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So, M* is having its much touted annual MIC 2023 conference from April 25-27, 2023 in the McCormick Place, Chicago. And they couldn't get a Rep from Vanguard (and from Blackrock)? This is just a chit-chat between 2 M* staffers.
MFO representatives also attend these MICs and @David_Snowball has given reports on the past. What is the MFO team at MIC 2023?
Dan Ivascyn, Rick Rieder, Rajiv Jain, Daniel O'Keefe, Aswath Damodaran, Liz Ann Sonders, and Lawrence Summers (among others) are scheduled to participate in the 2023 Morningstar Investment Conference (MIC).
Edit/Add: Joel Dickson from Vanguard (Global Head of Advice Methodology) and Philip Green from BlackRock (Head of Global Tactical Asset Allocation Team) will both participate in "The 60/40 Portfolio..." session on April 26.
Lucas: Customer service complaints have always been sort of a feature of Vanguard’s history. If you go back to the days when Bogle led the firm—this is a point that I made at that conference—there were lots of complaints over the years about Vanguard’s customer service. I like to compare Vanguard to, say, those of you who shop at Aldi. If you go to Aldi, you have your quarter, you get your grocery cart, you bring your own bags or you put it in boxes. I would say Vanguard has got more customer service ethos than that, but it is something where it’s not necessarily been known for high-touch customer service. And it is trying to become a leader in customer service and to really improve its technological offer.
So, what Vanguard is trying to do is, because it has experienced over the course of its history and continues even in this first quarter, experienced such asset growth, it’s trying to enable investors to do as much as they can as simply as they can online, so without talking to a human advisor. And they’ve really made investments in technology. They’ve modernized their technology platform, and they’ve seen increased resiliency and increased customer service scores.
The big snafu they made in 2020 was—this is Vanguard, they’re always thinking about investor assets and costs and trying to save money on behalf of investors—so, in 2020, when the market turned down, they stepped back and they looked and they saw that historically when the market falls, client communications sort of fall off a cliff. So, they actually slowed their hiring of customer service representatives right at a time when—in fact, what happened with the lowering of interest rates is that investor demand shot up and that caused, I think, significant wait times and lots of frustration. They have normalized that, and I think are committed to sort of being a little bit more, call it, I don’t know if cautious is the right word, but they’re going to be more prone to overspend and I think on what they expect they will need to try and improve customer service. In talking with Vanguard leadership, they feel like they’ve heard that and they’re trying to become known for best-in-class customer service. That is a goal of theirs, and they say they’ve made progress in that. It remains to be seen. We hear a lot of comments from that here at Morningstar. But the big thing always to keep in mind is that Vanguard serves a lot of customers. So, you’d expect that some of them would be frustrated. And I’ve heard both success stories and stories of frustration, and we’ll see if the stories of frustration are minimized over the coming years.
Seriously, Vanguard has to catch up to where they were in terms of customer service. There is no replacement to having human touch in communication of their needs. Having a robust interface on the website is one thing, but not everyone can fully take advantage of that feature. So Vanguard still have a way to go in order to catch up with Fidelity and Schwab.
"In talking with Vanguard leadership, they feel like they’ve heard that and they’re trying to become known for best-in-class customer service. That is a goal of theirs, and they say they’ve made progress in that. It remains to be seen. We hear a lot of comments from that here at Morningstar. "
There have been customer service issues at Vanguard for years. The firm was aware of these issues yet customer problems continue. I seriously doubt Vanguard will be able to provide anything resembling best-in-class customer service.
VG advisor is their glorified VG PAS ROBO-advisor. Apparently, a call center person calls about the allocation recommendations that the computer spits out.
I fully expect that as a low cost approach. Think VG want their clients to move up to the next level of advisory at higher fees. Schwab has their robo-based advisory and one of our poster uses it to run part of his portfolio.
VG advisor is their glorified VG PAS ROBO-advisor. Apparently, a call center person calls about the allocation recommendations that the computer spits out.
That's a cheap shot. (I'm not sure if the pun is intended or not; funny what the subconscious generates.)
