Ranked #1 for Best Robo for Complex Financial Planning Needs
Ranked #2 for Best Overall Robo
Ranked #2 for Best Robo from an Incumbent Financial Institution
With over $140 billion in assets under management, Vanguard’s Personal Advisor Services is the largest direct-to-consumer robo advisor. Vanguard offers a compelling robo with low fees and strong access to live advisors. In our most recent Robo Ranking, Vanguard’s Personal Advisor Services was ranked the Best Robo for Complex Financial Planning Needs, and it was ranked second in the Best Overall Robo and Best Robo from an Incumbent Financial Institution categories.
While Vanguard lacks the high-tech, streamlined online experience of some of its digital advice competitors, its team of live advisors can provide customized quality service at a considerably low price. A client can work with an advisor to create custom financial plans for complex financial situations. In fact, a new customer cannot proceed to open an account without talking to an advisor.
Although Vanguard’s minimum of $50,000 is higher than those of its competitors, it provides significant value to its customers. With a management fee of 0.30%, Vanguard undercuts most competitors when comparing service models that provide access to live advisors. Vanguard’s simple portfolio, which is constructed of just five ETFs in our account, is a reflection of its passive, low-cost indexing approach. This strategy has delivered consistent performance and helped Vanguard perform well in our ranking. Vanguard is a great choice for those looking for an advisor-centric experience while keeping costs very low.
Vanguard has announced a new, digital-only (no live advisor) robo that will have a $5,000 minimum and charge a 0.15% management fee. We predict that this offering will have similar investment strategies but offer more robust digital financial planning tools. Vanguard has lagged behind the younger, more tech-savvy startups. Its new offering is predicted to challenge them more directly.
- Access to live advisors at a low cost
- Clients have a dedicated advisor when they have $500k of assets
- Flexibility around unrealized taxable gains and concentrated positions
- High minimum investment at $50,000 (its digital-only offering with a $5,000 is not live yet)
- No automatic tax loss harvesting
- Less user-friendly digital interfaces than those provided by other robos
|Advisory Fee||0.30% annually for the first $5 million; 0.20% annually on the next $5 million; 0.10% annually on the next $15 million: 0.05% annually above $25 million|
|Average Weighted Expense Ratio||0.07%|
|Accounts Supported||Taxable, IRA, Roth IRA, SEP IRA, Trusts|
Performance Figures (as of 9/30/2019): ⭐⭐⭐⭐
|1-TR Trailing||Sharpe Ratio||2-YR Trailing (annualized)||Sharpe Ratio|
Digital Advice Ratings
Access to Advisors ⭐⭐⭐⭐
Due to its position as one of the largest asset managers in the world, Vanguard can build comprehensive plans with live advice for all of its robo clients for a low fee of 0.30%, a fairly sizable discount compared to similar offerings that offer live advice. Additionally, PAS clients with more than $500k in assets are paired with a dedicated advisor, as opposed to working with a different advisor every time. The one shortcoming in regards to Vanguard’s access to live advisors is that the investment minimum is high at $50,000.
Financial Planning ⭐⭐⭐⭐⭐
At Vanguard, all planning centers around the direct client-advisor relationship. Working with an advisor, users can plan for multiple long-term investment goals and receive a complete illustration of their financial lives. Given that investors work consistently with the same advisor, that advisor can provide a more personalized plan and better understand a customer’s situation. However, Vanguard does lack the sophisticated digital tools that other more technologically nimble firms provide.
Transparency and Conflicts ⭐
Vanguard had one of the lowest transparency scores in our rankings. It does not make the historical performance of its models public. Nor does it allow investors to see the holdings of a portfolio before it is opened. Lastly, Vanguard uses all proprietary funds in its portfolios. However, this did not impact its rating too heavily since Vanguard funds charge some of the lowest fees in the industry.
Features and Customer Experience ⭐⭐⭐
Vanguard lags behind some competitors in regards to the various features and technologies available on its platform. It keeps clients fully invested (no cash allocation) and its fixed-income holdings are held entirely tax-advantaged municipal bonds. Because Vanguard relies more on human advisors, it is more possible to receive a customized portfolio for clients with unique situations. Vanguard does not, however, offer automated tax-loss harvesting or any themed (SRI, active, etc) portfolios.
Costs (annually) ⭐⭐⭐⭐
|Management Fee||Fund Expenses||Total Cost|
|Personal Advisor Services (per $10,000)*||$30||$7||$37|
|Personal Advisor Services (at $50,000)||$150||$35||$185|
*Per $10,000 for comparison purposes with our other robo profiles but Vanguard PAS has a $50,000 minimum