Vanguard Personal Advisor
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Does the thought of a robo-advisor intrigue you and scare you at the same time? Do you wish you could have that ‘human touch’ just to reassure you that everything is okay?
It may sound like you’re asking for too much, but Vanguard Personal Advisor does just that – it provides the best of both worlds of the robo-advisor and personal advisor.
Are you ready to learn more? Check out my review of the Vanguard Personal Advisor plan to see if it’s something you should consider.
What is Vanguard Personal Advisor?
Vanguard Personal Advisor is a hybrid between a traditional robo-advisor and a personal advisor. It’s like having a personal financial advisor for a fraction of the typical cost of using a personal advisor.
You interview with a financial advisor to set up your portfolio. The advisor customizes a plan just for you and puts it into action.
The portfolio will be a mix of stocks, bonds, and ETFs to diversify your risk based on your risk tolerance. Unlike traditional robo-advisors, though, a personal advisor will oversee and rebalance your portfolio as necessary rather than relying on a program’s algorithm.
1. Account opening
This is where Vanguard Personal Advisor really differs. You have an interview with an actual personal advisor before opening an account, rather than answering questions on a computer. This gives it that ‘human touch.’
The advisor will ask questions about your income, life goals, and investment plans. He/she uses this information to create your portfolio to help you reach your goals.
Deposit and withdrawal
Investors need a minimum of $50,000 to open an account.
The amount is hefty, but it’s still minimal compared to traditional in-person brokers. Deposits are simple, just link an external account and initiate the transaction. It takes just a few minutes to get the deposit going.
The same is true of withdrawals. You can withdraw funds from your taxable accounts at any time. Withdrawals from your tax-advantaged accounts may be more difficult and/or include taxes and penalties if withdrawn before age 59 ½.
The Vanguard interface is easy to use and is available around-the-clock. You get a snapshot of your portfolio as soon as you log in, allowing you to see progress toward your goals. You can view an investment’s performance and determine if you’re still on track to meet your goals. The dashboard is available on any internet-enabled device.
Because you don’t have to do any trading yourself, there’s not much of a learning curve. It’s a plug-and-play interface that anyone can learn.
What can you trade?
Since the advisors build the portfolios, no two investors have the same investments. Most of the investments however are Vanguard ETFs.
This is a good thing, though.
If you know anything about Vanguard ETFs, it’s probably that they are among the lowest cost ETFs on the market. In fact, it’s not just Vanguard that uses these ETFs, many other robo-advisors do as well.
Other assets they may include in your portfolio include:
- US large-cap stocks
- US mid and small cap stocks
- International stock
- US short-term, intermediate, and long-term bonds
- International bonds
Vanguard doesn’t charge set-up fees or monthly fees. They do however charge account management fees. The amount you pay depends on the assets under management. Most investors fall in the first category, assets under $5 million, which is 0.3% annually. The fees go down from there, but not too many investors have more than $5 million invested.
In addition to the assets under management fee, you’ll pay the typical expense ratios of the investments traded, which right now is at a an average of 0.10%. That is as low as it gets as far as expense ratios are concerned.
This is Vanguard’s standout feature.
Most robo-advisors don’t offer any human interaction, hence the name ‘robo.’ Vanguard put a twist on the typical robo plan, though, giving access to a personal advisor, while keeping the fees close to what typical robo-advisors, like Betterment charge (0.25% of assets under management).
Vanguard customer service is available Monday – Friday 8 AM to 8 PM. You are free to contact your advisor at any time; you don’t have to wait for your quarterly investment reports to call with questions or concerns. Advisors are also available via email.
A team of advisors or dedicated advisor
While it would be great for each investor to have a dedicated advisor, you have to have at least $500,000 invested to do so. Investors with $50,000 – $500,000 invested have a team of advisors, which means you may talk to someone different each time you call. All advisors are on the same page though and should be able to help you.
If you want to find out more about Vanguard, you may check out their Youtube Channel where Tim Buckley, the Chief CEO of Vanguard shares a ton of interesting insights on Vanguard and Finance in general.
Do you have to choose the investments the advisor chooses?
No. You can choose your own investments, as the advisor is supposed to work with what is in your best interest. While it’s to your advantage to listen to the advice provided, you don’t have to use it exclusively – you can work as a team. Check out our in-depth review to see all the pros and cons.
Does Vanguard have offices for in-person visits?
No, Vanguard doesn’t have physical locations. All interaction you have with your personal advisor will be on the phone. In some cases, you may be able to request a video chat, but that’s as close to an in-person visit that you’ll get.
Do Vanguard advisors work on commission?
No. Vanguard advisors do not work on commission. This means you get advice that’s based on your goals and not the advisor’s paycheck. This may also mean that your advisor will choose the lowest cost investments that maximize your profits while helping you reach your goals.
Does Vanguard let you play with ‘what if’ scenarios?
We all want to know ‘what if, because we know life isn’t predictable. Vanguard does offer a tool that lets you play with different scenarios so you can see how you’d have to adjust your investments in order to meet or exceed your goals.
Do you get a customized portfolio?
Yes, Vanguard customizes your portfolio based on your needs. During your interview, Vanguard advisors ask a lot of questions about your income, assets, goals, plans, and even lifestyle hobbies. They get to know everything about you to help you create the best portfolio.
Can you withdraw funds at any time?
Yes, you can withdraw funds at any time. If securities must be settled to withdraw the funds, it may take a few days. Advisors do their best to help you choose the right investments to cash in to avoid excessive tax liabilities.
How do you know how your portfolio is doing?
Vanguard sends quarterly reports regarding your investments, but you can chat with your advisors at any time if you have questions or want to know your investment’s status.
Worth It or a Scam?
Vanguard is worth it for most people that have at least $50,000 to invest. The service costs a lot less than the cost of a traditional advisor but offers many of the same benefits. It’s like the best of both worlds between a robo-advisor and a traditional advisor.
Vanguard Personal Advisor Pros and Cons
Vanguard vs Betterment
Betterment is strictly a robo-advisor. You don’t get access to a personal advisor and you pay 0.25% of assets under management.
The main difference is the lack of need for a minimum balance. Anyone can invest with Betterment, using their tried and true robo-advisor services to meet their financial goals.
Vanguard vs Charles Schwab
Schwab Intelligent Portfolios is another robo-advisor service. You only get human advisor service if you have $25,000 invested.
Otherwise, it’s a robo-advisor with no monthly or annual fees. You only pay the operating expenses for each trade, which are minimal compared to traditional commissions.
Vanguard Personal Advisors is best for investors with a lot of money to invest. The annual fee for assets under management is minimal compared to a traditional broker, yet you get the same service.
If you want someone other than a computer telling you how to reach your goals, this could be the perfect way to reach financial peace.
Michael is a senior writer at The Robo Investor. He earned his master’s at the Craig Newmark School of Journalism at CUNY, and is currently taking CFP courses at the University of Scranton. He has been an avid finance enthusiast ever since he started investing at the age of 23. Meet the Team