A Word of Advice

THERE ARE CERTAIN things in life that remind you you’re getting old: You receive mail from companies offering their cremation services. You realize your house was made for a younger person. You have this urge to throw and give away things as if you won’t be here tomorrow. You feel it’s time to hire a financial advisor.

Actually, I’m not sure hiring a financial advisor is a sign of getting old, but that’s the way it struck me. I turned 67 this year, which I don’t consider old. But I believe there could be a time when I can no longer manage my investment portfolio. If I had a pension that covered my living expenses, I might have felt differently. But I rely on my savings for the majority of my retirement income—and I believe hiring a financial advisor is the right decision for me.

Today’s high stock-market valuations and low interest rates make it challenging to figure out the right way to draw down a retirement portfolio. That was another factor in my decision to hire a financial advisor—and it wasn’t the only one.

Having someone I can trust to give me reassurance and emotional support is important to me. I’m an investor whose emotions can sometimes derail a perfectly good investment plan. A good advisor could bring stability to my portfolio—and that should translate into better returns.

In addition, if something should happen to me, there will be someone to help my significant other navigate my finances. And finally, it’s become something I just don’t want to deal with. I used to like managing my money. Not anymore.

After much thought, I decided to go with Vanguard Group’s Personal Advisor Services. Here are seven reasons I chose Vanguard:

1. I trust the folks there. I have had a relationship with Vanguard for many years. I feel comfortable with the firm.
2. Its service is inexpensive. Vanguard charges 0.3% of assets each year to manage my investment portfolio. The funds in my portfolio average approximately 0.08%, so the total cost is about 0.38%. By contrast, the industry average for a financial advisor is almost 1%, while some major fund companies charge close to 0.5% for just a short-term domestic bond fund.
3. According to Barron’s, Vanguard was ranked No. 1 among the robo-advisors that the publication reviewed. Some of the metrics Barron’s used to evaluate this type of service were: customer experience, cost, performance, access to advisors, financial planning and account minimum.
4. I feel the improved performance of my portfolio will more than make up for the 0.3% management fee.
5. I like the stock, bond and cash allocation that Vanguard selected for me. It meets my financial requirements and risk tolerance.
6. I like the way Vanguard manages its advisory service. A financial advisor cannot recommend an investment plan without getting it approved. It’s reassuring to know my plan meets Vanguard’s requirements.
7. Vanguard’s service fulfills all my financial needs. I wanted someone to allocate my funds, rebalance my portfolio, tell me how much I can spend each year and update me on my progress in meeting my target goals. Vanguard does just that.

We have seen commission-free exchange traded funds and no-fee index mutual funds. Will Vanguard’s type of advisory service be the next revolution in bringing affordable financial advice to the masses? If so, how low can these fees drop?

This is not a recommendation for Vanguard’s Personal Advisor Services. Everyone has different needs and requirements. But I’m at a point in my life where I don’t want to be thinking about my investment portfolio. I’d rather be thinking about my next vacation. I believe hiring a financial advisor and selecting Vanguard will help me achieve that goal.

Dennis Friedman retired at age 58 from Boeing Aerospace Company. He enjoys reading and writing about personal finance. His previous articles include Friendly Reminder, First Responders and Truth Be Told.

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David Baese

6 years ago

I know I’m getting old because I have a pair of “dress” tennis shoes.

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