Vanguard officially launched its long-awaited advice service for the masses. They are calling it Vanguard Personal Advisor Services. When you go to Vanguard’s homepage for personal investors, you are greeted with this front and center:
It highlights the role of a human advisor, which is the biggest difference between Vanguard’s advice service and some of the other fully-automated investment services. Vanguard’s advice service is driven by a human advisor at every step of the way.
This is reflected in the call-to-action. The next step isn’t to answer a multiple-choice online questionnaire, get a pie chart instantly, and open your account in 15 minutes. Vanguard wants you to pick up the phone and talk to someone.
You need $50k minimum, which is higher than the other fully automated services. The fee is 0.30% of assets, on top of the low expense ratios of the Vanguard funds used.
Overall, I think it’s a great product. Many people will feel more comfortable if they talk to someone before they jump in. On the other hand, having to call someone before you can start may seem old-fashioned in this day and age.
Between $50k and $100k, relative to Wealthfront and Betterment charging 0.25%, the extra 0.05% fee from Vanguard for advice from a human advisor all year long is practically a steal. We are talking about extra $25-50 a year.
At $100k and above, Betterment‘s 0.15% fee is half of Vanguard’s fee. You then decide whether it’s worth the extra cost to get advice from a human advisor, and also whether you want Betterment’s tilt to value in its portfolio allocation.
It’s not just about knowing what to do. It’s also about actually getting it done consistently. I have yard service people mow my lawn and blow off dead leaves every week. Over the course of a year I pay them more than $1,000. They are not using any advanced techniques I don’t know of. Ever since I hired them, the yard is done much more consistently than when I was doing it myself.
Having your account managed would fall under a similar principle. If you have it down pat, you don’t need the service. If you find yourself second-guessing a lot, paying a small fee will get it done consistently and take it off your mind.
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