Vanguard's Unbelievable U Turn!
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- Опубліковано 2 бер 2023
- Vanguard have decided to close their Personal Financial Planning Service after only setting up back in 2021. Let's discuss what this means for people that were on the service and why I think they have taken this decision.
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#vanguard
I was offered this service I looked at it then the cost and thought nope. I’m a low cost index investor.
I do 3 things 1) equities for when I need the money in 10+ years, bonds for 2-5 years and cash for 0-2 years that’s it.
Vanguard clients in the U.K. are probably a bit more informed about paying for advice and for those who aren’t planning to retire in the next 10 years getting advice about taking out the money is more important then growing it, which with index investing is pretty simple work out your risk and as you get closer to retirement dial the risk back if you want to.
Most folks can have a 5 fund (or less) portfolio and that will work out fine. They can reallocate once a quarter (or year) if the markets put it out of their target profile. I did this when I was around 30 and it allowed me to retire from the workforce at 57. Key is to start young, continue to invest each month and manage your liabilities. Wishing everyone success in their own journey.
Which 5 funds do you use? Thanks!
@@sailingonasummerbreeze7892 All Vanguard (low fees). VFIAX, VWILX, VWUAX, VDC & VSS. Last two are actually ETFs. Just keep investing and think long term. Best wishes to you and your family.
@@kevin7151 Thank you Kevin for Sharing!
@@sailingonasummerbreeze7892 and keep automatically re-investing any dividends, those pennies make a huge difference over the course of ~15-20 years.
I only use a 3 fund. Keeps it simple! Buffett suggests a 2 fund.
I noticed this too, I have a friend who has a financial adviser that he recommends but minimum pot was £500k and total charge for advice is 2% per year on the total value of the portfolio, so vanguard would have been much cheaper for my lower pot.
I'm happy to do ls 60% though.
Keep up the great work! I always look out for yours and Damien's uploads!
🎉
Your viewer could simply move their assets to Vanguard Digital Advisor, keeping the benefits of being a Vanguard customer and having a predictable approach to their portfolio management over time. The fees are much lower than you would pay for active management.
Would be grateful if you would comment on Vanguards raid on the interest paid on cash held in SIPP accounts. When I questioned their notice of changing interest paid on cash held in my SIPP this is what they said.
That's correct, the interest rate will be reducing shortly. We plan to make this change between 13 and 27 March, and to set the interest rate at 2.2% from the date of the change.
We currently pay a variable rate on cash held, which is the Bank of England rate less 0.25%, meaning that you will receive 3.75%. Any cash in your account will earn interest daily and will normally be paid into your account on the first working day of the month.
I was always amazed that this was useful to someone. Idk I feel like a 2 fund portfolio is enough financial planning.
Bonds have been nothing but total shit for me. Shit, shit, shit.
I only have one their S&P 500 index fund if you don't count the money market cash fund that you are required to have when opening up an account with Vanguard. If the smartest inverter in the world says that's all you really need if you don't want to spend hundreds of hours a month investigating individual companies. Who am I to disagree with him!?! Its not like that advice prophets him in anyway so I can believe him.
@@Donkeyearsa
Bogle and economics professors also recommended low cost ETFs.
I was offered this but it didnt seem for me. When I ponder on it, its just a bit of a hard sell for VG simply because a lot of their customers are attacted to the low fees and such a service kind of defeats the purpose. Ofc it could be that this is still cheaper than what other platforms would offer for a similar service, but given their unique selling point, I was imagining that they would not put a lot of resources into it at first place.
Yes Vanguard is the cheapest 0.30% AUM when we get old & feeble will return.
No big loss for me. The whole Idea of Vanguard is self directed, high quality, low cost mutual funds that are put together, maintained and rebalanced by robots with professional human oversight.
Interesting that the U.S. PAS is .30% compared to higher in the U.K.
