Vanguard Advisor Rant

[Midpack]

In the 11 years I've been with Vanguard I've never asked anything of my rep, and didn't expect anything much. I had a portfolio asset allocation review twice, and they were worthwhile IMO, even though they were free (I would have paid a small fee for the exercise).

But I've continued to struggle with whether or not to do Roth conversions for years, and I thought surely Vanguard could advise me there. I've done various free online calculators, but they're generic black boxes, not meant as a sole basis for decision making. And they've all come back telling me conversions were pretty much a wash in our case.

i-ORP is the best tool I've seen, though it seems to have changed some over the years, and it too is a black box - I have no way of knowing how accurate it is. So I thought surely Vanguard could do something like what i-ORP does.

I asked my rep for a comprehensive withdrawal plan, including taxes showing Roth conversions if recommended. He said a Vanguard CFP could do that - a pleasant surprise. I told the rep and the CFP that I wasn't interested in an asset allocation review, said we could skip that part if it was part of their package. The CFP called and interviewed me for 45 minutes to prepare his response, and I made it very clear what I wanted, and didn't need. All sounded great.

Got all excited about the whole exercise.

So Monday, what do they send me - the same standard asset allocation review they've always provided, with no insights regarding withdrawals, taxes or Roth conversions. To top it off they recommended I dump one of my Vanguard funds - one I bought years ago based solely on their recommendation to buy it! And I told them both I'd be happy with reducing my AA to 50/50, the package used 60/40 as the target.

So though I don't expect much, IMO Vanguard delivers less in the advisor role...

[/rant]

 

[JoeWras]

One could imagine... The CFP talks to you, takes a few notes. When done, sends the task to some grunt worker while the CFP talks to the next customer to make them feel like they are getting royal treament. Meanwhile, the grunt worker ignores the notes and instead does the standard plug and chug that the computer spits out, and then goes and gets that extra coffee. Was it a Friday? Even more chance of that.

Vanguard is great, but they do have their warts.

In their defense, when I transferred my stocks from E*Trade to Vanguard, they took care of everything, flawlessly. It was a really good experience.

 

[Bestwifeever]

Calmly go back to the Vanguard CFP, say thanks, and restate what you really want in as few words as possible. Maybe mention that your friends get good advice from Fidelity....

 

[walkinwood]

That's a bummer. After reading your earlier post on this issue, I had decided to call vanguard after the holidays and ask for a CFP to guide me through some financial decisions. I don't think I'll waste my time now.

 

[Midpack]

Calmly go back to the Vanguard CFP, say thanks, and restate what you really want in as few words as possible. Maybe mention that your friends get good advice from Fidelity....

Update: I sent a follow up message to my rep asking about Roth conversions. His brief canned reply, depends on taxes, we recommend you talk with your accountant. In other words, ZERO help...

 

[Another Reader]

If you want help, go to Fidelity. I would not trust what Vanguard says anyway. No repercussions for bad advice. I use Vanguard because of Wellington and their low cost funds and ETFs. The latter are now easily duplicated elsewhere.

 

[target2019]

Update: I sent a follow up message to my rep asking about Roth conversions. His brief canned reply, depends on taxes, we recommend you talk with your accountant. In other words, ZERO help...

I think most FA would try to skirt the tax question. They need appropriate tax credentials, like CPA has (I think).

 

[MRG]

I think most FA would try to skirt the tax question. They need appropriate tax credentials, like CPA has (I think).

+1

That's a can of worms that no one wants to open(especially a close lipped fund company, I wouldn't expect Fidelity to do any more). A friend called those 0 up and 10 down.

 

[easysurfer]

Over the years, I've had 3 or 4 Vanguard Advisors assigned to me. The only time I talked to one was when he cold called to introduce himself and I answered the phone. I pretty much told him thanks but I like to do things on my own (pretty much, don't call me, I'll call you) . The other Advisors, I've just dodged and treat as a sales pitch and never call back -- guess this makes the job easier for them too .

 

[JoeWras]

I think most FA would try to skirt the tax question. They need appropriate tax credentials, like CPA has (I think).

