Vanguard Financial Plan Review: (4) Worth It?

This posts concludes my series on the Vanguard financial plan. See previous posts for details about the questionnaire, the written plan, and the consultation.

I think it was a good checkup. The recommended portfolio allocation was sound. It provided a good roadmap for getting on the right course. For this reason, it should be done early, not when you are already close to retirement. I wish I had done it when I was 25 or 30.

Narrow Focus But Right

Coming from Vanguard, the financial plan was heavily focused on the investment part. The recommendations fell in line with the composition of a Target Retirement fund. That’s not a negative. The recommendations by account still gave a clear roadmap for how to go from here to there while taking into consideration tax consequences. Inexperienced investors won’t be led down a wrong path.

It would be better if the financial plan was broader in scope. The written plan didn’t cover much else except investing for retirement. However, I’d rather have one thing right than more things wrong. I read many reports from people who received a broader plan from companies whose names start much earlier in the alphabet than Vanguard, only to have been steered into expensive investments.

The ultimate test: would I be happy if a family member takes the plan and follows it exactly? I would.

Limited Retirement Outlook Tool

The interactive tool for tracking your retirement outlook was useful but limited.

For young investors, it didn’t allow inputs for salary increases above inflation, varied savings rates, one parent staying home for a few years, etc. For older investors, it didn’t allow inputs for lifestyle changes such as downsizing residence, health care expenses before and after Medicare, and so on.

Because it only used the aftcasting method with historical returns, the outlook may be too optimistic. I would look elsewhere for a better planning tool.

Valuable Consultation

The advisor answered both investment and non-investment questions in the consultation session. After one session that comes with the financial plan, you get continued access to the advisor either by having Vanguard manage your accounts for 0.3% per year ($100k minimum) or through the free Ask a CFP Professional service offered only to Voyager Select or Flagship customers ($500k or more at Vanguard).

For a young investor, having Vanguard manage $100k for a year at a cost of $300 is a better deal than paying $250 one-time because you then have the advisor for one full year versus just one session. I think getting coached by an advisor for one year early on will help shape a young investor’s path forward. $300 is a very good price for that. You can cancel after you are fully trained.

If you already have $500k at Vanguard, I think it’s worth it to have an advisor on standby to answer questions. It’s free. You earned it. If nothing else, for the spouse. You will help create some jobs at Vanguard. It’s good to get an opinion from a trained, salaried advisor versus talking to friends, family members, or random people on the Internet. Why go it alone when you can walk with a guide?

I know some financial advisors read this blog. If you are an advisor, please let other readers know where and how you do it better. I know some readers have a financial advisor. If you have one, please let others know where and how your advisor does it better. Thank you.

[Photo credit: Flickr user SalFalko]

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  1. Brad F says

    Do you know if Vanguard accounts through your employer will count towards 500K total if you personal accounts dont exceed the minimum needed?

  2. Harry says

    From Vanguard: Vanguard personal services — assistance you can count on

    “We determine eligibility by aggregating assets of all qualifying accounts held by the investor and his or her immediate family members who reside at the same address, including investments in Vanguard mutual funds, Vanguard ETFs®, certain annuities through Vanguard, The Vanguard 529 Plan, and certain small-business accounts. Assets in employer-sponsored retirement plans for which Vanguard provides recordkeeping services may be included in determining eligibility if the investor also has a personal account holding Vanguard mutual funds. Vanguard ETFs and Vanguard mutual funds held in a Vanguard Brokerage Account are also included when determining a household’s eligibility; other assets held in a brokerage account are not.”

    • Brad F says

      I called Vanguard. If job related funds held by investment company, even if all assets in Vanguard products, no dice.

      Vanguard needs to trace the MFs back to you, and they can only see lump sump held at outside entity,


    • Harry says

      Yes, they said “employer-sponsored retirement plans for which Vanguard provides recordkeeping services.” Your plan has to be administered by Vanguard, not just having Vanguard funds in a plan administered by someone else.

  3. KD says

    Great advice! Is there a minimum for the Vanguard Personal Advisor Services? I did not see one on the webpage.

  4. TJ says

    Harry, you said that someone who is young with around $100k should pay the 0.30% for a year of management. What is the adviser actually going to do for the year? If they just throw me in LifeStrategy Growth or a target date fund, which I could do entirely on my own, I’m not sure that I see the point.

