PDF

Vanguard to Offer Free Investment Advice

The Vanguard Group and Financial Engines have inked an alliance that will allow retail investors of Vanguard funds to receive portfolio investment advice at no charge. Vanguard will initially offer the service in the second quarter to participants in emplo

The Vanguard Group and Financial Engines have inked an alliance that will allow retail investors of Vanguard funds to receive portfolio investment advice at no charge. Vanguard will initially offer the service in the second quarter to participants in employer-sponsored retirement plans, and later to Vanguard fund individual investors.

"Collaborating with Vanguard . . . reinforces our commitment to helping financial institutions and employers better serve individual investors."     - Bill Sharpe, Nobel Prize-winning economist and Co-Founder of Financial Engines            

How does it work?

The Financial Engines service is a forecasting model that takes into account variables like inflation, interest rates, and market performance. Users of the service are asked to respond to questions about their unique risk tolerance, time horizon, and assets to determine how close they are to their retirement goals, and how to invest to meet those goals.

The package was originally designed for retirement planning, but Financial Engines is expanding the service to allow retail investors to analyze an entire investment portfolio. For example, the service can be used to map out a plan to pay college tuition or buy a house. According to Vanguard, one of the key benefits of the service is that it helps investors minimize taxes, which can swallow returns in a hurry.

"Financial Engines utilizes an investment advisory methodology that emphasizes the value of long-term investing and the importance of consistency, taxes and costs - key components of Vanguard's philosophy." - John Brennan, Chairman and CEO of The Vanguard Group

The partnership is the latest step by Vanguard to increase investor education via the Internet to keep fund expenses at a minimum.

Vanguard Online Chat

Gus Sauter, who oversees the portfolio management of Vanguard's internally-managed equity funds, including 28 index funds and four actively managed
portfolios, recently fielded questions during a Sage Online chat. Although no earth-shattering investment revelations were made, Sauter did once again methodically espouse the benefits of indexing.

At one point in the discussion, Mr. Sauter was asked if index fund investing, which forsakes stock-picking and arbitrage, was un-American.

"I've got an American flag hanging in my office! I don't think it's un-American to acknowledge the inevitable truth that the average investor cannot beat the market." - Gus Sauter, Vanguard fund manager

For a complete transcript of the interview, click here.

Related Material


Feedback

Leave us your questions, comments and/or feedback:


Name: Email:

Feedback