Vanguard Personal Advisor Services Reviews


Vanguard Personal Advisor Services
Average Rating: 3 reviews

Summary

Vanguard’s platform provides a solid introduction to the world of automated investing and one which both experienced and beginner investors alike can take real benefit from. However, the high minimum deposit may be a deterrent to newbie investors.

Quick Facts

Minimum Deposit
$50,000
Assets Under Management
$101 Million
Year Founded
2013
Number of Users
Unknown

Fee Structure

Annual FeeAccount Value
0.3% $50,000+

Features

Single Stock Diversification
Direct Indexing
Tax Loss Harvesting
Fractional Shares
Human Advisors

Supported Account Types

Taxable Accounts
401k Plans
IRA Accounts
Roth IRA Accounts
SEP IRA Accounts
Trust Accounts
529 Plan Accounts

Expert Walkthrough

Rise of the Machines: The Full Tear Down on Vanguard’s “Robo Advisor” Service

Automated investment advisory services, or “Robo Advisors” as they have more popularly come to be known, are fast displacing Wall Street’s traditional investment advisors and their hefty service fees along with them.

Ordinary investors have been bearing the cross of high investment advisory fees for far too long - fees which are becoming increasingly difficult to justify given the broad range of markets and asset classes on offer from existing low cost ETF solutions. ETFs have been an important component of mainstream investing for years, allowing investors to gain exposure to a diverse set of markets and asset classes with minimal expertise.

This switch to ETFs among ordinary investors has been the primary driving force behind the “robo advisors”, an industry which consulting firm A.T Kearney forecasts to grow to $2.2 trillion in assets under management by the year 2020. With such a large slice of the pie up for grabs, the years ahead are likely to see a scramble into the “robo advisory” space so potential investors should weigh up their options carefully - making sure to partner with advisors who bring the largest amount of value to the table for the lowest cost - a fairly novel concept on Wall Street!

Introducing Vanguard’s Personal Advisory Service

While several firms are already well established in this new field of automated investing including Betterment, WealthFront and Personal Capital, it is the emergence of industry giant Vanguard which looks set make a considerable sized dent in the advisory landscape in the immediate future. Vanguard are no strangers of course when it comes to “disruption” within the existing financial universe.

The firm’s stellar run of success in the ETF space has catapulted them into second place in terms of total assets under management, toppling long term industry player State Street, and the firm looks increasingly well placed to challenge industry titan Blackrock for the number one position in the years ahead. Vanguard’s range of ETF assets are currently valued at more than $450 bn giving them a market share of close to 22 percent, proof if any were needed that the wide range of markets on offer along with the low annual costs have proved extremely popular with both average and professional investors.

Their new offering the “Vanguard Personal Advisor Services” (VPAS), has the potential to build on their existing success by targeting the investment advisory market which is expected to grow exponentially over the next decade. Unlike existing players within the “robo advisory” space, Vanguard is opting for a hybrid solution which leverages its already sizeable market position by combining an automated advisory platform alongside access to a traditional human advisors with CFP certifications, all for the bargain price of 0.3% annually.

So how does the Service work?

Vanguard’s service begins with a detailed questionnaire to establish an overall snapshot of an investor’s current financial position, including details such as current salary, tax information, current savings or retirement accounts followed by an upfront questionnaire to determine risk tolerance and future savings goals.

Based on the results of the initial survey, the Vanguard advisor will then construct a financial plan suited to an individual’s unique requirements by establishing the appropriate asset allocation mix appropriate for the plan’s objectives, and selecting funds and ETFs from Vanguard’s existing offerings to include within the portfolio.

An important point worth mentioning at this stage is that the financial plan developed via Vanguard’s advisor offers little in the way developing tax efficient investment strategies, estate planning, or insurance analysis. Vanguard appears to have adopted for a more narrow approach to planning in this regard, focusing primarily on long term saving plans for retirement and other life goals.

The narrow focus however is rewarded by the quality of Vanguard’s indexing capabilities via their huge collection of inhouse funds and ETF’s which offer investors low cost access to nearly every conceivable asset class and market in the world.

The “Indexing” approach to investing

Vanguard’s expertise with “indexing”, a passive style of investing which aims to replicate the performance of an underlying market such as the S&P500, is well suited for the robo advisory landscape as it removes the need for in depth fundamental analysis and due diligence on individual single stocks - a skill average investors often have no experience in, and a skill even sophisticated industry professionals find elusive given just how few actually manage to outperform benchmark index returns with any sort of regularity.