    • Harry says

      I remember I didn’t know much about investing when I was 30. Observing someone managing multiple accounts as one portfolio in several index funds, with consideration for taxes, and having opportunities to ask why they were doing that would be tremendously helpful. They would also have someone to answer questions such as how much to save, 401k, IRA, Roth, down payment for a home, 529 plan, life insurance, mortgage refinance, what to do with employer stock plan, etc. etc. — basically everything I write in this blog!

  5. TJ says

    I guess I just don’t see the need for ongoing consultation with them. After consolidating my Fidelity IRA to Vanguard, I believe I qualify for the $250 plan and I may just do that to get a double check on what I’m doing, and answer the most important question that I think that you just mentioned, “how much should I save?” It’d be interesting to see what their answer is. Is that worth $250, I’m not really sure….I don’t have 100k in assets though, so I don’t qualify for the 0.3% anyway.

  6. Frank Braccio says

    I counsel my family to start early, the earlier the better, starting with VG STAR fund since It requires just $1000. Then pick small cap.index fund next and then a mid cap fund and finally a foreign index fund. The emphasis should be to fund the small cap as much as possible. I am Luke warm on bonds…prefer not to have them. I stumbled across this formula thru the investment college of hard knocks. Recently two economists (?) wrote a manual suggesting such a strategy and I’ve forwarded it to many.

    • Dan says

      (I know – 1 year late to the conversation)

      Harry – amazing blog!

      Frank, I am really interested in this blend you speak of – can you point me in the direction of this ‘manual’ you speak of?

    • frank says

      Dan: sorrty to answer so late…just noticed your comment. email me and i will send you a copy of their book The Elements of Investing…by Malkiel and Ellis.

  7. Jason Hull says


    You asked a financial planner to weigh in, so here I am…

    It looks like what you got was really good for what it was. I would have advised on different piece, but, then again, I don’t know your specific situation.

    There are two ways to take this:

    1) If someone gets a plan with me and has sufficient assets in VG (definitely not a stretch for most of my client base), then use them as a sanity check against what I’ve told the client.
    2) For someone who goes to VG first (a very reasonable choice), use me to fill in the blanks (insurance, budgeting, career planning, real estate, entrepreneurship, estate planning, kids’ education funding, psychology, etc.) that the VG planner doesn’t cover.

    If the VG planner will do all of #2 for free, then DON’T PAY FOR ME! Either that, or use me for a couple of hours to sanity check everything that VG has told you.

    Based on what you’ve said, and without my own personal experience going through this (given that a significant portion of our net worth is in RE and small businesses), it seems like a really reasonably priced service.

    However, investing is only about 20% of personal finance.

    • Harry Sit says

      Jason – Thank you for your comments. I agree with your approach. After settling the investing part, if someone wants help in other areas Vanguard advisors don’t do or don’t do well, then work with an hourly financial planner.

  8. Evelyn says

    A bit of follow-up that I may well have missed in the articles or in the discussion related to the Vanguard Personal Services Advisor program. I spoke with VG today thinking it might be a good option.
    In order to participate beyond the asset minimum you will need to hold only VG funds. My case – I transfer all my current TDameritrade holdings to VG – they expect me to sell all holdings that are not VG @ $35 a fund and purchase VG funds that they will then manage. Management does not include tax loss harvesting. They do not take into account and manage your entire portfolio, i.e. say you hold direct CD’s outside of any brokerage account these are not included in your portfolio.

    They also will recommend actively managed VG funds if they are needed to help you meet your goals that have been developed.

    Bottom line for me – not a good option:
    – I want my entire portfolio – not just part of my holdings managed in regard to asset allocation and rebalancing
    -In my case there would be no reason to sell several of my DFA funds – just for the sake of replacing with VG funds

    The service may be excellent for some – but have to look carefully at what they are offering as opposed to what you want or need.

  9. Jan Pate says


    What is your 2015 recommendation on a Vanguard Financial Advisor for a person in their late 20s, that have less than $50K in assets through Vanguard? I guess it feels like there isn’t really a good fit for an advisor since I haven’t contributed the min of $50K-$100K.

    On Vanguards current site they state, “If you’re younger than age 50, you can pay our standard low fees (up to $1,000 depending on your balance) to receive a Vanguard Financial Plan.”

    Would the up to $1,000 even be worth it, or should I find an external Financial Planner specific to Vanguard investments where I wouldn’t have to pay that ridiculous fee?

    Any suggestions are welcome!

