Vanguard Digital Advisor offers professional money management services at lower-than-average costs. The robo-advisor helps clients balance their financial goals by directing their savings into a diversified portfolio of securities.
It comes with a variety of features, including a risk tolerance quiz, investment recommendations, and a wide range of investment options. Read our Vanguard review to find out more.
No advisory fees for the first three months
- No advisory fees for the first three months
- Automatic rebalancing
- Retirement planning tools
- Fast withdrawals
- No tax-loss harvesting
- Limited portfolio options
Trusted by millions of investors worldwide, The Vanguard Group is one of the pioneers of passive investing. In 2021, the Pennsylvania-based investment advisor was managing around $7 trillion in global assets.
It’s one of the world’s largest providers of exchange-traded funds or ETFs, and its offerings include stocks, bonds, and CDs. In addition to financial planning and asset management, the company also offers a robo-advisor.
Vanguard brokerage services are best-suited for brokers who are interested in low-cost investing. The robo-advisor and the asset planning services come with some of the lowest fees in the industry, which makes this company the perfect choice for less-experienced investors.
Although there is no shortage of positive reviews from current traders, Vanguard is not a BBB accredited company. But our assessment confirms that Vanguard is one of the market’s most reliable investment companies with almost 50 years of experience and reliable robo-advisor technology.
Moreover, Vanguard is built on a unique investor-owned structure that allows its 30 million investors to own the company’s funds. This structure ensures that the company remains focused on the investor.
Our Vanguard digital advisor review highlights the main advantages of using the Vanguard robo-advisor. We’ll tell how it works, what features it offers, and how it can help you achieve your financial goals. We’ll also compare Vanguard with two other robo advisor platforms, Betterment and Wealthfront.
How Does Vanguard Digital Advisor Compare to Other Robo-Advisors?
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How Does Vanguard Digital Advisor Work?
Our thorough Vanguard robo-advisor review will tell you how to use and sign up for this service.
The sign-up procedure
To use the digital advisor service at Vanguard, you need to start by opening an account. In order to do so, applicants need to meet certain requirements:
- You need to be at least 18 years old (19 in Alabama and Nebraska and 21 in Mississippi).
- You need to be a resident of the United States.
- You can’t be retired or close to retirement (one year or less).
- Your Vanguard account needs to meet the minimum balance requirement.
You can complete the sign-up procedure on the Vanguard website. You’ll be asked to create your profile with a username and password and then provide details like your name, address, and date of birth.
The online wizard will assist you in filing a questionnaire to help personalize your retirement plan. You’ll need to provide details like tax-filing status, income details (whether you are single, married, or head of a household), and your retirement account if you have one.
All of the information you provide is intended to help create your Vanguard portfolio. You’ll also be asked questions that are designed to gauge your risk tolerance and your appetite for taking chances.
Finally, the Vanguard robo investing service will ask you about your retirement goals. You don’t need to know absolutely everything about your retirement plans, and you can edit the profile any time you want.
You can also add additional goals, like your wedding expenses, kitchen renovation, or anything else you have in mind.
After you create the Vanguard account for the robo-advisor service, you need to link it with your bank account. You also need to fund your account with at least $3,000 to start investing.
Your Vanguard Digital Advisor portfolio is created based on your financial goals and risk tolerance. The robo-advisor recommends a portfolio of bonds and stocks and then manages your investments.
Vanguard reviews your account on a daily basis, automatically adjusting investment to keep you aligned with your goals.
Like similar services, Vanguard does much of the hard work for you. The account management features rely on an algorithm-driven service that saves you time and offers a certain level of expertise, which new investors typically lack.
Who Is Vanguard Digital Advisor for?
Vanguard Digital Advisor is for anyone who wants to invest in a simple, efficient, and cost-effective way. With this robo-advisor, you don’t need to stress about market changes or managing the portfolio on your own.
The robo-advisor relies on Vanguard’s proven investment methodology and sinks your savings into well-diversified ETFs in order to maintain balanced investments.
And to circle back to an earlier point about Vanguard fees, all of these robo-advisor services are perfectly affordable.
In short, Vanguard's online investing platform is designed to simplify the life of less experienced brokers and anyone else looking to balance numerous investment goals.
Vanguard's experience and expertise can help a range of clients build a well-diversified portfolio of ETFs and meet the unique needs of each client.
Vanguard Investing Portfolio Choices
Robo-investing with Vanguard involves the use of the company’s low-cost ETFs that offer varying contributions to different portfolios. The manner in which the portfolios are organized and managed depends on the risk tolerance and the client’s financial goals.
Your portfolio may include the following ETFs:
- Total Stock Market ETF
- Total International Stock ETF
- Total Bond Market ETF
- Total International Bond ETF
Even though this service constructs a diversified portfolio based on your retirement plans and financial goals, Vanguard investing with a robo-advisor is limited to the four aforementioned ETFs.
You won’t be able to invest in mutual funds or other financial products.
Pricing and Fees
We’ve already covered the requirements and the fact that your account has to be funded with at least $3,000. That’s not exactly a small sum of money, especially if you are a beginner.
Vanguard’s competitors, like Ellevest, have a much better offer when it comes to the account deposit requirements.
That said, Vanguard is still a great option for many users because of the very low management fees that edge out similar services. The Digital Advisor service fee is 0.20%.
For example, if you invest only the required minimum ($3,000 per year), the annual cost for the service is up to $6. This is a way below the industry standard, which is currently hovering around 0.29% or $8.70.
Another thing we must emphasize is that this robo-advisor includes the expense ratios of the ETFs. This means that you’ll probably pay even less for its services. Based on some rough estimates, the advisory fee can drop to 0.15%.
