Wealthfront vs Vanguard Personal Advisor Services
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Today’s comparison of Wealthfront vs. Vanguard Personal Advisor Services showcases two powerful robo-advisor options on the market right now. The Vanguard automatic investment robo and Wealthfront 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.
The Vanguard robo advisor uses basic portfolio allocation methods that are typical of robo-advisors. A computer algorithm creates a portfolio for each client, based your goals and risk tolerance. But here’s where Vangaurd is distinct from many competitors. Vanguard’s robo-advisor adds direct human financial advisors to the process. Your contact with the service is handled by an individual financial advisor, who acts as the point person in establishing your account and portfolio.
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 financial advisors.
Vanguard Digital Advisor
This new offering is smilar to the traditional robo-advisors and provides investors with low-fee investment management driven by your risk level and goals.
LIke many of its robo-advisor competitors the digital advisor creates a well-balanced investment portfolio that reflects your goals, age, and risk level. At present, it’s best differentiating features are:
- Low 0.15% investment management fee.
- Use of low-fee Vanguard ETFs (exchange traded funds).
- Access to the well-estblished Vanguard brand.
- New features coming soon: emergency fund and debt management assistance.
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’s combination of strategies would take an individual investor or investment manager 105 hours to replicate, according to company research.
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
|Wealthfront||Vanguard Personal Advisor Services|
|Overview||Wealthfront offers a low fee digital investment portfolio management tool with the added potential to lower your taxes.||Two robo-advisors. Vanguard Personal Advisor Services with digital and human advice. Vanguard Digital offers a computerized investment manager.|
|Minimum Investment Amount||$500||Vanguard Personal Advisor Services-$50,000|
Vanguard Digital Advisor-$3,000
|Fee Structure||0.25%||Personal Advisor Services-Sliding Fees:|
0.30% AUM on assets up to $5 million
0.20% AUM on assets between $5-10 million
0.10% AUM on assets between $10-25 million
0.05% AUM on assets over $25 million.
Digital Advisor-0.15% of AUM
|Top Features||Automated 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.||Personal Advisor-The human financial advisor drives the entire process. Together, you & the advisor create a customized investment plan. |
Digital-Low-fee Vanguard ETFs.
Rebalancing available in both.
|Free Services||Free portfolio review and home buying guide.||N/A|
|Contact & Investing Advice||Phone M–F 10 am–8 pm ET |
|Available by phone Monday - Friday from 8:00 am to 7:00 pm EST|
For Personal Advisor Services- Human financial advisor guides the process. Helps build portfolio with low fee funds & serves as investing coach.
Accounts below $500,000 get team of advisors & those above $500,000 get a dedicated personal financial advisor.
No financial advisors for Digital clients.
|Investment Funds||Low fee, diversified stock & bond ETFs.||Low fee stock & bond mutual funds and ETFs selected from among the scores of Vanguard funds.|
|Accounts Available||Individual & 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.|
Wealthfront Top Features:
- Daily tax-loss harvesting
- Path financial planner
- High-yield cash account
- Wealthfront Borrow – Loans
- Wealthfront Risk Parity Fund and Smart Beta
Vanguard Top Features:
- Quarterly rebalancing
- Financial advisors for all account holders – for Vanguard Personal Advisor Services
- Index and actively managed ETFs and mutual funds – for Vanguard Personal Advisor Services
- Vanguard Personal Advisor Services – Tiered fees, which range from 0.30% for accounts under $5 mil to 0.05% for accounts over $25 mil – for Vanguard Personal Advisor Services
- Vanguard Digital Advisor charges a low 0.15% expense ratio
- Vanguard Digital Advisor invests in low fee Vanguard ETFs
Wealthfront vs. Vanguard—Who Benefits?
All Digital Advisor-Wealthfront or Vanguard Digital
Wealthfront is an affordable and efficient robo-advisor that can benefit novice and expert investors alike. Wealthfront is ideal for the investor who’s comfortable with an all-digial investment manager.
Wealthfront is also appropriate for investors seeking lending, cash management, and a comprehensive digital financial advisor.
Vanguard Digital Advisor is appropriate for existing Vanguard clients with at least $3,000 to invest.
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 financial advisors, but you need $50,000 to invest.
Pick Vanguard Personal Advisor Services if you want a financial advisor.
Low on Cash? Wealthfront
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 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 Personal Advisor Services offers tax-loss harvesting on a case-by-case basis. We’re not sure if Vanguard Digital offers tax-loss harvesting or not.
Go with Wealthfront for Tax-loss harvesting.
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 Personal Advisor Services, Wealthfront comes out ahead.
Wealthfront Digital Advisors wins the “basic robo-advisor” fee contest with an expense ratio of 0.15% of AUM.
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 Robo-Advisors Fees and Minimums
Vanguard Personal Advisor Services
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.
Vanguard Digital Advisor
The Vanguard Digital Advisor requires $3,000 to invest and charges a 0.15% AUM fee. Additionally investors will pay a small amount for ETF management fees. Vanguard’s funds are known as low-fee leaders.
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. 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 low 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—Human Financial Planners
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 doesn’t offer human financial advisors. The Wealthfront Path financial advisor is a digital version of a financial planner. Although, with a low 0.25% invvestment management fee, Wealthfront users in need of financial planning might consider hiring a fee only financial planner for specific money-related questions and concerns.
Vanguard vs Wealthfront—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 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.
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 might lean towards Vanguard robo investing with the Personal Advisor Services.
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.
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’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|
Wealthfront also offers actively managed investment solutions like smart beta and risk parity. These are discussed more fully in our Wealthfront review (link at the bottom of the article).
Vanguard Personal Advisor Services
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 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 adddtional investment funds available to all of the Vanguard robo advisor clients.
Vanguard Digital Advisors
The following four Vanguard ETFs encompass the US and International stock and bond markets.
*Funds are subject to change.
Wealthfront vs. Vanguard—High Yield Cash
Vanguard or Wealthfront offer high yield cash options. With Vanguard, your cash can be invested in the high yield Vanguard Prime money market account.
While Wealthfront investors have access to the Wealthlfront Cash Account. There are no fees levied against investments in the Wealthfront Cash Account.
Both Wealthfront or Vanguard Personal Advisor Services offer comparable high yield cash accounts.
For the Vanguard Digital Advisor account, you’ll need to open a separate high yield cash account.
Wealthfront vs. Vanguard—Loans
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.
Vanguard vs Wealthfront Promotions
Sign up for Wealthfront with this link and you’ll receive $5,000 managed for free.
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.
At present, there are no specific Vanguard Promotions. Although the firm is known for low fee funds and customer service for all account holders.
Wealthfront vs. Vanguard—Which is Best? Takeaway
Choosing between Vanguard vs. Wealthfront boils down to what you’re seeking in an investment manager. Eash platform is disctinct, 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.
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.
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.
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.
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. In the Betterment vs Vanguard competition, both offer financial consultants with lower minimums and fees at Betterment.
However, investors who do have the $50,000 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: Wealthfront Review
- Direct Access: Wealthfront Investors (Receive $5,000 managed for free with this link.)
- Direct Access: Free Wealthfront Cash Account (no managment fee)
- Read the Complete: Vanguard Robo-Advisor Review
- Direct Access: Vanguard Personal Advisor Services
- Direct Access: Vanguard Digital Advisor
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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.