Time out. This was not an FA, this was a CFP. Taxes are part of the CFP certification. And why did the CFP even bother to talk with Midpack about this and not stop up front. Midpack made it clear what he wanted.

 

[JoeWras]

And, then, why does Vanguard have this on their web site:

https://investor.vanguard.com/financial-advisor/financial-planning

Minimizing your taxes
The less you pay in taxes, the more money you keep. According to our research, an advisor can help minimize an investor's tax burden in two ways: first, by efficiently allocating assets between taxable and tax-advantaged accounts; and second, when the time comes to withdraw money, such as for retirement, by developing a tax-smart distribution plan.

I know this is from their Personal Advisor Services. But, uh, don't understand why this would not apply to Flagship services. (Not sure if Midpack has Flagship, but you get my point.) Oh, maybe a Roth conversion isn't a "withdrawal." But does it matter?

 

[ERD50]

+1

That's a can of worms that no one wants to open(especially a close lipped fund company, I wouldn't expect Fidelity to do any more). A friend called those 0 up and 10 down.

It would be interesting to hear back from OP, to see if Fidelity does offer anything more.

But it is so dependent on assumptions, and unknowns. I suspect 'a wash' is about as good as you'll get for most scenarios.

Even though it may be a wash for me, I decided to go ahead with ROTH conversions up to 15% for flexibility. If I had a large expense in the future, the ROTH would provide a source of funds I could draw from w/o incurring taxable gains in that year.

Even that is fairly unlikely, I might have something I could sell for little/no gains, but you never know.

-ERD50

 

[GrayHare]

As my uncle told me, "Free advice is worth exactly what you pay for it." Free asset reviews are mostly data gathering efforts. If you say you have lots of $ invested elsewhere, they know to market you harder. Saying you have millions at a competing brokerage might at least get you a better rep.

 

[Midpack]

And, then, why does Vanguard have this on their web site:

https://investor.vanguard.com/financial-advisor/financial-planning

I know this is from their Personal Advisor Services. But, uh, don't understand why this would not apply to Flagship services. (Not sure if Midpack has Flagship, but you get my point.) Oh, maybe a Roth conversion isn't a "withdrawal." But does it matter?

I am Flagship. And I just sent the quote to my rep, so thank you. A "tax smart distribution plan" is exactly what I asked for to begin with. Roth conversion was an ancillary question.

 

[MRG]

And, then, why does Vanguard have this on their web site:

https://investor.vanguard.com/financial-advisor/financial-planning

I know this is from their Personal Advisor Services. But, uh, don't understand why this would not apply to Flagship services. (Not sure if Midpack has Flagship, but you get my point.) Oh, maybe a Roth conversion isn't a "withdrawal." But does it matter?

PAS is a service that has an agreement with the proper weasel words to protect Vanguard. I assume that flagship doesn't.

 

[LOL!]

Flagship to my knowledge has never gotten one any financial planning advice for free. It has ALWAYS been investment advice restricted to what asset allocation to have and what funds to buy or exchange.

One can read over past forum discussions and see the the "free financial plan" has never been a real financial plan with insurance, withdrawals, and taxes considered. It has only been an investment plan. But if anyone wants to chime in otherwise with specific counter facts, I'd sure like to read them.

With PAS up and running, the distinction is even more obvious. I don't think the old pre-PAS would do any tax-loss harvesting for you, but the new PAS will do so, but there is clearly a fee.

 

[Texas Proud]

Update: I sent a follow up message to my rep asking about Roth conversions. His brief canned reply, depends on taxes, we recommend you talk with your accountant. In other words, ZERO help...

This is what I was going to say.... that they would NOT get into recommending anything tax related... too much liability if they got it wrong...

I would be surprised if Fidelity would do this exercise...

 

[Options]

Midpack, no way would I leave my tax bracket management to a VG "adviser" (or anyone lese for that matter). I am reminded of when first moving funds to VG asking the adviser if TIPS were a good idea; I learned then I will only get the best answers that I need from my own research and learning.