PAS is a hybrid service (0.30%) that provides unlimited handholding to go along with their Digital Advisor (0.20% standalone) allocation recommendations.
No personal experience. I suggested Vanguard to a couple of people who are using it now, so I get a bit of feedback that way. They are primarily using it for asset and cash flow management. I don't know how much in the way of general financial planning Vanguard provides.
I've been with VG for a long time. They are for the "do it yourself" investor. IMHO If you want assistance they're not for you. I've never had problems.
It used to be (until 2015 or so?) that Vanguard would provide Voyager Select and Flagship customers with a free financial plan. After reviewing the basic survey that a customer filled out, a CFP would discuss the customer's situation over the phone for about an hour. There would be shorter followup conversations, before and after the plan was prepared.
The plan was not cookie-cutter, at least in the sense that it provided for keeping a lot of non-Vanguard assets, both individual stocks and funds. The plan offered suggestions on how to deal with specific (overweighted) individual stock holdings. Vanguard said it had tools to help the DIY investor implement the plan on their own, or that Vanguard could manage the portfolio for the investor.
I didn't mention specific financial planning because this particular service was discontinued years ago and I don't know whether a service like this is integrated into Vanguard's current service offering.
I didn't mention specific financial planning because this particular service was discontinued years ago and I don't know whether a service like this is integrated into Vanguard's current service offering.
So much has changed at Vanguard post-pandemic, and their phone service has declined. I still recall being the Voyager Select and Flagship customers. I will give them a call later in the evening 8am - 8 pm, EST) and report back.
At present, there is little details on their plan. Fidelity has their advisory plans, but we are unfamiliar with their Fidelity Flex Funds, and the level of planning that Fidelity offers.
Several fund families now have 0% ER funds for advisory accounts only. Fido version is Fido Flex, TIAA version is class W, etc. I am sure that the firms get some cut from the advisory fees although this isn't visible to clients.
Fido also has retail Fido ZERO funds where the ER is 0% but Fido says that it uses security lending extensively to recover costs and cheaper indexes from related Geode Capital - it was started by Fido, then only controlled, finally spun off. https://en.wikipedia.org/wiki/Geode_Capital_Management
Both Fido and Schwab offer extensive advisory services through affiliated advisors. These advisors use firms' platforms and have other contractual agreements. I think that Vanguard got out of this type of advisory business years ago.
Using solely Flex funds without other ETFs and non-Fidelity funds will not work for us. Fidelity will make their money from their 0.35%-1.0% advisory fee. They have made several cold calls, but the timing was premature. I will reach out to them again for details on their level of planning.
Fidelity Flex® funds are a lineup of Fidelity mutual funds that have zero expense ratios, and include proprietary active and passive funds. Flex funds are currently available only to certain fee-based accounts offered by Fidelity, like Fidelity Go®. Unlike many other mutual funds, the Flex funds do not charge management fees or, with limited exceptions, fund expenses. Instead, a portion of the advisory fee you pay is allocated to access the Flex funds in which your account will be invested.
They're generally good funds. Be advised that Fidelity is still tinkering with its lineup. For example, Fidelity recently shuttered the Intrinsic Opportunities Fund (FFNPX), a MCV offering. It looks like Fidelity decided to change its lineup from mostly actively managed funds to mostly indexed funds. Here's the original lineup (CityWire PR) and the current lineup (M* search by name)
One of the few actively managed funds is FJTDX. It is managed by the same team as the retail fund FCNVX, with similar ultrashort duration, though the actual holdings while similar don't seem to be identical. That is, these funds are not clones. Nevertheless, performance difference seems to approximate the difference in ERs, i.e. 0.25%. Here's a Fidelity comparison page for the two funds.
The slightly better performance of the Flex fund is somewhat illusory. As noted above, the fund is getting paid management fees out of your pocket. They're just getting laundered through advisory service charges. So the management fees aren't subtracted from the performance figures of the Flex funds, making the Flex funds look a little better than they actually are.
