I took advantage of their complementary Personal Financial Planning Service when I moved a bunch of assets into Vanguard last year. I figured, hey, it's free, why not take advantage of it?
They started by sending me a questionaire, about 15 pages if I recall, about what we owned, what we spent, our concerns and goals, etc. It was a fair amount of work to fill this out, but they did a good job asking the right questions.
We were assigned a CFP (certified financial planner) and we scheduled an hour-long telephone call to go over my answers. I was pretty happy with this experience, he took the time to understand the situation we're in and what our goals are.
He prepared a large-ish report and we scheduled one or two follow-up calls to discuss it. At this point I was glad the service was free, and not $1000 or $1500 or whatever they normally charge.
Good things:
- The report contained a cash flow analysis, "time path testing", and sensitivity testing for our retirement scenario. The time path testing used actual market returns from 1960 to 2004, giving 45 simulations (assuming you retired in each of those years). The data looped from 2004 to 1960. I'd prefer they use data back to the 1920's, but...
- I felt they were appropriately conservative with the withdrawal rate in retirement.
- The CFP probably did a better job of estimated post-retirement income taxes than I did.
Disappointments:
- Most of the text in the report was computer-generated and probably the same as any other report.
- The service was focused on retirement planning and didn't offer much in the way of tax advice, how much insurance we should carry, etc. Maybe that's normal, I've always been a maverick and never paid for advice before...
- The biggest disappointment was the limited data set for time path testing. I've chosen a fairly diverse portfolio which starts with a 70/30 stock/bond split and is subdivided into specific categories (e.g. within stocks, there's international and domestic, then within domestic there's large/mid/small-cap, and within each of those there's growth and value - altogether there's about 15 categories in the portfolio). The CFP agreed that the 70/30 split was appropriate for us and recommended changes in the subcategories. Unfortunately, their data set for time path testing is based only on the 70/30 split of stocks and bonds, using the average return for "stocks" and "bonds" as a whole. I was hoping we could run the time path testing once with my allocation, and once with the CFP's recommended allocation, and see how they differed for that time period. Plus, given that the data set only used overall averages for stocks and bonds, I can't think of a good reason why it doesn't go back earlier than 1960...
Because there weren't any hard numbers to back up the CFP's advice (specifically, to reduce my admittedly large exposure to international and emerging markets stocks, eliminate my international bond exposure, and increase domestic large-caps) I made a few minor tweaks to the allocation but ignored most of the advice.
Overall, it was worth my time just for the reassurance of having a planner look at our situation and confirm that our retirement plan is feasible... but I'd feel very disappointed if I'd spent more than $100-200 for it.
