Vanguard Financial Planning

[Bestwifeever]

LOL, have you used the Vanguard financial planner?

[DevonMiles19]

What i the quality/acumen of the advisors Vanguard provides?

[Midpack]

Quote:

Originally Posted by DevonMiles19 What i the quality/acumen of the advisors Vanguard provides?

I've had good experiences (twice), but all advisors are not created equal based on what I've read from others here. There may be some luck of the draw involved.

IME they are very good at analyzing your current holdings and mapping out a Bogle style plan using low expense, passive/index funds. They provide two proposed plans (see below), one that maintains your current holdings as much as possible (including non Vanguard funds) and another that's closer to their fundamental approach. If you current plan is much like what Jack Bogle has promoted over the years, they may recommend little if any change (my case). My report was 24 pages, which qualifies as very detailed IMO.

If you are hoping for a completely original portfolio with other than mutual funds or incorporating other investment philosophies, you will be disappointed. But given that

• what they offer is "free,"
• they are a business offering in-house mutual funds, and
• they were founded on the principals of index fund investing

I wouldn't expect them to promote other completely different investment philosophies. While a full service broker may choose from a wider array of investments, you never really know what motivation may underlie the choices they make on your behalf (commissions & fees).

Quote:

We have developed two portfolios for you to consider. Each one incorporates Vanguard’s investment philosophy, including a commitment to maintain broad diversification. However, each portfolio goes about it in a different way. Both portfolios strive to match your target asset allocation within acceptable ranges, and depending on your objectives, you may find one portfolio more suitable to your style. Integrated Portfolio The Integrated Portfolio maintains current holdings where possible while integrating them into a diversified portfolio. This approach is suitable for clients who have a preference for and are comfortable with their current holdings, but are looking to ensure they are properly diversified. Consolidated Portfolio Vanguard believes there are additional measures you can take to further enhance your chances for success over the long term provided you are willing to move more assets within your portfolio. This Consolidated Portfolio is also highly diversified, and may also offer these additional benefits: Lower annual portfolio costs. Vanguard funds charge a small fraction of the industry average to manage your assets. Because costs subtract directly from investment returns, this may result in a higher balance for you over the long term. (The projected impact of costs on your portfolio is illustrated in the Your retirement outlook section of this report.) Greater tax−efficiency. The taxes you pay on the distributions from your portfolio also detract from returns. Adjusting your portfolio to hold tax−efficient investments in taxable accounts can help minimize the impact taxes have on your portfolio’s returns. Simplicity. The convenience of consolidating your investments at one or only a few companies can greatly ease the management of your portfolio, as well as help with recordkeeping and tax preparation. During your consultation, your financial planner will discuss both the Integrated and Consolidated approaches

[Trooper]

Quote:

Originally Posted by Midpack No disrespect intended, but does $40K warrant a comprehensive financial plan?

No disrespect perceived...it's a valid question. I have about $2.2M in total assets, and looking for another set of eyes.

If/when I move assets to Vanguard, won't that create a taxable event, unless the assets are qualified?

[Midpack]

Quote:

Originally Posted by Trooper No disrespect perceived...it's a valid question. I have about $2.2M in total assets, and looking for another set of eyes. If/when I move assets to Vanguard, won't that create a taxable event, unless the assets are qualified?

Assets that can be transferred in kind do not create a taxable event. Almost all the funds and stocks I owned were transferred in kind. If that hadn't been the case, I would have taken years to transfer my portfolio, if at all. Selling everything and paying CG taxes on all of it would have been a show-stopper for me, and presumably anyone else.

The easiest way to know is to simply tell Vanguard (or whoever) what your holdings are and they can readily tell you which can be transferred in kind, and which cannot. Costs nothing but a phone call/email exchange. As you might imagine they've done this successfully thousands if not millions of times.

[LOL!]

Quote:

Originally Posted by Bestwifeever LOL, have you used the Vanguard financial planner?

No, because it would cost us money. That is, it is not free to us. Hint: We do not have $500,000 invested at Vanguard.

