Wealthfront vs Vanguard Digital and Personal Advisor Services
This comparison of Wealthfront vs. Vanguard Digital and Personal Advisor Services showcases two powerful robo-advisors.
In this review find out whether Wealthfront or Vanguard is for you?
The Vanguard robo advisors and Wealthfront have some vast differences, most notably target clientele, live advisors, cryptocurrency access, and fees. But both are well-known names in the financial sector, with solid historical performance and a knack for appealing to their clients’ needs.
Contents
*Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link.
Currently, Vanguard owns the title of robo-advisor with the most assets under management, at $190 billion. While Wealthfront holds the 4th place in the robo-advisor AUM race with $27 billion AUM.
Wealthfront vs. Vanguard—Top Features
Wealthfront vs. Vanguard—Overview
What are Vanguard Digital and Personal Advisor Services?
Vanguard, well-known for low fee index mutual funds, is the powerhouse behind the 2 Vanguard robo-advisors:
- Digital Advisor Services – an automated investment manager
- Personal Advisor Services – a comprehensive hybrid with live and digital investment management and advice.
Vanguard Digital Advisor
Like many of its robo-advisor competitors the digital advisor creates a well-balanced investment portfolio that reflects your goals, age, and risk level. The Vanguard Digital Advisor is a basic robo advisor investment manager with rebalancing and goal-based investing.
Vanguard Personal Advisor
The Personal Advisor robo-advisor begins the investment process with a human financial advisor, who acts as the point person in establishing your account. The investment strategy is broader with the Personal Advisor and includes access to both passive and active investment strategies.
With the Personal Advisor Services, you can expect a complete financial plan.
Because of its connection to the larger Vanguard company, the Vanguard robo-advisors offers its clients a host of benefits and services, including access to professional financial advisors for Personal Advisor customers and lower account management fees than most traditional financial advisors.
What is Wealthfront?
Wealthfront may not be part of a larger financial company, but you shouldn’t underestimate it. Wealthfront is one of the earliest and largest stand-alone robo-advisors, so it has longevity and experience on its side.
With low investment management fees, Wealthfront employs state of the art research to craft an efficient, diversified investment portfolio.
This means that your investments are managed in a comparable way to a high fee financial advisor, for a fraction of the cost.
Wealthfront recently added customization features to it’s platform. If investors choose to add individual funds to their pre-made portfolio or create their own, diversified ETF mix, then Wealthfront will manage the account including rebalancing and tax-loss harvesting. The customization options include access to over 100 ETFs and two Greyscale cryptocurrency funds for investors seeking bitcoin and ethereum investments. Or, you can craft your own ETF portfolio for Wealthfront to manage.
Visit the Wealthfront platform and take a look around. You’re eligible for free management if you sign up here.
Investors with Wealthfront can expect a combination of DIY investing and professional digital support—a nice middle ground for investors who feel confident in their risk tolerance and financial goals. Wealthfront offers a range of digital services for investors at all stages of their financial journey. And their product specialists, available by phone, are all licensed financial professionals.
Wealthfront Top Features:
- Daily tax-loss harvesting
- Path digital financial planner
- High-yield cash account
- Wealthfront Borrow – Loans
- Wealthfront Risk Parity Fund and Smart Beta
- Customization with cryptocurrency funds and individual ETFs
Vanguard Top Features:
Digital Advisor
- Low average 0.15% investment management fee (fee varies based upon asset allocation).
- Retirement planning feature which shows how to reach your goals
- Invests in 4 low-fee Vanguard ETFs (exchange traded funds).
- Access to the well-established Vanguard brand
Personal Advisor Services
- Financial advisors for all account holders – for Vanguard Personal Advisor Services
- Index and actively managed ETFs and mutual funds – for Vanguard Personal Advisor Services
- Tiered fees, which range from 0.30% for accounts under $5 million to 0.10% for accounts over $10 million – for Vanguard Personal Advisor Services
Wealthfront vs. Vanguard—Who Benefits?