Surprised to hear you like Life Strategy funds. If there ever was a reason not to have your money in these funds was 2021 into 2022...bonds lost money as well. I was able to move my bond funds into cash, and as a result my portfolio loss in value was ~8%. Cheers
Good video. I suspect the reason they have gotten out of the managed portfolio is due to a few factors:
1) their clientele were not what they expected (so the income was less than expected, so overall they may have been running at a loss)
2) The uncertain times that we are in. It would be very easy for a vanguard customer to analyse the managed returns vs index tracking, which would put Vanguard in a difficult situation, potentially reputation damage
3) Offering advice sort of goes against the ethos of Vanguard, as their ground roots are around offering the cheapest bang for the buck index, which maximises returns to the investors. Managed / professional services goes against this on so many levels
They held our hand for 1 year actually PAS CFP was great but, I was cheap didn't want to pay him anymore. However, we had only 4 or 5 core eft/mutual funds. 0.30% AUM yearly was aprox $2700 saving now!
Can you share the 11 funds and the weighted percentage? I'm really really curious what they recommended. Yes I know every financial situation is different but I can read between the lines pretty easily. It would be very interesting data to see.
I don’t have this information, I didn’t feel appropriate to ask. I bet the allocation doesn’t look that different to a corresponding Lifestrategy fund though….
They made "management account" which new its same as stocks and shares account but you do questionnaire say how much risk you want to take, then they make all the decisions for you
Yes I came across this recently. The risk questionnaire is....well....hopeless.
TBF, the current equities market seems incredibly difficult to navigate, even for those who "know what they are doing". Granted, this is coming from someone who doesn't know what they are doing.
Every single person on earth who can consistently and unfailingly predict the market is already a trillionaire.
The problem is people wanted to hold them responsible for the decisions they were making.
This is why I do it all myself. It's easy to get excellent diversification with just a handful of low cost index funds. No advisor is going to give your money the same care as you, yourself will. They won't come up with a custom tax plan that goes far beyond what most tax preparers could ever imagine as I have nor will they keep an eye on your investments as you will. Additionally, they have a vested interest in keeping your money invested so even when markets have been so plainly over-valued such as they have been and still are they will push you to "stay the course". Why do you think this guy's "friend" is sitting on loses that he'd prefer not to actualize.
I think I found my new favorite finance channel
Thank you! I found my new favourite viewer.
@@ThatFinanceShow damn, that was a fire reply
Their financial advisors are not retired. How good could they possibly be?
😂
There is a 20 yr spread between the client they wanted and the client they got. I suspect that 0.79% fee doesn't cover the cost of the services rendered given the gap in average balance between the two groups.
Transferred funds out of Vanguard when I called them to talk to someone about adding my wife's name to my accounts and was placed in a holding queue for a long time before I just hung up. I believe that your phone number is tied to your Vanguard balance and if you are deemed a low balance holder you are placed on a long hold.
Urgh, nothing worse than being stuck on hold forever.
It's obvious. They very clearly want to go to digital advisor route like betterment. That is what they are spending money trying to copy and that is the way they want to go
Makes you wonder doesn’t it, would they be better sticking to what they were good at and the foundations the company was built on?
I got a message a few days ago saying that my account was being closed!
I only found out this morning and you are the only video I found - after looking for a while - who is talking about it!
Wtf is going on?!
Weird isn’t it, what are you going to do?
New sub here!
Welcome!
Now if you had highlighted Vanguard is reducing dramatically their cash interest rate and increasing even more dramatically their fees for holding your cash…
Folk who use Vanguard are usually anti ‘advice’ fees. Bogleheads and all that.
true. vanguard if founded on low cost indexing.
People, use trackers who do not need advice, fund managers cannot beat the market, constantly without super high risk stocks. so in short, use a tracker rather than advice. its cheaper. I use A SIPP and buy my own shares, based on value and growth, I also use SPXP 500 Tracker. would not buy bonds, I would buy utilities stocks.
Exactly
True, but some U.S. Bogleheads say they will recommend their spouse use PAS service if they die first.
so fiduciary duty and not generating Alpha that no one was willing to pay for. customers wanted crypto returns. but wasn't going to happen
6:40 "massively underestimated cost"
I sense the presence of consultants who think that you can "transition" all the experienced people and substitute Microsoft Power Apps with "AI" supported by freshers at TCS or Infosys and fronted by someone who basically has a script to make up for experience.