Online I am able to get a 22-page "Portfolio Watch" report which probably has most of the same info that a Vanguard investment plan has. Can anybody tell me how different that would be from a "Vanguard Financial Plan"? That is, for folks who have gotten a Vanguard Financial Plan and who have also gotten the Portfolio Watch output, what is different between them?

[pb4uski]

Portfolio Watch and the financial plan are different, but share some similarities.

As you know, Portfolio Watch is point in time comparison of your portfolio (including non-Vanguard accounts if you chose to include them in your holdings) against certain metrics for a defined target portfolio.

The first section (first 7 pages) of the Vanguard plan compares your portfolio to two target portfolios similar to Portfolio Watch and makes recommendations of how to get from where you are to the target. The next section is Your Retirement Outlook shows estimated portfolio balances for a best, average and worst scenario and success probabilities similar to what Firecalc does, how the success rate changes at different levels of spending, and then summarizes the information that you provided to them and that they used in developing their conclusions.

[Midpack]

Quote:

Originally Posted by LOL! No, because it would cost us money. That is, it is not free to us. Hint: We do not have $500,000 invested at Vanguard. Online I am able to get a 22-page "Portfolio Watch" report which probably has most of the same info that a Vanguard investment plan has. Can anybody tell me how different that would be from a "Vanguard Financial Plan"? That is, for folks who have gotten a Vanguard Financial Plan and who have also gotten the Portfolio Watch output, what is different between them?

The VFP begins with analyzing your current portfolio (first 4 pgs of 24), not unlike Portfolio Watch. From there the next 20 pages in the VFP output include:

1. Vanguard offers you two portfolios
   • Integrated - maintains current holdings where possible
   • Consolidated - additional measures if you're willing to move more assets to improve "chances for success"
2. Detailed recommendations - shows current, integrated, consolidated by each holding
3. Your retirement outlook, how your portfolio will grow (sort of a FIRECALC lite)
   • Your spending outlook (what you can afford to withdraw in table form spending vs prob of success)
4. Information you provided (just a summary of personal info)
5. Your personal holdings (all account holders have this)
6. Recommendations listed by type of account (similar to #2 above, by account instead of holding)
7. Transactions to achieve Integrated Portfolio showing Capital Gain (Loss) for each and total
8. Transactions to achieve Consolidated Portfolio showing Capital Gain (Loss) for each and total
9. Allocation of future savings
10. Assumptions and disclosures (2 pages of undoubtedly required legalese)
11. Contact info & notes

I am NOT recommending anyone pay for the privilege unless you simply don't know how to construct a portfolio at all, then it could be money well spent indeed, way less expensive than hiring an ongoing FP/FA. However, if it's free (or close) based on portfolio size, it's not a bad second opinion - and again the follow up phone discussion is more valuable than the standard plan you receive in writing IMO.

[LOL!]

Thanks to both pb4uski and Midpack for the info. I appreciate it.

[Alan]

Quote:

Originally Posted by LOL! Thanks to both pb4uski and Midpack for the info.

+1

[Options]

Quote:

Originally Posted by Midpack ... I am NOT recommending anyone pay for the privilege unless you simply don't know how to construct a portfolio at all, then it could be money well spent indeed, way less expensive than hiring an ongoing FP/FA. However, if it's free (or close) based on portfolio size, it's not a bad second opinion - and again the follow up phone discussion is more valuable than the standard plan you receive in writing IMO.

Well I did pay for it but feel I got great value based on their recommendations because (a) it confirmed planned consolidating everything to VG thereby reducing my expenses by over 50%; (b) I wanted the plan to corroborate results in ORP, FC, and FIDO, which it did; and (c) given that it's just about time for the annual rebalancing act, I liked the recommendations they did make.

Note: one recommendation they made which I didn't like/not going with are 10% in int'l bonds. New VG product since 5/13 and not getting the best press. Also, too new for my taste and don't like test-driving new industry products. Interestingly, VG was most optimistic/generous portfolio scenario, followed by ORP, FC, then FIDO. Next year, I'll do one final corroboration with ESPlanner because I like the detail it provides. Paying for VG FP now gave me confidence to make certain decisions at this time in preparation of FIRE in 12/14. Post PF consolidation, all future VG FP's are free.

