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Here’s The Advice You Get From Vanguard’s New Robot-Human Hybrid
As Ted's linked article mentioned, Vanguard's Target Date Funds seem to be composed of these very same funds and age appropriate percentages. These target date funds automatically re-balance and do this at a lower cost and lower minimums.
For a 35 year old, I selected Vanguard's 2045 Fund (VTIVX) which has an ER of .19% and minimum of $1K:
The Robo service requires $50K and costs (.5%) and here's its portfolio:
@bee, sorry that I missed your earlier question. I think they are similar in the portfolio makeup. Question is how frequent do they rebalance? Also which part if robo (algorithms driven) and which is human to justify the 0.5% fee?
Schwab's has similar product, Intellegent Portfolio. I need to look into it to better understand their differences.
Not sure I understand the question . If you think its too few bonds I sort of agree but there are plenty of people that age who are 100% in equities. If you think its too many bonds I would argue that its always good if a bear market occurs to have a source of funds to add to equities
@bee posted: "The Robo service requires $50K and costs (.5%) and here's its portfolio"
@Sven posted: "Also which part if robo (algorithms driven) and which is human to justify the 0.5% fee?" +++++++++++++++ just to clarify, the fee is 0.3%, not 0.5%
90% equities? My 'inner-robot' is screaming 'Danger Will Robinson'....
Someone help me out here --- I guess I just don't get the "robo-adviser" fad... Seems more like marketing the sizzle, rather than delivering the steak. These retail brokerages are demonstrating they are "doing something", so they can seem to show they are adding value. Is a robo-adviser for investors too lazy/stupid to rebalance their own portfolio? If so, is an investor who is too stupid to rebalance, someone who should be 90% exposed to the equity markets?
15-16 years ago, would Vanguard's fully human advisor have provided the exact same allocation recommendation to a 35-year-old? If so, how does adding a "robot" improve things. Frankly, I would be more concerned with any broker who suggested a 90% stock allocation in 1999 -- when it would have failed so miserably -- then invests (how much) in a robo-program which delivers the same result in the 6th year of a bull market..
By the way, are Vanguard robo-human advisers cyborgs/bionic? Are they better than the fully human advisers? Better, stronger faster?
Pure robots are definitely faster - the data are "untouched by human hands".
The impression I get of mass marketed portfolio management services (e.g. Fidelity Portfolio Advisory Services) is that they have a few different portfolios (possibly comprised of a gazillion funds, likely built with "robotic" assistance), and they match you to the closest portfolio. For their 1% fee or so, they provide some handholding ("stay the course"), and talk to you.
Vanguard provides a financial plan, and I'm confident uses the "robotic" tools to allocate investments based on longer discussions with you, and what your needs and time frames are. A bit less cookie cutter. John Markoff talks about AI vs IA (intelligence augmentation); Vanguard would appear to be taking the latter approach.
Sorry not to be clear; I would never advise anyone, even conservative and risk-averse, provided they would not OCD over things every day or week, to be in anything but 100% equities at that age. All contingency funds, whether dry powder or emergency or nearterm needs etc etc, should be in cash (in this day and age). Everything else in equities. None of this balanced stuff at that age. Sez me, a parent to two young-adult investors.
Comments
For a 35 year old, I selected Vanguard's 2045 Fund (VTIVX) which has an ER of .19% and minimum of $1K:
The Robo service requires $50K and costs (.5%) and here's its portfolio:
Am I missing something here?
Schwab's has similar product, Intellegent Portfolio. I need to look into it to better understand their differences.
@Sven posted: "Also which part if robo (algorithms driven) and which is human to justify the 0.5% fee?"
+++++++++++++++
just to clarify, the fee is 0.3%, not 0.5%
Cheers
My 'inner-robot' is screaming 'Danger Will Robinson'....
Someone help me out here --- I guess I just don't get the "robo-adviser" fad... Seems more like marketing the sizzle, rather than delivering the steak. These retail brokerages are demonstrating they are "doing something", so they can seem to show they are adding value. Is a robo-adviser for investors too lazy/stupid to rebalance their own portfolio? If so, is an investor who is too stupid to rebalance, someone who should be 90% exposed to the equity markets?
15-16 years ago, would Vanguard's fully human advisor have provided the exact same allocation recommendation to a 35-year-old? If so, how does adding a "robot" improve things. Frankly, I would be more concerned with any broker who suggested a 90% stock allocation in 1999 -- when it would have failed so miserably -- then invests (how much) in a robo-program which delivers the same result in the 6th year of a bull market..
By the way, are Vanguard robo-human advisers cyborgs/bionic? Are they better than the fully human advisers? Better, stronger faster?
The impression I get of mass marketed portfolio management services (e.g. Fidelity Portfolio Advisory Services) is that they have a few different portfolios (possibly comprised of a gazillion funds, likely built with "robotic" assistance), and they match you to the closest portfolio. For their 1% fee or so, they provide some handholding ("stay the course"), and talk to you.
Vanguard provides a financial plan, and I'm confident uses the "robotic" tools to allocate investments based on longer discussions with you, and what your needs and time frames are. A bit less cookie cutter. John Markoff talks about AI vs IA (intelligence augmentation); Vanguard would appear to be taking the latter approach.
He was on CSPAN a week ago, talking more generally about robots replacing humans:
http://www.c-span.org/video/?327812-5/washington-journal-john-markoff-robots-manufacturing