Vanguard Financial Planning

[ETFs_Rule]

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Originally Posted by pb4uski 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.

I love Vanguard ETF's and Vanguard annuities (for the purpose of doing a 1035 exchange from another annuity). My understanding is that Vanguard also sells "actively managed" mutual funds. Are they recommending those to clients? That is a conflict of interest right there. Never lose sight of the fact that a non-fiduciary does not legally work for you.

[Midpack]

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Originally Posted by ETFs_Rule I love Vanguard ETF's and Vanguard annuities (for the purpose of doing a 1035 exchange from another annuity). My understanding is that Vanguard also sells "actively managed" mutual funds. Are they recommending those to clients? That is a conflict of interest right there. Never lose sight of the fact that a non-fiduciary does not legally work for you.

It might be more meaningful to provide actual/specific examples/evidence where Vanguard/VFP has not put the interests of an account holder first (fiduciary responsibility) instead of posting open ended (false IME) speculation and generic answers. I'd certainly be interested in whatever specific actual concerns you're aware of. Otherwise you're just telling us we could get killed crossing the street...

[pb4uski]

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Originally Posted by ETFs_Rule I love Vanguard ETF's and Vanguard annuities (for the purpose of doing a 1035 exchange from another annuity). My understanding is that Vanguard also sells "actively managed" mutual funds. Are they recommending those to clients? That is a conflict of interest right there. Never lose sight of the fact that a non-fiduciary does not legally work for you.

You seem to be suggesting that if Vanguard recommends any of their actively managed funds in their financial planning that it is a conflict of interest? Silly.

To the best of my recollection, the funds they have recommended to me were mostly index funds. But the reality is that even their actively managed funds are solid and fees are low in the spectrum of actively managed funds. You obviously have some sort of axe to grind. If your criticism was based on some actual experience you could relay, your criticisms might carry some validity.

[ETFs_Rule]

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Originally Posted by Midpack It might be more meaningful to provide actual/specific examples/evidence where Vanguard/VFP has not put the interests of an account holder first (fiduciary responsibility) instead of posting open ended (false IME) speculation and generic answers. I'd certainly be interested in whatever specific actual concerns you're aware of. Otherwise you're just telling us we could get killed crossing the street...

Google fiduciary duty VS suitability standard. There is a clear difference.

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If your criticism was based on some actual experience you could relay, your criticisms might carry some validity.

Index funds CONSISTENTLY beat actively managed mutual funds.

Another study

5 Lies About Index Funds - Forbes

[Midpack]

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Originally Posted by Midpack It might be more meaningful to provide actual/specific examples/evidence where Vanguard/VFP has not put the interests of an account holder first (fiduciary responsibility) instead of posting open ended (false IME) speculation and generic answers. I'd certainly be interested in whatever specific actual concerns you're aware of. Otherwise you're just telling us we could get killed crossing the street... Quote: Originally Posted by ETFs_Rule Google fiduciary duty VS suitability standard. There is a clear difference.

Many here are well aware of the definitions, and all are capable of Googling same, but thanks. Again, what specific concerns and evidence do you have re: VFP or Vanguard in general?

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Originally Posted by ETFs_Rule Index funds CONSISTENTLY beat actively managed mutual funds. Another study 5 Lies About Index Funds - Forbes

Are we still talking about Vanguard? Your links couldn't be more in their wheelhouse...

[pb4uski]

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Originally Posted by Midpack Many here are well aware of the definitions, and all are capable of Googling same, but thanks. Again, what specific concerns and evidence do you have re: VFP or Vanguard in general?.......

+1 Time for him to put up or shut up.

[ETFs_Rule]

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Originally Posted by Midpack Are we still talking about Vanguard?

I'm talking about anything actively managed VS passively managed, Vanguard or otherwise. I like Vanguard but I will always go with index funds. The statistical evidence is clear that ETF's consistently beat actively managed.

[pb4uski]

While I agree that index funds tend to outperform managed funds - and that is why the vast majority of my equity portfolio is in indexed funds - to jump from that fact to then assert that any adviser recommending any managed funds to a client is violating their fiduciary duty to the client is just totally stupid.

