Vanguard offers financial advice in response to clients' demand

October 19, 1997|By KNIGHT-RIDDER NEWS SERVICE

Vanguard, the mutual-fund giant that built its business by selling no-load, low-cost funds to do-it-yourself investors, has discovered that customers want more.

They want advice. On the cheap.

John Brennan, Vanguard's chief executive officer and soon-to-be chairman, sees it firsthand when he holds invitation-only road shows for high-end customers.

Many clients ask Brennan what funds he would pick for a certain type of investor with a given set of goals. Say, early retirement in 10 years. "They always ask for advice, which I don't give them," said Brennan.

Vanguard is answering the demand by rolling out its own financial-planning services. Given its history of low cost, Vanguard won't be opening offices all across the country. It will sell its personal financial services the same way it sells its mutual funds, by phone: 1-800-567-5164.

The nation's No. 2 fund company offers:

A one-time investment plan for a flat fee of $500. Three plans are available: One focuses only on retirement, one looks at investing for college education and retirement, and one for estate planning.

An ongoing, personal advisory service in which the customer pays an annual fee -- 0.5 percent of the assets under management, if the customer uses Vanguard funds exclusively, 0.65 percent if not. The minimum annual fee is $2,500. Investors need at least $500,000 to invest.

A trust program to manage clients' money. The fee is the same as the one for the ongoing advisory service.

Pub Date: 10/19/97

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