    • Harry Sit says

      When you don’t have $50k yet, how much you are adding to your investments is much more important than how you invest. You can just put the money in a Target Retirement fund or LifeStrategy fund. It will be reasonably diversified.

    • Ann Clare Barrows says

      I signed up with a Vanguard Personal advisor a few months ago. I am already retired and wanted my money invested conservatively. My advisor reallocated my investments from conservative balanced funds to Vanguard’s riskiest funds. Within weeks, I had lost $100,000. I fired my investment advisor, but I am still stuck in risky investments. I may never recover my losses. I am not rich. I cannot afford to lose this money. The investment advisor didn’t care about my comfort level. She was using some “one size fits all” approach that may work if I was 30 years old, but I am 65 years old and no longer working. I would encourage others in my position to please stay away from Vanguard financial advisors. I spent $1,000 in fees and lost a lot of money.

    • Harry Sit says

      Ann – Just curious, what were you in before and what were those Vanguard’s riskiest funds your advisor reallocated to? Did you agree to a plan beforehand? If so, did the advisor deviate from such plan or did you change your mind about the plan between then and now?

  10. Don says

    I called Vanguard this morning and talked to an “Asset Transfer Specialist” in “Concierge Services” (the person who answered the phone when calling their 800-number). I have a new Rollover IRA account with Vanguard with about $150k and another $75k in a Roth IRA that I plan to transfer soon, and I might move my wife’s Roth IRA (~$75k) there too.

    I mentioned that I’d be interested in the one-time $250 Financial Plan Consultation with an Advisor. She insisted that Vanguard does not offer this service. She explained that I’d have to have $500k at Vanguard before I’d be eligible for the free version of this consultation, but that the $250 option for smaller accounts was not available. She continued to tell me that my only options are to enroll in their Personal Advisor Services program for 0.30% AUM fee or manage my accounts on my own with my own research/planning with no fee other than the expense ratios on the funds.

    So, does anyone else have recent experience with the one-time consultation? Has it been discontinued?

    • Harry Sit says

      Don – It appears the $250 paid option is discontinued. If you want you can enroll in the Personal Advisor Services program and cancel after six months.

    • Don says

      Good point, Harry. I assume cancelling PAS after six months leaves my investments in the same funds that they were when managed (no transactions are triggered because of my withdrawal from the program)? In that case, I’d get the benefit of the financial plan with PAS, regain control of my accounts, and then be responsible for re-balancing to maintain the strategy of the plan, all while saving some money on fees.

      Seems a little “cheapskate-ish” of me to do that, but I don’t necessarily feel like PAS is doing much more than quarterly re-balancing after the initial plan. I could potentially re-enroll in PAS for six months every several years for an updated financial plan if I feel like I need guidance at that time. Thoughts on this approach? I wonder if Vanguard has minimums on how long you must be enrolled in PAS, or if they disallow re-enrollment…

    • Harry Sit says

      I don’t think your canceling will trigger any sale. You know how the funds are invested before you cancel anyway. There is no minimum commitment. I doubt they will turn away re-enrollment.

  11. Jim says

    For someone like me with the bulk of their assets in a 401k not managed by Vanguard, it doesn’t seem like Vanguard has an offering that will help. I’ve got a separate 100k Vanguard account, but I wouldn’t want a financial plan that only looks at that and ignores all of the other assets.

    Is that assumption correct?

  12. Harry Sit says

    It depends on what you mean by help. At least back when I did it, the provided written plan included specific recommendations for how to invest in the 401k plan even if it’s not managed by Vanguard. I could ask questions about the 401k plan during the consultation. These count as help in my opinion. Of course they wouldn’t be able to help manage it by doing trades.

    Vanguard made some changes to how they provide advice and the financial plan. I don’t know whether the current service still works the same as before with regard to 401k plans not managed by Vanguard. I also noted in the first and second parts of this series a quirk you would have to work around if your plan has Vanguard funds as investment options.

  13. Dan says


    We are getting closer to retirement and are looking at Vanguard to move all are assets to and use them as a personnel (retirement) advisor.
    Do you know if we would do that would we be limited to only be invested in vanguard funds

    • Harry Sit says

      Yes, Vanguard only recommends their own funds and ETFs. If you want to keep some existing positions say because you’d have to pay a lot of capital gains tax if you sell, you can work out with them to leave those positions alone.

  14. John says

    Signing up for a service, getting the advice, then cancelling the service is a pretty douchey thing to do. You’ve obviously never worked in a service business before. But you will save 30 basis points. So it’s your call.

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