Wealthfront vs. Vanguard – Which Robo-Advisor is Best for You?

wealthfront vs. vanguard roboo-advisor comparison

Wealthfront vs. Vanguard Personal Advisor Services

Today’s comparison of Wealthfront vs. Vanguard Personal Advisor Services showcases two powerful robo-advisor options on the market right now. The two have some vast differences, most notably target clientele and affordability. But both are well-known names in the financial sector, with powerful historical performance and a knack for appealing to their clients’ needs.

Wealthfront or Vanguard – which one is for you?

Wealthfront vs. Vanguard—Overview

What is Vanguard Personal Advisor Services?

Vanguard, well-known for mutual funds, is the powerhouse behind the Vanguard Personal Advisor Services robo-advisor. This backing makes the Vanguard robo-advisor a very appealing offering on the digital investment market.

Currently, Vanguard owns the title of robo-advisor with the most assets under management, at $115 billion.

Because of its connection to the larger Vanguard company, the Vanguard robo-advisor offers its clients a host of benefits and services, including access to professional financial advisors and a lower account management fee than most traditional investment services.

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 robo-advisors, so it has longevity and experience on its side.

Investors with Wealthfront can expect a combination of DIY investing and professional support—a nice middle ground for investors who feel confident in their risk tolerance but want the failsafe provided by Wealthfront’s Path financial planner. Wealthfront offers a range of digital services for investors at all stages of their financial journey.

Wealthfront vs. Vanguard—Top Features

 WealthfrontVanguard Personal Advisor Services
OverviewWealthfront offers a low fee digital investment portfolio management tool with the added potential to lower your taxes. A personally craftd robo-advisor investment portfolio guided by a human financial advisor.
Minimum Investment Amount$500$50,000 minimum
Fee Structure0.25%0.30% of AUM below $5 million; 0.20% of AUM from $5 million to below $10 million;
0.10% of AUM from $10 million to below $25 million; 0.05% of AUM of $25 million and above.
Top FeaturesAutomated investment management including rebalancing, daily tax-loss harvesting & portfolio review.  Simple selling plan for those with company stock. For investors with more than $100K, tax-optimized  direct investing service may lower taxes & increase returns. Path online financial advisor explains whether you're "on track" for retirement. The human financial advisor drives the entire process. Together, you & the advisor create a customized investment plan. You can be as involved as little or as much as you'd like with your investments. The advisor monitors the plan. Rebalances your portfolio when needed.
Free ServicesFree portfolio review and home buying guide.N/A
Contact & Investing AdvicePhone M–F 10 am–8 pm ET
Email-24/7
Available by phone Monday - Friday from 8:00 am to 7:00 pm EST
Investment FundsLow fee, diversified stock & bond ETFs.Low fee stock & bond mutual funds and ETFs selected from among the scores of Vanguard funds.
Accounts AvailableIndividual & joint investment accounts. Roth, traditional, SEP & rollover IRAs. Trusts. 529 college savings plan accounts. Individual & joint investment accounts. Roth, traditional, SEP, Simple & rollover IRAs. Trusts.
PromotionsN/AN/A

Wealthfront Top Features:

  • Daily tax-loss harvesting
  • Path financial planner
  • High-yield cash account
  • Loans

Vanguard Top Features:

  • Quarterly rebalancing
  • Financial advisors for all account holders
  • Tiered fees, which range from 0.30% for accounts under $5 mil to 0.05% for accounts over $25 mil

Wealthfront vs. Vanguard—Who Benefits?

Wealthfront is an affordable and efficient robo-advisor that can benefit novice and expert advisors alike. While Vanguard can also be said to benefit investors at all levels, although its high minimum balance prevents many beginning investors from jumping right in.

Investors with a small minimum investment amount would benefit from Wealthfront. At only $500, this investment amount is within reach of most investors—even those just starting out.

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.

Investors who are looking for a larger financial institution to back their robo-advisor would benefit from the Vanguard Personal Advisor Services robo.

Additionally, investors who choose Vanguard will have human financial planners assigned to their portfolios—a clear benefit of working with a financial powerhouse.

Vanguards automatic investing is also shared by Wealthfront.

Wealthfront vs. Vanguard— Fees and Minimums

There’s no comparison in this category: The Vanguard Personal Advisor Services robo-advisor is definitely tailored for a wealthier clientele. In a head-to-head – Wealthfront fees vs Vanguard, Wealthfront comes out ahead.

