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Meeting With a Financial Planner From Vanguard Flagship Services

This article was written by in Financial Advice and Advisers. 20 comments.

On Tuesday, I had a phone consultation with a Certified Financial Planner from Vanguard. It was an initial meeting, wherein we talked about each other, focusing on my goals. I tried to take into account many of my own suggestions for working with a financial adviser, but in preparing for the meeting, I realized — well, I’ve known this, but nothing brings an issue more to the front of the mind than being required to think about it — that I’m not sure about the next steps I’d like to take with my life.

I’ve been running Consumerism Commentary since 2003. While I started it as a hobby and an opportunity to learn how to manage my own finances, it has grown into a business of its own, allowing me to leave my unsatisfying day job and work for myself. I don’t see myself doing this forever. When looking at the long-term possibilities, there is a significant opportunity to grow this business, but I also need to ask myself if that’s the right direction for me in the long term. I’m not particularly interested in writing a book, like many other personal finance bloggers have done. I love writing and building communities, and that’s been the core of what I’ve been doing since the early 1990s; I was just lucky to apply these interests to personal finance at the right time — a time I needed it from a personal perspective and a time at which the world would suddenly show a growing interest in independent financial voices.

It’s important to know and understand life goals before talking with a financial planner in order to devise a plan that matches those goals. When I left the non-profit arts management world in 2001, my dream was to re-enter when I was in a better financial situation. And while I thought it was an impossibility at the time, I liked the thought of starting a foundation if I ever found myself in the position to do so, never thinking I would have that opportunity. Today, I’m not convinced that is the right path for me. For now, I plan on continuing what I’ve been doing, but working harder to identify where I’d like to see myself in twenty years.

Of course, people set goals all the time, only for life’s circumstances to move in a different direction. All the best planning in the world can’t take into account changing interests and desires. Regardless of my contemplation over goals, I met with Vanguard’s financial planner. I came away with a good strategy that I can use for my investments while mapping out my future. He also helped me understand why, given the option and a desire to have tax-efficient bonds in your portfolio, it’s better in the long term to have bonds in accounts like 401(k)s and any stock funds in taxable accounts, the opposite of what I thought would be a good tax strategy. This is an idea I’ll share in a future article. Update! Read more about the investing strategy I discussed with the Vanguard financial planner.

The financial planner I spoke with is not paid by commission. He understood I subscribe to the index fund philosophy, and recommended only index mutual funds — and only four specific funds for the right diversification and asset allocation that will allow me to likely perform better than a savings account, invest for the long-term, and give myself a cushion to think about the next steps in my life.

Here are some interesting articles I came across this week, including one of my own published elsewhere.

Earlier this week, I wrote an article for Forbes about start-up entrepreneurs looking for capital funding. In some instances, starting a small business can require some money up front, and I’ve offered some suggestions for coming up with the funds. I’ll be writing for Forbes more often, and I’ll point out when those articles are published. On the same topic, don’t miss last Sunday’s podcast featuring a venture capital firm targeting entrepreneurs within Generation Y.

On Monday, Briana from 20 and Engaged hosted the latest edition of the Carnival of Personal Finance, which included last week’s guest article that asked, Could you Survive at the Poverty Line? This guest article from Your Finances Simplified attracted some media attention; the author will be appearing on WINA Morning News, a radio show in Charlottesville, Virginia, live at 7:45 AM on the east coast. The radio station also streams online, so you can listen if you’re outside of the broadcast area.

Sam from Financial Samurai notes that credit card usage has increased. For the last few years, a good percentage of American consumers put away their credit cards in what appeared to be a New Frugality. Experts asked each other whether the recession would breed a new generation whose philosophy was rooted in frugality.

While it’s a generalization, it’s fair to say that those who lived through the Great Depression had a good understanding of saving and buying what they need without relying on credit. The recession might have fostered a new generation with similar ideals, and many authors we’ve featured on the Consumerism Commentary Podcast have expressed their belief in a fundamental long-term shift in attitude, but that doesn’t seem to be the case. People have been returning to credit whenever it is available.

The Jenny Pincher describes the difference between making money and becoming wealthy. It’s all in the mindset. I agree with the article, but I like to step back once in a while and look at the big picture. Whether making money or becoming wealthy, you should have goals, and these goals should be in your mindset at all times. As I mentioned above, I’m working on defining my own long-term life goals, but I know that any goal itself is not related to money. Money is a tool to help put goals within reach or extend my goals to have a larger effect, but it should not be a life mission to die with the biggest bank account balance.

Updated December 23, 2011 and originally published December 17, 2011.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 20 comments… read them below or add one }

avatar 1 Anonymous

Sounds like exciting stuff talking with the Vanguard CFP about some the future! I’ve never met up with one, but I can imagine some of the fun discussions on one’s dreams and aspirations we could have.

