Vanguard Personal Financial Planning Services

[lauraf13]

Has anyone used Vanguards Financial planning services?

There are three areas with each costing $500.

I would like to know if their services are a good value.

If anyone has had experience with this, I would appreciated hearing your opinions.

Laura

 

[baanista]

Re: Vanguard Personal Financial Planning Servicesy

I am too cheap to pay money for financial planning. I prefer to spend my time learning about the issues. But Vanguard is probably one of the safer places to spend your money for this. I would expect them to be far less likely to be sales agents masquerading as planners.

Still this is likely to be a financial doc in a box analysis program that generates generic answers for generic people. If you have odd plans like retiring really early they may not have any useful advice and might provide you with misinformation.

My general theory for financial planners is that if you know enough to be able to tell if the planner is steering you wrong, you are wasting your money. If you don't know that much, you are risking your net worth.

If you lack confidence in your own analysis, this could be a reasonable way to validate your ideas and find possible holes in your plans. As such it could be a good way to help you sleep better at night. But I would be leary of counting on any financial planner to be the sole source of my financial plan.

Regards,

Baanista

 

[RedOscar]

Lauraf13,

Wish I could give you some input on the question, but I (like Baanista) am too cheap to spend $500 or more for what is possibly "cookie-cutter" advice.

I suspect you are probably savy enough to develop and manage a decent plan on your own with many of the tools available on the Internet and at your public library. To me, financial management requires periodic maintenance that can't be provided with a one time purchase the Vanguard service will provide.

But then again, Vanguard may be able to offer an objective look at what you are doing and make some useful suggestions. Question is; "Is $500 a reasonable amount for that service?" So far, they haven't reached my price point!

Red

 

[vickifool]

We've had a financial plan done a couple of times. The most informative part for us was filling out the questionnaire. (Once we hired a fee plus commission company, and the other was by Merril Lynch. The ML plan was a brilliant illustration of what can go wrong with the canned product. Neither outfit got my name right, and it really isn't hard.)

A good questionnaire is at http://www.efmoody.com/planning/planningoverview.html

look on the left for "client questionnaire" and also look at the "budget"

Vickifool

 

[Mr._johngalt]

Early in my retirement, I considered professional
financial advice and even met with a few CFPs.
I ALWAYS thought that I knew more than they did
and so I have never used any "pay for advice"
services. My results have been excellent using only
my own ideas with infrequent (free) brainpicking.
I wouldn't dream of paying anyone to tell me what to do with my money. It's a total waste. All of the info you
need is readily available. Why pay for it??

 

[Mr._johngalt]

I just read a newspaper article (USA Today??) which opined that "everyone" needed a financial planner.
My opinion still is that no one who is halfway
intelligent and willing to spend a bit of time needs
one. I am speaking of choosing investments. I
acknowledge that when you get into tax law and
legal maneuvers, professional help is necessary.
However, I interviewed quite a few CFPs and never
saw that I would get any value for my money.

 

[northwestbob]

You can get the cookie cutter portion of the Vanguard investing advise from the Vanguard web site. They have a little self test to determine what kind of market fluctuations you can stand without having a heart attack. From that they give you suggested portfolio allocations based on your "risk" tolerance and age.

I am about to find out about their other services. They offer three types: investment portfolio advise, retirement portfolio advise, and estate planning. I have access to at least one of these for free because my former employer used them for their 401k and my balance with them is to their liking.

They are very friendly over the telephone and exert absolutely no pressure. They brought up several ideas I had not thought of just in discussing my using their services. My impression is that they would be good moral support even if you already have a good idea what you want to do with your money.

You have to fill out a detailed questionaire, which is half the battle for any financial plan. (It is like having someone else do your income tax return. By the time you gather up all the information, filling out the forms is eays.) I haven't finished the questionaire yet. I'll keep you posted.

For whatever it is worth, I have a 401k plan (rolled over into an IRA) with 30% in Index 500 and 70% in money market. I recently received a roughly equal amount of cash from a lump sum settlement of a defined benefit pension plan (also rolled over into an IRA). So that means I am only 15% invested. I am thankful that I received the cash now and not two years ago. Had I invested then I would be sorry.

The question is: what to do? I feel like a deer caught in car headlights. Although I am an engineer like intercst and can do the calculations, it still scares the daylights out of me. I am still working and have about 10 years to finish saving so that I can quit.

 

[Mr._johngalt]

Making the "leap" to ER is scary for most people. Hopefully I can be an inspiration to others. I semiretired in 1993 with very little
net worth, but with a plan and determination to make it work. Now, 10 years later, I can not imagine a better
decision. I think the worst thing is waiting too long.
Many of my friends and contemporaries are gone
and none of them were even thinking about
retirement when I opted out at age 49. If you want to
retire and can see how it might work, go for it. If you
seriously consider the downside of waiting until you
are completely comfortable, it might become an
easy decision. It was for me.

