Why is Vanguard pushing the Advisory service so hard?

[ejman]

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Originally Posted by USGrant1962 Vanguard is a private, for-profit company. Profits are distributed annually to salaried employees based on the Partnership Plan. Here's an article discussing it: https://www.inquirer.com/business/va...-20200713.html Vanguard has also been running some funds, particularly money markets, at a loss, so that needs to be funded in addition to their operating costs for ~17,000 employees. The whole "Vanguard is owned by its funds" thing seems to me to be a corporate structure built as a marketing gimmick.

Thank you. Very helpful answer. It seems the corporate culture started changing around 2010 according to the article as benefits become progressively skewed towards upper management. A tenor of the times I suppose. Still sad to see as for so long Vanguard seemed to be so different from other companies in a good way.

[youbet]

I'm always interested in the difference between "Vanguard the brokerage company" and Vanguard funds. For example, I have a significant position of VTSAX and several other Vanguard funds at Schwab where I consolidated everything after FIREing. I like VTSAX a lot. But I have no interest in moving my Schwab accounts to Vangurad (the brokerage) because I prefer the Schwab trading platforms.

I couldn't always do this. At one time I had to pay a commission to buy Vanguard funds at Schwab. And Admiral funds were not available. But that's mostly changed over the past years. And, of course, there are now Vanguard ETF's available at any brokerage.

I'm definitely not going to sell my substantial holding in VTSAX and buy another company's TSM fund (of which there are many) because Vanguard is apparently backing out of their so-called "promise" to provide health spending accounts for retirees.

[JT90505]

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Originally Posted by teejayevans I used Fidelity’s too and had the same recommendation as above…sell everything not with us put it in Fidelity.

Wow. I've been with Fidelity for decades, had the financial people who we meet with yearly for years and years, and **never** had a suggestion that we move funds held outside Fidelity to Fidelity.

Unlike Vanguard, where the free advice we received was to move absolutely everything to Vanguard. Still have money with Vanguard and don't have a problem with them, but in terms of advice Fidelity has been far less parochial.

Our experience is that there is a great deal of difference.

[RunningBum]

I login thru my bookmarked link https://personal.vanguard.com/us/TPView which does not have the Advisory Service promo (though it does have a notice about International mail every time which would be nice to suppress). That link also takes me directly to the Balances & Holdings page after login, skipping the Account Overview page which I don't like.

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Originally Posted by Amethyst Years ago, when their financial plan was free for Flagship customers (they charge for it now), we had them do one for us, which I kept. It mostly consisted of "sell everything else you have, and put it in Vanguard." The tax consequences of all that selling would have been dire, so we didn't follow their advice.

I had one done many years ago too, but had a different experience. As I recall they only had a few suggestions of things to sell and put in VG funds. I had maybe 20-30 individual stocks at the time and a couple funds outside of VG and some inside. I don't recall the mix, but if I was 40/60 outsideVG/inVG the changes might have made me 50/50. I don't recall if they I gave them the cost basis of outside accounts.

[MRG]

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Originally Posted by JT90505 Wow. I've been with Fidelity for decades, had the financial people who we meet with yearly for years and years, and **never** had a suggestion that we move funds held outside Fidelity to Fidelity. Unlike Vanguard, where the free advice we received was to move absolutely everything to Vanguard. Still have money with Vanguard and don't have a problem with them, but in terms of advice Fidelity has been far less parochial. Our experience is that there is a great deal of difference.

I spent three days with a dirty rotten annuities salesman who insisted we move all our assets to Fidelity and annutize them. I had started our conversation saying I wouldn't consider consolidating and had zero interest in annuities. When I told this to the branch manager he said he didn't have any other advisors for me. So there's that.

I guess it depends.


OP to your question it's easy to set those things up and nothing better comes along and you're getting repetitive content. They have nothing else to tell you.

