Author Topic: Vanguard introduces a low-cost advice service to more investors  (Read 3029 times)

forummm

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Vanguard introduces a low-cost advice service to more investors
https://personal.vanguard.com/us/insights/article/risi-itv-pas-052015

I personally won't be signing up for this. But I see a lot of posts on here where people are paying advisors 1% or more for advice and the advisors put them in funds with 6% load fees and 1-2% ERs. If you really think you need advice, at least get cheaper advice where they aren't selling you on unnecessarily expensive products.

forummm

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Re: Vanguard introduces a low-cost advice service to more investors
« Reply #1 on: May 08, 2015, 07:33:38 PM »
But you also shouldn't take all their advice...

http://vanguardblog.com/2015/04/02/my-message-to-millennials/

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Invest 12‒15% of your income for retirement.

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Use a 12‒15% savings rate as your target. Does this number make you cringe? Keep in mind this goal includes both your contributions and your company match.

Now THAT makes me cringe.

dungoofed

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Re: Vanguard introduces a low-cost advice service to more investors
« Reply #2 on: May 08, 2015, 09:02:34 PM »
At 0.30% it's only twice the cost of Betterment.

Would be interesting to see the balances of the people using the service. $150/year (0.3% on $50K, the lowest eligible balance) should probably only buy you about an hour of the adviser's time.

a1smith

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Re: Vanguard introduces a low-cost advice service to more investors
« Reply #3 on: May 08, 2015, 10:21:57 PM »
At 0.30% it's only twice the cost of Betterment.

Would be interesting to see the balances of the people using the service. $150/year (0.3% on $50K, the lowest eligible balance) should probably only buy you about an hour of the adviser's time.

With $50K balance Betterment is 0.25%; it is not 0.15% until your balance is >$100K

forummm

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Re: Vanguard introduces a low-cost advice service to more investors
« Reply #4 on: May 09, 2015, 07:29:36 AM »
With Betterment are you getting advice from a human? If not, that's not the same. Instead of Betterment, if you need someone to manage your money for you, just put your money in Vanguard Target Retirement for the year you hit 65 and be done with it.
« Last Edit: May 09, 2015, 07:31:54 AM by forummm »

Indexer

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Re: Vanguard introduces a low-cost advice service to more investors
« Reply #5 on: May 10, 2015, 06:30:58 PM »
You can't compare it to Betterment.  For all its hype Betterment is just a collection of online tools including a rebalancing engine.  It will recommend funds and rebalance them.  Most of those tools also already exist elsewhere for free.  Actually for what it is I think 0.15% is a rip off.  If you already have a pretty good idea what you are doing this is fine, or save yourself the 0.15% and just do it yourself. 

A person can talk to you about your tolerance for risk.  A person can talk to you about financial topics other than just your investment options. If the market crashes a person can talk you through it.  If you get it in your head that you want to dump everything into tech stocks a person can talk you out of it.  If you want to know how you should invest in your 401k in addition to your IRA, an advisor can do that. 

Does a mustachian need this?  Probably not.  I don't.  Your friends & family?  I know mine do, and 0.3% for an expert(who is going to use low cost index funds) is worth it for them.

dungoofed

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Re: Vanguard introduces a low-cost advice service to more investors
« Reply #6 on: May 10, 2015, 06:44:07 PM »
Ok so, I was being a little facetious in my post above. But it has got me thinking, what is the difference between a Vanguard adviser telling you "stay the course!" and an email from Betterment saying "stay the course!"

Also, don't think these Vanguard advisers aren't running off some kind of script. I wouldn't be surprised if they are just bulking up their data to replace their advisers first with offshored advisers, then later with a completely automated product.

forummm

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Re: Vanguard introduces a low-cost advice service to more investors
« Reply #7 on: May 10, 2015, 07:32:40 PM »
Ok so, I was being a little facetious in my post above. But it has got me thinking, what is the difference between a Vanguard adviser telling you "stay the course!" and an email from Betterment saying "stay the course!"

Also, don't think these Vanguard advisers aren't running off some kind of script. I wouldn't be surprised if they are just bulking up their data to replace their advisers first with offshored advisers, then later with a completely automated product.

I'm OK with Vanguard telling people to stay the course. And telling them to put their money into Vanguard funds. It's literally the best thing they could do with their investment dollars. Their Target Retirement Fund options already are completely automated products.

Indexer

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Re: Vanguard introduces a low-cost advice service to more investors
« Reply #8 on: May 10, 2015, 09:06:59 PM »
Ok so, I was being a little facetious in my post above. But it has got me thinking, what is the difference between a Vanguard adviser telling you "stay the course!" and an email from Betterment saying "stay the course!"

Also, don't think these Vanguard advisers aren't running off some kind of script. I wouldn't be surprised if they are just bulking up their data to replace their advisers first with offshored advisers, then later with a completely automated product.

I think a conversation with an expert is going to be more compelling than an email.  People have already told you to stay the course.  If things are bad enough that you are second guessing that then an email probably isn't going to cut it.

I highly doubt they are planning on outsourcing or replacing the service with a robo or that they are reading a script.  For comparison the base phone reps at a Vanguard/Fidelity/Schwab/etc. are going to have at least Series 6 & 63 investment licenses.  A fee only financial advisor/planner will have at least a Series 7, 63 & 65(or 66), and maybe a CFP and/or CFA to boot.  These aren't really jobs you can outsource.  For one I don't think you can even get these licenses unless you are a US resident.  I can't think of a single firm that outsources 'these' types of jobs.  Hiring hundreds(thousands?) of financial advisors is also going to be a whole lot more expensive than adding an automatic rebalancing tool to the website*.  I don't know what they make, but given what advisors at other institutions(including the firm I work at) get paid I'm going to assume at least in the 60-80k range, maybe even 100k+.

* They already have a tool that will build a portfolio for you of index funds based on your goal, time horizon, and risk tolerance.  Add tax efficiency standards to the recommendations and automatic rebalancing and you have a robo.  They could probably offer such a service for free.... and then charge just the people who want a professional they can talk to.

EDIT:  The ad that popped up at the bottom of the screen when I read back over this was a link to Vanguard's ETF recommendation tool!  Wow.... fitting.  :D
https://personal.vanguard.com/us/funds/etf/tools/recommendation?reset=true

« Last Edit: May 10, 2015, 09:22:03 PM by Indexer »