(audience applauding) So I am thrilled to introduce my colleague who in turn will introduce our panel of Vanguard experts. Susan Jubinski is here from Morningstar. Like Jeff, she's a Morningstar veteran. She is even longer tenured than me at Morningstar, which is really saying something. She's been at Morningstar for 30 years.

She has had many, many different roles, managed a big team of people at various points in time, raised her triplets who just started college this year. And... (audience applauding) Well, it's a big, big deal. But I sometimes call Susan Morningstar's secret weapon, but the good news is she's not really a secret weapon anymore.

I think many of you know her in her role as Director of Content. She is all over Morningstar.com. She is writing really helpful articles, interviewing people. She is just a tremendous resource for me, and I know for all of you who use Morningstar.com and are looking for good investment information, Susan is a go-to person.

So I'm so happy that she agreed to be here to be one of our moderators. She's one of the best moderators we have, and she is going to introduce our Vanguard panel. Thank you, Susan. - Well, thank you, Christine. One of my favorite things I do in my job is interviewing Christine.

So it's great to be here, and it's so wonderful to meet so many of you. As Christine mentions, I've been around a little while, and I was at Morningstar when the Bogleheads board started on what I believe might have still been Morningstar.net. I'm not sure if we were .com even yet.

So it's great to meet all of you. I'm very happy to be here, and especially this year. We're having quite a year, aren't we? That 60/40 portfolio is really working out for everybody this year. And I think it's at times like this, even though we're all long-term investors, you start to wonder, hmm, how am I defining investment success in a market like this?

And how am I really doing, and how should I be thinking about my financial situation when we're entering a period of rising interest rates, which we haven't seen in a while? We're dealing with some pretty hot inflation, which we also haven't seen for a while. And boy, those interest rates and bond market, whoo.

So I think it's a very interesting time, even for long-term investors. So it's great to sort of have Vanguard in the house to talk with us a little bit about how they're sort of thinking about as an organization, investment success, and maybe what we can sort of learn from that and take away from that.

Not just in a market like this, but when things just get so much better in the market, we hope, soon. So they're here with us today to share some research that they've been doing on sort of personalization and advice and how to be thinking about financial advice. And then they're gonna do a presentation, and then we're gonna pivot over into the Q&A session for about 20 minutes.

I have a couple of questions related to the market that I wanna sort of ask. But then we're gonna turn things over to you to ask your questions about the market, their research, Vanguard. After all, we have Vanguard in the house, so let's take advantage. So let me introduce, of course, Joel Dixon, who is currently Vanguard's Global Head of Advice Methodology, and Paula Costa, who is a Behavioral Economist at Vanguard.

And they're both coming to us from Vanguard's Texas office. Who would have thought, Texas, Vanguard. Anyway, thank you both for being here. It's great to see you, Ann. - Well, thank you. - Check us out. - Great being here. Quickly, how many of you first-time Bogleheads Conference? - Whoa.

- Uh-oh. (audience laughing) Haven't seen my shtick. (audience laughing) Okay. No, that's great. I'm glad you're here. This is actually also Paulo's first Bogleheads Conference. (audience applauding) Please be nice to him. You can take other things out on me, but please be nice to Paulo. What we did wanna do today is just give a little bit of kind of what's happening behind the scenes from an investment standpoint and how we think about, you know, when we talk about Vanguard's core purpose, you know, taking a stand for all investors, treating 'em fairly, giving the best chance for investment success, what does that mean?

How is that evolving? What are we thinking about in the, whether it's the current environment, whether it is just the situation of what it means to have investment success? And, you know, a lot of things, you know, you folks do it really well with helping each other out on the boards or, you know, the discussion that was, that Nick just had on a number of different topics and so forth about, you know, what really matters is what matters to you.

And yet the investment industry, when we talk about advice, when we talk about value from certain things, it ends up being these rules of thumb, these generic descriptions, oh, save 12 to 15% a year. You know, 4% withdrawal rule in retirement. You're gonna live for 30 years in retirement.

All of these things actually lead to recommendations that are at best on average, if this will happen, and actually at worst may not actually figure out the sort of trade-offs that actually exist in a full kind of thinking about a plan. And so one of the things that we've been doing a lot of lately is how do we talk about and think about personalization?

