Vanguard is one of the best-known investment firms. In fact, founder John Bogle is known for introducing the index fund and making investing accessible to the masses. Now, Vanguard has entered the robo-advisor space, offering its Personal Advisor Services.
However, while Vanguard’s fee for personal investment direction is competitive, it is only available to those who can meet the service’s high minimums. Read this Vanguard review to see if the features and benefits of Personal Advisor Services outweigh some of the drawbacks.
Vanguard review: Personal Advisor Services
After years of being one of the premier providers of index funds and index ETFs, along with other investment services, Vanguard is ready to compete with robo-advisors with its Personal Advisor Services. However, Vanguard offers a twist: Instead of letting an algorithm handle everything, a real person periodically reviews your portfolio.
The result is a mostly automatic plan that allows you access to an advisor when you feel you need it. Rather than being a true robo-advisor like Wealthfront or Betterment, this service looks more like a technology-assisted investment advisor.
How Vanguard Personal Advisor Services works
Most robo-advisors ask you a few questions, set up your account, and use an algorithm to divvy up your money. Vanguard Personal Advisor Services doesn’t work that way. Instead, you sign up for web access, answer a few questions, and then schedule a time to talk with a human advisor.
Once you speak with your advisor, they will develop a plan for you using proprietary tools and build a portfolio with a mix of low-cost bond and stock investments. Your advisor will likely lean heavily on index funds and ETFs created and managed by Vanguard.
The advisor reviews your portfolio regularly, making tweaks, assisted by the technology used to analyze your situation and your goals. Most of the work is done by software, but your advisor can make personalized changes based on your progress and preferences. You can also schedule a time to chat with the advisor over phone or video, or send questions via email.
However, you can’t even sign up for Vanguard Personal Advisor Services unless you have $50,000 to invest. This can be spread across different Vanguard accounts, but it needs to be there to use this service. If you don’t have much money to start, using a robo-advisor like Wisebanyan, Acorns, or Betterment would be a better option.
Additionally, you won’t get a dedicated account advisor until your holdings reach $500,000. Until then, any advisor you reach via phone, email, or video could be someone different than who you connected with before.
Vanguard Personal Advisor Services products and features
For the most part, Vanguard Personal Advisor Services is straightforward. You can include the following accounts in this service:
- Traditional and Roth IRAs
- SEP and SIMPLE IRAs
Vanguard does offer you the ability to take advantage of other types of accounts, like 529 college savings plans and solo 401(k)s. Your advisor will consider these other assets in your comprehensive long-term plan, but the accounts won’t be managed as part of the Personal Advisor Services. When you consult with your advisor, let them know about other accounts you hold with Vanguard and other brokers so they can include them in their planning calculations.
Vanguard will review your assets and allocate them to optimize for taxes. Investments that already come with tax benefits will be held in your taxable accounts (if you have them), while other assets will be held in tax-advantaged accounts, like IRAs. Tax-loss harvesting is also taken care of on a per-client basis.
Every quarter, your assets are rebalanced based on your goals and progress. Rebalancing might take place more or less often, however, if your agreed-upon financial plan calls for it.
For the most part, there aren’t a lot of bells and whistles to this service. You have an account, and it is managed by a software program overseen by an actual person.
How to open an account with Vanguard Personal Advisor Services online
As mentioned earlier in this Vanguard review, you won’t complete all the steps to set up your account entirely online. Once you create your web access, you finish the process with the help of a human advisor.
However, once everything is settled, you can review your portfolio online. The interface is easy to use, and it’s easy to track your progress over time. It’s also possible to quickly project different scenarios, so you can see what happens if different market conditions prevail over time.
Vanguard’s site is simple to navigate, and it’s possible to access different tools and research once you have your web account set up. However, even though some of Vanguard’s accounts (like 529s and 401(k)s) aren’t covered under Personal Advisor Services, you can still work toward other goals and manage those using a Vanguard dashboard.
Vanguard Personal Advisor Services charges a flat fee of 0.3 percent annually, and there are no discounts offered as your account balance goes up. On top of that, you will also pay the expense ratio for funds used in your portfolio. In general, Vanguard index funds and ETFs come with ratios as low as 0.05 percent, but there are also actively managed funds that have ratios of 0.40 percent or higher.
Still, as long as you stick to Vanguard products in your portfolio, you shouldn’t have to worry about commissions, transaction charges, and other additional fees.
The management fee seems a little on the high side when compared to other robo-advisors. However, when compared to other active investment management services, it’s a pretty good deal. Remember: with Vanguard, you receive access to a human advisor whenever you want. That’s not always possible with other robo-advisor services.
It’s possible to schedule a time to speak with an advisor via phone or video conference, Monday through Friday, from 8 a.m. to 8 p.m., EST. You can call 877-527-4942 during those hours to speak with someone. Advisors are also responsive through email.
Personal Advisor Services benefits
The biggest benefit to Vanguard Personal Advisor Services is the access to an actual human being when planning your future.
While robo-advisors can be attractive and inexpensive, the reality is that there is only so much customization you can build into an algorithm. With Vanguard, you get the best of both worlds: powerful technology solutions with a higher degree of personalization. An advisor will also help you work your non-Vanguard accounts into the plan, which is very helpful.
You can speak with an advisor via video conference or on the phone. It’s also possible to fire off an email when you have questions.
Additionally, when you invest with Personal Advisor Services, you get access to a wide variety of funds. Some of the other robo-advisors use Vanguard’s funds — this allows you to invest directly with the source.
The benefit of this comprehensive account management is offered at a relatively low fee as well. While the fee is higher than Betterment’s, and you can access fee-free investment options through Robinhood and Wisebanyan, the fact that you get human attention at such a low price helps Personal Advisor Services stand out.
Personal Advisor Services drawbacks
As you might imagine, the biggest drawback to this service is the fact that you must have $50,000 to sign up. Most beginning investors can’t come close to meeting that requirement. On top of that, getting a dedicated advisor requires you to reach the $500,000 threshold, so you won’t get truly personalized attention until much later.
Additionally, even though there are tax strategy services with this Vanguard product, you won’t see daily tax-loss harvesting monitoring. If you want help with tax-loss harvesting, you need to speak with an advisor to help you work it out.
Finally, you might have to pay transaction fees. Most robo-advisors like Wealthfront and Betterment cover transaction costs in their account management fee. Vanguard doesn’t.
Plus, while other robo-advisors rely heavily on index ETFs, you might have other types of investments in your Personal Advisor Services portfolio. If you decide to include non-Vanguard assets in your account, it will lead to sales charges and other fees.
Who should use Vanguard Personal Advisor Services
For the most part, this service is best for those who already have a good start on their portfolios. Beginning investors with a small amount of money should look into other options, like Betterment, Acorns, WiseBanyan, or Finhabits.
On the other hand, if you have at least $50,000 to invest and you want more customized help planning your finances and reaching your goals, Vanguard Personal Advisor Services offers good value for the money.
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