Vanguard's flagship actively managed equity index funds (Windsor and Windsor II) growth of $10,000 for 1, 3, 5 and 10 year periods are very competitive with the Total Stock Market Index fund (all Admiral shares). In fact, Windsor outperformed Total Stock for the 1, 3 and 5 year periods ended 10/31/2013 and Windsor II bested Total Stock for the 10 year period. But please, don't let facts get in the way of your arguments....

[ETFs_Rule]

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Originally Posted by pb4uski While I agree that index funds tend to outperform managed funds - and that is why the vast majority of my equity portfolio is in indexed funds - to jump from that fact to then assert that any adviser recommending any managed funds to a client is violating their fiduciary duty to the client is just totally stupid. Vanguard's flagship actively managed equity index funds (Windsor and Windsor II) growth of $10,000 for 1, 3, 5 and 10 year periods are very competitive with the Total Stock Market Index fund (all Admiral shares). In fact, Windsor outperformed Total Stock for the 1, 3 and 5 year periods ended 10/31/2013 and Windsor II bested Total Stock for the 10 year period. But please, don't let facts get in the way of your arguments....

You're wrong. You're not doing an apples to apples comparison. VWNFX takes more risk than the total stock market and so the total stock market index is not it's comparable benchmark. If you want more risk and you want to do better than the total stock market index then simply pick a mid-cap ETF and/ or small cap ETF to supplement your VOO ETF. Simple.

I researched
Vanguard Windsor II Inv (VWNFX)

The fund invests mainly in large and mid-capitalization companies whose stocks are considered by an advisor to be undervalued. So it's benchmark is probably a mix of large cap value and mid-cap value, although Yahoo lists this fund as being mainly a large cap fund.

As I expected, since the peak of the market in 2007 VTV (large cap value) has OUTPERFORMED VWNFX.
VOE (mid cap value) has easily outperformed VWNFX.

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any adviser recommending any managed funds to a client is violating their fiduciary duty to the client is just totally stupid.

You might be a broker trying to justify your job. Anyone who is a non-fiduciary does not legally work for their client. Personalized advice is not free. Brokers make commissions when they sell actively managed mutual funds. Investors make less over time when they invest in actively managed mutual funds. The only way to totally eliminate conflict of interest is to work with a fee-only RIA. Personally I do it myself. Investing is easy.

[pb4uski]

The notion that a large cap, value fund is riskier than a total stock fund is an interesting angle that I guess we'll just need to agree to disagree on.


I would agree that VTV is a good comparison since both VTV and Windsor II are large cap value focused, but VTV does not outperform Windsor II as you suggest. The growth of $10,000 for Windsor II was higher then VTV for the 3, 5 and 10 year periods ended 10/31/13 and actually substantially higher for the 10 year period ($22,100 vs $18,900) and for the 1 year period VTV eked out a win.

And I'm not a broker, I'm a CPA.

[Alan]

Despite all the arguments about VG CFPs recommending their managed funds, do we have any proof that they do? I've requested one, completed the preliminary work and have an appointment scheduled next month with one of their CFP's. I'll be wary about any managed funds or annuities they recommend, although they didn't do that last time I had a plan done some years ago.

[jazz4cash]

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Originally Posted by Huston55 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.

++1
Recently attended 2 Fido retirement/investment seminars offered locally and it feels like a very low key annuiity pitch even though they never specifically push an annuity.......I assume that comes in the individual session. I am married to them through two 401k plans so I expect to be a client for the duration and will keep going to the seminars.

[RunningBum]

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Originally Posted by Alan Despite all the arguments about VG CFPs recommending their managed funds, do we have any proof that they do? I've requested one, completed the preliminary work and have an appointment scheduled next month with one of their CFP's. I'll be wary about any managed funds or annuities they recommend, although they didn't do that last time I had a plan done some years ago.

Mine was done back in 2006. They did not recommend moving anything to managed funds. At the time I held maybe 20% in individual stocks at another brokerage, and around 5-10% with another mutual fund company and they only recommended selling a couple of the individual stocks, and not the other mutual funds. No reasons given for the ones they recommended selling, btw, and I didn't ask. I also had some Wellington and they actually recommended moving that to the Total Stock Index Fund.

They did offer a "simplified alternative" of the Life Strategy Funds. This is all index funds as well, which they keep balanced, and the one they recommended to me matched my AA goal at the time. I didn't add up the expense ratios of the parts to see how they matched up.