It's a matter of perspective - how you want to allocate the advisory fees in your mind - do they all go for advisory services (when you compare advisory fees from different providers), or do you mentally reduce the advisory fees and add that to the Flex funds' ERs, thus reducing the funds' performance numbers?
Finally, with respect to Vanguard changes, Vanguard dropped the free financial plan offering years before the pandemic. I'm just not sure of exactly which year.
Comments
MFO representatives also attend these MICs and @David_Snowball has given reports on the past. What is the MFO team at MIC 2023?
Dan Ivascyn, Rick Rieder, Rajiv Jain, Daniel O'Keefe, Aswath Damodaran,
Liz Ann Sonders, and Lawrence Summers (among others) are scheduled
to participate in the 2023 Morningstar Investment Conference (MIC).
MIC Agenda
Edit/Add:
Joel Dickson from Vanguard (Global Head of Advice Methodology)
and Philip Green from BlackRock (Head of Global Tactical Asset Allocation Team)
will both participate in "The 60/40 Portfolio..." session on April 26.
There have been customer service issues at Vanguard for years.
The firm was aware of these issues yet customer problems continue.
I seriously doubt Vanguard will be able to provide anything resembling best-in-class customer service.
So where are their human touch when they want to do more advisory services?
That's a cheap shot.
(I'm not sure if the pun is intended or not; funny what the subconscious generates.)
PAS is a hybrid service (0.30%) that provides unlimited handholding to go along with their Digital Advisor (0.20% standalone) allocation recommendations.
Think VG want their clients to move up to the next level of advisory at higher fees.
Here's Vanguard's table of advisory services. All are 0.30% or less. Even at the $5M+ level.
https://investor.vanguard.com/advice/compare-investment-advice
The plan was not cookie-cutter, at least in the sense that it provided for keeping a lot of non-Vanguard assets, both individual stocks and funds. The plan offered suggestions on how to deal with specific (overweighted) individual stock holdings. Vanguard said it had tools to help the DIY investor implement the plan on their own, or that Vanguard could manage the portfolio for the investor.
I didn't mention specific financial planning because this particular service was discontinued years ago and I don't know whether a service like this is integrated into Vanguard's current service offering.
At present, there is little details on their plan. Fidelity has their advisory plans, but we are unfamiliar with their Fidelity Flex Funds, and the level of planning that Fidelity offers.
Fido also has retail Fido ZERO funds where the ER is 0% but Fido says that it uses security lending extensively to recover costs and cheaper indexes from related Geode Capital - it was started by Fido, then only controlled, finally spun off. https://en.wikipedia.org/wiki/Geode_Capital_Management
Both Fido and Schwab offer extensive advisory services through affiliated advisors. These advisors use firms' platforms and have other contractual agreements. I think that Vanguard got out of this type of advisory business years ago.
They're generally good funds. Be advised that Fidelity is still tinkering with its lineup. For example, Fidelity recently shuttered the Intrinsic Opportunities Fund (FFNPX), a MCV offering. It looks like Fidelity decided to change its lineup from mostly actively managed funds to mostly indexed funds. Here's the original lineup (CityWire PR) and the current lineup (M* search by name)
One of the few actively managed funds is FJTDX. It is managed by the same team as the retail fund FCNVX, with similar ultrashort duration, though the actual holdings while similar don't seem to be identical. That is, these funds are not clones. Nevertheless, performance difference seems to approximate the difference in ERs, i.e. 0.25%. Here's a Fidelity comparison page for the two funds.
The slightly better performance of the Flex fund is somewhat illusory. As noted above, the fund is getting paid management fees out of your pocket. They're just getting laundered through advisory service charges. So the management fees aren't subtracted from the performance figures of the Flex funds, making the Flex funds look a little better than they actually are.
It's a matter of perspective - how you want to allocate the advisory fees in your mind - do they all go for advisory services (when you compare advisory fees from different providers), or do you mentally reduce the advisory fees and add that to the Flex funds' ERs, thus reducing the funds' performance numbers?
Finally, with respect to Vanguard changes, Vanguard dropped the free financial plan offering years before the pandemic. I'm just not sure of exactly which year.