That's why this so hopefully catchy title about putting the you in value. Because what matters and what's valuable is dependent on everyone's individual assumptions, situation, perspective, goals, and so forth. And then related to that is how it all integrates together. And so that's what we were gonna talk about.

And I kind of just wanted to quickly talk about, you know, when the kind of high-level principles of success that we often talk about, goals, balance, cost, discipline. Okay, all motherhood apple pie type stuff. But I think what's important to recognize here is really only one of these four categories, the balance one, specifically talks about asset allocation.

You know, that the other things that are so important are things like what are your goals? How are they different? How do they evolve over time? How much are you spending or saving? And is that consistent with what you want for your lifestyle and approach? Cost, well, not just investment costs, but taxes and so forth.

Often, I mean, other than say the Boglehead Group, not often talked about enough. You know, Eric Balchunas last night did a great job in sort of saying, hey, look, here's the, you know, the power of the structure, the mutual ownership structure and the cost piece of it. I would just add the other power is the alignment with the end investors about the focus being there without the same conflicts of interest that often exist.

And then discipline is just sticking to that plan. Well, how do you value all these things? A lot of what we talk about in providing value or security or so forth tends to be related to investment balances. Well, if you do this today, you will have $100,000 25 years from now.

You know, your asset allocation or maybe even your saving rate, but it doesn't integrate it all together and think about the trade-offs and then your personal situation and what kind of recommendations would be right for you. So there are a couple of, there are two different sort of things that we just wanna talk about before we get to the Q&A.

And you're gonna be seeing a lot more of this from Vanguard in terms of the future and discussions of what does it mean to be successful and so forth. One is focused a lot more on the accumulator area, but this whole concept of financial wellness, which is a big issue for especially younger investors, but not exclusively younger investors.

But now thinking about like the total balance sheet considerations of clients, debt versus assets versus how do you save? How do you create the ability to save longer term? And then the second we'll talk about is a little bit of integration in a quantitative way actually of financial planning concepts and investment concepts to put them on the same playing field.

And we'll do that with a case study. And I just wanna let you know, I'm gonna be asking for your participation in this. I'm gonna want you to be bogey heads, you know, helping out somebody that might be posting. And so we'll see on that and then talk about what kind of the trade-offs there that might be there.

And this concept of personalization and integration is what you're gonna see more and more of from Vanguard going forward. I will say there are two kind of research papers behind these two topics. I am a co-author on none of them. So I am the stuffed suit. Paulo is a co-author on both of them.

So, but I just wanted to sort of set that up and he'll talk about financial wellness. I'll come back and talk a little bit more about the value in personalization. All right. - Thank you, Joel. So, this is a preview of our new paper, the Vanguard's Guide to Financial Wellness.

It's not out yet. So this is a preview for a special audience. But the idea of this paper is what, given your personal situation, what are the next best actions that you should take to achieve your financial goals? So the idea here, yesterday during dinner, Eric Baltunis showed that graph that the bottom 50% in wealth of the population only have 1% of stock market wealth.

And that's a pretty striking number. So let's look at the financial health of the American household. So first of all, 40% of families do not save money. That's a pretty sobering number. 36% of households cannot cover an emergency of $400. And 45% of these families carry credit card debt.

And the average credit card debt is actually over $6,000. And this is the debt that is over, in terms of interest, 20% a year. So you put all these facts together. It's like, in our mission, we want to give investors the best chance for investment success. How can one have the best chance for investment success with this?

So how can we help them? So that's the genesis of this paper, is to try to give everyone the best chance for investment success. So just, financial wellness is a topic that people talk a lot about. I just wanna be precise in the way that we define it. So here we say, is the objective financial situation of a person, of a household, is the ability to meet current and near-term financial obligation, and be on track to meet future goals.

And we divide it in three steps. And the idea here is, step one is take control of your finances. We hear people saying a lot, money controls me. And how do we fight that back? So the first idea, well, how do you take control back from your finances? So, and then the second one, once you have that saddle, how do you prepare for emergencies?

