Vanguard financial plan experience

[Rich_by_the_Bay]

Like quite a few others, I took advantage of the free CFP services included in Vanguard's flagship deal. We filled out a basic questionnaire a few days in advance, and the planner called at the appointed hour. Our goal was a sanity check on the overall game plan.

DW and I met with her for around 45 minutes. She (the CFP, that is) was certainly more focused on investment and allocation advice rather than comprehensive financial planning. Bottom line was that her advice was surprisingly appropriate, relevant and sensible: keep doing what we're doing (which is essentially what is in Solin's retirement book). We are now down to 4 funds (total market index, international index, total bond, and MMF) plus a couple of smaller straggler accounts I can't roll over, at a 50:50 allocation, excluding our emergency/large expense fund which we like to keep aside in a separate account.

The word "annuity" never came up. I know not everyone has a good experience with that service, but overall, it was worth doing and the CFP is available by phone at our discretion.

P.S. Another benefit was that it increased DWD's confidence level in our plan. Nice to hear it from a 3rd party.

 

[Alan]

Your experience sounds very familiar to my own about 3 years ago. The word "annuity" never came up, but that could be because I have pensions. I haven't bothered to take them up on future consultations.

 

[Rich_by_the_Bay]

I should add that she advised no more than 5% in cash; we also have 5 years worth of living expenses as short-term federal bonds in our bond allocation.

 

[Moemg]

I also had the free plan done and was very happy . They never mentioned an annuity . I also had them do a plan years ago when they still charged for the plan . The woman I had was so helpful . She went over the plan and explained all the reasons for her suggestions . I did implement most of them so the second plan was more of a tune up.

 

[mickeyd]

I also have had a free VG plan done and reviewed/updated a couple of times. I was happy with the service and glad that I knew that the CFP would be VG biased, which was OK with me because I am tilted that way also. The hour discussions that I have had with them after the FP is produced have also been very productive as I could ask why, why, why they recommend funds that I would have no inclination to jump into.

 

[Htown Harry]

I'm down a couple of notches in the Vanguard hierarchy, in Voyager. The VG information page suggests the fee I would pay provides essentially the same analysis you all received, but without the personalized "ask a CFP" follow-up opportunity.

I will need to decide whether I want such a check up at this stage. I have confidence in the soundness of my plan, but DW and I would find it reassuring to have some fresh eyes take a look.

Would you all agree $250 represents fair value for the services?

 

[bizlady]

We too did the plan a few years ago and the same funds were recommended: total market index, international index, total bond. They recommended no cash knowing at the time we were 2 years from retirement. We ignored that as we felt we wanted some. Have been happy with the funds, BUT hear too often that the same 3 funds are recommended. Doesn't that seem odd to anyone else?

 

[Rich_by_the_Bay]

Would you all agree $250 represents fair value for the services?

If I were going to pay for the service, I would go to an independent fee-only advisor. Why not get a truly independent opinion - maybe there are non-Vanguard opportunities for you.

We are already pretty much Vgd based, and it was a free service so we tried it on for size with a limited agenda.

 

[Katsmeow]

I'm not sure I would pay $250 for it truthfully.

We did it (for free) when DH rolled his pension lump sum into Vanguard. That represents a bit under 80% of the portfolio. The rest is in his and my 401k at Fidelity.

They basically suggested moving anything we could to Vanguard (but we decided to keep those at Fidelity). They did then give a plan that would take into account Fidelity. They did ask what alternative options we had for investments at Fidelity. They kept DH's Fidelity investment the same. In mine, I had mine invested as part of our equity share of our portfolio and they moved it to the bond portion.

For the money at Vanguard, we had some money we told them we would need reasonably soon so that they would keep in the MM fund.

Everything else was suggested to be Total Stock Market (admiral), Total bond (admiral) and total international (had no admiral at the time, does now).

They asked us what our asset allocation was and we told them we were thinking of 50-50. The CFP said she agreed with this but who knows what she would have said if we had not given an answer?

The big point of contention we had with her was that we were interested in investing about 8% of the portfolio in Wellesley. She didn't recommend it. She had no real strong reason for it ...just kept saying she recommended the others more.

We asked her to tell us if we followed her recommendations but would have 8% in Wellesley how much would we put in the other funds to maintain the same asset allocation. She refused to tell us which I found annoying. I told her I understood she didn't recommend it but couldn't she save us the time of having to do the asset allocation ourselves? No.

So...we ended up doing it ourselves. It just seemed unnecessarily rigid.

I thought the recommendations for the 3 Vanguard funds was OK but not exactly rocket science and certainly not worth $250 to get.... That doesn't mean they were bad. We did invest in those 3 funds (and Wellesley) and made the change to my Fidelity plan but I would have come up with a substantially similar plan on my own.

 

[Alan]

I wouldn't pay $250 for the VG advice. I did it because it was free, and it was essentially a reaffirmation of the AA we had. I couldn't use the VG funds suggested since, at the time, 35% of it was still in my 401k and 12.5% was in DW's IRA's in Fidelity.

 

[easysurfer]

Why did the CFP's suggest no cash?

 

[FinanceDude]

Why did the CFP's suggest no cash?

Because they work for Vanguard.......

 

[LOL!]

Why do you need any cash when short-term bond funds will do nicely?

 

[Rich_by_the_Bay]

Why did the CFP's suggest no cash?

They figure that 5% should carry you over for a year or so during a downturn, after which you can skim from whichever asset class was highest. And of course MMF yields are miniscule.

