Vanguard VPAS

[cbo111]

Greetings,
I am looking to retire in a couple years and currently have about $800k scattered among a government Thrift Savings Account, a couple IRA's, an ING account, USAA Roth account, etc. I want to consolidate to a single plan and am looking at the Vanguard VPAS. They advertise a low .3% flat rate fee to manage the account (low compared to their .7% plan).
Anyone out there have experience using this service?
I am a little worried about the hidden costs of fund sales and purchase transaction fees when they do the periodic re-balance of the account.
Also, the plan defaults to purchasing only Vanguard Funds. Is this a smart idea?
Thanks,
Chuck

 

[Another Reader]

I looked at this for a family member but my concern was they were going to use a mix of actively managed funds and index funds. I could not get a list of the portfolios they use. I finally concluded that the portfolio might look a lot like the Star fund.

I think this could be helpful for someone that does not pay a lot of attention to their accounts and has numerous accounts started at various times scattered throughout mutual fund companies, brokers, retirement plans, and banks. That was the situation I was trying to fix.

They include the basic financial plan and you get an advisor (the word was advisor, not planner) that you could ask for help or answers to questions. If the investment portfolios are acceptable, I think there are a lot of people that would benefit from the service.

Since the account would be rebalanced using Vanguard products, there would be no fees to sell or buy.

 

[Free To Canoe]

I have no experience with this product but it is an interesting concept and the price is right. Perhaps the info from Boogleheads below can be helpful.

"What You Get

You get a designated financial advisor with CFP credential. The advisor will work with you on a plan. After you sign off on the plan, the advisor will take care of implementing it. They will check the accounts quarterly to keep them on track but only rebalance if the asset allocation is off by 5% or more.
The plan can be updated whenever you have substantial changes in your financial life. You also get an annual review. During the course of the year you can email your designated financial advisor at any time with questions or request a scheduled callback or web video conference.
If you have money in employer sponsored plans, such as a 401k not managed by Vanguard, the advisor will also tell you how to invest your 401k money. If you have other financial questions such as when to claim Social Security or how much to save for college, your financial advisor can help with those too. All these are free, included as part of the service."

Vanguard Personal Advisor Services Manages Your Accounts At An Affordable Price | Bogleheads® Blog

 

[Ready]

If you have $500K invested with Vanguard you are eligible for a free plan and access to a CFP any time you have questions. I doubt the advice with VPAS would be any better than their free advice.

 

[cbo111]

Thanks for the info. I read through their brochure last night. It mentions that I am free to cancel the service at any time with no penalty. So in theory I can enroll in VPAS, get the financial plan and implementation done, then down the road just cancel the VPAS service and monitor the funds on my own.

 

[Midpack]

Thought this might interest you if you haven't read it already Vanguard Personal Advisor Services (VPAS): The First Low-Cost "Indexing" Solution For Financial Planning Services? | Kitces.com.

But if you have $800K invested with Vanguard, you get their Vanguard Financial Plan and access to advisors anyway, as Ready noted above. I would be very surprised if the VPAS methodology and recommendation holdings would be much if any different than the VFP method/recommendations.

As for having all your eggs in the Vanguard basket, there are lots if threads on that, and the crowd here is split. Many are all Vanguard, others choose to hold multiple accounts with others for any number of reasons. You might read some of those threads (** loosely related), ultimately you'll have to decide what's best for you.

** http://www.early-retirement.org/forums/f28/vanguard-or-schwab-70648.html

 

[MRG]

This sounds interesting for my sister. She's not willing, or lacks the confidence to DIY. She's only got a couple hundred thousand, outside of annuties, but I know shes paying in excess of 1% to have someone manage it in active funds.

I've tried to help, but don't feel I want to manage her assets. Her logic on the costs of the advisor, well my annuties have high fees.
MRG

 

[thefinancebuff]

I looked at this for a family member but my concern was they were going to use a mix of actively managed funds and index funds. I could not get a list of the portfolios they use. I finally concluded that the portfolio might look a lot like the Star fund.