[ejman]

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Originally Posted by MRG I spent three days with a dirty rotten annuities salesman who insisted we move all our assets to Fidelity and annutize them. I had started our conversation saying I wouldn't consider consolidating and had zero interest in annuities. When I told this to the branch manager he said he didn't have any other advisors for me. So there's that. I guess it depends. OP to your question it's easy to set those things up and nothing better comes along and you're getting repetitive content. They have nothing else to tell you.

Apparently someone at that branch decided you are not "Fidelity Material" for whatever reason. Unfortunately (fortunately?) that type of impression tends to linger on for a long time both sides of the transaction - moving on seems to work most of the time. As to my question ( I am the OP) Yes, I suppose I'll just join the other 20 million or so households in the US that have managed their finances reasonably well and don't have anything else to complain about. I think I should just follow my own advice now and move on.

[target2019]

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Originally Posted by ejman Every time I log on to Vanguard (where I have the majority of our funds) I get a push for their advisory services, I get a constant barrage of e-mails with the same. It just seems they are starting to drift far from Saint Bogle's maxims. Their advisory rates are not unreasonable at 0.30% or thereabouts for assets but enough already! Why are they doing this? They already have 8 trillion in assets apparently somebody there thinks enough is not enough.

As a customer you have agreed to accept certain marketing.
As an internet user you have the ability to block certain elements, scripts, etc. on sites. This is what various blocking extensions do.
Many pages have simpler versions, like the login page mentioned earlier. Even there you can hide annoying elements as you wish with an ad filter extension.

[tb001]

We got a free plan back when vanguard did this. It was helpful in getting DH on board and flagging some areas of concern. That said, I spent a significant portion of the call educating the advisor on why we were taking SS early (young kids/old parents) and why our taxes wouldn’t be anywhere close to what they estimated.

At the time, they couldn’t take outside assets into consideration, so the plan was of limited use other than to convince DH that I knew more than the advisor. They also seemed to be oblivious to the tax fallout of their recommendations. Had we done what they suggested we would have had huge capital gains at the worst time. A few small tweaks would have made it much more tax efficient to implement.

We had a call with our new account manager a few months ago and the lack of ANY decent advice was shocking. We had a great experience with our former rep, so this was very disappointing. He spent the entire 60min parroting our questions back to us without ever giving us useful suggestions. Instead he suggested a free intro call with one of their FAs.

We have a our call set up next week with their FA where supposedly he will put together a free financial plan as a pitch to use their advisory services. His background looks phenomenal and he sent over a very detailed document request, so we have high expectations for our call. If it goes well, I can see us seriously considering the FA service for the first few years of retirement. This advisor has a special focus on tax management, which will be a big challenge for us, so given the fees, it may be worthwhile. So far, our biggest challenge has been actually following through and making the recommended changes when we’ve had these calls. We need to be able to just ok the changes and have vanguard implement them!

[ImThinkin2019]

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Originally Posted by Chuckanut Sadly, the truth is there are a number of people (probably a majority) who without the help of aFA, would hit their mid 60's, and end up leaving the SS office saying "Is that all I get to live the rest of my life!?!?!?!" I've known several like that. The FA somehow motivates them to save something for retirement. Otherwise, their retirement would be SS and whatever social service programs the local government offers to low income seniors. At least Vanguard doesn't soak them with high fees.

I think this is a good point.

I have heard from a number of people "my guy is great - I can introduce you." I suspect that they all can't be "above average" but what they can do is motivate people to save early and often. Then as the market goes up compounding takes place and the people think their advisor is stellar.

Just inspiring people to save is a really good thing. I think a lot of people would benefit from it. Left on their own it is likely that many will not. Know some of these as well. Unfortunately.

[Markola]

Can’t you just “unsubscribe from Vanguard marketing emails” or something at the bottom of one?

[INTJ10]

I was encouraged by a Vanguard customer service rep, who was helping me with a transfer, to take advantage of a free call with a Vanguard advisor.

The sent me a fairly detailed questionnaire to fill out before the scheduled appointment with the advisor. I had received the free Vanguard advisory service in the past and it was helpful so I had medium to high hopes for the call. I had some questions about some shorter term investments.