Seeking a digital automated investment advisor? Choose Wealthfront
Wealthfront is an affordable and efficient robo-advisor that benefits novice and expert investors alike. Wealthfront is ideal for the investor who’s comfortable with an all-digital investment manager.
Wealthfront is also appropriate for investors seeking lending, cash management, and a comprehensive digital financial advisor.
The Wealthfront portfolios are more broadly diversified than those at Vanguard Digital. Wealthfront also offers investment customization and tax loss harvesting, both unavailable at the Vanguard Digital robo-advisor.
Vanguard Digital Advisor is appropriate for existing Vanguard clients with at least $3,000 to invest. If you want basic digital investment management for a low management fee, then Vanguard is suitable. Although there are other free and low priced digital investment advisors as well. Schwab Intelligent Investors and SoFi Automated Investing both offer fee-free investment management. SoFi also offers 1/2 hour financial consultant meetings for all clients.
For an all digital advisor-we prefer Wealthfront due to their “extras”, low investment minimum, and comprehensive Path online financial advisor.
Need a Financial Advisor? Vanguard Personal Advisor Services
Vanguard Personal Advisor Services offers live financial advisors, but you need $50,000 to invest.
Pick Vanguard Personal Advisor Services if you want investment management and a combination digital and human financial advisor.
Low on Cash? Wealthfront
Beginner investors with a small minimum investment amount benefit from Wealthfront. At only $500, this investment amount is within reach of most investors—even those just starting out.
Wealthfront is the clear winner with only $500 to get started.
Tax-Loss Harvesting – Wealthfront
Wealthfront will benefit anyone who wants frequent tax-loss harvesting. Wealthfront’s daily tax-loss harvesting offering is much more frequent than other robos on the market.
Vanguard offers tax-loss harvesting for the Personal Advisors, but not Digital Advisors offer.
Go with Wealthfront for Tax-loss harvesting.
Fees and Minimums – It’s a tie
Wealthfront wins the minimums race with only $500 needed to get started, in contrast with Vanguard Digital’s $3,000 required minimum.
For the all-digital plan, Vanguard’s fees are lower than those at Wealthfront.
The Vanguard Personal Advisor, with financial advisor access costs 0.30% AUM for your first $5 million. But, you must have at least $50,000 to get started.
Vanguard Digital Advisors wins the “basic robo-advisor” fee contest with an expense ratio of 0.15% of AUM.
Wealthfront vs Vanguard—Deep Dive
Aside from the higher minimums and the live advisors with Vanguard, you are likely wondering what else sets these two robo-advisors apart. This deep dive will showcase other important differences and help you decide between Wealthfront or Vanguard robo advisors.
Fees and Minimums
Winner: It’s a tie. Fee’s for Vanguard Digital are lower than Wealthfront, but minimums for Wealthfront are the lowest.
Vanguard Personal Advisor Services
A $50,000 minimum is required for the Vanguard Personal Advisor robo-advisor and comes with a tiered fee system:
- .30% AUM for accounts under $5 million
- .20% AUM for accounts over $5 mil and under $10 mil
- .10% AUM for accounts over $10 mil and under $15 mil
If you have a lot of money to invest, this tiered fee scale is extremely attractive—.20% AUM fee is practically unheard of.
Vanguard Personal Advisor Services has one of the highest minimums of any robo we feature here on Robo-Advisor Pros at $50,000. But, this amount can be spread out over other non-robo Vanguard accounts. Although it is lower than Personal Capital’s $100,000 minimum for their investment Advisory services (remember: Personal Capital has free retirement planning options).
Vanguard Digital Advisor
The Vanguard Digital Advisor requires $3,000 to invest and charges a 0.20% AUM fee. But the management fee is reduced by the average ETF fund management fees. Vanguard claims that your fees will approximate a 0.15% AUM fee, depending upon your asset allocation.
Wealthfront Fees and Minimums
Wealthfront fees and minimums, on the other hand, require only a $500 minimum and charge a low management fee of 0.25% AUM regardless of the size of your investment portfolio.