Another great thing is that you don’t need to pay the Vanguard robo-advisor fees for the first 90 days after opening the account. The money you save early on can be used for future investments or deposited into a savings account.
Vanguard Account Types
There are several account types that the digital advisor is capable of managing.
First, the robo-advisor manages 401(k) retirement accounts, as well as several other IRA accounts, including traditional IRAs and Roth IRAs.
There is also an option to choose a rollover IRA account. If you don’t want any IRA accounts, you can always opt for individual or joint tenants with rights of survivorship or JTWROS accounts.
However, don’t forget that those JTWROS accounts are taxable.
Vanguard’s Robo Investing Tax-Strategy
Unlike many other robo-advisors, including Betterment, Vanguard doesn’t offer the tax-loss harvesting strategy. Tax-loss harvesting is a strategy used to reduce tax liability.
It involves selling investments that have lost money in order to claim the capital loss on your taxes. This can be an effective way to reduce your taxable income, and it’s especially beneficial if you plan to invest the proceeds from the sale into similar assets.
The absence of this feature with Vanguard’s robo-advisor service is a notable downside.
Instead, Vanguard uses tax-efficient investment. It uses the minimum tax cost basis method. This is a way to minimize the tax impact of selling securities.
This method looks at the cost basis of each security and then determines which ones to sell in order to minimize the taxes owed. This can be useful when rebalancing a portfolio or selling securities for any reason.
Vanguard Human Advisor Services
The digital advisor at Vanguard isn’t accompanied by a human advisor. Instead, the service tailors to investors who are comfortable with leveraging technology and don’t need to chat to an actual person about their financial situation.
If you need more personalized advice and support from a trained professional, you’ll have to sign up for Vanguard’s Personal Advisor Services.
Of course, this service is separate from the Vanguard Digital Advisor platform and comes with additional costs.
Firstly, you’ll need to invest $50,000 to enroll. There is also a Vanguard fee of up to 0.30% of your balance annually (around $150 a year for a $50,000 portfolio).
But regardless of which service you choose, Vanguard takes a holistic approach to financial planning, and the company works with you to create a plan that fits your unique needs.
Moreover, their advisors are available anytime, both online and by phone.
Vanguard Mobile App
Vanguard offers a mobile app to access your digital advisor account. The app is available for both Android and iOS devices and can be used to check your account balance, recent transactions, and holdings.
You can also use the app to view your account's performance and asset allocation. The mobile app makes it easy to stay on top of your finances while on the go.
Vanguard Digital Advisor is a reputable service that gives investors the confidence they need. However, there are some drawbacks to using Vanguard Digital Advisor. As such, it is important to compare it to similar services before choosing Vanguard to manage your investments.
Vanguard Digital Advisor vs. Betterment
Vanguard Digital Advisor is a great choice for investors looking for a hands-off approach to investing.
The robo-advisor will automatically rebalance your portfolio and make investment choices for you based on your goals.
Betterment is another excellent choice for those who want a robo-advisor to manage their investments.
Both Vanguard and Betterment offer low fees, but Vanguard includes costs that you are not going to pay with Betterment.
Vanguard's account minimum deposit is $3,000, which is way more than the requirements at other companies. Betterment doesn’t require any deposit. However, Vanguard provides a faster service.
Withdrawals are processed within two days, while at Betterment, it is between four and five days.
Vanguard Digital Advisor vs. Wealthfront
Wealthfront is another great robo-advisor. It offers low-cost services that are primarily designed for those who want their investments to grow over time.
It’s a suitable option even for beginners because it allows you to set up your financial goals and track how your finances grow over time.
Wealthfront is a better option than Vanguard if you're looking for ways to grow your savings. Although the Vanguard brokerage account fees are lower than Wealthfront’s, the former’s minimum deposit requirement is only $500.
Vanguard offers phone support during business days. There are regular business hours for different services. For example, for personal investors, the support is available from Monday to Friday between 8 a.m. to 8 p.m. (E.T).
If you want to learn more about Vanguard brokerage services, there is an extensive knowledge page with articles, tutorials, and online guides.
Our Vanguard review highlights the key benefits of using Vanguard Digital Advisor while shedding light on some of its imperfections.
It is a good option for investors who want a hands-off approach to investing. It is also a good choice for those who want to invest in a Vanguard fund but don't have the time or knowledge to do so on their own.
However, Vanguard Digital Advisor may not be the best option for investors who want a lot of control over their portfolios. The platform offers limited customization options and a limited selection of ETFs.
Is Vanguard good for beginners?
The robo-advisor by Vanguard is a great option for investors who are just getting started. The company offers a wide variety of investment options and has a long history of stability and success. Additionally, Vanguard provides excellent customer service and educational resources to help beginners start their investing journey.
How trustworthy is Vanguard?
Vanguard is one of the most trusted investment companies in the world. For nearly 50 years, Vanguard has been committed to helping investors reach their financial goals. Vanguard is known for its low-cost index funds, which offer investors a simple way to invest in a wide range of asset classes. Vanguard also offers a variety of other investment products, including mutual funds, ETFs, and 401(k) plans.
Is Vanguard Digital Advisor only for retirement accounts?
No, robo-investing by Vanguard is not just for retirement accounts. It can be used for any type of investment account, including taxable accounts, IRAs, and employer-sponsored retirement plans. Vanguard Digital Advisor can help you manage all of your investments in one place, making it easier to reach your overall financial goals.
Is Vanguard Digital Advisor worth it?
Vanguard Digital Advisor is a robo-advisor from one of the largest asset managers in the world. It offers a simple, low-cost way to invest, so it’s definitely worth exploring. Although it requires a $3,000 minimum investment, the robo-advisor offers valuable tools that will help you achieve your financial goals. Read our Vanguard review to find out more about this service.