In the call, the advisor made it very clear that he wasn't going to provide any advice unless I signed up for the service. He told me that upper management at Vanguard decided that the free advisory services were costing the company too much so that group (advisory services) has to justify themselves in the company by bringing in advisory services revenue.

The experience has made me pretty bitter towards Vanguard right now because they wasted my time just to make a little money.

[Markola]

I don’t have any particular insights into the Vanguard company, but we are satisfied Vanguard Personal Advisory Services clients, for which we pay thirty basis points and have a dedicated CFP. VPAS was started in 2015. Here’s the disclosure brochure covering fiduciary responsibilities, fees, how the advisors are compensated, etc.

https://personal.vanguard.com/pdf/vpabroc.pdf

[ejman]

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Originally Posted by INTJ10 I was encouraged by a Vanguard customer service rep, who was helping me with a transfer, to take advantage of a free call with a Vanguard advisor. The sent me a fairly detailed questionnaire to fill out before the scheduled appointment with the advisor. I had received the free Vanguard advisory service in the past and it was helpful so I had medium to high hopes for the call. I had some questions about some shorter term investments. In the call, the advisor made it very clear that he wasn't going to provide any advice unless I signed up for the service. He told me that upper management at Vanguard decided that the free advisory services were costing the company too much so that group (advisory services) has to justify themselves in the company by bringing in advisory services revenue. The experience has made me pretty bitter towards Vanguard right now because they wasted my time just to make a little money.

Your experience sort of reinforces my belief that Vanguard is drifting from the principles that attracted so many of us to Vanguard in the first place. Well, I guess if enough people start feeling a bit disenchanted with Vanguard and vote by moving their money they may get the message (or not) for myself, I just started a small account with Schwab. We'll see how that goes.

[RetiredHappy]

Move your money to Fidelity... we get free advice/reviews from the local office VP/CFP. We schedule appointments on her calendar and meet her in the office. She also has another CFP on her team who helps us with transfers etc. We were also surprised with a nice cash transfer bonus for each of us, based on size of the transfers.

[ejman]

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Originally Posted by RetiredHappy Move your money to Fidelity... we get free advice/reviews from the local office VP/CFP. We schedule appointments on her calendar and meet her in the office. She also has another CFP on her team who helps us with transfers etc. We were also surprised with a nice cash transfer bonus for each of us, based on size of the transfers.

Thank you. I will explore that. If you could elaborate on your transfer experience and subsequent interactions that would be helpful. ( I assume you were with Vanguard before and transferred your accounts to Fidelity?)

[RetiredHappy]

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Originally Posted by ejman Thank you. I will explore that. If you could elaborate on your transfer experience and subsequent interactions that would be helpful. ( I assume you were with Vanguard before and transferred your accounts to Fidelity?)

We were with Merrill Lynch Wealth Management and wanted to transfer to Vanguard. After a month of nightmarish interactions and their inability to set up our VG accounts as trust accounts, we decided to go back to Fidelity, which was where we were with for decades before moving to ML. Unfortunately, my husband's IRA was successfully moved from ML to Vanguard, so we had to do another move for his IRA from VG to Fidelity.

We called the local office and were asked how much investments were going to be moved so that they could assign the right person as our advisor, who turned out to be a VP and also a CFP. Because we wanted to go in the same day, the person had us meet with someone from her team, who is also a CFP, because she was unavailable that day. We met with this FA, who was excellent and he was very sharp. Since we were former clients there, he caught that my name was set up in their system wrongly. Well, my name is what I would say... difficult. He went about to call the back office folks as to what was needed to correct my name and got the process started, before setting up a new account and for the transfer to take place a few days later. He initiated the transfer for my husband from VG and ML immediately. Amidst all these, the VP came in and they were both the nicest and some of the smartest people whom we have met. We chatted about our goals etc and that we no longer wanted our investments managed and they agreed that they would support us with our self-directed investments.

At the end of all these, the FA team member person let us know to expect transfer bonus to be credited in 60 days and we each got our own allotment of bonus because we have individual accounts. We were beyond pleased.

