Vanguard Managed Account Program?

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WishingHorse
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Vanguard Managed Account Program?

Postby WishingHorse » Thu Dec 13, 2012 11:37 pm

Hi, all, newbie here. I have 401k investments with Vanguard through my work. I contribute 5%, and my employer matches it. Recently, I've been wondering if I should use the Vanguard Managed Account Program. It's a fee-based service, and I'm wondering if it's worth the money. Any advice? Thanks!

VinTek
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Re: Vanguard Managed Account Program?

Postby VinTek » Fri Dec 14, 2012 6:41 am

How much is the fee and what are you expecting them to do for you that you can't do for yourself? I don't see the services offered in the plan that do very much for you. Those services are:
  • Automatically enrolling employees in your defined contribution plan.
  • Increasing their plan contributions annually by a percentage you set.
  • Allocating their assets appropriately over time, without having to take action.
I don't see those service as worth much, if anything.

DoingHomework
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Re: Vanguard Managed Account Program?

Postby DoingHomework » Fri Dec 14, 2012 9:03 am

VinTek wrote:I don't see those service as worth much, if anything.


Automatically enrolling employees in your defined contribution plan.

You've already done this. Value $0

Increasing their plan contributions annually by a percentage you set.

This requires, at most, a form completed once per year. Assuming you are slow and it takes you 12 minutes, that 0.2 hr/year. If you make $50 per hour that's $10.

Allocating their assets appropriately over time, without having to take action


Assuming you invest in Vanguard target date funds, again, this is already done for you so it has $0 value. If you invest in index or other funds instead then perhaps it costs another 3 minutes of your time every year to look up the allocation of the relevant target date fund to see what allocation Vanguard would set for you. So worst case, 3 minutes per year or 0.05 hr valued at $2.50 per year.

So the value of this program might be $12.50 per year.

If the fees are less than that it could be worthwhile.

Alternatively, it seems to be free if your account value is over $50,000. You should probably wait until you have at least that much. If you have less than that you are probably young and should stick with a 100% total stock market allocation.

Bichon Frise
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Re: Vanguard Managed Account Program?

Postby Bichon Frise » Fri Dec 14, 2012 9:45 am

VinTek wrote:I don't see those service as worth much, if anything.


Having being offered many of their services, sometimes even for free, I talk with the person on the other end and say "no thanks."
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."

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