Vanguard, Amex Ending INVEST Financial Advice Service


The program fees seemed to surpass those investors could get by going to Vanguard directly.

Vanguard Group is ending its INVEST for Amex by Vanguard financial advice service for American Express U.S. card members less than two years after announcing the partnership.

As ThinkAdvisor reported when Vanguard and Amex launched the service in April 2022, the program carried a 0.50% gross annual advisory fee, with Amex receiving up to half as a “promoter fee.”

That 0.50% annual expense surpassed the fees that investors could be charged by going directly to Vanguard, at least one independent expert noted.

Jeff DeMaso, who edits The Independent Vanguard Adviser newsletter, writing Nov. 22 about the program’s end, noted that while Amex cardholders could access Vanguard’s hybrid robo-advisor and earn additional credit card points with INVEST for Amex by Vanguard, ”You could go straight to Vanguard and get a similar [or better] service for 0.20% or 0.30%.”

A Vanguard spokesperson confirmed the offering’s end in a statement Thursday.

“Effective February 29, 2024, Vanguard and American Express will discontinue INVEST for Amex by Vanguard,” the company said, noting the program stopped accepting new enrollments on Nov. 15.

“Vanguard will seamlessly transition current INVEST clients into Vanguard Digital Advisor, an all-digital advice offer, or Vanguard Personal Advisor, a hybrid advice offer. Both services provide high-quality, personalized advice designed to best meet an investors’ needs and preferences,” the statement said.

The firm’s Personal Advisor service carries a 30 basis-point annual advisory fee, while Digital Advisor comes with a roughly 15 basis-point net advisory fee, according to the Vanguard spokesperson.

DeMaso recalled that when Vanguard and Amex first introduced the service, he suggested that those who wanted to invest with Vanguard didn’t need a third party.

“While I haven’t seen the stats, I’ve got to think that most investors agreed with me. Given that the math didn’t work, I doubt many people signed up for Invest for Amex by Vanguard,” he wrote last week.

“I can’t say I’m surprised that Vanguard and Amex pulled the plug on the program — I’ve been scratching my head over the partnership and program since the first announcement. I’m just impressed the executives were willing to cut their losses so quickly,” DeMaso added.

In an email to ThinkAdvisor on Thursday, DeMaso said, “It was such a weird partnership in the first place. It’s not like Vanguard needed to leverage Amex’s brand/reputation to enhance the credibility of its advice services.

“Vanguard’s advice business must have been in the tens of billions of dollars … when the partnership was announced. So, why do it? If anything, I’d argue that offering this complicated, higher-cost product/service hurt Vanguard’s brand!”

DeMaso also noted that Vanguard “reset” the tiers of its advice platform — from Digital Advisor to Wealth Management — earlier this year, and “INVEST for Amex was the odd man out.”

Vanguard itself acknowledged in a disclosure, DeMaso added, “that you could get the same service at a lower cost by going straight to Vanguard instead of signing up for this program with Amex.”

An INVEST for Amex by Vanguard brochure filed with the Securities and Exchange Commission on Nov. 15 noted the service’s discontinuation and said unless participants unenroll by Feb. 28, Vanguard will transition their portfolios to either Vanguard Digital Advisor or Vanguard Personal Advisor, depending on their service level.

RIABiz reported on the development Wednesday.



Source link