Hope all is well!

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avatar 2 Anonymous

I had a phone meeting with a Vanguard CFP this year during the process of moving my 401k money into a rollover IRA. He was able to discuss any aspect of my financial life. Very helpful.

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avatar 3 Anonymous

I’m happy to hear that the CFP was paying attention to asset location (i.e., tax-efficient placement of funds between accounts). I wasn’t honestly sure if Vanguard CFPs paid attention to that or not when proposing a portfolio. From what I’ve seen via correspondence with readers, most advisors overlook it completely.

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avatar 4 Luke Landes

I can’t say with any surety that he would have brought up allocation for tax efficiency if I hadn’t mentioned it first, but he was comfortable talking about the topic and offered insight I hadn’t considered. I think knowing the right questions to ask and steering the conversation in the right way can help a CFP do his own job better.

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avatar 5 Anonymous

Ah, I see.

And I completely agree re: helping to steer the conversation.

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avatar 6 Anonymous

One of the main things I wanted to get from my conversation was a handle on asset allocation. At first I was a bit frustrated with the CFP since he seemed to be avoiding the topic. I soon came right out with the question (or perhaps it was my proposed AA, I forget which) and he lit right up and said the CFPs were only allowed to get into that if the customer brought it up first. This was a bit of a surprise as I thought the AA was somewhere near the top of the list in importance.

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avatar 7 Anonymous

I’m not sure if I mentioned this on your blog, Mike, but I would say the reason most advisers don’t discuss asset location with their clients is because clients generally don’t get it. A lot of clients tend to look at each account separately and don’t take all their accounts together as one portfolio. Then they bring up questions like, “Why is this account doing so much better?” And often they don’t really listen to or comprehend the answers. I’m not saying clients are dumb, but if they understood asset location they probably wouldn’t use an adviser. In this case, doing what is in the client’s best interest may not be the smartest financial move but it is the smartest psychological move (keeps them from harming themselves).

If you understand that all your accounts form a single portfolio, then mentioning asset location will likely get your adviser’s attention and they’ll be happy to help you with it.

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avatar 8 Anonymous

Great insight, Paul. Thank you.

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avatar 9 Anonymous

Just noticed that you describe Asset Allocation as allocating a portfolio across multiple accounts. When I speak of Asset Allocation I am talking about what that portfolio consists of (percentage stocks vs binds, etc.). Distribution across accounts is secondary, especially if you only have one account!

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avatar 10 Anonymous

Mike, I read your retirement and tax books this year. Excellent, and I recommend them to anyone who needs to get up to speed quickly on those topics. I read the Bogleheads’ and Jim Otar’s retirement books as well, on your recommendation. Thanks!

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avatar 11 Anonymous

I’m happy to hear you enjoyed the books! Thank you for taking the time to let me know.

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avatar 12 eric

Can I ask you what four index funds you talked about? I’m in the stages of planning my asset allocation as I just did a rollover to Vanguard. The topic has been on my mind lately.

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avatar 13 Luke Landes

Sure. I still plan to do another post in greater detail. I’m looking at the Total Stock Market Index, International Stock Index, Intermediate Term Bond, and New Jersey Tax Exempt Bond.

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avatar 14 eric

Thanks for the reply! Looking forward to the post then. I’ve heard recommendations for the Intermediate Term Bond fund elsewhere and wondered why specifically intermediate vs. Total Bond fund. Hopefully, we can get into that with your upcoming post!

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avatar 15 Anonymous

I have used Vanguard CFP’s for about 5 years, No commission, no bravado, just helpful advice.

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avatar 16 Anonymous

Does it cost anything to talk to a Vanguard planner?

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avatar 17 Anonymous

For investors with < $50,000 in assets at Vanguard, the cost is $1,000. For investors with $50,000-$500,000 the cost is $250. For clients with $500,000 and up, it's free.

See here and here for more info.

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avatar 18 Luke Landes

Just want to note that $250 or $1,000 is the cost of a full financial plan. If all you want to do is talk to a CFP at Vanguard, they might give you one initial consultation-type call for free — or at least a lower price. That’s the “Ask a CFP professional” listed on this page.

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avatar 19 Anonymous

Does anyone know often are you allowed to receive the full Financial Plan from Vanguard? That is, can you update the plan annually? Once every 3 years?

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avatar 20 Anonymous

You can get them as often as you want. But the offer for a plan at a reduced fee (that is, for $250 or $0) is for one plan per 12-month rolling period.

See here then click “Check our fee schedule.” The information is in the footnotes.

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