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Old 02-28-2017, 08:48 AM   #1
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Vanguard Advisors

I'm a DIY investor so I don't want/expect much 'advice.' My previous reps never had answers, they always had to get back to me, but they always got back to me and sometimes their 'advice' was useful. My current rep is completely useless, and will only talk via phone - even though I've asked him to use email.

I'm adding bond funds to my taxable account for the first time, always had enough room in deferred accounts to avoid it until now (equities just too high). So I thought I'd ask his recommendation re: Tot Bond Fund vs Intermediate Tax-Exempt or other muni funds. He parroted back what I told him with zero insight!

IME VG advisors have reached new lows, but maybe it's just the individual. I may demand a new advisor. Or maybe it's their way to push clients into PAS.

[/rant]
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Old 02-28-2017, 08:55 AM   #2
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Many posts about this on Bogleheads this past few months. At least they didn't misplace your funds or put someone else's information into your account history, or fail to get back to you when you have questions about your 5 or 10 million dollar account!

Growth comes at a cost. The growing number of people on that forum who report going to FIDO, Schwab, or TDAm is telling (granted, not representative, wholly anecdotal, etc....)
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Old 02-28-2017, 08:57 AM   #3
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I have never found anyone at Vanguard that knew what they were talking about. When they first introduced their PAS under a different name a few years back, I got the pitch from a couple of their FA's. I'm pretty sure I knew more than they did, although they were young and earnest.
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Old 02-28-2017, 09:03 AM   #4
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So I the thought I'd ask his recommendation re: Tot Bond Fund vs Intermediate Tax-Exempt or other muni funds. He parroted back what I told him with zero insight!
Bond funds are pretty simple I think. For the two choices you listed for a taxable account will depend pretty much on your marginal income tax bracket.
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Old 02-28-2017, 09:47 AM   #5
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Bond funds are pretty simple I think. For the two choices you listed for a taxable account will depend pretty much on your marginal income tax bracket.
We tend to be $10-20K over the 15% bracket.
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Old 02-28-2017, 10:07 AM   #6
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Not surprising, since I think the average person on this forum knows more about investing than 98% of the general population, including many financial advisors. The other 98% probably have much more basic questions than we do. It's kind of like calling a computer support hotline and getting the answer "make sure your computer is plugged in, then try rebooting". It would be worthless advice for me, since I'm a sophisticated computer user, but I bet it would solve the problem for 80% of callers.
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Old 02-28-2017, 10:20 AM   #7
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We tend to be $10-20K over the 15% bracket.
Some folks over the 15% tax bracket pay a 30% marginal rate. If that's you, then tax-exempt bonds are fine. Otherwise if you are in the 25% marginal income tax bracket, you can use total bond.

As you may know, I'm only buying short-term corporate bond index fund because I want to shift my average duration to a short term. So I recommend VCSH or VSCSX. The lower yield from shorter term bonds will have lower tax consequences and you may be able to tax-loss harvest.

But the reality is it probably won't matter what you choose to do.

Bond yield comparison calculator: https://files.thefinancebuff.com/cal...alculator.html
(found this while reading the bogleheads.org wiki)
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Old 02-28-2017, 10:40 AM   #8
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Some folks over the 15% tax bracket pay a 30% marginal rate. If that's you, then tax-exempt bonds are fine. Otherwise if you are in the 25% marginal income tax bracket, you can use total bond.

As you may know, I'm only buying short-term corporate bond index fund because I want to shift my average duration to a short term. So I recommend VCSH or VSCSX. The lower yield from shorter term bonds will have lower tax consequences and you may be able to tax-loss harvest.

But the reality is it probably won't matter what you choose to do.

Bond yield comparison calculator: https://files.thefinancebuff.com/cal...alculator.html
(found this while reading the bogleheads.org wiki)
Thanks, that led me to this which is helpful https://personal.vanguard.com/us/fun...et=0#form#form
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Target AA: 45% equity funds / 30% bond funds / 25% cash - radically changed Nov 2018
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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Old 02-28-2017, 12:25 PM   #9
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Do you have an advisor, or a flagship representative? Are you paying the 0.3%?
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Old 02-28-2017, 12:43 PM   #10
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Do you have an advisor, or a flagship representative? Are you paying the 0.3%?
I have a Flagship rep, I am not paying a fee.