Vanguard is not capable of evolving to the next revolutionary level.
It was Burton Malkiel who provided Bogle with an intellectually fully realized investment premise.
He has developed the next step at Wealthfront.
Vanguard is probably closing its advice service in the UK because it’s not profitable, just as they did with their factor ETFs after a few years.
Yep, the long and short of it.
Vanguard trading fee's are ridiculous, before I left in 2016 they were one of if not the highest charging commissioned brokerage in the business.
Don't know what they charge in UK but it the US it has been free for a while now. They did take a long time to get there though.
Vanguard retirement funds went from stellar performance to now below market average. I'm not sure how this happened since they mostly follow S&P and have a healthy bond mix?
Bonds got killed. I moved a lot of my 401k into BND when it was around the all time high…oops 😢. It was in stable value and I thought a recession was going to make bonds rocket. Instead….
Bonds got killed. I moved a lot of my 401k into BND when it was around the all time high…oops 😢. It was in stable value and I thought a recession was going to make bonds rocket. Instead….
@@amyx231 Inflation will kill bonds when the central bank inevitably raises interest rates. If you can hold out till rates fall you will recover somewhat but who has that kind of patience ?
their auto-advisor wasnt making any money
Just start investing early in your career and put all your investment money in a cheap Vanguard index fund. Don't splurge on anything until you're wealthy. Budgets for regular people are just excuses to spend money on luxury they can't afford, so don't create budgets. By the time you get to retirement, you'll almost definitely be better off than if you had been playing the balancing and rebalancing game. Live a bit below your means, and your "means" will grow enough that you don't live your whole retirement on the financial edge hoping to die before your last annuity matures.
So they will finally stop the consent of spamming me and "HIGHLY" suggesting it when I call them that I need to join up to the service.
I guess so
I worked at vanguard briefly and I generally don't recommend them.
Interesting, more info please?
@@ThatFinanceShow I'm in the US and worked with US customers on 401ks (as in, the sponsor of their 401k was an American company) and my husband is the first point of contact for any other US retail product at vanguard. Since I'm in the US some of this might not apply, but I think it speaks to a wider problem.
The workplace is a very toxic call center type in general, which sucked, but the training is also VERY POOR. they hire a lot of temps when they need them and then abruptly fire them when they don't, so depending on when you call, you might have someone who didn't know what a 401k even was 2 weeks ago. I routinely saw misinformation being given to participants and vanguard does not stand behind anything their customer service reps say, I'm not even sure what the point of customer service for 401ks is since we could just tell you wrong info and if you make a decision based on that info, too bad so sad, it was always your responsibility to understand your plan rules on your own.
For example, I had a man who took out a loan against his 401k for $40,000. He then got another job offer. He called in to ask if he could still pay back that loan if he left his current job, because he was not able to either repay or pay taxes on $40,000. Some plans do allow for this. His plan did not. The rep incorrectly told him that his plan would allow him to pay it back. So he took the new job offer and then called in again several months later to ask why he couldn't set up payments online, and I told him his plan wouldn't allow it. It was not a fun call. Stuff like this was so routine though.
I was part of a wave of temps that were laid off abruptly recsnfly, although they told us they were going to hire full time out of us temps, I think they were using us until they got their Philippines contact center running, since hold times during the pandemic were up to several hours. My philippino coworkers were lovely, but again, they were all new, and the training is REALLY BAD, so I imagine for the next couple of years the majority of employees will be new again and none of them have any idea what they're doing.
Some fairly routine situations take really long. Any kind of divorce situation takes 100+ days to process. Why? They just decided it was okay for that department to be really backed up I guess, I never saw them hiring for it
On the retail side, it's highly segmented. They have a special tool with like 5 drop downs with 20+ options each just to try to figure out which department to transfer you to, and misrouting is insanely common. A few weeks ago my husband had someone call in because a random $60,000 appeared suddenly in his individual investment account. It was determined that someone else's money was deposited into his account, Vanguard's mistake. Vanguard was closing for the evening, and my husband needed guidance on what to do with this client. The response from management was that the client had to call back tomorrow to notify some department. Why was it his responsibility to make sure it got fixed after he already was notifying us, I don't understand.
