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EVERY SO OFTEN, I see comments on social media about Vanguard Group’s Personal Advisor Services (PAS). One person posted that he’d talked to a growing number of people who quit PAS. There was no particular reason given for why they left. But I don’t doubt it. I’m a PAS client. I’ve often thought about terminating my relationship.
I’ve been with PAS since 2018. When I first joined, the PAS advisors made a few changes to my investment portfolio. They increased my stock asset allocation by about 12%. In my bond portfolio, they increased my exposure to corporate bonds by about 30%. Have I benefited from these changes? Yes. They added enough value to justify the 0.3% advisory fee.
I now ask myself: What value can they provide over the next three years? Why don’t I take over the management of the portfolio they created? All I have to do is rebalance it every so often. My expenses would be just 0.06% of assets, versus a total of 0.36% today. That would be quite a savings.
But life is not always that simple. If I was in the accumulation stage, I’d be managing my own money. But I’m not. I’ll be 71 this year. This is the time when my wife and I are planning to make significant withdrawals from our portfolio.
We’re planning to do a lot of traveling in the next three years. If COVID is under control, we’ll spend most of our time on the road. We also want to buy a new vehicle, plus do some more work on the house.
What do I want from my PAS advisor over the next three years? A withdrawal plan for these large expenditures. I would also like some emotional support, such as a periodic phone conversation reassuring me that these large withdrawals won’t jeopardize our financial security. I don’t want to be worrying about money—not while I’m trying to enjoy my retirement.
Three years from now, I want to relax in my hotel room, log on to my PAS account and still see that big green round circle that reads: “>99% likelihood of success.”
Thanks for your inciteful post. I have always managed our finances. I have used Vanguard advisers in the past and thought they were competent but pretty vanilla in their advice (which can be a good thing).
I am 77 and concerned how my wife would handle our finances if I die first. I have thought about establishing a relationship with an adviser, but my wife will require someone she can meet in person. I used to have an account with Fidelity and met in person with someone every year. There was always a “soft sell” to those meetings but I found them to be somewhat better than my Vanguard experience. I may also consider an independent adviser.
I am well aware of how significant investment costs can be. We currently are invested only in ultra low cost broad market index funds and have no intention to change. I am not sure how that would work with an adviser, perhaps an hourly fee one.
Dennis, Thanks for your insights! My wife and I are now retired but before retirement I managed our IRA’s. Now that we are retired we pay a large company to manage the IRA’s. I pay more than your PAS account charges but I justify the cost for a few reasons. My wife would have little knowledge on how to manage the IRA’s if something were to happen to me. She is comfortable with our feduciary advisor and knows she can expect him and his company to look after her interests. I also like the peace of mind that comes from having professionals manage our accounts. I have set up a spreadsheet model of a simple IRA stock/bond allocation that I would implement if I still did it on my own. It uses Vanguard ETF’s (Total US stock, total international stocks and total US and International bonds) that with my limited knowledge of how to do this makes sense to me. Our advisor managed account outperforms my attempt to control the IRA’s. I also like that I can contact my advisor and have him call me back in less than an hour. The ability to just go about retirement and have some fun traveling without having to watch our accounts constantly and second guess my abilities is a big advantage in my eyes.
Dennis, I think this is a very rational approach. It sounds like you know yourself, and have put a good plan in place. Good luck with the house renovations. We are in the midst of renovating our two bathrooms. It’s going well, but feels like it is taking forever. We also want to start traveling. I hope you enjoy your travel.