Tracking portfolio performance is straightforward using Vanguard’s investment interface which is available on all platforms including mobile. The dashboard allows investors to keep up to date on the latest portfolio movements and also keeps track of saving and investment goals which were established as part of the initial financial plan.

Unlike other automated platforms within the “Robo Advisor” space, Vanguard differentiates itself by also providing a fully CFP Certified human Advisor who conducts periodic reviews of the underlying portfolio to ensure it is in tune with the client’s saving objectives.

Under the Hood: Key Features of Vanguard’s Personal Advisor Services

Vanguard’s advisory offering comes with several key features one would expect with one of the largest investment firms in the world.

Pros

Wide Range of Accounts - the Vanguard Personal Advisor Service offers a wide range of account types ranging from brokerage accounts, IRAs and revocable trust accounts.

Personal Advice - Vanguard’s hybrid approach will appeal to investors who wish to retain some level of interaction with their advisor via phone, email, or video conferencing. This human “touch” is one of the key differentiating factors in Vanguard’s advisory offering.

Range of Investment Options - as one of the market leading ETF and listed fund providers, Vanguard offers a truly unrivalled array of investment options to users of their advisory services. As an indexing specialist, Vanguard ETFs are a tried and tested option for many popular markets and their ultra low cost makes them extremely competitive to boot.

Insured Accounts - All accounts are covered up to the value of $500,000 via SPIC insurance and and up to $50,000,000 excess via Lloyd’s of London.

Simplicity - All trades via Vanguard’s advisory service are cleared through Vanguard Brokerage Services meaning clients are spared the trouble of complex clearing agreements between different brokers and investment firms.

Cons

High Minimum Deposit - The $50,000 account minimum is a steep hurdle for beginner investors although experienced investors with an established nest egg stand to benefit from accessing a professional advisory service at an ultra low rate.

Cost - while Vanguard’s cost of 0.3% is still ultra low on the grand scheme of things, competitor firms like Betterment and Wealthfront do offer cheaper alternatives for higher deposit accounts which may appeal more to seasoned investors or investors who feel less inclined to make use of Vanguard’s human advisory features.

No Tax-Loss Harvesting - Unlike some of the other robo-advisors they lack this functionality. Optimal tax loss harvesting can lead to improved portfolio performance. Rival advisory Betterment claim their own tax loss harvesting algorithm has boosted returns by 0.77% according to data on their website.

No Face to Face Meetings - Despite Vanguard’s hybrid approach, investors will still have to deal with their human advisors via electronic means including phone, email, and video conferencing. While this may disappoint investors who value the human touch, the approach helps keep the cost of managing your money ultra low.

Overall Impression

Vanguard Personal Advisor Services is a solid automated advisory platform and a welcome new entrant to an industry which is likely to mushroom in the months and years ahead. Vanguard’s market leading position in ETFs and listed funds space make it the perfect candidate to excel in this new field by leveraging its existing expertise in passive investment strategies for an entirely new customer segment looking for quality professional advice.

Combining its “indexing” know how alongside an ultra low cost money management platform is a sure fire win for investors looking for access to professional style advisory services without the professional price tag. The hybrid structure of the service offers a decent halfway house for investors who find themselves between a professionally advised and self directed investment mentality.

Overall, Vanguard’s platform provides a solid introduction to the world of automated investing and one which both experienced and beginner investors alike can take real benefit from.


Reviews

InvestorJunkie.com 2015-10-10

Overall a solid entry into the robo-advisor space. Though the service will exclude beginning investors because of the high minimum deposit. Other robo-advisors have cheaper annual fees.

mymoneyblog.com 2014-05-19

After doing my research, my new suggestion to my wife is to pay for Vanguard Personal Advisor services if I am unable to manage our investments. She is brilliant but lacks the interest (and time if I’m gone with our kids and all) to do it on her own and I trust Vanguard to do a fine job. The reasonable fees, ability to keep my assets at Vanguard, and assigned human advisor make it better in my opinion than any other “robo-advisor” option. Still, I hope she never has to sign up.

kitces.com 2014-04-21

The bottom line, though, is to watch out for the financial planning juggernaut that Vanguard has just created. Because of Vanguard’s sheer size, it has the real potential to shift the landscape for robo-advisors, human advisors, and the middle market of underserved consumers, all at once.