Investors who are looking for robo-advisors with low minimum investment requirements or account management fees more in line with Wealthfront might consider tossing robo-advisors like Betterment or M1 Finance into the running.
Account Types
Winner: It depends. Both offer a variety of account types, but if you’re seeking a 529 account, choose Wealthfront.
Vanguard Personal Advisors
- Individual and joint investment accounts
- Roth, traditional, SEP, Simple and Rollover IRAs
- Trusts
Vanguard Digital Advisor
- Individual and joint investment accounts
- Roth, traditional, SEP, Simple and Rollover IRAs
This is a relatively limited account selection for a basic robo. You’ll find greater account choices at many comparison robo advisors.
Although you can access a high yield money market fund at Vanguard, you’ll need to set up a separate account, outside of the robo-advisors.
Wealthfront
- Individual and joint investment accounts
- Roth, traditional, SEP, Simple and Rollover IRAs
- Trusts
- 529 College Savings Plan
- High Yield Cash Account
Wealthfront is the only robo-advisor that offers the 529 College Savings account, that we are aware of. This is a big offer for those seeking to invest for a child’s education.
Human Financial Planners
Winner – Vanguard Personal Advisors
Vanguard
Vanguard Personal Advisor Services pulls ahead in this category. All portfolios are managed by a combination of human financial planners and algorithm-based robo-advisors. This platform allows you to collaborate as much or as little as you would like.
Vanguard Personal Advisor portfolios valued under $500,000 have access to the team of advisors who manage other accounts as well. Investors with accounts over $500,000 have a designated personal advisor for their portfolios.
Vanguard Digital advisor doesn’t offer financial planner access, although you can talk to a Vanguard service representative for general questions.
Wealthfront
Wealthfront doesn’t offer human financial advisors. The Wealthfront Path financial advisor is the best digital version of a financial planner that we’ve seen. That said, nearly all Wealthfront customers service representatives have basic Series 7 broker licenses. Although, with a low 0.25% investment management fee, Wealthfront users in need of financial planning might consider hiring a fee only financial planner for specific money-related questions and concerns.
Tax-Loss Harvesting
Winner – Wealthfront
Be aware that more frequent tax loss harvesting might lead to greater tax record keeping.
Vanguard
Vanguard is not against tax-loss harvesting, but they operate on a case-by-case basis for the Personal Advisor Services. One potential benefit to Vanguard’s strategy is that investors can be sure a qualified financial professional is overseeing their tax-advantaged strategies.
Wealthfront
Wealthfront is more proactive in this category, offering tax-loss harvesting on a daily basis for all taxable accounts. For investors who understand the pros and cons of tax-loss harvesting, this more frequent practice may be valuable come tax time.
As a reminder, tax-loss harvesting only matters in taxable investment accounts. Money within a retirement account isn’t taxed, so won’t benefit from tax-loss harvesting.
Investments
Winner – Wealthfront wins the digital and cryptocurrency contest. It’s a tie for Vanguard Personal Advisors vs. Wealthfront.
Wealthfront’s core portfolios are more diversified than the four fund Vanguard Digital Advisor. The addition of additional ETFs including socially responsible or sustainable investments and strategy ETFs is a sound recommendation for Wealthfront.
Vanguard’s robo-advisors offer low-fee index funds for the bulk of their investment portfolios. While Wealthfront allows users to customize their portfolios, or create their own with individual ETFs. Investors who want an opportunity for actively managed investments and more personalized customization along with financial advice might lean towards Vanguard robo investing with the Personal Advisor Services.
Vanguard Personal Advisor Services
The hybrid Personal Advisor Services offers both index and actively managed funds. Because the investment process is directed by a live financial advisor, you have the opportunity for greater customization and personalization.
