A couple of months ago, I agreed to a phone call with my Personal Capital advisor. I’m a huge fan of their free software, which breaks down asset allocation, investment fees, and expenses. I had a list of questions ready for the advisor, and was excited to get some feedback on my asset allocation. I was very candid about being a DIY investor who was seeking feedback but would not be interested in a long-term advisory relationship.
To my disappointment, the call was an extended sales pitch. While I received information about how Personal Capital might handle my assets, I got no useful feedback on my current portfolio and no answers to my prepared questions.
“The secret to happiness is low expectations”
Despite a suboptimal initial experience, I signed up for a similar complimentary 45 minute phone call with a Vanguard Financial Advisor. I entered with low expectations, disclosing from the start that I’d not be interested in a long-term advisory relationship, yet I was pleasantly surprised by the turn of our conversation. There was no hard sell. The advisor allowed me to direct the conversation from the start, asking if I had questions and frequently following up to ensure he’d adequately addressed and correctly understood my concerns. I received valuable feedback in several areas: he gently suggested I might have an overly aggressive equity allocation and advised transitioning to 80/20 sooner rather than later; suggested we build up our taxable account to rely on as a bridge to retirement preferentially to taking early 72(t) distributions; informed me that our pooled 401k would need to be separated in order for my wife to take early 72(t) distributions; and suggested lowering our REIT allocation and substituting currency-hedged international bond funds for TIPS. I could envision him as a partner on the road to financial independence.
While I intend to remain a DIY investor, I was impressed by his willingness to provide an example of the value he’d impart. This loss leader approach was much more valuable than the hard sell I received from Personal Capital. I realize that this may be less a reflection of corporate culture than the ability to be a good listener. Variation in interpersonal skills could account for the entire difference. Despite my enthusiasm for both institutions, I entered this experiment with a strong bias favoring Vanguard. So take it all with a grain of salt.
Financial Literacy for The Newly Minted Physician