A cynic might note that it is in Vanguard's interest to be conservative here to (1) drive down client expectations and (2) increase the required savings rate in its financial planning models. There's no upside for Vanguard to be high and wrong on the overall market and limited (if any) downside to Vanguard being pessimistic.
Well people can invest in something else that has higher returns than 5% with the same risk and abandon services like ETFs so Vanguard has something to lose. You might be right though in the way that people got so used to invest in ETFs and will still invest with a 5% gain. Vanguard might be aware of that and might be trying to pull down the expectations to increase their margin. This is all unfounded speculation though.
It's fairly rational to point out that the market is overvalued at the moment to begin with. If anything, I'd expect some big losses in that 5% median if economic pressures leave people worried and speculating.
Not the original poster but I would point to the Shiller PE (i.e. CAPE) ratio as a useful indicator of potential over-valuation. The increasing cost required to make the same in earnings is disconcerting.