And later on, when you have that saddle, making progress towards your goals. So, take control of your finances. And I'm gonna start with a very controversial topic. Create a budget that works for you. Some people love budgeting, and some people hate budgeting. And the point here is, actually, I think that most people actually hate tracking their expenses, because that can get pretty boring pretty quickly.

But the, actually, in the paper, we create two, like a short questionnaire, like two questions, just for people to find out what's the budgeting style they prefer best. But the idea here, basically, if you know how much money's coming in and where your money's going, that's just a really simple, powerful step.

And here, just be mindful, these steps are not in order. You know, any step, any positive step that you take, you know, will contribute to your financial goals. The second one is pay at least a minimum on all your debt. And the reason is, basically, you don't want to go into default, because that's gonna take a hit in your credit score, your debt will become more expensive, and in the future, you may not even be able to access that.

So, make sure you pay all of that. So, make, maximize the employer match. So, the idea there is, I just found this statistic that, for me, was surprising. 31% of people that have access to a 401(k) with a match actually do not contribute up to the match. And that's, you know, tens of billions of dollars that are left on the table every year.

So, that's something very straightforward that, you know, can improve chances of investment success. And then, I would be remiss if I didn't say pay down high-interest debt. And the point here, one thing that I had forgotten, having lived in Massachusetts for a long time, when we moved down to Texas, what we saw is, you know, the payday loan shops are everywhere.

And those shops, you know, on a good day, you come out with a loan of an annualized rate of 300%. On a bad day, 1,000%. So, it's just absolutely absurd. It's really expensive. And also, credit card debt that doesn't have such a high interest rate, but compared to payday loans, we're still between 15% and 20%, but sometimes even higher, depending on your situation, your credit score.

So, this is what we call taking control of your finances. So, this lays the groundwork. But then, once you start to accumulate assets now, we think of preparing for the unexpected. And then, obviously, we're talking about emergency savings. And at Vanguard, we actually think about emergency savings in two steps.

So, first, set up emergency savings for unexpected expenses. So, we're talking about those, you know, you get a flat tire or, you know, your heat stop working. So, we're talking about those expenses that you should keep around $2,000 or half of your monthly expense, and usually in a checking on a high-yield savings account.

Then, building up a reserve of three to six months and that, you know, for potential job loss. And the idea there is that because job loss is something that doesn't happen as frequently, you can keep that in an accessible investment account. For example, you can put that in a taxable brokerage account.

You can even put some of that in a Roth IRA because their contributions can be withdrawn tax-free. So, I still remember not very long ago when I first had my emergency savings all filled up. And I remember just looking at that amount on my screen and then, you know, being stressful because of, you know, financial things.

But just looking at that number and just staring at it, the amount of peace of mind that that brought to me. And it's just, I think, one thing in personal finance that we don't talk as much about, and it's extremely important, is, you know, how powerful cash can be.

You know, we talk about asset allocation. We talk about stocks and bonds. But, you know, cash, you know, it also brings a lot of peace of mind to folks. And we don't -- we shouldn't forget about that. For, you know, for the everyday investor, that's extremely important. And then, evaluate your insurance needs.

And here, obviously, health insurance. But for younger folks, disability insurance. Because a lot of your capital is actually in your human capital. It's in the salary that you're going to earn for the rest of your life. So, that shouldn't be forgotten. And then, get your legal documents in order to ensure that your wishes are realized.

Here, we are talking about wills. We are talking about power of attorney. We -- so, these are conversations that are really tough to have. But it's best to have them while you're here. Imagine how tough it could be for your loved ones if you're not here to have those conversations.

And also, guardianships for people who have kids and pets. So, those are things that they may not necessarily have, you know, a dollar sign next to it. But they're extremely important as well. And then, once you have prepared for the unexpected, now making progress towards goals. So, now, you know, the bread and butter.

Increase savings and make the most of your tax advantage accounts. So, in step one, you already maximize your employer match. Now, you know, retirement. If you have access to a Roth IRA, contribute to a Roth IRA. We saw last time Nick doesn't like when you maximize your 401(k), you know.

But if you want to maximize your 401(k), you're fine. You can do it. So, if you want to use your HSAs for retirement savings, you know, the triple tax advantage can go a long way. Obviously, HSAs for health, 529 for education. And then, you get to flex with taxable accounts.