I thought the call would end with an offer to assist with switching my portfolio around to match their recs, or to set up a call-back date to do this, but they didn't even ask. The report they provided just gave a number and offer to help do that if I wanted to. Low-to-zero sales pressure.

Overall I think for most of us it's just a sanity check on investments. For some they may find they aren't considering their AA correctly across all accounts. And for those switching from a financial adviser, I think taking advantage of this would be a good step to get guidance and learn from.

I would agree this isn't a complete financial plan since there is no discussion of things like insurance and other stuff that a recent poster listed.

I don't recall any discussion of tax efficiencies either. At the time most of my tax deferred was in my company 401K so I'm not sure if the bond funds there were considered inadequate. But I did have bonds in both my IRA and taxable funds and I don't think they suggested any changes to those.

[samclem]

ETFs,
Welcome to the board. You've been here two days, posted 26 times, and said about the same thing every time ("indexing is good"). Okay already.

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Originally Posted by ETFs_Rule You might be a broker trying to justify your job.

You've made similar allegations in other places. Before you start swinging, take awhile and learn the players here.

[ETFs_Rule]

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Originally Posted by pb4uski The notion that a large cap, value fund is riskier than a total stock fund is an interesting angle that I guess we'll just need to agree to disagree on. I would agree that VTV is a good comparison since both VTV and Windsor II are large cap value focused, but VTV does not outperform Windsor II as you suggest. The growth of $10,000 for Windsor II was higher then VTV for the 3, 5 and 10 year periods ended 10/31/13 and actually substantially higher for the 10 year period ($22,100 vs $18,900) and for the 1 year period VTV eked out a win.

YOU are the one who compared VWNFX to the total stock market. I'm saying that is not an apples to apples comparison. How VWNFX does compared to the total stock market says NOTHING about whether or not their managers are outperforming their RESPECTIVE benchmark indexes. The way you evaluate manager performance is by comparing the fund to their respective benchmark indexes. VWNFX may be low cost compared to other actively managed funds but it still doesn't look like the managers have outperformed their benchmarks. Most actively managed funds average about .8% worse than their respective benchmark index. Large cap stocks especially are so widely followed and highly traded that managers really CANNOT outperform their respective indexes. The efficient market hypothesis is too overwhelming.

Proof is in the pudding....


And I'm not even sure if Yahoo accounts for expense ratio and turnover. If so then VTV did EVEN BETTER than this comparable actively managed fund!
Have any others you would like for me to compare?

[pb4uski]

Looks like you are only looking at share prices and not including the value of reinvested dividends.

Anyhow, in 3 years and over 5,000 posts, I've never felt the need to add anyone to my Ignore List. Since ignorant is a derivative of ignore, I guess it is appropriate that you're the first - congratulations!

[ETFs_Rule]

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Welcome to the board. You've been here two days, posted 26 times, and said about the same thing every time ("indexing is good"). Okay already.

And if you read the thread someone claimed that they had found that one actively managed diamond in the rough that did better. I proved them wrong with a Yahoo chart and they couldn't handle the truth.

And to their last point I prove them wrong again....

VTV = 2.31 yield
VWNFX = 2.08 yield

[Bestwifeever]

Twenty nine times.

[samclem]

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Originally Posted by ETFs_Rule And if you read the thread someone claimed that they had found that one actively managed diamond in the rough that did better. I proved them wrong with a Yahoo chart and they couldn't handle the truth.

And guess what--you are WRONG even about this one case.
The big problem with your Yahoo chart is something I will leave for you to discover, but it is missing important data. The right info covering the exact same time period is in the attached chart. Windsor 2 outperformed your (much flogged) ETF as well as the appropriate index (large cap value). Now, most of the time an index fund or ETF will outperform the applicable index, but your blanket statement that a manager of a large fund cannot ever outperform is just silly. Don't be such a Johnny One Note.

Stick around, cool the attitude, read more.

[samclem]

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Originally Posted by pb4uski Looks like you are only looking at share prices and not including the value of reinvested dividends.

A winner!
(And you already threw on the wet blanket with that stuff about "commissions". Wait until the news about bid-ask spread hits!)