly and
based on your average daily balances in the Portfolio across the entire fee period. VAI won’t
charge a fee on the money market fund balances held within the Portfolio when calculating
and collecting the advisory fee."
« Last Edit: January 27, 2014, 04:27:29 PM by meteor »

Tyler

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Re: Is Vanguard Personal Advisor Service fee (0.30%) reasonable?
« Reply #1 on: January 27, 2014, 04:52:06 PM »
A service fee of 0.3% isn't unreasonable for active management.  However, the real cost comes from what they do with that power.

The adviser still has the power to run up costs by:

1) buying and selling a lot (running up taxes and transaction fees)
2) purchasing preferred funds that buy and sell a lot internally (running up hidden taxes)
3) purchasing funds with high expense ratios
4) purchasing crappy funds that offer him kickbacks

It really comes down to whether you personally trust the person with the power to manage your money. 

burly

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Re: Is Vanguard Personal Advisor Service fee (0.30%) reasonable?
« Reply #2 on: January 27, 2014, 05:04:53 PM »
I just had an appointment with Vanguard advisor who wrote a 25 page report on how I might change and manage my portfolio for early retirement.  I went through it line by line and was really impressed with their suggestions.  They claim they adjust it over time to meet my needs but it appear they charge "30 basis points (0.30%) annually."  I'm not quite sure if that is reasonable or not.  I usually manage my own and avoid fees for advice, but after reading this report, I learned a lot and think he could probably do better than me.

Here is what the brochure says:
"Annual service fee. In consideration for VAIís services under this Agreement, youíll pay
VAI a 30-basis-point (0.30%) annual service fee. The fee will be calculated quarterly and
based on your average daily balances in the Portfolio across the entire fee period. VAI wonít
charge a fee on the money market fund balances held within the Portfolio when calculating
and collecting the advisory fee."

That is very cheap IMHO.... Normal fee at the firms I've worked is ~1.2% on the first million or 2 and discounted there after.

meteor

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Re: Is Vanguard Personal Advisor Service fee (0.30%) reasonable?
« Reply #3 on: January 30, 2014, 11:11:17 AM »
I just found out they will charge me $3000 a year to manage my account.  That seems like a lot of money for me (I just cancelled ATT landline, netflix DVDs, post office box, and Audible fees to cut back on expenses). 

I was completely impressed with their 25 page report of how they will carry out the detail for my ER, regarding tax adjustments/selling loses first, etc.  I know they could do a much better job than me, I just don't know if it is worth $3000.  That would pay 6 months of my health insurance.  But I also paid and extra $15,000 in taxes last year because I didn't expect such a huge income from Vanguard...so obviously I'm *not* doing a great job.

Anyone else use them for fund management?
« Last Edit: January 30, 2014, 11:15:26 AM by meteor »

markstache

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Re: Is Vanguard Personal Advisor Service fee (0.30%) reasonable?
« Reply #4 on: January 30, 2014, 11:56:12 AM »
If you like the report, just buy one every 10 years (or 5 if you're the impatient type). Its not like things are going to change that much year-to-year. Almost any fee-only (I pretty sure that's term, not fee-based) would provide a similar report for a reasonable cost, and be cheaper in the long run.