Dear @Markola: Your information above is exceedingly helpful and insightful. Thank you.
A quick follow-up, if I may: Do you pay for your Vanguard advisor? I used to understand that above a certain dollar invested threshold, Vanguard would provide some bare bones advice for free. That was hearsay from an old friend years ago, and may have never been accurate.
My experience over the past couple of years, however, is that Vanguard now wants us to pay for such advice (as a percentage of invested assets, assessed quarterly), which we have resisted. Our view is we can run FireCalc and have an account here on this great forum, so why would we ever go back to paying a FA again?
Obviously though, advice from Vanguard would be helpful. And there is a boatload of stuff about retirement planning and drawdowns about which I am ignorant. The idea of paying a FA just triggers me.
I was a DIYer, too, during the pure accumulation phase, which is simple, just work and save. For several reasons, I found Vanguard Personal Advisor Services appealing and we signed up for them to manage our IRAs and most taxable accounts a couple of years ago. I still control some other accounts. The annual charge is 30 basis points plus the normal low index fund expense ratios. You are right that Vanguard also offers some free Flagship services, including a plan that you then DIY but we opted for PAS management. Some of our reasons are:
1). Someone neutral and knowledgeable to talk to. DW does not care one whit about finance but she deserves an equal say in our finances. Hopping on the phone with our assigned advisor who wrote our plan with us is just super helpful in navigating touchy subjects like how much, when and by what means to pay for a home remodel that she wants to do. If just left to the two of us, such topics would be “uncomfortable,” shall we say.
2) If something happens to me, everything is set. She doesn’t have to learn the 4% Rule or argue with people online about it or fend off annuity salesmen or whatever. She just calls our advisor and starts getting a payment for life. I take great comfort in that.
3) As someone who has drunk the Vanguard Cool-aid, I value the fact that my advisor works for them and all advice I get is in alignment with Vanguard principles and based on index funds. I have never been advised to buy some annuity or insurance policy, etc. Everything is 100% Vanguard culture and products.
4) Vanguard PAS has excellent, clear, proprietary tools and modules for every conceivable planning issue, whether health care needs through life, when to optimally take SS, etc, which we’ve used and trust. We already discussed the Dynamic Spending Model above, which is revolutionary for our retirement plans. We’d be working for years and years more if we stuck to a 4% Rule or 3% Rule or 3.14% Rule, or 1% Rule, ad infinitum. No. Vanguard has spent millions on their own spending projection software and, respectfully, I trust its advice more than the confusing, shifting and conflicting advice of strangers and calculators on the internet.
5) It’s common knowledge that investor mistakes through emotion-based fiddling is detrimental to wealth. Vanguard PAS is my form of Mistake Prevention Insurance.
I got my 80 year old mother signed up, too, and it’s been a godsend. It takes a lot of pressure off of me knowing that she’s not reliant on my financial advice or management. We have arranged it so that I have full control if and when needed during her incapacity someday but she has her own professional plan based on her goals and just gets a monthly check. If anything else comes up, we hop on the phone with her advisor.
Having any kind of advisor will never be for everyone, especially for such a forum of financially literate people such as this one. I could probably do it all DIY if I was single but Vanguard PAS really works well for us for all the family dynamic and psychological reasons above. I got started by reading about them, then scheduling an informational call and I just liked what I heard. A lot of mental weight has come off, honestly. It’s been the difference between trying to do everything in my house with pliers, two screwdrivers and a Swiss Army knife vs. having the run of Home Depot if I need something. YMMV.
