Vanguard is a well known no-load mutual fund company globally. They offer a wide selection of ETFs, no-load mutual funds, financial planning and other services from a stock broker.
They also offer Vanguard Personal Advisory Services (PAS) an investment management service in addition to its traditional financial products. The PAS delivers a blend of algorithmic and human investment advice for their client funds.
Continue reading below to learn more about Vanguard’s Personal Advisor Services and how you can get started with their hybrid-robo advisor!
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Table of Contents
Vanguard Quick Facts
|Began Operations||May 1, 1975|
|Oldest Fund||Wellington Fund (July 1, 1929)|
|Total Assets||About $6.2 trillion in global assets under management, as of January 31, 2020|
|Number Of Funds||About 190 U.S. funds (including variable annuity portfolios) and about 230 additional funds in markets outside the United States, as of January 31, 2020|
|Number Of Investors||More than 30 million investors, in about 170 countries, as of January 31, 2020|
|Average Expense Ratio||0.10% (U.S. asset-weighted fund expenses as a percentage of 2019 average net assets)|
|Chairman & CEO||Mortimer J. Buckley|
|Number Of Employees (Crew)||About 17,600 in the United States and abroad, as of January 31, 2020|
|Core Purpose||To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success|
Vanguard Personal Advisor Services shines in their investment mix, its high performing minimal fund expense ratios with Vanguard’s branded ETFs, and its offering of unlimited access to human financial advisors
In 2001, the company’s first ETF, the Vanguard Total Stock Market ETF, entered the market. Since 2001, they have enjoyed a meteoric rise to overtake State Street at the second spot in the ETF market. In the future, there are motions set to continue their market dominance and are likely to challenge industry behemoth BlackRock for the top position. Recently, Vanguard’s ETF total assets were valued at over $1.2 trillion.
Vanguard is set to continue its tradition of disruption in the financial market space with its foray of Vanguard’s Personal Advisor Services into the burgeoning robo-advisor market. With over $161 billion in assets under management as of December 31, 2019, Vanguard already has a stable foundation for future growth in this area.
Vanguard Personal Advisor Services Summary
|Account management, planning or subscription fee||
|Setup or onboarding fee||None|
|Advisor access and credentials||
|Financial planning services||Can advise and create a custom portfolio for a variety of situations, such as saving for retirement, college, or a family vacation home.
|Investment expense ratios||Asset-weighted average is 0.10%.|
|Brokerage options||Clients must move money to Vanguard.|
|Portfolio construction||Customizable on client-by-client basis.|
|Tax strategy||Assets are allocated strategically among taxable and tax-advantaged accounts to optimize for taxes. Tax-loss harvesting done on client-by-client basis.|
|Customer support options (includes website transparency)||Customer service hours are Monday to Friday, 8am to 8pm Eastern time.|
|Promotion||No promotion available at this time|
- Low management fee for an online planning service
- Large investment selection.
- Comprehensive management.
- Access to financial advisors.
- High account minimum.
- Website offers less of a guiding hand than some competitors.
(Learn more at Vanguard)
How Does It Work?
So what can the Vanguard Personal Advisory Services do for you? They can help develop a custom investment plan based on your life goals and then manage your investments to line up with your custom portfolio preferences which will be built through Vanguard’s low-cost index funds.
Once you’re a client, you can choose to use Vanguard’s online or mobile app to view all of your portfolio holdings and investment performance and keep track of goals. Not only that, you get access to chat with a Vanguard personal advisor anytime you want, so if you have any questions, you can easily contact them whenever you need to do so.
Advisors are available by phone, email and videoconference from 8:00 AM to 8:00 PM Eastern Time.What’s more is that all deposits and withdrawals are made through your personal advisor which can help you keep you on track.
You get an annual report and Vanguard rebalancing your portfolio if it drifts more than 5% in order to maintain your target asset and fund allocation. Plus you pay 0.3% of assets under management – this equals about $150 for every $50,000 invested – and you can cancel anytime.
- Covered by SIPC insurance — accounts at Vanguard are covered up to $500,000 and by excess coverage from Lloyd’s of London up to $50,000,000 per account.
- Services are self-clearing — Vanguard uses self-clearing through Vanguard Brokerage Services for all trades and transactions.
Vanguard Personal Advisor Services has an annual fee based on the amount of assets being managed. They have a flat fee os 0.30% of all the assets under management and that amounts to $150 per your on a $50,000 managed account or $1,500 per year for a half a million dollar portfolio.