[Midpack]

Quote:

Originally Posted by Midpack I am NOT recommending anyone pay for the privilege unless you simply don't know how to construct a portfolio at all, then it could be money well spent indeed, way less expensive than hiring an ongoing FP/FA. However, if it's free (or close) based on portfolio size, it's not a bad second opinion - and again the follow up phone discussion is more valuable than the standard plan you receive in writing IMO. Quote: Originally Posted by Options Well I did pay for it but feel I got great value based on their recommendations because (a) it confirmed planned consolidating everything to VG thereby reducing my expenses by over 50%; (b) I wanted the plan to corroborate results in ORP, FC, and FIDO, which it did; and (c) given that it's just about time for the annual rebalancing act, I liked the recommendations they did make.

I worded my remark a little too defensively. Like many here, I'm leery of others who might interpret comments as recommendations, when they're not. I do think the VFP has value worth paying for in some cases, but that's a personal decision for each of us to make on our own. Sorry...

[pb4uski]

Quote:

Originally Posted by Options .....Note: one recommendation they made which I didn't like/not going with are 10% in int'l bonds. New VG product since 5/13 and not getting the best press. Also, too new for my taste and don't like test-driving new industry products. ....

I've been pleased with my VG international bond fund so far. I bought it in early June and the annualized return since then has been +1.22% compared with -3.61% for the same period for the VG Intermediate Term Investment Grade fund that it replaced in my portfolio. Though i concede it is way too early to tell.

[jerome len]

Vanguard financial planning is very basic......evaluating what you have and recommending changes. The challenge is they are very limited in their advice and most would not call it a financial plan. I have a friend that had a trust over 1million and they wanted to invest him/her in 3 basic index funds.......total stock......total bond and total International......that was their investment plan and they wanted 20+ basis points to manage it.

On the other hand most financial firms want to sell you management at 1% a year or more, mututal funds far most expensive than index funds and high profit other products like variable annuities.....none of which I need or want.

The answer for many? Find a fee only financial planner, buy a few hours time for under a thousand dollars and have them evaluate what you have, explain what you need to do and where you should accomplish it........then get your self educated.....lots of good books and magazines will help. $40,000 is a nice start but most on this blog need/want a vision how they can get to 1m before ER.......good luck.......you'll get a lot of good advice on this blog.....a lot of very bright middle income, sort of average, but very smart participants.

[JoeWras]

I have a friend who works for a different company than those mentioned here. He is not a CFP.

He plugs in the numbers into his company's tools and out pops the report. It absolutely includes insurance.

Why? Because he gets really unbelievable commissions on the insurance and annuity products he sells.

Love him as a friend, but would never trust my plan to him.

---

"Friends don't let friends sell annuities."

[Options]

Quote:

Originally Posted by Midpack I worded my remark a little too defensively. Like many here, I'm leery of others who might interpret comments as recommendations, when they're not. I do think the VFP has value worth paying for in some cases, but that's a personal decision for each of us to make on our own. Sorry...

Thank you, but no offense taken, Midpack. I like your nuggets of wisdom .

I posted because I've been meaning to share my experience with the whole VG FP experience. I dealt with 3 FP's total (probably uncommon, but I had some variables to include). I decided to consolidate all investments to VG as I've been meaning to anyway. First FP did recommend VG admiral shares funds (which have lower fees vs. investor shares based on your investment minum), but failed to do so for one of them. I thought that was either careless of him or he didn't put that much effort into it. Second FP, did some extra work/research for me, which I appreciated. Third FP assisted with consolidating all funds to VG, and is doing (process not complete yet) an exceptional job.

Quote:

Originally Posted by jerome len Vanguard financial planning is very basic......evaluating what you have and recommending changes. The challenge is they are very limited in their advice and most would not call it a financial plan. I have a friend that had a trust over 1million and they wanted to invest him/her in 3 basic index funds.......total stock......total bond and total International......that was their investment plan and they wanted 20+ basis points to manage it. On the other hand most financial firms want to sell you management at 1% a year or more, mututal funds far most expensive than index funds and high profit other products like variable annuities.....none of which I need or want. The answer for many? Find a fee only financial planner, buy a few hours time for under a thousand dollars and have them evaluate what you have, explain what you need to do and where you should accomplish it........then get your self educated.....lots of good books and magazines will help. $40,000 is a nice start but most on this blog need/want a vision how they can get to 1m before ER.......good luck.......you'll get a lot of good advice on this blog.....a lot of very bright middle income, sort of average, but very smart participants.

