While other robo-advisors have been busy signing up millennials to replace aging baby boomers, Vanguard has been the real pacesetter. The fund giant has convinced its wealthy clients to let robots manage some of their money. Impressively, Vanguard has migrated a large population of its older wealthy clients with $500,000 plus in assets to the robo-advisor platform loved by millennials. Its minimum investment has dropped from $500,000 to $50,000 but the nimbler, simplified investment platform is growing at a much faster pace than the old business.
How has Vanguard managed to keep its baby boomers happy in the digital wealth management world? Like Fidelity, Schwab and Personal Capital, Vanguard has kept the human touch. The hybrid robo-human advisor is available at a cost competitive advisory fee of .30%. Vanguard assets under management are climbing faster than its competitors. Only 14% of it clients are under 50. The level of human advisory services scales up as your minimum account balance grows. If you want premium wealth management services at a low-cost digital world fee, Vanguard is definitely worth a look.
Assets Under Management: Over $83 billion
Client Profile: Baby boomers 1946-1964.
Relatively low 0.30% Fee
Automated dividend reinvestment
Daily tax-loss harvesting
Personal advisors (phone/video)
Personal advisors for a fee
Account Fees9Platform Features9Asset Allocation9Customer Support10
Table of Contents
What do you need to start?
Vanguard Personal Advisor asks you to first create a login before filling out the questionnaire. Once you’re registered with the service, you can get started answering the basic investor profile questions on your age, income, risk tolerance, and so on. Here is where Vanguard parts ways from other digital wealth managers. Next, you will be asked to make an appointment with a personal adviser. This is more formal than Fidelity’s option of calling a personal adviser for more guidance during the sign-up process. Rather than answer a few questions here and there as they arise, Vanguard’s pool of investment advisors are there to provide investment coaching. Until you hit $500,000, though, you will be dealing with a personal advisory team each time you call the service not a dedicated investment advisor. Nonetheless, for a 0.30% advisory fee, the team is ready to get you started and guide you on your automated retirement investment journey.
What questions do they ask?
General investor profile questions include age, investment goals, and time horizon.
To assess your risk tolerance, you will be asked about: current investments, other assets and income sources, investment preferences, and any withdrawals you plan on making from the portfolio. You will also be asked about your tax status.
Dashboard – Vanguard’s dashboard is designed to be simple and intuitive. You can access your portfolio, view performance and use the financial planning tools. Behind the simple interface, investors have access to some of the research tools of the mutual fund powerhouse to research funds, stocks and ETFs.
Vanguard Personal Advisor Features
|Account Minimums||The minimum deposit is $50,000.|
|Accounts Supported||Taxable: Individual, Joint; Trusts; IRAs, Roth IRAs, SEP IRAs, 401(k) Rollovers|
|Account Management Fees||.30, human advisers for a fee or >$500,000|
|Investment Expense Fees||0.05-0.19%|
|Asset Allocation||ETFs from various asset classes.|
|Tax Harvesting||Yes. Free on all taxable accounts.|
|Auto Re-balancing||Yes. Free.|
|Mobile App||Yes – You can download the iOS app here and Android app here.|
|Customer Support||Speak with an investment professional Phone/Videoconference — M-F 8 am-8 pm ET|
The Personal Touch
Vanguard has retained its personal touch. Once your portfolio reaches $500,000 in assets, you will be assigned a personal investment advisor. Advisors can add value by:
– providing planning guidance and coaching
– minimizing taxes
– suggesting a portfolio of low cost funds
This may explain Vanguard’s secret to retaining big money clients. They continue to receive premium investment advice while benefiting from a 60% drop in fees on the leaner robo-advisor platform to 0.30%, versus an industry average of 1.02%.
Vanguard Personal Advisor still considers investment advice to be key to investment success in the digital wealth management world. Personal advice at the goalsetting stage is important to the overall success of the retirement portfolio.
“That seems really simple, but when you press many investors, they actually have multiple goals. You have to get a clear understanding of what those goals are and where they may compete with one another,” explains CEO Bill McNabb.
Therefore, all investors have access to personal investment advisors by telephone and video conferencing via an 800 number. Once goals are set, the automated robo-advisor ensures human emotions do not take over.
Vanguard Personal Advisor seeks to maximize after-tax returns by building a portfolio broadly diversified across market sectors and asset classes.
Vanguard PAS portfolios allocate investments across Vanguard’s proprietary funds, including:
- Vanguard Total Stock Market Index Fund Admiral Shares
- Vanguard Total International Stock Index Fund Admiral Shares
- Vanguard Total Bond Market Index Fund Admiral Shares
- Vanguard Total International Bond Index Fund Admiral Shares
- Vanguard Intermediate-Term Investment-Grade Fund Admiral Shares
- Vanguard Short-Term Investment-Grade Fund Admiral Shares
- Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares
|Review||Read Review||Read Review|
Impressively, Vanguard Personal Advisory Service competes on advisory fees with robo-advisor upstarts. Its fee at 0.30% is only a tad above that of Wealthfront, Betterment and SigFig (all at 0.25). For a low fee, investors also benefit from access to Vanguard’s professional fund and stock research, and financial planning tools. Among its new clients, Vanguard is making an appeal to investors who may trade on their own accounts by promoting the benefits of non-biased, automated trading that takes human emotions and biases out of trading decisions.
Pros of Vanguard PAS
You may like Vanguard PAS for the following reasons: Low fee of 0.30% on assets under management
- 0.30% Fee
- Automated dividend reinvestment
- Daily tax-loss harvesting
- Automated rebalancing
- Personal investment advisors (phone/videoconference)
Cons of Vanguard PAS
The reasons below might be why you won’t like Vanguard PAS.
- Access to dedicated personal advisors for a fee, or assets >$500,000
- Uses proprietary funds in asset allocation
Is Vanguard PAS Right for You?
With help from its wealthy client base, Vanguard PAS is set to be the first robo-advisor to pass $100 billion in assets. There are cheaper and even free robo-advisors. Vanguard has two starting points to help investors assess the value proposition offered by Vanguard’s established investment advisory services. Whether you have one or many investment goals, Vanguard encourages its clients to receive financial guidance on goals-based forecasting, before you create an investment portfolio, and periodically along your investment journey. To help you get started, access to a financial advisor is available over the phone during the website sign up process. A second starting option is a portfolio evaluation. Like WealthSimple, Vanguard will evaluate your existing financial accounts and provide a free consultation. Both are educational on ramps to Vanguards’ robo solutions.