The core holdings include Vanguard’s low-cost Admiral Shares, including:
| Investment Fund Category | Index Fund Ticker Symbol |
|---|---|
| US Total Stock Market | VTIAX |
| Total Bond Market Index Fund | VBTLX |
| Total International Bond Index Fund | VTABX |
| Intermediate-Term Investment Grade Fund | VFIDX |
| Short-term Investment Grade Fund | VFSUX |
| Intermediate-Term Tax-Exempt Fund (taxable accts only) | VWIUX |
There are additional investment funds available to all of the Vanguard Personal Portfolio robo advisor clients.
Vanguard Digital Advisors
Vanguards Digital Advisor offers four basic Vanguard ETFs, in proportions that reflect your risk level and goals. If you want more than four funds this one isn’t for you.
The following four Vanguard ETFs encompass the US and International stock and bond markets.
*Funds are subject to change.
We were impressed with how the portfolios are crafted at Vanguard. They use a risk quiz that is designed by Trueprofile.com, a company that uses economic science to design the risk questionnaire. The tool reveals a true risk tolerance, loss aversion score that will likely lead to the best possible asset allocation.
These four ETFs cover nearly the entire stock and bond markets in the US and internationally. Although Vanguard lacks style funds or other asset classes like real estate or commodities in the digital plan.
Wealthfront Investments
Wealthfront’s portfolios are also crafted to fit with specific risk levels. Depending upon your risk tolerance level – from conservative to aggressive – you’ll have varying percentages of stock ETFs vs. bond ETFs. The best way to vary your Wealthfront asset mix is to change your risk tolerance or to add additional ETFs or a cryptocurrency fund.
We really like Wealthfront’s fund choices, and their chief investment advisor, Burton Malkiel, author of A Random Walk Down Wall Street, is one of the greatest investing minds of the past 50 years.
Wealthfront’s fund choices are divided among broadly diversified, low-fee stock, bond and alternative exchange traded funds:
| Investment Fund Category | Index Fund Ticker Symbol |
|---|---|
| US Total Stock Market | VTI and SCHB |
| Foreign Stock - Developed Market | VEA and SCHF |
| Foreign Stock - Emerging Market | VWO and IEMG |
| Dividend Appreciation Stock | VIG and SCHD |
| US Treasury Inflation Protected Bond (TIPs) | SCHP and VTIP |
| US Government Bond | BND and BIV |
| Municipal Bond | VTEB and TFI |
| US Corporate Bond | LQD |
| Foreign-Emerging Market Bond | EMB |
| Real Estate | VNQ and SCHH |
| Natural Resources (Energy) | XLE and VDE |
For a nod to active investing, Wealthfront also offers a risk parity fund and smart beta investing options in addition to the individual ETFs, crypto fund and pre-made portfolios.
While Wealthfront investors have access to the Wealthfront Cash Account. There are no fees levied against investments in the Wealthfront Cash Account.
Goal Setting and Retirement Planning
Winner – Digital win goes to Wealthfront. Personal Planning comes in quite close.
Vanguard
The Vanguard Personal Advisor with live advice can help you navigate all of your future goals, including retirement planning.
The Digital advisor focuses solely on the retirement goal.
For DIY calculators and planning, the Vanguard website offers a goals page with tools and calculators to help you plan for a variety of savings goals, emergency fund, and college.
Wealthfront
The Wealthfront Path Digital financial planner is programed to answer 10,000+ financial, investing and money-related questions. We haven’t found another digital planner that’s as comprehensive as Path.
The Wealthfront Path goal setting assistance answers questions like:
- Can I buy a home-in this city?
- Am I on track for early retirement?
- Can I take a year off for retirement?
- Can I send my kid to college?
- Project your net worth over time
- Understand the tradeoffs when you make a financial decision
Wealthfront vs. Vanguard—Loans
Winner-Wealthfront
Vanguard’s robo-advisors don’t offer lending options.
Wealthfront Borrow – Portfolio Line of Credit has no application fees and is available for all customers with an individual, trust, or joint investment account worth $25,000 or more. The loan is available quickly with a low interest rate. It’s a helpful feature to pay for expenses like a vacation or wedding, when you don’t want to sell investments to free up cash.