I don't agree with that and feel that 5 years or so in cash works better for us. She expressed understanding and I proposed 2 y in cash and another 4-5 years in short term govt bonds and she was OK with that.

Not sure either party could prove the point.

 

[JBmadera]

I think I posted here, but perhaps it was at Bogleheads: we can move all our funds over to Vanguard and I guess be "Flagship", other than having all my funds under one roof (which would make updating quicken faster, btw I really wish I hadn't upgraded to v 11, yuck), what is the actual benefit, is there really a difference between Voyager, Flagship, etc?

Again the simpleness is appealing, but to be honest I do like have my $$$ spread out just a bit (Fidelity, Infinity, American Funds), but if there were really solid benefits to moving to all Vanguard I would do it.

Thoughts? Thanks!

 

[chinaco]

I have not done the VG Financial review.

I did do one with a CFP from a large investment bank that manages some of our tax deferred assets.

He confirmed that I was on the right path. Although, when I described my preference for VG and low cost index funds... he reacted a little (I thought he was being defensive) and pointed out an outlier case where a low cost active fund had outperformed the S&P 500.

He did not offer any advice about the overall retirement plan... only investment oriented advice.

I would expect VG to do the same thing (focus on allocation of their products). Doing the full plan is time consuming and requires a lot of interaction.

 

[Sconie]

I've done it three times and each time I have thought it was well worth the small effort required on my part. I always feel as though the Vanguard planning process is great on keeping me (us) focused on doing the "basics" right----and once you do that, just about everything else becomes peripheral.

 

[Sconie]

I think I posted here, but perhaps it was at Bogleheads: we can move all our funds over to Vanguard and I guess be "Flagship", other than having all my funds under one roof (which would make updating quicken faster, btw I really wish I hadn't upgraded to v 11, yuck), what is the actual benefit, is there really a difference between Voyager, Flagship, etc?

Again the simpleness is appealing, but to be honest I do like have my $$$ spread out just a bit (Fidelity, Infinity, American Funds), but if there were really solid benefits to moving to all Vanguard I would do it.

Thoughts? Thanks!

I have "bounced" around between the Select and Flagship levels for well over 10+ years now; sometimes I'm classed as "Select" and sometimes as "Flagship." IMHO, there is no substantive difference between the two levels.

FWIW, I've pulled a lot of my cash out of Vanguar---just because I can get some much higher rates at internet-type banks, with FDIC insurance to boot, that I can in Prime Money Market.

 

[Moemg]

Would you all agree $250 represents fair value for the services?

I have done two Vanguard plans . The first was twelve years ago when they still charged for plans . I think I paid between $150 to $200 . The second was the free plan . There was a world of difference between the plans . The first one was worth every penny and included a lot of education on the why's of the recommendations . The second plan was much more basic and was a push for all Vanguard and was not worth $250 IMHO.

 

[Midpack]

Would you all agree $250 represents fair value for the services?

I went through the free plan with Vanguard, but they pretty much confirmed my AA and holdings were spot on, and had little to recommend. It was reassuring, but I didn't learn anything. My plan was/is based on The Four Pillars.

Unless you don't know how you want to invest [most people don't, though most here do], for about $25 I'd buy, read and apply any one of :

The Four Pillars of Investing
The Investor's Manifesto
The Boglehead's Guide to Investing
The Coffeehouse Investor
any of Scott Burns Couch Potato portfolios (not in a book that I know of)

There are other good books, but I know these first hand.

If you do, I am certain Vanguard would approve of your AA & holdings. I think you will sleep a lot better if you know exactly why you own each of your holdings - you won't get that from a Vanguard plan alone. If you're still uncertain, spend the $250 with Vanguard.

And finally, if you're eligible you can get pretty much the same thing by viewing your portfolio online at Vanguard's Portfolio Watch. I look at that once in a while for reassurance.

Best of luck...

 

[WilliamG]

Retired in 2000 and have done the Vanguard plan around 3 times. Also have a friend who retired a couple of years later that has done the same. Their shelf recommendation has evolved. First time the strategy was more slice and dice and balanced index/managed funds. Problem: I think they offset Windsor II large value with US Growth; a bad choice for several years. Overall target was to mimic broad market. Later used Diversified Equity fund as the "managed" broad market counterpart to TSM. Another bad choice.

We just completed our latest session. Have finally relented and gone mostly Total Market and Total International, but have held on to our 30% allocation to Wellesley. To "counterbalance" Wellesley they suggested a combo of Growth Index and Extended Market Index. We stayed with TSM because we want the slight value tilt. We have Total Bond Index in Roth but complement Wellesley bonds with GNMA and Short Term IG.

Concerning cash, we used to include our cash in overall portfolio but are now following the Vanguard "pattern"; i.e., periodic withdrawals for spending needs are removed from the portfolio being managed for investment. The timing and amount of withdrawal to cash can vary to suit your demeanor as Rich noted above.

 

[walkinwood]

My experience is similar to the OP.
Their advice amounted to tweaks on my plan, so I never followed through on any recommendations.

 

[mickeyd]

Why did the CFP's suggest no cash?

As I recall that process, you (the client) list your assets during the data accumulation process and indicate which ones you do not want to be included in the plan analysis. I recall "xing" out PMMF, STB fund and cash savings. This is why the CFP would not recommend MMF for my AA. Perhaps that's the deal with the OP also.