Vanguard is retiring the regular mutual accounts and encouraging everyone to upgrade to a brokerage account by assessing everyone a $20 per fund fee if they don't upgrade. vanguard released a training video that basically said they don't care if they lose customers over this, which I guess is fine, but emphasized how they would still make money if people transfered out so long as they were using vanguard specific funds which just seemed. I donno. A little weirdly mask off to me.
There were a lot of strange anti-customer practices in general, like the attitude is very much that they do not care. Oh my God, it literally takes an act of god to get a supervisor on the phone. If someone requested a supervisor, I would just tell them "I can do this or this for you" and then stop talking to them until they agreed to one of those options because I KNEW my supervisor would NEVER get on the line. Getting a research team to look into anything was a HIGHLY DISCOURAGED LAST RESORT I remember my team lead saying "it costs vanguard $90 to do this, never do this unless indicated to" and of course it rarely was. On the retail side, they don't want you to send paper forms, but some things can only be done via paper form, e.g. losing access to your account online, which encourages employees to say they will send you the form and then just not do it.
Basically, if you kind of know what you are doing so you don't need customer service, and if nothing ever goes wrong (like Vanguard misapplying money into your account) you will probably be okay. If you ever need anything explained to you or you ever needed anything fixed, you were seriously rolling the dice, there was no telling how many times you would need to call back to get someone who knows enough to help you and was willing to hurt their stats to get it done.
And we had no secure email server to receive documents so people had to fax things in. The number of times I heard people who were transferring their deceased loved one's assets into their own name tell me it only took a few days at Fidelity or whatever, but we were taking months, omg.
Anyway thanks for listening to my long rant. There was such a general anti client vibe there that's hard to describe. I felt like I was working for an ISP sometimes, because management just DIDNT CARE AT ALL about their clients. Omg we weren't allowed to call people back on the 401k side. You waited 2 hours to talk to me and got disconnected going through a tunnel? Your problem! Stuff like that. Arbitrary stupid decisions that make it frustrating. I don't know if this helps, I hope so.
I can't seem to find this anywhere else and still see the service on their website. Do you have a reputable source that this came from?
Yes, this came from vanguard I’ve seen direct communications and checked before making the video.
Could this just be a UK thing ?
@@jwsdrums10 yes it’s the uk arm
My Vanguard exposure has been a disaster the last two years. Just as well I have no plans for it for another 5 or 10 years.
So even though investing is for the long term, your Vanguard exposure 'has been a disaster' over the last 2 years. Hmmm.
@@roconnor01 do you think two years is a long time for investing? I have been in it for much, much longer than that. You can’t have watched any of the finance channels on YT without them explaining that investing is a long term thing. Then again, I wouldn’t take money advice me, I bought Deliveroo at the IPO. 😬
So when things recover where will you be ?
U been helping Damien 😊 get back to work 😂
😂
I think they are getting rid of the service because markets are down. If I was a "financial adviser," I'd want markets going up, so I can make my 'clients" money and say, "See what a good job it is I'm doing. Aren't you glad you signed up and paid .78% of your portfolio to me every year?" When markets are tanking, it much harder to find safe haven investments.
I don’t know, a good adviser explains to clients that there will be periods like this on a long term journey.
I was offer this service. Hard pass.
My BIL is a financial advisor. He is a salesperson.
Hard pass giving my money to salespeople tonput my money into funds
We’re short the 1/2 a million needed for these services. We’re not far off though but apparently we’re not part of the group. Lol
Jack Bogle would be sick
Seem to be heading in a different direction don’t they.
I think they underestimated how much their customer base has grown to include the younger demographics. This younger demographic is more massive and thus will overwhelm Vanguard's services, which was intended for the older folks, who will be leaving the work force soon.