Security
Winner – It’s a tie. Both platforms are secure.
Vanguard
Vanguard has been around a long time and has well honed security protocols.
Client funds are covered by SIPC (Securities Investor Protection Corporation) and excess insurance. The site uses state of the arti 256-bin SSL encryptioin and provides two-factor authentication.
Wealthfront
Wealthfront partners with expert security companies to create and maintain secure, read-only links. These firms use bank-grade security and employ state of the art data protection. Wealthfront does not store your account password. Read more about Wealthfront Security here.
The Wealthfront Cash account is FDIC insured through partner banks for up to $2 million for individual accounts and $4 million for joint accounts.
Vanguard vs Wealthfront Promotions
Sign up for Wealthfront with this link and you’ll receive $5,000 managed for free.
Get $5,000 managed for free when you sign up for Wealthfront below:
Wealthfront Invite
Once you are a Wealthfront customer, you’re eligible for free investment management. When a friend signs up and funds their account, you get $5,000 managed for free. And your friend also gets $5,000 managed for free! It’s a win – win.
Vanguard
Vanguard Digital currently has a management fee waiver promotion. As of November, 2022, Digital Advisors clients get 90 days of free investment management.
FAQ
For all-digital and automated investment advice, we prefer Wealthfront due to its greater investment selection and wider range of features. If you’re seeking a robo-advisor with live financial advisors, Vanguard Personal Advisors is better, as Wealthfront’s financial advice is all-digital.
We believe that the low 0.25% AUM fee is quite low and a good value for the investment management and advice that you receive. If you’re seeking fee-free investment management then check out these free robo-advisors.
Vanguard is among the premier financial management companies with a legacy of low fee investment advice and products. We have no reservations about the Vanguard investment firm.
Wealthfront vs. Vanguard — Wrap up
Choosing between Vanguard vs. Wealthfront boils down to what you’re seeking in an investment manager. Each platform is distinct, so the decision between Wealthfront or Vanguard shouldn’t be difficult.
Both robo-advisors have performed well over the last few years and have demonstrated over time their stability and commitment to their clients. However, that’s about where their similarities end.
For digital investment advice Wealthfront wins hands down.
Despite not being part of a larger financial institution, Wealthfront is a solid choice. This robo-advisor packs a lot of value into one affordable package. The Path financial advisor is only one of Wealthfront’s offerings that demonstrates the power of a robo-advisor to help keep investors on track for their professional goals. Although, anyone can link their accounts and access Path, regardless of whether you’re a client or not.
Since digital investing is Wealthfront’s jam, they do it exceptionally well!
Wealthfront wins the access competition for new and small investors. Unless you have $3,000 for the Digital Advisors and $50,000 available to invest in the Personal Advisor, Vanguard may be out of the question.
In fact, even if you don’t open a Wealthfront investment account, the high yield cash account is a solid choice for emergency and short-term cash needs.
For live financial advisors you’ll choose Vanguard Personal Advisors.
When considering Wealthfront or Vanguard, and seeking someone to guide the process, Vanguard is the only choice. We like how the advisor guides the process and fees are quite low when compared with traditional financial advisors.
Bit, if you lack the $50,000 minimum investment amount and want a low-fee robo-advisor with access to financial advisors, and a low minimum investment amount SoFi Invest is worth a look. SoFi offers fee-free investment management and live financial advisors.
Read the Complete: Wealthfront Review
Read the Complete: Vanguard Robo-Advisor Review
Related
- Betterment vs. Vanguard vs. Wealthsimple
- Personal Capital vs. Mint. vs. Quicken
- Wealthfront vs. Fidelity Go
- Betterment vs. Fidelity Go
Sources:
- https://personal.vanguard.com/pdf/vanguard-digital-advice-brochure.pdf
- https://personal.vanguard.com/pdf/vpabroc.pdf
- https://www.wealthfront.com/legal/disclosure
Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.
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