Many investors did indeed pursue an "automatic pilot" like approach with certain Vanguard funds and this has cost them dearly, the Vanguard Index 500 fund for example declining 45 percent at one point. This furthur emphasizes the importance of getting sound independent investment advice and not overly focusing on the convenience and low cost nature of numerous Vanguard funds, or the internal in-house investment advisory service provided by Vanguard, which although conceptually appealing is simply not independent advice.
Parish & Company recommends accessing the Vanguard family of funds via a discount broker so that investors can also gain low cost access to individual stocks, additional fixed income alternatives and funds in other fund families when appropriate for their portfolios.
Although Vanguard does now provide good 401K and 403B related programs to large employers, more emphasis should be placed on accessing and improving self directed programs at public pension systems in addition to providing such programs to small and mid sized employers. Stronger international offerings, in particular country specific index funds, will also be important.
Significant confusion now exists in the marketplace regarding mutual fund returns, fees and the relationship between the mutual fund descriptions and the mutual fund holdings. In addition, turnover ratios are far too high as many fund families are exposing investors to unnecessary taxes, fees and risk. Vanguard is good with respect to low fees, low turnover, descriptions that match holdings and solid diversification.
Parish & Company is an independent fee based investment advisor to individuals, pensions and trusts based in Portland, Oregon.