They told me it's all index funds now by default. It can be part index funds part active funds only if you insist on having actively managed funds.

 

[BellBarbara]

Yes we just went through this - moved everything to Vanguard and had one of their CFP's put a plan together. It's all index funds. They only include active funds if you request this. I liked the planning part, and even though we said no to have them do it for us, they did send us detailed steps to selling what we had and moving to the recommended index funds. Overall easy.

They did not try to sell us anything at all either, nothing at all like our experience with Fidelity.

 

[cbo111]

Thanks bellbarbara
I am going to open a VPAS in the next couple weeks. I will report back on the experience.

 

[Billk400]

VPAS experience

I just got an investment plan and have signed up for the PAS at Vanguard. I wanted a "check" on my estimates / calculations to retire in 3 years (guess you can't call it "early" as I will be going into partial retirement at age 62). The PAS plan (don't need to use the PAS to get the plan; just need to have over $500K at Vanguard, which I had anyway).

The plan included all index funds (I had mostly index, but some managed funds and ETF's) and the expenses will be lower with the recommended funds so overall the PAS fee of .003 is approx 50% paid for by the savings in lower fees.

The plan outlined was not significantly different than what I had (a few % more in stocks / less in bonds). There was no pressure at all to sign up for the PAS during my investment review with the advisor. NOTE: if you do sign up for PAS you will get the same advisor when you call in with questions or have reviews. The "advisor" if you have more than $500K and not taking the PAS will be "the first available advisor", not a dedicated advisor.

As my wife and I are still working we have about 50% of our investments outside of Vanguard in 401K and 403b, so for the plan to work we will need to mirror those investments to those we have at Vanguard.

BTW it looks like we can retire at 62 (earlier if i really get frustrated with work...lol) without a problem as long as the market doesn't crap out again (I guess it will sometime, just hopefully not anytime soon).

I'd be happy to answer any questions others may have regarding my experience with the PAS.

 

[BellBarbara]

Great! Yes, I forgot to add that they "double checked" our decision to retire early 2 years ago and gave us a thumbs up at 97% (planner said they give thumbs down at 85%). The percentage is actually higher to us because our budget right now is much higher due to medical costs and some extraordinary travel we are doing while we are younger.

Even my hub, who worked for Fidelity, was commenting just the other night about how much better he feels that we moved to Vanguard....no calls trying to sell us stuff.

 

[friar1610]

My plan is to continue without PAS and self-manage (all funds are VG indexes; also have I-Bonds and CDs) until my mental capabilites dictate that I shouldn't or I die. My wife has all the information on how to initiate PAS when one of those happens. I enjoy tracking the portfolio and rebalancing it when needed; my wife doesn't. Therefore, looking down (or, perhaps, up) from wherever I am at that time and knowing that she has someone knowledgeable holding her hand will be well worth the .3% fee.

 

[cbo111]

So, my TSP, TD-Ameritrade, USAA Roth, 150K in cash are all flowing into Vanguard. I decided now was the time to consolidate. Total pretax for the account will be about 150K in pretax, 55K in Roth, along with the 150K in cash. I also have about 300K in a work 401K spread in a 2025 fund with AA of 60/40. My advisor is supposed to look at my profile and create a plan for me. My retirement dream is to retire mid 2015. I have a 40K pension (cola-adjusted) and own a home and condo free and clear.
Some of you have mentioned having a positive experience with Vanguard. I am wondering what you think my financial planner will recommend to purchase. I am somewhat risk-averse and hope he doesn't recommend funds with high expenses.
cbo

 

[Billk400]

I just had an investment plan developed and implemented by Vanguard - Personal Advisory Service. I actually had fees reduced (helped offset a significant portion of the .3% PAS fee) and I was using low(er) cost funds anyway. They recommended all index funds; the big change was moving a significant portion of the $ out of a target date fund. My allocation to bonds was reduced to 34% with a corresponding increase in equities. I am 59 and plan on retiring in 3 years.