FWIW I had all our assets with Fido until 2005. They were more than happy to provide basic advice without any additional fees, although the quality of the advice varied by individual.
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No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 45% equity funds / 30% bond funds / 25% cash - radically changed Nov 2018
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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Old 03-01-2017, 07:21 AM   #11
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I am Flagship and out of curiosity asked for a financial plan back when they were supposed to be included. I expected them to wrap the info I provided into a glossy boilerplate plan but I didn't get a plan at all - just talk. The adviser was nice enough but seemed to know less than me. I was underwhelmed. No way I would pay the fee for a personal advisor but it might be worthwhile for someone who is anxious, not knowledgeable and is just looking for a decent couch potato AA. I suspect the paid advisors do have some glossy, boilerplate plans that they can wrap you particulars into once they get an idea of your needs and risk profile.
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Old 03-01-2017, 08:18 AM   #12
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I am Flagship and out of curiosity asked for a financial plan back when they were supposed to be included. I expected them to wrap the info I provided into a glossy boilerplate plan but I didn't get a plan at all - just talk. The adviser was nice enough but seemed to know less than me. I was underwhelmed. No way I would pay the fee for a personal advisor but it might be worthwhile for someone who is anxious, not knowledgeable and is just looking for a decent couch potato AA. I suspect the paid advisors do have some glossy, boilerplate plans that they can wrap you particulars into once they get an idea of your needs and risk profile.
That's odd. I'm Flagship and I got a 20 page financial plan for free just a few months ago, December.

It is the same stock plan they've always offered (with occasional recommendation updates), it's not really tailored to any individual. You set the AA with their guidance if needed, and they recommend what assets to hold to fill out your portfolio accordingly. They analyze your current holdings in full detail along with all the safe mainstream investing tenets, and show you how to map into their choices if you wish - they tell you exactly which assets to sell and which assets they'd recommend you buy. It's a worthwhile exercise for free, but it's not revolutionary or truly unique to the client.

And the discussion has been the most valuable part of the exercise IME, more than the boilplate document.
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Retired Jun 2011 at age 57

Target AA: 45% equity funds / 30% bond funds / 25% cash - radically changed Nov 2018
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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Old 03-01-2017, 08:23 AM   #13
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That's odd. I'm Flagship and I got a 20 page financial plan for free just a few months ago, December.

It is the same stock plan they've always offered (with occasional recommendation updates), but they analyze your current holdings in full detail with all the mainstream investing tenets, and show you how to map into their choices if you wish - they tell you exactly which assets to sell and which assets they'd recommend you buy.
That's very odd. I expected just the sort of generic plan you got. I asked for the plan and got nothing but a little talk.
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Old 03-01-2017, 09:06 AM   #14
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Has anyone looked at the Financial Engines tool available through the VG site?
It gives very specific analysis & advice- which may or not be good advice-but nevertheless is interesting.
I've always wondered why they offer this for free when (it could be argued) it competes with their fee-based offering.
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Old 03-01-2017, 10:43 AM   #15
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Has anyone looked at the Financial Engines tool available through the VG site?
It gives very specific analysis & advice- which may or not be good advice-but nevertheless is interesting.
I've always wondered why they offer this for free when (it could be argued) it competes with their fee-based offering.
I just tried it and was underwhelmed. It transferred most of my accounts from VG including outside investments I track there. It didn't transfer the data from our joint taxable account so I added that in manually. I couldn't see any way to make the planning engine understand that I am not single - for tax or for account holding so I just let it assume all the accounts were mine. Retiring at age 69 (coming up this summer) it advised me that I could go with over 6%/year and told me to expect up to a 12% crash in the next decade.

I have heard a lot of good things about this planner so I am guessing I didn't see how to tune it. Or maybe the VG free version is crippled.
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Old 03-01-2017, 10:57 AM   #16
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Our son would be an excellent candidate for a VG plan. That is what I'd advise him when he inherits.

Let's face it, for most of us experienced investors here we are our best planners.
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Old 03-01-2017, 11:01 AM   #17
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That's very odd. I expected just the sort of generic plan you got. I asked for the plan and got nothing but a little talk.
Don, me too. Same as you. All talk, no writing.
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Old 03-01-2017, 11:06 AM   #18
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We get a free plan every year, by asking. The "cost" is the low key pitch to buy the management service. Not interested at this time. However, when/if I am smart enough to see impairment on my DW's part and my own, I can imagine buying it just to keep our hands off the wheel.
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Old 03-01-2017, 11:23 AM   #19
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Midpack,

Have you looked around to see if any brokerage firms offer a muni bond fund that is specific to Illinois? If so you would save both federal and state taxes, which I would have to assume would be better than putting Total Bond Fund into a taxable account.

If you can't find a state specific fund, look up the percentage of bonds that are based in Illinois, as you can still deduct that percentage from your state taxes.
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Old 03-01-2017, 12:24 PM   #20
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I just tried it and was underwhelmed. It transferred most of my accounts from VG including outside investments I track there. It didn't transfer the data from our joint taxable account so I added that in manually. I couldn't see any way to make the planning engine understand that I am not single - for tax or for account holding so I just let it assume all the accounts were mine. Retiring at age 69 (coming up this summer) it advised me that I could go with over 6%/year and told me to expect up to a 12% crash in the next decade.

I have heard a lot of good things about this planner so I am guessing I didn't see how to tune it. Or maybe the VG free version is crippled.
My understanding is that FE retirement income assumption is based on putting everything into an annuity indexed for inflation at retirement. That could explain the rosy 6% spending rate.
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