The higher the investment you choose to go, the fees become less pricey. Also, keep in mind that the fee is billed quarterly to your account.
|0.30%||First $5 million assets|
|0.25%||Assets between $5 million and $10 million|
|0.10%||Assets between $10 million and $25 million|
|0.05%||Assets above $25 million|
Not to mention, along with the 0.30% management fee, the underlying mutual funds and ETFs in a client’s portfolio carry expense ratios that average 0.10%, it’s lower compared to other advisory services. Vanguard advisors use only Vanguard ETFs, which do not incur brokerage commissions at Vanguard.
Should You Apply For Vanguard’s
Personal Advisor Services?
If you’re able to deposit $50,000 to invest then consider investing it through Vanguard. Although their Personal Advisor Services charges a bit more compared to others, it also offers more for your account since Vanguard’s advisors combine the strengths of a robo-advisor with personalized financial planning.
Pros and Cons of Vanguard
- Automatic Deposits. Vanguard lets its clients make automatic deposits weekly, bi-monthly, or monthly.
- Outstanding Investment Pedigree. Vanguard’s investment options are excellent. Its ETFs are some of the best performing and lowest cost on the market. In fact, Vanguard’s ETFs are so good, even their robo-advisor competitors use them in their service offerings.
- Diverse Range Of Investment Options. Vanguard uses a more modern approach to investing by diversifying its investments as much as possible to increase investment returns and decrease losses. Vanguard’s mix of investments includes bonds, to give its clients fantastic portfolio diversity and a broad mix of investments.
- Unlimited Access To Live Human Financial Advisors. Unlike other robo-advisors, Vanguard actually has human financial advisors for their clients if they so choose. This gives their clients peace of mind knowing that a real person is handling their finances instead of an algorithm based robot. Investors with over $500,000 enjoy the dedicated services of a financial advisor. More premium investors get continuous contact and the ability to build a relationship with advisors over time.
- Individual Taxation Optimization And Minimization Plans. Sometimes robo-advisor services will include tax optimization and minimization into the algorithms of their automated services. However, one size does not always fit all. Vanguard designs tax harvesting packages on a client by client basis which has the effect of maximizing the savings on each account. Vanguard will also create a portfolio that strategically allocates assets among tax-advantaged and taxable accounts.
- Accounts Are Insured. Vanguard’s accounts are covered up to $500,000 via SPIC insurance and up to $50,000,000 through Lloyds of London, to give their clients a sense of security.
- Access To Admiral Class Shares. Vanguard is replacing regular Investor Share with the lower-cost Admiral™ Shares for many funds. This is a great benefit as Admiral Shares are usually charged 0.10% lower than other comparable investor class shares. Previously, access to Admiral Shares required meeting $10,000 per account threshold.
- Not Accessible To Small Investors. For those of you who have less than $50,000, you will be locked out of this service. Other robo-advisors, such as WiseBanyan, Wealthsimple, Wealthfront and Betterment have low or no account minimums and are better suited to small investors with a limited pool of capital.
- Vanguard Charges Account Management Fees On All Accounts. Individuals who have invested up to $5 million with Vanguard are required to pay a flat rate of 0.30% in fees for account management. If this sounds like an issue to you, then there are other services such as Schwab’s Intelligent Portfolios, that do not charge any account management fees at all. Wealthfront also doesn’t charge account management fees for deposits under $10,000 (they will no longer manage $10,000 for free for new clients starting April 1, 2018), does charge a flat rate of 0.25% for accounts over that amount.
- High Buy-in To Get Discounts On Account Management Fees. Vanguard does not offer discounts on account management fees until you have more than $5 million dollars invested. This ceiling is very well out of reach for many people. Clients need to be proactive and self-disclose financial aspects which should be considered by Vanguard’s financial advisors when creating advice to suit their client’s financial situation. Failure for clients to disclose important considerations, such as 401K plans or college savings plans could result in a mismatch between the investor’s savings goals and the ability of their portfolio to meet those goals.
- No Fractional Shares. Unlike some services out there that allow clients to invest in a fraction of a share of a company, Vanguard does not offer this feature. This means that an excess funds that remain after a purchase will not work towards earning returns for the owner.
- No In-Person Meetings. Although Vanguard does offer ways to interact with your financial advisor, there is no in-person meetings. However, they do offer face-to-face meetings via videoconferencing.
Vanguard Personal Advisor Services is a strong hybrid advisor and it is best for larger account balances, access to financial advisors, and for those who are looking for comprehensive financial planning. But it does have a hefty $50,000 account minimum.