 

[lauraf13]

Northwestbob, I look forward to what you have to say about Vanguard's financial planning services. I have since opted to have my money managed by a couple of guys I've listened to for many years on the radio. So far I'm happy with what they have done, but who knows I might be looking at Vanguard again.

 

[Mr._johngalt]

Hey lauraf13, is one of those "radio guys" Bob Brinker?
Just curious.

 

[lauraf13]

No, these guys are local to the Dallas-Fort Worth area and do a local radio program on Sunday mornings. Also, one of the guys does the financial news on a local TV station. Their names are Jim Lacamp and Pat Reddell. Their web site is: http://www.money-sense.com/

 

[Mr._johngalt]

I don't recognize those guys. There was a guy who wrote for the Dallas Morning News when I lived there.

Scott something...............Burns?? He was excellent.
Normally I love to listen to financial/business programs,
but I can not handle Bob Brinker. I try to listen
sometimes but inevitably I have to turn off the radio.
Not only is he overbearing and condescending, but
frequently he has no idea what the answer is and tries
to bluff his way through anyway by offering
information which has nothing to do with the caller's
question.

 

[Bill]

Scott Burns, I read his columns in the Houston Chronicle. His web page is http://www.dallasnews.com/business/scottburns/

 

[goldenx]

After reading all the responses to the initial question about Vanguard's Financial Plan Services, I do not think anyone actually gave her the answer she requested. I understand most folks on this site do not want to spend the fee costs. Many people can use this company's fee based services free or at a reduced rate if their former company plans were at Vanguard. Also if you have enough to invest and discuss the fee with Vanguard, you may find the cost goes away.

We actually have had all 3 plans done free over the years leading up to what turned out to be an early retirement. I agree that filling out the forms is half the value to the client. It forces you to do what everyone should have done over the years. When you see everything in black and white and in one place, it makes future planning much easier.

We found the estate planning results a real eye opener. Suggestions about how we held ownership (joint is not always the best way) in our assets made extensive differencies in what our heirs will eventually have to pay in estate taxes. I know that those laws have changed recently, but most of them have sunset laws that I assume we all hope we outlive!

The retirement plan was extensive and the resulting info gives you exactly what you can spend through age 90. Rates of withdrawal are suggested dependent on various rates of return on the investments. The only flaw I see is that in the investing portion Vanguard recommends its funds only - a mix of index and managed to suit the client's situation and risk tolerance. What I like about Vanguard is their conservative reputation.

Basically, one always has to use their own common sense; and individual knowledge base's differ widely as does long term interest in managing their own investments during retirement. We have used managed accounts in the past and were very disappointed to say nothing of not getting one's money's worth from the fees.

Vanguard is a good check up or a good backup to one's own work; and if you are looking for someone to just tell you what to do, you may be safer with Vanguard than other sources you might use. I think working at investing and studying it can be a great stimulant in retirement - perhaps it could be considered a good substitute for going to work even - some may need that in their life. Just make sure you have a backup plan in case the spouse in charge can no longer do the job.

I hope this helps.

 

[lauraf13]

goldenx, thanks for your input. That was exactly what I was looking for. I wish Vanguard would open an office in the Dallas-Ft. Worth area. Fidelity has an office here, but I don't particularly like Fidelity. My 401K is with them. I don't have any specific complaints, but I just don't get that warm fuzzy feeling from them. :-/

 

[newellcr]

Folks,

I'm probably way too late to help Laura, but I would think this thread still gets traffic so here is my post. I've had a couple of free evaluations from different financial companies. Sometimes I actually learn something, most times it is a waste of an hour of my time. If you are considering paying for a plan, I recommend that you seek out a free plan first. A few years back Primerica was offering a free plan - don't know if they still are. I had them run one for me and I thought it was ok. You might want to look at http://financialengines.com/ too. It offers free and fee advise options.

American Express and Costco are in cahoots now. American Express offers Costco members a financial plan at a reduced cost. AMEX also offers a money back guarantee too. Currently, I'm considering paying AMEX to prepare a plan for me. If it holds no new advise for me, I can get my money back. Then there is the Motley Fool. They are offering a free 30 day membership in their financial planning/advise program.

Cheers,

Chris

 

[Mr._johngalt]

Hey Chris. Just one man's opinion but I do have some experience. I have had financial plans prepared
several times. None was ever any help to me
whatsoever. Why, this board contains a treasure
of info to do your own plan. Do it on your own. Hiring
someone is a total waste.

