For the past two years, the giant
mutual-fund firm Vanguard Group has been testing an adviser service that
combines aspects of Web-based advice and investment-modeling algorithms with
traditional human contact. It is called Vanguard Personal Advisor Services, and
a company spokeswoman says it will be launched to all Vanguard clients sometime
this spring. The move comes as other asset managers are sprinting into the hot,
tech-driven area of the financial-planning business. Charles
Schwab Corp. in March launched Intelligent Portfolios, an automated
Robo advisers are online services
that suggest custom portfolios for investors based on math formulas. Vanguard’s
service—combining input from both a “robot” and from a human in the form of a
salaried Vanguard adviser—is a combined approach that some other money managers
Heading up the project at
Vanguard is Karin Risi, 42 years old, the head of the Malvern, Pa.,
company’s retail investor group. The service is tiered, and tied to an
investor’s net worth. The more money the investor has in the service, the more
personal attention he or she gets from an adviser. The fee is an annual 0.3%
based on a client’s investment size. Clients with portfolios larger than $5
million will pay a lower fee. Ms. Risi talked about Vanguard’s efforts in a
recent interview at the firm. Here are edited excerpts:
WSJ: How is what you’re offering different from a “robo adviser”?
MS. RISI: It’s not a robo adviser, but there are similarities.
I view it as more of a hybrid. We certainly have the dedicated adviser who
works on a continuing basis with a client and does dedicated financial
planning, but it’s powered by a technology platform.
WSJ: Why didn’t Vanguard just go the technology route like other
MS. RISI: I think in short we believe in the value of the
[human] adviser. We’ve been advising clients for nearly 20 years, so we have
seen, through multiple market cycles, the value of the adviser. We still think
that’s really important to marry those two. The desire was to get the scale and
bring a lower-cost opportunity to many more clients.
WSJ: How do you think some clients will feel about having less personal
contact with an adviser?
MS. RISI: I think we’ll see. Many of our clients will have a
one-on-one experience. In many cases, they might be quite satisfied with the
Web experience, with the opportunity to interact with a mobile device or
through a Web video, on a tablet or a smartphone, with an adviser who has
access to their accounts—that might be satisfactory.
WSJ: What do you think of the competitiveness in the financial-advisory
MS. RISI: It’s increasing. There are traditional advisers,
there are large fund companies like Vanguard that have multiple advisory
offerings that range the continuum, and then there’s the emerging category of
all-digital advisers. I think, ultimately, that’s all good for investors. It
offers choice and allows different investors to gravitate toward the type of
advice that’s best for them.
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