And I think that was Nick's point. Taxable accounts, you know, taxable brokerage accounts, they give you the flexibility. If you want to save for a house, if you want to save for vacation, if you want to do early retirement, not that I'm talking about thinking about early retirement, Joe.

>> I'm thinking about my early retirement. >> But then, also, this is a time to consider paying down low interest debt. For example, if you were one of the lucky ones that got a mortgage, you know, under 4%, there used to be something realistic, you know, 12 months ago, but not anymore.

Car loans, student loans, and also, one of my favorite parts of this paper is set a strategy for your charitable giving. You know, I think there is much good to do in this world. And if we have an opportunity to do it, why not? And then, the benefits of all of this.

Obviously, we talked about, we talk a lot about dollar signs. But here, this statistic shocked me. Sixty-five percent of Americans say money is a significant source of stress. And if you look at folks under age of 40, that number is way up 80%. The economy is taking 88%. So, people are extremely stressed about money.

So, where can financial wellness, like, help here and alleviate some of these issues? So, a lot of research showing that it alleviates, you know, mental health concerns. It improves sleep. Relationships at home. I mean, how many marriages end because of financial concerns? Self-esteem, productivity, attendance at work. So, these are things that, you know, we talk so much about finance, and we, you know, such a, in that way, a privileged situation in which, you know, we have friends and colleagues that know so much about this.

But there are a lot of people out there who don't have this source of knowledge and information and willingness, you know, to help each other. So, you start seeing this more and more from Vanguard. For example, this is a new tab in our 401(k) page. If you see in the middle, welcome back, Paulo.

This may or may not be a screenshot of my own 401(k) page, but you will see more and more of this. It's already live, and it's based on the findings of the paper. But, you know, just guidance, financial wellness may not be enough for some people, and that's where advice can come in.

So, I'll hand it back to Joel to talk about the value of personalized advice. >> Thanks, Paulo. I actually just wanted to kind of build on a couple of things there. When we talk about the benefits of investing, or in the case of financial wellness, what do you think defines success?

I'd be just interested in some thoughts. What is success? I'm sorry, having enough? Okay. Being happy. Okay. And that's where I want to go. The emotional piece, the outcomes of peace of mind or happy or feeling secure or so forth. And, you know, the messages that we've had, and I would even say vanguard over the years, hey, save for the long term, save for retirement, save for retirement, save for retirement.

Yeah, absolutely, you should be doing that as a 25-year-old, 30, 35-year-old. But it also doesn't resonate if they're worried about, shoot, I've got this credit card debt that is just sitting on top of me that's not allowing me to do anything. I have different goals and different sort of emotional reactions with money over the course of my lifetime.

And that's why thinking of a more holistic total view is coming out of this. So this part is that we're going to talk about is how do you think about putting all of this together and kind of making tradeoffs and taking an integrated personalized look? And by the way, this could be called the value of personalized advice, which it is in the white paper that we just released on this within the last month or so.

But it could also just be called the value of personalized recommendations. It's not advice per se, but about how do we surface for each individual situation the best options that can generate success and therefore hopefully peace of mind or more confidence in the approach. So let me talk a little bit about that, which is when we think about personalization, it's elements that go beyond investment performance.

So much of what we talk about is investment performance. And I'll be a little bit provocative. I'm sure get to this in the Q and A. You know what? It is really, really fun to talk about investment things. What's the market going to do? Should I be in the three-fund portfolio, the permanent portfolio, market cap portfolio?

Those are a lot of fun discussions. At the end of the day, if you don't have how much is being saved or what your kind of standard of living expectation might be or so forth, honestly, all those things are kind of just at the margin. They don't really matter that much.

Yeah, you can be successful with a three-fund portfolio. You can be successful with a market cap portfolio and so forth. But a lot of these things that we end up talking about that are much harder to quantify can make as much or more of a difference in terms of outcomes and success.

So integrating those kind of concepts of financial planning, whether it be savings strategies, drawdowns, approaches, tax pieces into that, but at your situation and for your perspective. And then looking at the forward and going back to Vanguard's principles for investment success, I can summarize that in one phrase, which is you're going to increase your success by first controlling what is under your control and managing those things that aren't under your control.

