Vanguard Digital Advisor review: Automated ETF portfolios with a $3,000 minimum
Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.
- Vanguard Digital Advisor is an automated investing account that manages your portfolio for you.
- The account has a $3,000 minimum and 0.15% annual advisory fee.
- Vanguard Digital Advisor invests your money into a personalized portfolio of Vanguard ETFs.
- Click here to open an account with Vanguard Digital Advisor.
Is Vanguard Digital Advisor right for you?
|Vanguard Pros||Vanguard Cons|
Established in 1975, Vanguard has long positioned itself as a behemoth in the online brokerage and trading arena. The investment platform offers a range of wealth-building products, including self-directed brokerage, retirement, advisor-managed, and automated accounts.
Among those is its Vanguard Digital Advisor automated account. This account — unlike its hybrid advisor-managed and automated Vanguard Personal Advisor Services account — uses an algorithm to create and manage a personalized portfolio of Vanguard ETFs on your behalf.
If you’re new to investing or simply prefer to take the automated, hands-off route, keep reading to see if Vanguard Digital Advisor is right for you.
Bottom line: Vanguard Digital Advisor is best for hands-off investors looking for personalized, automated investment portfolios.
|Editor’s rating||4.15 out of 5|
|Promotion||None at this time|
How does Vanguard Digital Advisor compare?
0%, $3/month, or 0.35%/year
0.25% (0.06% to 0.13% for fund fees)
Fidelity Flex mutual funds
|Open an account||Open an account||Open an account|
Vanguard Digital Advisor and Fidelity Go both create and manage personalized portfolios for you. The two differ, however, when it comes to minimum account requirements, fees, and investment choices. There’s no minimum requirement with Fidelity Go, and you won’t have to pay any advisory fees if you have a balance below $10,000.
With Vanguard Digital Advisor, on the other hand, you’ll run into a $3,000 minimum and 0.15% advisory fee. In addition, Vanguard uses its own ETFs while Fidelity Go relies on its own mutual funds. While Vanguard’s ETFs have expense ratios (fees), Fidelity Go’s mutual funds don’t.
Wealthfront’s advisory fee is slightly higher than Vanguard’s, but it has a lower minimum requirement. This investment app could be a good option if you’re solely looking for automated advice. However, Vanguard and Fidelity might be reasonable options for investors interested in opening other wealth-building accounts.
If you’re interested in Vanguard Digital Advisor, though, keep reading to see if it’s right for you.
Learn more about Vanguard Digital Advisor at Vanguard.com »
Ways to invest with Vanguard Digital Advisor
Automated investment management
Vanguard Digital Advisor is best for passive or hands-off investors who like the idea of having their investments managed for them. The automated advisor creates a portfolio that aligns with your investment preferences, risk tolerance, and goals.
When it comes to account types, Vanguard Digital Advisor manages the following:
- Individual or joint tenants with rights of survivorship (JTWROS)
- Traditional IRAs
- Roth IRAs
- Rollover IRAs
Vanguard also says Digital Advisor can manage other Vanguard-administered personal investment accounts and employer-sponsored retirement accounts. If you’re wondering which instruments the automated platform uses, though, it invests your money into a diversified mix of ETFs compatible with your risk tolerance. More on that below.
Vanguard Digital Advisor’s ETF investment selection includes the following:
- Vanguard Total Stock Market ETF (0.03% expense ratio)
- Vanguard Total International Stock ETF (0.08% expense ratio)
- Vanguard Total Bond Market ETF (0.035% expense ratio)
- Vanguard Total International Bond ETF (0.8% expense ratio)
Expense ratios represent the annual operating expenses of assets like ETFs and mutual funds. As shown above, you’ll mainly incur a couple of fees: The annual 0.15% fee and the expense ratio fee (ranges from 0.03% to 0.8%).
Account setup and user interface
Vanguard asks multiple questions about your investment preferences, risk tolerance, and financial goals when determining how to make the best recommendations. The automated advisor also uses an assessment tool to measure your risk profile (the amount of risk you’re willing to take on with your portfolio).
Its risk tolerance measurement gives you the option of five different risk attitudes: Very conservative, conservative, moderate, aggressive, and very aggressive.
When it comes to navigability, the Vanguard Digital Advisor interface is quite simple to use. It not only lets you view progress toward financial goals (eg. retirement), but it also offers a financial outlook feature that shows you how much you’ll need to invest to meet those goals.
In addition, the platform allows you to connect external accounts so you can view all of your assets at once.
Is Vanguard Digital Advisor trustworthy?
Vanguard has an A+ rating with the Better Business Bureau. While BBB ratings range from A+ to F, the bureau says its Vanguard rating reflects its opinion of the entire company’s interactions with its customers.
Besides customer complaint history, the BBB also considers licensing, advertising, and government actions when evaluating businesses. But as mentioned on its website, the bureau’s ratings don’t ensure a company will be reliable or perform well.
It’s wise to do your own due diligence in addition to the bureau’s research. Vanguard has closed 67 complaints in the past 12 months, according to BBB data.
Rickie Houston is a wealth-building reporter at Personal Finance Insider who covers investing, brokerage, and wealth-building products.
Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.
Source: Read Full Article