 

[newellcr]

Hello John,

Thanks for the reply. "Do it on your own. Hiring
someone is a total waste. "

Mostly I agree, but maybe AMEX has a workable slant that I haven't thought of yet. If the cost is refundable, what is there to loose. Right now, I'm leaning toward working though my questions here and tossing my AMEX questionnaire in the file.

Cheers,

Chris

 

[lauraf13]

It is my understanding that AMEX has their own funds and therefore, push their funds over others. I have heard that they are one of the worst about pushing their own funds. I'm sure that Vanguard would also tend to push their funds over other funds, but at least with Vanguard most of their funds are low cost.

 

[Mr._johngalt]

My experience with AMEX was just awful!!

 

[newellcr]

GDER, Laura, and John,

Duly noted - 3 votes against. The $50 in Costco cash arived yesterday. Our AMEX rep didn't push a thing other than a plan.

Cheers,

Chris

 

[Ted]

As I mentioned in previous posts, I'm planning to set myself up as an investment advisor.  I'm not participating in this forum to solicit business, but it is useful for me to learn about people's needs for advice and experience with other "financial professionals."

The big dilemma that a person faces in deciding how to manage their assets is this:
1.  They can deal with a "professional," but even if the "professional" is legitimate (and most are), there is the liklihood that a significant portion of their investment returns will be "milked away" in commissions and management fees.  And companies (probably including Vanguard) that offer relatively inexpensive advice, probably have it being provided by somebody in a distant office who is fresh out of college.
2.  People can become educated about investing by reading books, attending classes, etc.  The problem with that is that it requires time and effort, and some of the published information is contradictory, so which advice does a person believe?
3.  People can just "wing it," relying on their own instincts -- which is what most people seem to do.  From what I have seen, however, most people who do this inadvertently end up paying a lot more in management fees and taxes than they need to.  They might realize that they are paying a few percent here and a few percent there, but don't realize the long-term cumulative effect of that, in terms of drastically reducing their potential gains.

My concept of providing investment advice is to (a) look at the person's assets and then (b) quote them a fixed fee for discussing their preferences, and then providing specific written recommendations as to how to change their investments to achieve their preferences, with minimal future costs.  This generally would involve the type of investments that I have mentioned favorably in various posts, such as Vanguard and TIAA-CREF mutual funds and U.S. Treasury securities, which they would purchase directly or through a broker of their choice.

If you are looking for an investment advisor, see if you can't find one who will offer that sort of an arrangement.
By law, whomever you hire must provide a written statement describing their services and fees.  You should certainly obtain that from them before committing to anything.

 

[newellcr]

Ted,

Good luck with the future career. There is certainly a need for the skill. You wrote "2. People can become educated about investing by reading books, attending classes, etc. The problem with that is that it requires time and effort, and some of the published information is contradictory, so which advice does a person believe?"

I agree, it can take hundreds of hours to ferret out the answer to just one portion of a financial plan. That's why I was talking to AMEX. I probably would have hired the job out to AMEX but the saleswoman wanted another $350 each and every year to answer current questions and to meet with us 3 times a year. Depending on the difficulty of questions, I would expect some of the follow on advise to be included in the original fee. There was also potential for a commission for her in addition to the up front plan cost. Also, it's a financial plan, why do I need to see her 150 times before I croak? How many times does the plan need to be updated?

Now that I've found this site, I can probably slice my research time by a fair percentage.

Cheers,

Chris

 

[unclemick]

A. You don't need a plan.
B. You need a plan.
I am a die hard Bogle-head and 100% VAnguard fund owner except for my hobby stocks. Having read a lot and used many a planner over the years, I don't need to pay Vanguard extra for what I already know.
I've been investing and reading since 1965 (instead of reading and then investing )- my investment mistakes over the years would pay many times over the most expensive plan mentioned to date.
Each ER, I would suspect falls some where between A. and B.

 

[Ted]

In general, I think that the "plan" for anyone should be to get their money invested in a way that is (1) diversified, (2) has low initial and annual costs, and (3) has minimal taxes. In these three respects, most people's investment mix has lots of room for improvement.

Once a person establishes a portfolio that meets the above criteria, however, they should be capable of managing it themselves, by periodically re-balancing among assets to maintain approximately the same asset allocation. An honest investment advisor should explain to them how to do that. It might still be in their interest to have an advisor periodically perform a "financial check-up" on their investments, which should cost only a few hundred dollars.

Incidentally, the financial advisors who make the really big bucks (at investors' expense) are the ones who are hired by "high net worth" individuals to manage their assets, for a fee that typically is about 1.5% per year. I'm sure that very few justify their existence by enhancing investment returns by more than their fees. And some of those who try too hard for high returns assume excessive risks that sometimes prove devastating.