Vanguard Personal Advisor Services Fees and Minimums

A $50,000 minimum is required for the Vanguard 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 $25 mil
  • 05% AUM for accounts over $25 mil

If you have a lot of money to invest, this tiered fee scale is extremely attractive—a 0.05% AUM fee is practically unheard of.

Wealthfront Fees and Minimums

Wealthfront fees and minimums, on the other hand, requires only a $500 minimum and charges a low management fee of 0.25% AUM. At this time, Wealthfront does not offer a tiered fee system.

Vanguard Personal Advisor Services has one of the highest minimums of any robo we feature here on Robo-Advisor Pros. This puts it in league with robo-advisors like Ellevest Premium ($50,000 minimum, .50% AUM), though it is much lower than Personal Capital’s $100,000 minimum for their investment services (remember: Personal Capital has free retirement planning options).

Investors who are looking for robo-advisors with minimum investment requirements or account management fees more in line with Wealthfront might consider tossing a robo-advisor like Betterment or M1 Finance into the running.

Wealthfront vs. Vanguard—Deep Dive

If the high minimum investment required by Vanguard hasn’t turned you away, you are likely wondering what else sets these two robo-advisors apart. This deep dive will showcase a few other important differences of Wealthfront vs. Vanguard Personal Advisor Services.

Wealthfront vs. Vanguard—Human Financial Planners

Vanguard 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 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.

Wealthfront doesn’t offer human financial advisors. The Wealthfront Path financial advisor is a digital version of a financial planner

Wealthfront vs. Vanguard—Tax-Loss Harvesting

Wealthfront is more proactive in this category, offering tax-loss harvesting on a daily basis. For investors who understand the pros and cons of tax-loss harvesting, this more frequent practice may be valuable come tax time.

Vanguard is not against tax-loss harvesting necessarily, but they operate on a case-by-case basis. One potential benefit to Vanguard’s strategy is that investors can be sure a qualified financial professional is overseeing their tax-advantaged strategies.

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.

Wealthfront vs. Vanguard—Investments

Are you choosing a robo-advisor that will best support your needs?

Both Wealthfront and Vanguard’s robo-advisors offer low-fee index funds for the bulk of their investment portfolios. But, investors who want an opportunity for actively managed investments and more personalized customization should choose the Vanguard Essential Portfolios robo-advisor.

Wealthfront’s portfolios are 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 only way to vary your Wealthfront asset mix is to change your risk tolerance.

Wealthfront Investments

Wealthfront’s fund choices are divided among broadly diversified, low-fee stock, bond and alternative exchange traded funds:

Investment Fund CategoryIndex Fund Ticker Symbol
US Total Stock MarketVTI and SCHB
Foreign Stock - Developed MarketVEA and SCHF
Foreign Stock - Emerging MarketVWO and IEMG
Dividend Appreciation Stock VIG and SCHD
US Treasury Inflation Protected Bond (TIPs)SCHP and VTIP
US Government BondBND and BIV
Municipal BondVTEB and TFI
US Corporate BondLQD
Foreign-Emerging Market BondEMB
Real Estate VNQ and SCHH
Natural Resources (Energy)XLE and VDE

Vanguard Investments

Unlike other robo-advisors, Vanguard does not limit your investment choices strictly to ETF’s. Instead, they are comprised primarily of index funds, but may also include actively managed funds. The core holdings include Vanguard’s low-cost Admiral Shares, including:

Investment Fund CategoryIndex Fund Ticker Symbol
US Total Stock MarketVTIAX
Total Bond Market Index FundVBTLX
Total International Bond Index FundVTABX
Intermediate-Term Investment Grade FundVFIDX
Short-term Investment Grade FundVFSUX
Intermediate-Term Tax-Exempt Fund (taxable accts only)VWIUX

*Funds are subject to change.

Wealthfront vs. Vanguard—Which is Best? Takeaway

Choosing between Vanguard vs. Wealthfront boils down to what you’re seeking in an investment manager.

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.

Unless you have $50,000 available to invest, Vanguard may be out of the question.

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.

If you’re seeking a low-fee robo-advisor with access to financial advisors, and a low minimum investment amount then Betterment might be worth a look. (add affiliate link) In the Betterment vs Vanguard competition, both offer financial consultants with lower minimums and fees at Betterment.

However, investors who do have the minimum investment amount may strongly consider Vanguard Personal Advisor Services. This robo-advisor combines the best of both worlds: access to Vanguard’s professional human advisors, investment algorithms, and portfolio management.

Read the Complete Vanguard Personal Advisor Services Review

Direct Access: Vanguard Personal Advisor Services

Read the Complete Wealthfront Review

Direct Access: Wealthfront

More Comparison Articles

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.

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top