So what's under your control? Your savings, your spending. You know your tax situation. You know your risks. You know your goals. What's not under your control? Even though CNBC would like you to think it is, what's the market going to be doing? I would extend that to how long is your planning horizon?

We make these assumptions. This was something I said with Christine on the long view a couple of years back. And I said-- and actually, Nick mentioned it a little bit earlier about over-accumulation. You know, that's a result of the assumptions that people often make about how you define success in retirement, which is most assumptions about retirement sufficiency assume you retire at 65 and you live with certainty to age 95.

So success is defined based on an absolute certainty that you are going to live to age 95. You may. You probably will not. And now all of a sudden, you think, OK, now what does success mean in that standpoint? So that's kind of the things, taking the uncertainty of longevity into the consideration when developing recommendations into the situation.

So one of the things that we did with this is we have actually created a new-- call it a model, but it basically quantifies all these things and tries to integrate them. It's called the Vanguard Financial Advice Model, which is really about four components. It's a very detailed cash flow simulation after tax.

We basically coded the US tax code and then running cash flow simulations over expected life with the uncertainty of we have no idea what the market is going to do. And so we test a whole bunch of different scenarios with the uncertainty of life expectancy. You may die at 40.

You'll probably live to be 85 or older. You may live to be 105, which actually creates a different type of risk from all of those models where it assumes you live to 95. And then preferences. And this is about focusing on the entire range of outcomes and mitigating those things that could be bad outcomes.

Because let's face it, not meeting your hopes or your goals or your expectations from a spending standpoint is a lot worse than exceeding those in terms of how you feel. You had more than enough in that latter case. You have not enough in the previous case. Not enough is a heck of a lot worse than having more than enough.

And so how do you account for that? And this is this whole preference thing. For those that are more in the economic statistical standpoint, we can actually calibrate financial planning, things like savings and spending, right alongside of investment returns by doing it in this way through things we call a utility function and modeling of all that that puts them on the same playing field.

So that's what we're doing here. This is where I need your help. I want you to meet Pete and Kim. Pete is 59 years old. Kim is 64 years old. If you do the math-- I won't have you do the math on your own-- they have about $1.2 million in assets.

They are currently spending $80,000 a year. Pete has $110,000 annual salary. He would like to retire next year, early retirement, join his wife. They have other things they want to do besides working. And you can see their current allocation in terms of an asset allocation. 60% stocks, all US stocks, 25% bond, 15% cash.

They have some Social Security coming at some point in the future. But my question to you is, if you see this sort of profile, what would be the-- and I'll just do one quick math for you. Their spending as a percent of their overall wealth is 6.7%. OK? So what's the-- yes, Rick?

She will get Social Security-- well, that's a question, is how you're choosing Social Security. She has not yet. That will be one of the integrated recommendations that comes out of this. But let's just say-- because what Pete wants to do, Pete's 59, and he wants to retire next year.

Christine is sitting here going, there is no way. Right? How many of you agree with that? No way. Keep working. Somebody's-- yeah, keep working. Is that what it is? Keep working. The current-- sorry. The current annual benefit is that Social Security that Kim has that she has not claimed yet.

No, he cannot claim Social Security at 60. Not saying that he is going to. Because she has not claimed either as of right now. There is no Social Security currently being claimed and therefore an income. Kim could certainly claim Social Security if she wanted to, but she has not.

All right, here's the deal. Let me put it in this terms instead. If Pete retires next year, they're going to need to withdraw $80,000 from their investment portfolio to meet their spending. OK, with that-- Die soon. What? Die soon. There's another strategy. All right, the point-- absolutely. We basically are doing things that are-- like, hey, look, you can't do this.

You need to eat your vegetables and work longer or think about this differently. Maybe even go back to work or part-time job or whatever it might be. But that's not their goals. Can we meet their goals? And are there things that we can do to say, hey, look, we may surface some trade-offs for you, but are there some different things that we can do to meet your goal, Pete's goal of wanting to retire next year?