There's also a large sector of people who are just scared to leave their money in banks again, because of their predatory nature. They charge fees for everything, even when your money is just sitting there doing nothing. I haven't even factored in inflation as yet. Vanguard fees, amount to about 1% in charges. Younger people are realizing that fees matter a lot, hence they'll flock to Vanguard. There is already trillions of dollars in Vanguard's accounts, and so there comes a point when it can get impractical. The government needs to provide safe alternatives.
Retiring boomers are kicking mutual fund companies in the teeth at the moment, and for the next 30 years.
If I had 100k would I need
'financial advice '? 🤷♂️
The fact you asked that question means yes, you probably would.
100k isn't going to last you a lifetime so yes, you should get financial advice on what to do with it.
Probably, yes - but why pay someone $1,000 every year on your 100K for advice in a fund family based on low fee index funds? That's the point.
@@SirHargreeves
Learning towards a rhetorical question.
Personally, no I wouldn't.
@@gazza2933 My point is that 100k is not enough to retire on. You could maybe get 4k a year income if it’s invested. This comment itself is financial advice.
greed is not success its the reason for poverty
Vanguard has gone downhill. Its customer service is horrendous. We are planning to move our portfolio to another brokerage this year. I suggest everyone do the same.
Their service was always lousy. Fidelity sucks for other reasons. Who else? I hate Schwab.
Depending on how much you interact with Vanguard, if you call them twice a year because you are buying and holding, maybe not such a big deal.
Their website is not efficient, but when I wished to trade stock during periods of high volatility, their site worked. They are the walmart of investing, not glamorous, but low prices.
@@briangasser973 Minimizing compounding costs matter a lot to the final result.
I’m one of those whales they hoped to land. The thing is, all I did was dump money into Vanguard’s VFIAX fund which tracks the S&P500.
I like Vanguard because it’s SIMPLE. I don’t take financial advice anymore and haven’t for decades. Not because I’m a financial genius. Quite the opposite really. I just realized the distance between the ass I needed to kick for being stupid was a lot closer that way.
My relatives all pay expensive financial planners. I can't believe they waste money like that. My wife's aunt was all "he sends me flowers every Christmas!" I said: "He should be buying you a new car every Christmas with what you're doling out to him." It's insane.
@@bb5242 Exactly. And your relatives are lucky if their planners actually plan their finances to your relatives' benefit. Too many "financial planners" plop their clients' money into unprofitable investments for a kickback. They'll still make clients money but at a significantly lower rate than honest financial planners do or even the clients just putting money into a good index fund.
Hey Eric, I was wondering, I keep hearing about a 60/40 split but you are all in equities?!?!
@@RobertJohnson-lb3qz I'm ALWAYS all in on equities. The stock market goes up and down all the time. But no matter how far it goes down it always recovers then goes up again. I will only liquidate when I see mushroom clouds on the horizon.
@@EricDaMAJ Good one.🤓 It would definitely simplify my situation if I were all in on VTI. I’ve just started to study a couple of Bogle inspired books to eventually manage it myself. Small fee and all, it’s still painful especially in a shaky, sometimes descending market.
But is the fund you chose better than VTI?
Vanguard please get rid of ESG! ESG allowed Vanguard to be released of fiduciary responsibilities from managed IRAs and 401ks. Before ESG the bill passed by Trump (yeah I know) required all fiduciary responsibilities to fall on institutions managing retirement.
Jeez… Please tell me VTI is totally out of esg…
I'm totally fine without any advice service. If they have an advice service, they would be pressured by the WEF and others to advocate for ideological based investing. Certainly, a great move to abandon ESG. Vanguard needs to adhere to the vision of John Bogle.
Vanguard just told those interested in the WEF's criteria for investing to pound sand - they aren't interested in the social justice B.S.
This whole story is untrue.
Nope it’s absolutely true. In the UK we are talking about, not the US.
When you call your own show rubbish you smear dirt on the nose of every viewer.
Ermmm…ok. 😃