In a brand new cross-promotion initiative, investment firm Vanguard has announced a partnership with American Express to offer an investment product to qualified Amex card members. A 50-50 business split, the new product has American Express bringing the clients and Vanguard offering the financial and portfolio advice. However, investors may not benefit as much as you’d initially think. Read on for more details.
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American Express Launches New INVEST Product for Card Members
In mid-April 2022, Vanguard and American Express announced a new joint product for qualified Amex card members. Called INVEST, it offers Amex members access to Vanguard’s digital asset management and a free 30-minute financial advisor consultation.
Qualified members need $10,000 minimum to open an INVEST account, but AMEX membership points rewards only kick in once the account has $50,000 or more invested. You’ll receive 5,000 points annually for an account balance up to $100,000, 25,000 points from $100,000 to $500,000 and 50,000 points for over half a million. As a comparison, new American Express Gold Card holders can earn a 60,000 point bonus after spending $4,000 in the first six months.
Some financial advisors have minimum asset thresholds of $100,000 or more and charge an average of 1% of a client’s portfolio value as their fees. On the other hand, as part of the INVEST service, Vanguard will offer a free consultation with a Vanguard financial advisor and ongoing financial consultations if the client has $100,000 or more in an INVEST account. Additionally, there is no advisory fee for the first 90 days, but thereafter an annual fee of 0.50% of assets managed will apply.
What Investors Need to Know
As part of the partnership, American Express rewards annual point bonuses for higher INVEST account balances and up to $75 for members who also hold an American Express High Yield Savings Account. On Vanguard’s end, investors have access to automated portfolios constructed with low-cost, diversified Vanguard ETFs–a familiar feature for those who already use similar robo-advisor services.
However, the INVEST fee falls at the higher end of fees for such portfolios. Expense ratios can vary widely, with passively-managed ETFs charging as low as 0.2% and actively-managed mutual funds going as high as 1.5%. The companies even have a disclaimer at sign-up informing customers that the 0.5% advisory fee may be split between them, and should you desire, you could access the same Vanguard services for less if you sign up through Vanguard and not through the dedicated American Express INVEST portal.
According to the small print, the extra amount spent in fees pays for the annual AMEX points and the financial advice clients will receive. Only half of all individuals with $500,000 or less in investable assets work with a financial advisor, so packaging an automated investment service with AMEX points and a free initial consult could be helpful for those investors unsure whether working with a financial advisor is best for their situation.
Bottom Line
Vanguard has partnered with American Express to offer a new investment service to qualified card members. Called INVEST, the product includes a free 30-minute consultation with a Vanguard financial advisor, annual Amex membership points rewards and ongoing automated investment portfolio management of low-cost Vanguard ETFs. Although the cost is slightly higher than other passively-managed fund fees, interested investors may benefit from the opportunity to speak with a financial advisor for the first time.
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