So with that as a little bit of-- yeah? Yeah. It might. Might have-- What's that? If only they had somebody giving them advice, right? Exactly. Or surfacing recommendations for what they could do. So this is not meant to be a sales pitch for advice, but about thinking about this in a more holistic perspective of what the trade-offs are around both spending, savings, and so forth.

So let me just show you what this looks like in their current strategy, because any value is not just relative to the current situation that they have, their current characteristics, but about what their current investment strategy is, too. Too often, we do value calculations as if, well, if you do this, if you do asset location, you can get 50 basis points.

Well, not if you're currently doing asset location. Not if you're currently equally weighted in your asset allocation across your accounts. You're not going to get 50 basis points. So how do you think about this relative to the current strategy that they are coming to you with? And what this shows is, on the left-hand side, the likelihood of them being able to spend $80,000 a year, which is what they currently say-- basically, there's a 20% chance that each year, on a real inflation-adjusted basis, they'd be able to spend $80,000 a year if Pete retires next year.

And so pretty much anything to the left reflects risk of shortfall relative to their goal. The right-hand side, it says likelihood of final bequest amount, how much is left when they die. But think of this as actually financial flexibility in retirement. Things that are closer to zero, there's not a lot there if something happens.

And the reason that they get lucky, maybe, in certain instances, at the far end of the tail, is because they died early. Because this-- or they had really, really outstanding returns in some of the return scenario. This is what you get with a longevity standpoint. Yeah, there's a chance they'll be OK.

But pretty much, they're not going to be able to spend what they want. And they're going to have no flexibility in their financial situation in retirement. So with that, let me just sort of-- I'm going to actually skip over that real quick. This is, with recommendations, in thinking about it from an integrated standpoint, now that 20% chance of having that lifestyle, if you will, is defined by the amount of spending.

We would say, hey, you know, you could actually have a bit of a more of a 70% chance of having this lifestyle by cutting your spending by a bit. And also, with different approaches, this will shave or switch your distribution to the right on expected amount at the time that you die.

Now, how did we get there? And again, this will be different for every different client, for every different approach, and so forth. So I'm going to focus for a moment on the right-hand side. The right-hand side is in kind of investment return space. So based on what you're doing today, if you look at the far right-hand side, in this particular situation, we've calculated 218 basis points.

You would have to do with your investments 218 basis points, 2.18% per year, every year better on your investment returns to get the same outcome as if you were to follow these suggested recommendations for your portfolio. And those recommendations being defer social security, fix cash drag and home bias in your portfolio, reduce annual spending, and use tax-smart investing.

So there's a whole bunch of things that kind of work together. All right, so here's the question. I can predict where Rick is going to go with these questions. Is this one-time advice, or is this ongoing? Could you do this as one-time advice? Absolutely. Absolutely. Will you, I should say, outside of this room, will you actually do it as one-time advice?

And that's the thing of to be able to realize that there has to be that discipline part of sticking to the long-term investment success principle, and you actually have to execute on that to capture that value. And so two things here I just wanted to highlight. And again, I knew Rick would be in the audience, so I do want to say, you're accounting for the extra fees or savings in fees.

You cannot look at value without sort of saying, hey, there's a difference in fees. In this case, it was a positive 20 basis point difference in fees, because they were coming from some high-cost mutual funds. These are actually some case studies we've actually taken from some real-type situations. But then there's also the importance of interaction effects.

And I can't emphasize this enough. This is where we do all of these recommendations one-off. We talk about asset location. Then we talk about tax-loss harvesting. Then we talk about international investing. And we do all of the analysis one at a time. And then we say, well, in aggregate, it kind of adds up.

Sometimes it doesn't add up. Take the case of asset location. We can debate what Nick said about asset location later. That's not germane for the point. Asset location and rebalancing. If you asset locate the sort of conventional wisdom way, stocks in a taxable account, bonds in a tax-advantaged account, and you were rebalancing, but stocks tend to go up over time more so than bonds, you're going to be realizing capital gains, all else equal, in the taxable account.

So the sum of-- if you say, hell, we're rebalancing adds 20 basis points. And asset location adds 30 basis points. Therefore, you get about 50 basis points. No. Because you might get 10. Yeah, asset location will add some value. But it's also not that full value. Because once you account for the extra tax of the rebalancing in the taxable account, it's not as strong.

