Experimenting with a Financial Advisor, Part III

To read part I go here and part II go here.  So I just had my second consultation with my Vanguard advisor and it was pretty short.  Not sure if I learned anything groundbreaking or was super impressed by their presentation, but I decided to enroll with them.  I got a little more info on their fee structure, because I do want to clearly understand what and how much I’m paying.  So as mentioned in my previous posts, Vanguard Personal Advisor Services (VPAS) charges 0.3% of assets under management (AUM).  This is in addition to the expense ratio (another fee) of the funds they use.  They only use index funds to construct your portfolio, no individual stocks or bonds and that’s in line with their investing philosophy.  Altogether, Ted estimates my total fees are going to be a little under 0.5% of AUM charged yearly and pro-rated quarterly.  So that’s roughly about $500 for every $100,000 you let them manage.  As I type this I hope the service is worth the money.  Ted did say that I can make an appointment with him anytime I want.  Nice.

A little surprisingly to me, they advised I invest 100% in stocks right now, broadly diversified through US large and small/med cap stocks and international stocks.  Dang not even 1% in bonds?? I guess I’m a little surprised since the stock market’s been pretty volatile so far, especially in the new year.  But I guess not too surprising since bond returns have been so low and the feds have just increased rates and probably will continue to do so if the economy supports it, making bonds purchased now worth less over time.  Also, I’m still a good 30 years out from retirement to weather the volatility.

My current and recommended asset mix by VPAS

So if you’re in your 30s and have a high risk tolerance then it seems like investing heavily stocks might be the right asset allocation for your retirement portfolio.  Saved you the 0.3% fee too.  You’re welcome. ?

Leave a Reply

Your email address will not be published. Required fields are marked *