Vanguard Personal Online Advisor Users Service Agreement
Vanguard Personal Online Advisor Users Service Agreement
"POA Users Agreement"
I. Overview The Vanguard Personal Online Advisor ("POA") service is an Internet-based advisory service offered by Vanguard Advisers, Inc. ("VAI"), a federally registered investment advisor and an affiliate of The Vanguard Group, Inc. ("Vanguard"), to clients who want access to online investment advice ("Users"). POA is an online investment advisory tool powered by Financial Engines Advisors, LLC ("Financial Engines"), an independent investment adviser unaffiliated with VAI or Vanguard.
II. Description of services and methodology POA offers investment advice based on an investment methodology developed by Financial Engines. For more information about Financial Engines, please see "IV. Financial Engines". POA uses Financial Engines' proprietary software to analyze historical and current returns, volatility, crosscorrelations, and other factors to develop individualized target allocation recommendations. The Financial Engines software employs returns-based style analysis, optimization, and Monte Carlo simulations, among other techniques, to develop its target allocation recommendations. The main sources of information analyzed include historical returns for mutual funds, individual securities, and broad asset categories (e.g., large-capitalization U.S. equity returns, money market returns, foreign equity returns, etc.), security-specific information (such as mutual fund expense ratios), and current market data and information.
Financial Goal Forecasting. POA generates a forecast, or estimate, of the chance of reaching a client's financial goals. Forecasts are based on inputs provided by Users including: (1) current account balance(s), (2) current savings or contribution rates, (3) time horizon (i.e., years until goal), and (4) investment goals (i.e., desired account balance at the close of time horizon). The forecasts generated by POA are reasonable estimates based on information supplied by Users and are not guarantees of future results, and reliance on historical and current data necessarily involves certain inherent limitations.
POA generates a forecast through the use of simulations, which are hypothetical economic scenarios based upon analysis of historic and current returns, volatility, cross-correlations and other factors. POA creates thousands of hypothetical future economic scenarios to evaluate how account investments might perform under a variety of circumstances, including changing interest rates, inflation and market conditions. The forecast is a percentage figure representing the number of scenarios in which user account(s) would be sufficient to meet or exceed the investment goal at the end of the time horizon. POA also can include information about stock options in a financial goal forecast.
Investment Recommendations. POA provides specific buy and sell recommendations to help allocate assets among a limited universe of investment alternatives (mutual funds and other investment company securities) available for investment. In the case of eligible retirement plans, the client's employer generally selects the universe of investment alternatives available to accounts using the POA service.
VAI ? POA Users Agreement v.11.2012
Account Reviews and Monitoring. POA enables Users to review their account(s), monitor progress towards financial goals, receive forecasts and investment recommendations, and access educational materials. Although POA updates the values of most mutual funds and stocks in a client's account(s) daily, it is the user's responsibility to review and update account(s) to adjust for significant changes in investments or personal circumstances.
POA does not recommend allocations of individual stocks, even if they are available for investment in your account(s). POA does not select the investment alternatives available for investment in your account(s). By recommending allocations among the available investments, POA does not endorse the selection of particular investments as available investment alternatives for your account(s).
POA will not take into consideration any favorable tax treatment on your company stock investment when providing advice.
Users have no obligation to accept any suggestions provided by POA and neither VAI, Vanguard, nor Financial Engines is authorized to make decisions regarding client account(s) or investments in connection with the POA service.
III. Fees Vanguard Users do not pay a fee to use POA. In addition, the purchase or sale of Vanguard fund shares through Vanguard (whether or not suggested by POA) is not subject to a load, sales charge, or commission. However, each Vanguard fund incurs advisory, administrative, and custodial fees, as well as other fees and expenses that it pays out of its own assets, and certain Vanguard funds assess Purchase and Redemption fees. More information about the Vanguard funds, including information about fees and expenses, is available in the fund's prospectus.
IV. Financial Engines As an independent, third-party, federally registered investment advisor, Financial Engines is able to provide its services free from conflicts of interest. For more information about Financial Engines, please write to Financial Engines, Attn: Customer Support, 1804 Embarcadero Road, Palo Alto, CA 94303.
V. Other important disclosures Standard of care. Insofar as VAI acts as a fiduciary as defined in the Employee Retirement Income Security Act of 1974 (ERISA) in the performance of the services outlined herein, VAI shall act in accordance with ERISA's requirements for fiduciaries. In addition, VAI and its representatives will perform the services described in this POA Users Agreement in good faith and in accordance with applicable federal and state securities laws. However, neither POA, VAI, nor any of their affiliates will be held liable for any losses arising out of any action performed or omitted, or for errors of judgment made, within the scope of the performance of such services except for losses arising from its negligence, willful malfeasance, bad faith, or breach of its fiduciary duty. Participation in POA does not waive your rights under federal and state securities laws or ERISA which may impose liability in some circumstances on persons acting in
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Vanguard Personal Online Advisor Users Service Agreement
"POA Users Agreement"
good faith. VAI and its representatives and affiliates are not liable for any losses caused by circumstances beyond our reasonable control.
Transaction and redemption fees. Some funds charge fees on the purchase of shares. These fees, designed to offset the cost of buying and selling securities, are paid directly to the fund and are not sales charges. Additionally, some funds charge redemption fees in order to discourage short-term trading. POA may recommend investments with either or both of these types of fees. Should you incur such fees as a result of the services provided under this POA Users Agreement, you acknowledge that these fees will be assessed on your purchase, or deducted from your redemption proceeds, in accordance with the conditions set forth in the prospectus of the particular fund you bought or sold for your account.