On the other hand, something like tax loss harvesting and asset location can actually build on each other. Because now if you have more of the volatile asset in the taxable account, where if there is value in tax loss harvesting for you, you can actually now do more tax loss harvesting.

And again, if you can realize that value, it can actually be even higher than the sum of the two. So that's what this interaction or multi-strategy effects tries to capture, is this integrated approach to doing it. So I'm going to leave it there. We're already kind of running a little short on time.

I want to make sure we get to some Q&A. But what are the key takeaways here? This is all meant to try to get to having Vanguard help clients make high-value life decisions. What is your goal and your expectation? Pete wanted to retire at 59. It's really easy to say, keep working longer.

But that's not his goal. That's not what's going to get him peace of mind. Are there things that we can do to think about that problem maybe a little bit differently? Secondly, investment performance is definitely important. Don't get me wrong. I would never say otherwise. But financial planning elements and a total plan can provide even better investor outcomes and often can make a bigger difference in the return space or so forth than investment performance itself.

And then third is this all depends on the situation that you're in. That previous example with Pete and Kim, there was no value. Matter of fact, there was negative value for Roth conversion proposals or strategies. So somebody might go out and say, oh, well, you want a Roth convert because you diversify your tax rate.

And you might help protect against RMDs once post-72 hitting you from a tax torpedo standpoint. Nope. In the situation that we were looking at, negative value. Bad recommendation. So it all depends on the situation that you're in and the current strategy that is being employed. With that, Susan, turn it over to you.

And thank you. And actually, I'd like to turn it over to you. I have a list of questions, but we have eight minutes left. So line them up. Come on up. Ask your questions. If for some reason you don't have any, I have plenty. But I have a feeling you do have some questions.

Well, this is just more of a comment. That was a very good presentation. Thank you. But I've been thinking about the customer service problem at Vanguard. I think I have a solution. Either you give us a dedicated phone line for bogel heads, or when you speak to that nice voice recognition lady, say, I am a bogel head, and it shoots you right off just when you're-- So let me put it this way.

I'll take that back. I would say, though, we're not immune to seeing and hearing about the customer service issues. I would say the bogel heads actually do have a very powerful voice. The website, the bogelheads.org site, is perused daily by senior Vanguard people. So trust me, we have heard everything about the app, about the customer service challenges, and so forth.

Now, that said, I am more than happy-- it kind of detracts from the investment piece message. And that is a real problem. Because if that is what detracts from the potential for achieving investment success, we've lost. And by we, I mean all of us, because we're here to try to improve the investment success of the investors.

That said, I know it can be an issue. It's a hot topic. I am happy to stand out in there in the hallway afterwards, come up, give me whatever feedback you'd like. I'll stay as long as you want, and I will take it back. I personally cannot do a heck of a lot about it.

But if you do want to be heard and so forth, I'm happy to do that and kind of organize it. I would ask for how you have experienced it yourself, though, because what's really important is, are we seeing it in certain areas? Is it certain types of transactions and so forth?

That could actually be really helpful from that standpoint. I don't have a customer service question. Vanguard has always led the way in using economies of scale to reduce costs. As they push further into the personal advisory space, is there a likelihood that they'll be able to reduce the cost to the individual investor for that service?

Right, so I'll go, yeah, you're going to let me handle the strategy. Hey, Vanguard, make life better for me. He's the head of advice methodology. I'm a behavior economist. I think he's good. Thanks, Paulo. Paulo's already on my list, by the way, because we were in a team celebration thing for what was his birthday.

And he goes, yeah, today I'm half old. And I was like, wait, how old are you? And he said 31. I was like, well, I said half, half old. I have it on tape. Any case, the PAS, first of all, from an advice standpoint in lowering costs, I mean, there are already kind of multiple avenues at Vanguard.

We have a personal advisory services, 30 basis points. We have 30 basis points plus the underlying fund fees. I should say that. There's a 15 basis point net advisory fee with our digital advisor platform. But there's always kind of look, re-evaluation, assessment of cost and service offerings at Vanguard.