The bad news is the best person to carry this out is you, as only you have all of the variables, of which there are (just too) many. Chief among them are: (1) do you project your tax rate to be higher in the future (in which case conversions are generally a good idea)? (2) your marital status; (3) are you delaying SS? (4) if converting, what tax bracket will you convert up to. There are other variables as well, including your current taxable versus tax-deferred dollar ratio, future income (pensions, annuities, etc.).

Like you, I struggled to wrap my head around conversions. The very best place I found to get educated is the BH forum. The help there is just amazing. I have learned so much that this first year doing conversions I not only converted but recharacterized, and next year will expand further by converting/re-converting/recharacterizing to optimize the number of shares converted. I can't tell you how satisfying it was to have pulled it off successfully. If I can learn this stuff, anyone can.

Here are some threads I have bookmarked that have helped me tremendously and I hope they do the same for you:

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=182887&newpost=2773601

https://www.bogleheads.org/forum/viewtopic.php?p=2441970#p2441970

https://www.kitces.com/blog/using-systematic-partial-roth-ira-conversions-and-recharacterizations-to-fill-the-lower-tax-bracket-buckets/

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=179688&newpost=2721584

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=178614&newpost=2704499

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=185499&newpost=2815454

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=186445&newpost=2831627

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=202284&newpost=3100886

https://www.bogleheads.org/forum/viewtopic.php?t=200776

https://www.bogleheads.org/forum/viewtopic.php?f=1&t=194462&newpost=2969210#p2964047

Edited to add: I agree with Texas Proud's statements as well regarding liability.

 

[target2019]

Time out. This was not an FA, this was a CFP. Taxes are part of the CFP certification. And why did the CFP even bother to talk with Midpack about this and not stop up front. Midpack made it clear what he wanted.

I can't answer for the individuals involved. I know that a CFP is not necessarily an EA or a CPA. I'm just letting you know what my experience has been, and financial companies do not prepare taxes or give specific tax advice for my/your situation. They can help you choose between types of offerings, but in most cases when you ask for specific tax advice they refer you to a certified tax prep firm or cousin Joe who does taxes. That's partly due to the fact that the person on the phone does not know the complete tax situation.

 

[MRG]

I'm private client with Fidelity and any tax question I ask is given the same type of answer. Look at what Fidelity recently did with RIP. There was a detailed year by year withdrawal report, showed projected balances, yearly withdrawal, federal tax, MRD. Where is it now? Gone with the latest upgrade.

I believe no one wants to sign up at Vanguard, Fidelity or any fund company as it's not their core competency. If they wanted to be in that business they'd have an offering. Perhaps PAS gives you that?

 

[DrRoy]

If you want help, go to Fidelity.

My Fidelity rep recently changed. In my first meeting with the new guy, he specifically recommended doing regular to Roth conversions based on my lower tax bracket after I RE next year, and also offered to assist with RMD's when the time comes.

 

[Texas Proud]

My Fidelity rep recently changed. In my first meeting with the new guy, he specifically recommended doing regular to Roth conversions based on my lower tax bracket after I RE next year, and also offered to assist with RMD's when the time comes.

I think there is a difference in a general stmt saying 'do regular Roth conversions due to you being in a lower tax bracket' and someone asking for specific things to do and how much to convert....

 

[Badbreath]

they (Vanguard or any other Mutual fund Comp) will not help with how to do your taxes. They will tell you which fund is more or less tax efficient.

 

[Midpack]

they (Vanguard or any other Mutual fund Comp) will not help with how to do your taxes. They will tell you which fund is more or less tax efficient.

Not sure who this is directed at, but I wasn't asking for help with how to do taxes. Just a "tax smart distribution plan" as described on their website.

 

[LOL!]

If anyone finds a discount broker (Vang, Fido, Schwab, E*trade, Scottrade, TDAm, et al.) that will give one a "tax-smart distribution plan" with specific Roth conversion amounts and ideas that is basically free, then I hope they report in this thread. For some reason, I just don't think such a place exists.

And if it is not free, please feel free to report as well.