Agreed, it's not a true FP, but for me it was enough. I've already read/am reading/will continue to read enough books, websites, etc. I was looking for (a) additional confirmation that I'm on track for FIRE 12/14), and (b) an "extra pair of eyes" reviewing my current plan. Other than the int'l bonds fund (which I don't particularly fault them for), I'm pleased with the feedback I got. My new basis points after consolidation will amount to a mere .1275%, and I'm okay with that.

[ETFs_Rule]

Quote:

Originally Posted by Trooper Hi, I thought I read that Vanguard offers free retirement planning if you have an account with them? I have about $40K in a mutual fund with them. Can anyone confirm this and have any other details? Thanks, Trooper

Beware of anyone who offers "free" financial planning advice. Free = non-fiduciary. Non-fiduciary means that they don't legally work for you. They are acting in the capacity of salesmen. You want fiduciary advice.

Hopefully that's a PASSIVELY managed mutual fund! AKA an "index fund", AKA an ETF.

[Huston55]

Quote:

Originally Posted by JoeWras I have a friend who works for a different company than those mentioned here. He is not a CFP. He plugs in the numbers into his company's tools and out pops the report. It absolutely includes insurance. Why? Because he gets really unbelievable commissions on the insurance and annuity products he sells. Love him as a friend, but would never trust my plan to him. --- "Friends don't let friends sell annuities."

Although I like the services, tools, and responsiveness that Fido provides, my experience with them is that most roads lead to annuities of some kind in some quantity. That's what their website 'retirement income' tools do, and that's what the FP I met with did. Frankly, it's a little disappointing. But, that's why it's called 'advice', I don't have to take it.

[panacea]

Quote:

Originally Posted by Midpack I don't see any false advertising whatsoever among your quotes. They don't meet your definition of a financial plan (comprehensive to be sure), but you're certainly entitled to your POV. Of course there is no accepted definition of what a financial plan should include, so like so much in financial services, (very deliberately) subject to interpretation.

Below is the CFP Board's definition of what the planning process should include, in terms of content. The Board requires that CFPs follow a defined procedure if they are performing financial planning work. However, if a CFP is working with a client on a single specific issue (insurance or college planning for example) if doesn't necessarily meet the definition of financial planning. Unfortunately, there is a lack of continuity in the industry right now where anyone can call themselves a financial planner or say they do financial planning. And unfortunately, this often results in advisors with no fiduciary responsibility not following any kind of defined procedure and/or selling products to their clients.


“Financial planning subject areas” denotes the basic subject fields covered in the financial planning process which typically include, but are not limited to:

• Financial statement preparation and analysis (including cash flow analysis/planning and budgeting)
• Insurance planning and risk management
• Employee benefits planning
• Investment planning
• Income tax planning
• Retirement planning
• Estate planning

- See more at: Financial Planning FAQ - CFP Board

[pb4uski]

Quote:

Originally Posted by Trooper Hi, I thought I read that Vanguard offers free retirement planning if you have an account with them? I have about $40K in a mutual fund with them. Can anyone confirm this and have any other details? Thanks, Trooper

Quote:

Originally Posted by ETFs_Rule Beware of anyone who offers "free" financial planning advice. Free = non-fiduciary. Non-fiduciary means that they don't legally work for you. They are acting in the capacity of salesmen. You want fiduciary advice. Hopefully that's a PASSIVELY managed mutual fund! AKA an "index fund", AKA an ETF.

ETFs Rule,

While I would in most cases agree with your caution on "free" financial planning, Vanguard is a bit different from the rest IMO in that they are not shareholder owned - they are owned by their fund shareholders similar to a mutual bank or cooperative. In my experience their recommendation are sensible and are not as "sales" oriented as those of a for-profit commercial funds. In fact, in my 3 planning sessions over the years, I can't recall the word annuity being mentioned once even though I know Vanguard offers annuities through relationships with certain insurers.