It happens all the time. What that might look like, I don't know going forward, per se, or in some ways, it's always a discussion. I would also say, though, one of the things that we are doing a lot with, and we've talked about it a bit, is this concept of what we would call CX alpha or customer experience alpha.

Not necessarily anything to do with advice. But can we help investors? And again, this is for people largely outside of this room. But can we help people be better investors? Here's a really good example. Every year, we see IRAs being funded. People get the message, oh, I should fund my IRA.

They fund it, and then they leave it in cash. OK? If there were something along the journey of, as they're investing, a nudge, a reminder, a client experience piece that could help them, not force them, but nudge them to invest, over time, they are going to be better investors.

And so there's a whole host of those types of things that we're looking at from an experience standpoint that may have nothing to do with advice, but can still help improve outcomes in material ways and very low cost ways. This question is for Paolo. Given the inflationary environment that we are in, what is your insight on the 4% safe withdrawal rule?

Because I know that you've been doing some research on that. Right. Thanks. Oh, you're welcome. So number one is, I understand the hesitation because of inflation, given that-- especially for folks who are early in retirement, because the 4% rule actually adjusts your payments for inflation over time. But that's an adjustment pretty early on in retirement, and that's going to be baked in for all the rest of retirement.

But the good thing about the 4% rule is that, I mean, I understand that we haven't seen inflation for a really long time. Having said that, the 4% rule was tested during the high inflation times of the '70s and the '80s, and it still had a high chance of success.

So far, inflation has peaked over the past year, but it's starting to trend down a little bit. So hopefully, it will be just a blip. But so far, the 4% rule is still a good starting point for people in retirement. Thank you. We have time for one more. Oh, oh, no.

I'm the last one. I hope it's a good one. So I'm really passionate about time in the market, and I got lucky when I was 22 to get good advice from co-workers to invest heavily. And I was wondering, what is Vanguard doing to try to get the younger people who are just starting their first job to invest because it's so critical-- that's literally the most critical time-- that they get their money in the market?

I just wanted to know if Vanguard has any outreach to maybe high schools or colleges. So not so much the outreach to high school and colleges per se, but certainly the young investor in getting on the right path because habits that get put in place early tend to persist if we can do that.

So a couple of things, and one is-- I'll turn it over to Paulo to do this. But this whole financial wellness piece is really aimed at doing that because-- and it's not just about investing. It's about that sort of total balance sheet because, I mean, let's face it. Paying off debt is saving.

So how do you get people into the position where they can save and invest to meet their long-term goals? I actually live this right now. My son just graduated college, 24 years old, just turned 24 years old, first job. Thankfully, he asked me what he thought he should do.

And he has a 401(k) plan at his employer that matches dollar for dollar up to 5%. And I was like, hey, look, do that. Save money in a Roth IRA, which makes sense in his personal situation, and forget about everything else because you're on a good path there. It's a large percent of his annual income that he's saving from those two things.

And I'm like, live your life. Be happy. You have the ability, and you can have the peace of mind that, hey, the markets will go up, they'll go down. But if you're saving, in his case, it's between 17% and 20% with those two recommendations of his pre-tax income, if you include the employer match, you know what?

For retirement, for 40 years from now, you're in good shape. We'll figure it out and adjust as need to along the way. Yeah, so the two recommendations that Joel just mentioned, obviously getting the employer match, and I mentioned some-- I mean, 31% of people are not even getting that.

So starting with the match is extremely important. Then fund your Roth IRA. But to Joel's point, also this recent generation coming out of college now is facing a very different circumstance. Student loans are a big thing for them, and people with six digits of that at 22 years old.

And then there is a question of the trade-offs. Do I pay down my debt, or do I save for retirement? And that's why it's so important for us to put out the financial wellness guidance, to talk about the trade-offs. Because we don't want-- we see this on the internet very often.

I wish I had done this 20 years ago. We want to prevent that. So getting that early and saying the importance of savings. But also, to Joel's point, don't necessarily overdo it, because you still have a life to live. And especially with these folks, they also have a lot of debt to pay.

So we have to be mindful of the trade-offs. But just getting the match, getting the Roth IRA funded, that already goes a really long way. Thanks for the question. Thank you. I'd like to thank both of our speakers today, who will be around for additional questions if you have them.