We have been sending them many emails in the early days while waiting for the transfers to happen, and we got almost immediate replies from either our FA or this team member FA. They are on the ball.

We did our research on how we wanted to turn our portfolio into how we wanted to look and then set up an appointment on her calendar. We met with her last week and she was extremely helpful in showing us features and tools on the website on how to analyze our portfolio. She gave us feedback as to various funds and whether we should be overweight or not on some of the sectors. We set the appointment on her calendar for an hour and she blocked off 1.5 hours for us.

Other small stuff... because my husband had remaining RMD to withdraw, we called their 1800 number and someone helped him immediately and within a minute, the funds showed up in his checking account. Our FA also said if we are doing our RMD in December, the 1800 number may have longer hold times and to contact her instead and she will get a 3-way call in so that we get priority in getting our call answered.

Hope the above helps. If you have other questions, please let me know.

[tulak]

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Originally Posted by Markola Can’t you just “unsubscribe from Vanguard marketing emails” or something at the bottom of one?

They don't make it that easy. I was able to call them and remove myself from all marketing material. I don't get the advisor pop-up anymore when I login, so whatever they did solved the problem for me.

[coveredbridge]

I have the majority of my assets at Vanguard and I'm generally happy with them. However, in recent months I've found them lacking in certain respects. For example, I used their Portfolio Watch tool to keep my asset allocation in order. They recently "upgraded" this tool and now it is garbage. When I told them about it they said "Oh we are working on that" That was months ago and it's still junk. Another example, I was looking for short duration high yield funds for part of my bond allocation. VG has no offerings in this sector, so I had to open an account at Fidelity to invest in this type of fund. I could have purchased the Fido fund thru my VG brokerage account, but it would have had trading restrictions on it. When I received a survey from VG I told them about it. No followup from VG. I have to wonder if I'll need to move from VG to Fido in the future. VG just seems to be behind the times and not responsive to developments in the markets.

[JT90505]

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Originally Posted by ejman T...subsequent interactions that would be helpful....<with> Fidelity?)

We have a dedicated advisor who has assistants who provide help completing transactions if you need it. The advisor meets periodically, they call yearly to set a meeting time...if you don't want to meet they don't push.

In our household only one of us really deals with the finances. Something we really appreciate is that periodically we meet with the (free) financial advisor and go over our holdings and review the results of the Retirement Income Planner tool (or whatever they call it now). For us, this is the primary value of the advisor, ensuring we are both aware of the page we are on.

As far as advice, at the core they hew the corporate guidance which is along the lines of:
- Guaranteed income for "core" expenses. If Social Security does not meet core expenses they will consistently suggest Annuities. And every advisor we have had has consistently accepted we don't want annuities.

- Growth for, well, growth. And funding non-core expenses.

If you don't ant to follow their advice, we have had no pushback. And they have never suggested selling non-Fidelity assets and moving the money to Fidelity. Maybe we have just gotten lucky with the advisors we have had, but Fidelity handles 401k assets for company I retired from and all the people I stay in touch with have had the similar experience. Which is not a guarantee all advisors are the same.

Quality of advice? We do our own thing for better or worse. We listen, alternate perspectives are always good to hear.

[Ready]

Vanguard did a great job introducing Americans to the concept of low cost index funds outperforming actively managed funds. Jack Bogle was the pioneer for this concept. As a result they were able to grow by pulling a lot of money away from higher cost brokerage firms to build their business.

Over time, the competition caught up with them and began offering their own low cost index funds. Fidelity has several zero fee funds that undercut the fees at Vanguard. But Fidelity can do this because they still have a substantial business made up of actively managed funds and portfolio advisory services.

So for Vanguard to compete in the new playing field, they now have to offer some of those higher cost structure funds to their client base to cover their overhead. It was inevitable that building a company entirely on low cost index funds could only last so long. While index funds may be the best choice for the investor, it’s not necessarily a winning formula for growing Vanguard’s business under the current business climate.