Why is Vanguard pushing the Advisory service so hard?

[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.

 

[teejayevans]

I go through their app, so I don’t see them and in the email there is a comment with a link to opt out, why not just do that?

 

[VanWinkle]

I am also a Vanguard customer and receive the same advertisements for the Advisory service. I understand they just can't "stand pat" in this changing financial system we are currently involved with. It is easy for me to delete emails and not pay attention to adds when I access my account with Vanguard.
I guess I am just not as irritated with the adds and realize that the better Vanguard does, the lower the expenses on my index fund portfolio there.

VW

 

[Another Reader]

Why? For the same reason they tried to eliminate the retiree insurance funds - not enough revenue!

 

[RobbieB]

Yup, just trying to make a buck.

 

[OldShooter]

Yup, just trying to make a buck.

Slightly more accurately, just trying to dig out of the hole they were in after the zero-fee wars. I don't think we've seen the end of firms' maneuvering to recover.

 

[ejman]

Yup, just trying to make a buck.

As I understand it from what Vanguard says we all (collectively) own the Vanguard funds we invest in. So this additional fee for advisory services on primarily index funds goes to whom exactly? Salaries for employees? The corporate Jet? lower fees to fund holders? It certainly doesn't seem to go for employee health coverage from what I saw in another thread.

 

[RobbieB]

And what does this have to do with making a buck?

 

[ejman]

And what does this have to do with making a buck?

Dunno, that's what I'm hoping to find out. You tell me.

 

[Sunset]

Perhaps OP's allotment of stock is out of whack with what Vanguard thinks is OK, and therefore conclude this person could use some help.

DW just deposited a large check into her checking account. Two days later the Financial sales person (FA) phoned and left a message telling her they offer all sorts of financial help.
Obviously triggered by the size of the account now.

 

[RobbieB]

Yup, just trying to be helpful.

 

[racy]

I'm OK with their advisory service. Although I keep DW updated monthly and have laid out a plan for after my demise, I'm pretty sure she'll opt to call Vanguard's Advisory Services. Fine.

 

[Gumby]

I get the same push for advisory services when I sign in. In my view, the old principle applies - if you don't ask, you don't get. So, I don't mind them asking; I have never had a problem saying "no, thanks".

 

[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.

 

[teejayevans]

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 used Fidelity’s too and had the same recommendation as above…sell everything not with us put it in Fidelity. Apparently tax consequences are not a concern for their cookie cutter advice.
In the never ending debate of F vs V….in my experience they’re both the same.

 

[Badger]

All of our Flagship IRAs are with Vanguard. Just keeps it simple that way. I have always taken care of our investments but keep my wife informed before any adjustment have been made. Stocks are with Ameritrade and cash with CU. I have thorough instructions for myself (if I get addled), my wife, and (not so savvy with investing) grown children when we are gone.
Their advisory services emails don't bother me but maybe in the future my wife or children may want to use them. I just click on it along with all the other emails I am not interested in at the moment to go to the little trash can.


Cheers1

 

[OldShooter]

... In the never ending debate of F vs V….in my experience they’re both the same.

I'd add Schwab to that list -- pretty much the same.

And .. at the bottom they are businesses. They need to sell products and services to make an annual profit. Even VG needs retained profits to pay for new things. Hence, they are certainly going to try to sell products and services to their highest potential clients; their current base. No harm, no foul, IMO.

 

[USGrant1962]

As I understand it from what Vanguard says we all (collectively) own the Vanguard funds we invest in. So this additional fee for advisory services on primarily index funds goes to whom exactly? Salaries for employees? The corporate Jet? lower fees to fund holders? It certainly doesn't seem to go for employee health coverage from what I saw in another thread.

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/v...rofit-sharing-irs-taxes-revenue-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.

 

[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.

 

[OldShooter]

... The whole "Vanguard is owned by its funds" thing seems to me to be a corporate structure built as a marketing gimmick.

I think if you read some history you will find that this is not the case. One book at hand is David Swensen's "Unconventional Success" where in a chapter entitled "Failure of For-Profit Mutual Funds" he discusses nonprofits Vanguard and TIAA. The VG structure, though, is discussed in many investment books.

Recall that technically any mutual fund has a board of directors who hire the fund's management company. The VG structure is a little sticky, though, as the for-profit management company is owned by the shareholders in the funds. But it is definitely not a "gimmick." I have never been interested in studying it, but IIRC there are some IRS issues with the management company's tax relationship with its owners. Apparently the IRS wants to impute and tax a "profit" when the management company works for the funds at cost. That's all inside baseball to me.

 

[ejman]

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/v...rofit-sharing-irs-taxes-revenue-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]

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.

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]

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.