Unexpected, yes. But was it also unavoidable?

Vanguard, which rarely makes corporate acquisitions, yesterday agreed to buy Altruist, a wealthtech platform and custodian for independent advisors. “As more investors in Vanguard funds choose to work with financial advisors, we see a significant opportunity to build on the strengths of two complementary organizations to help advisors serve clients more effectively,” Vanguard CEO Salim Ramji said in a statement. The deal is worth about $4 billion, according to The Wall Street Journal.

The acquisition is the latest step in Ramji’s push to move Vanguard beyond low-cost asset management and deeper into financial advice. “It was inevitable that something like this was going to happen,” said Doug Fritz, co-founder of wealth consultant F2 Strategy. “Ever since the start of the robo-advisor days, the industry’s been waiting for this golden conversion of asset and wealth management.”

You Want My Advice?

Since 2018, Altruist has emerged as a challenger to legacy custodians such as Charles Schwab and Fidelity, serving more than 6,000 independent advisors. In February, it launched an AI tool through its Hazel platform that can analyze documents and generate personalized tax strategies, briefly shaking up brokerage stocks. “Altruist was built on the simple belief that when independent advisors have better technology and lower prices, they can do their best work,” founder and CEO Jason Wenk said.

As for Vanguard, the firm has been building out its advice business since Ramji took over as the company’s CEO in 2024:

• Vanguard established a dedicated advice and wealth management division in December 2024.
• Over the past two years, it has significantly expanded its advisor-facing model portfolio offerings. This month, the firm rolled out its first customizable model portfolios.
• Vanguard plans to fully launch AI capabilities for its Digital Advisor service in 2027, connecting the tools directly to investors’ portfolios to provide personalized financial planning.

Independence Day. Vanguard said Altruist will continue operating as its own business, retaining its leadership, brand and advisor focus. Advisors may still have concerns about what Vanguard ownership means for its independence and innovation. “Altruist clients are typically the small, nimble, fast-growing mammals in an old dinosaur ecosystem,” Fritz told Advisor Upside. “If Vanguard comes in and stops all the innovation progress that Jason and his team have been building, then yeah, it will be a problem.”

Others argue advisors shouldn’t get too attached to vendors. “For all my financial advisor friends, please let this be a reminder,” Manish Khatta, CEO of investment strategies firm Potomac, wrote on LinkedIn. “Stop getting caught up with the nonsense of technology and the narratives in our industry.” Khatta applauded the deal but said advisors shouldn’t mistake custodians or technology providers for true partners. They should focus instead on the thing that gives their own businesses value: growing assets under management.

He also called himself “Daddy Manish” in the post. That’s not news, but we do think it’s noteworthy.

Advisors advise … duh! It’s in their title. But sometimes clients don’t listen.

Less than 30% of American adults can correctly answer Stanford University’s “Big Three” questions on interest, inflation and diversification. It makes sense, then, that people hire professionals to manage their finances. But clients don’t always take their advice — or even ask for it before making a potentially costly financial decision.

It can be frustrating, but advisors need to remember that clients aren’t professionals and it’s still a learning process for many. “There’s a lot of bad habits that take a long time to break,” said Bryan Byrer, founder of Millennial Financial Planning. “You’ve got to give yourself and clients grace because it’s not a personal knock against you as an advisor.”

See You on the Back Nine

Recently, one of Byrer’s clients made an expensive purchase without consulting him: a golf cart. “I’m actually friends with the client, so I saw it on their Instagram before they told me about it months later,” he said.

When they meet, Byrer doesn’t plan to make the client feel bad about the purchase. Instead, he wants to understand why they made it and establish checks and balances to prevent similar impulse purchases. “Money is a very emotional subject, and emotions drive behaviors,” Byrer said. Many of his clients have 30-plus years of financial habits to overcome.

A Little Tough Love. Ultimately, clients can do whatever they want with their money. But things can get tense when a client ignores an advisor’s recommendation, suffers the consequences and then expects the advisor to fix it.

“Preventing a financial problem is usually easier and less expensive than unwinding one,” said Thomas Ravert, managing director at Pathway Capital. Cleanup often requires more time, complexity and professional responsibility, he said, which is why he charges a premium in those cases. “That is not punishment,” he told Advisor Upside. “It is accountability and economics.”

And sometimes, an advisor may have to walk away. Daniel Lash, a CFP with VLP Financial Advisors, recalled a client who eventually ran out of money after repeatedly disregarding advice. “If you go separate ways with the client, the spending issue is not likely going away for them, but it will for the advisor,” he said.

There’s the old adage that time in the market beats timing the market. But what would returns look like if you actually could time the market?

One dollar invested in the S&P 500 in January 1988 would grow to $64.79 through the end of this July if left untouched, which is about an 11% annualized return, according to research from GammaRoad Capital Partners. If an investor missed the market’s 30 best days, that return would shrink to just about 6%. But if an investor avoided the market’s 30 worst days, that $1 would become $482.46, about a 17% annualized return. Advisors often try to impress the impact of missing the market’s best days upon nervous investors during market downturns as a reason to stay invested, but missing the worst days has a disproportionate impact compared with missing the best days.

The conventional approach of staying fully invested during downturns so as not to miss the market’s best days “would make sense for an investor with an unlimited time horizon and an unlimited balance sheet,” said Jordan Rizzuto, managing partner and CIO at GammaRoad. “Just about every investor on the planet does not fit that category.”

60/40 Can’t Come to the Phone Right Now

The classic 60/40 allocation makes sense during disinflationary periods, when bonds rise as stocks fall, but the math changes when that inverse relationship breaks down. “While it is marketed as balanced in the past three decades, in the current environment we believe we’re in now, that’s actually a concentrated risk,” said Rizzuto. “That’s not a diversified portfolio.”

In addition to Tidal’s GammaRoad Market Navigation ETF (GMMA), there are a handful of products on the market that seem to use tactical allocations to avoid bad trading days, per VettaFi:

• The Ultra Risk Parity ETF (UPAR) uses leverage to balance risk across TIPS, US Treasurys, global equities and commodities. The fund has about $60 million under management and has gained about 10.5% so far this year, according to ETFDb.
• The VanEck Long/Flat Trend ETF (LFEQ) similarly follows technical signals to adjust allocation between the S&P 500 and T-bills. It has almost $29 million under management and is up about 12.5% this year.

Sit With the Discomfort. Achieving true diversification in this market environment requires a lot of short-term performance discomfort, with a portfolio “not looking like the passive index while it continues to march higher,” said Rizzuto. It also requires some professional risk “because a more diversified portfolio looks much less like most of the conventional model portfolios that are put out there right now.”