Investment results. There is no assurance that you will achieve positive investment results by implementing the recommendations provided through POA. VAI and its affiliates do not and cannot guarantee the future performance of your account, nor can VAI and its affiliates ensure that the securities purchased will be profitable. Investment return and principal value will fluctuate with market conditions, and you may lose money. Although POA's investment recommendations are designed to be prudent and diversified, all investments are subject to risks, including the risks described in the prospectuses of the investments that are recommended.
Communications. You agree to verify the accuracy and completeness of your information on any communications to or from VAI and its affiliates and to inform VAI and its affiliates immediately of any inaccuracies so that we may make any appropriate adjustments to the recommendations, if needed. You agree to provide VAI and its affiliates with updated information if any information provided by you changes at any time. Particularly, you agree to provide updated information when your investments or your personal or financial circumstances change. You should be aware that failure to update such information could negatively impact the ability to provide advice appropriate for your risk level and financial holdings.
You consent to the physical and electronic transmission and storage of your personal and financial information by and among POA and you, VAI, Financial Engines, the plan sponsor, their respective assignees and successors, service providers, and other parties as necessary and permissible under this POA Users Agreement.
Enforceability. If any part of this POA Users Agreement is found to be invalid or unenforceable, it will not affect the validity or enforceability of any other part of this POA Users Agreement, which will continue in full force and effect.
Arbitration. All controversies arising out of or relating to any services provided by POA, VAI, Vanguard, Financial Engines and their respective affiliates, directors, or employees with respect to advice provided pursuant to this POA Users Agreement, or which relate in any way to this POA Users VAI ? POA Users Agreement v.11.2012
Agreement, will be resolved by arbitration and, to the extent not governed by federal law, such as ERISA, governed by the laws of the Commonwealth of Pennsylvania without reference to its conflicts of law rules. Note that this arbitration clause does not constitute a waiver of any right under federal or state securities laws, or under ERISA, including the right to choose the forum in which to seek resolution of disputes.
Arbitration shall be conducted in accordance with and subject to the then-applicable Commercial Dispute Resolution Procedures of the American Arbitration Association (the AAA Rules). Unless otherwise mutually agreed upon by the parties, the arbitration hearings will be held in Philadelphia, Pennsylvania. A panel of three arbitrators will be selected in accordance with the AAA Rules. The arbitrators will allow such discovery as is appropriate and consistent with the purposes of arbitration in accomplishing a fair, speedy, and cost-effective resolution of disputes. The arbitrators will reference the Federal Rules of Evidence and the Federal Rules of Civil Procedure then in effect in setting the scope of discovery. Judgment upon the award rendered in any such arbitration may be entered in any court having jurisdiction thereof, or application may be made to such court for a judicial acceptance of the award and enforcement, as the law of such jurisdiction may require or allow. You consent to service of process by first-class mail to your addresses maintained on record at Vanguard.
You should know that: (1) arbitration awards will be final and binding on all parties; (2) by electronically subscribing to the POA service, all parties are waiving their right to seek remedies in court, including the right to a jury trial; (3) pre-arbitration discovery is generally more limited than and different from court proceedings; (4) the arbitrators' decision is not required to include factual findings or legal reasoning; and (5) any party's right to appeal or to seek modification of ruling by arbitrators is strictly limited.
The arbitration clause may not apply to residents of all states.
Term and Termination. The term of this POA Users Agreement begins when you subscribe to the POA service. Each time you log on to POA again, the terms and conditions of this POA Users Agreement will apply to your use of the POA service. Therefore, it is recommended that you print a copy of this POA Users Agreement for your records and future reference. VAI may terminate this POA Users Agreement if you do not comply with its terms. You may terminate this POA Users Agreement for any reason at any time without penalty. When you log off and cease your current use of POA, we will not have any obligation to make any recommendations, monitor your account or take any action for your account.
Assignment. You agree not to assign this POA Users Agreement, and we agree not to assign this POA Users Agreement (within the meaning of the Investment Advisers Act of 1940, as amended) without your written consent.
Hold Harmless. You agree to use the POA service according to this POA Users Agreement. If you do not comply with the
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Vanguard Personal Online Advisor Users Service Agreement
"POA Users Agreement"
terms of this POA Users Agreement, you will hold VAI and Financial Engines, and if you are sponsored to use POA by your employer or other organization, the employer or organization harmless from any loss. You agree to use the Advisor service for your personal use only, not for commercial or business purposes.
Disclosures. VAI reserves the right, at our discretion and without prior notice, to change the investment planning methodology and/or other POA components and/or to discontinue POA, in whole or in part, at any time. Changes may affect all POA participants, individual POA participants, or only those in certain classes or groups.
POA is a framework to be used in your investment planning, but it is not a substitute for your own informed judgment. You are responsible for your own investment decisions; you may accept, reject or modify the investment recommendations POA will provide. You are responsible for reviewing your account periodically to monitor changes in the market and the value of your investments.
By providing your e-mail address, you agree that you will accept all electronic communications from POA at your e-mail address and will not make any claims against POA, VAI, Financial Engines, or their respective affiliates if you do not receive any communications the parties send to your e-mail address. You agree to notify POA promptly if your e-mail address changes.
Vanguard Advisers, Inc. (VAI), is a Pennsylvania corporation and an investment advisor registered with the Securities and Exchange Commission. VAI's mailing address is P.O. Box 2900, Valley Forge, PA 19482-2900. For additional information about VAI, please call 800-310-9228. VAI has established and operates under a Code of Ethics that complies with the requirements of the federal securities laws. VAI will provide a free copy of its Code of Ethics to any client or prospective client upon request.
VAI ? POA Users Agreement v.11.2012 [VG_POA_Agmt_11_2012]
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