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One question facing robo-advisors like Betterment: If these services are simply building portfolios out of index funds and exchange-traded funds — primarily from Vanguard — why wouldn’t investors just go straight to the source?
Vanguard has heard that question, of course. That may be one reason why it created its own successful online advisor, Vanguard Personal Advisor Services, and launched a strictly digital, lower-cost option, Vanguard Digital Advisor, in 2020. So how do these services, plus Vanguard’s brokerage, compare with a managed experience at Betterment? This Betterment versus Vanguard comparison shakes that all out to help you decide which company is best for you.
For details on each service, read below.
Betterment is best for:
Hands-off investors.
Retirement investors.
Users with low balances.
Those who want automatic rebalancing.
Users who like goal-based tools.
Betterment at a glance
Account minimum | $0. |
Account management fee | 0.25%. |
Investment expense ratios | Average expense ratio of 0.11%. |
Account fees (annual, transfer, closing) | None. |
Portfolio mix | Core portfolio uses ETFs from 13 asset classes. Portfolio options include: Betterment Core, Goldman Sachs Smart Beta, Blackrock Target Income, Betterment Flexible Portfolio. Portfolio mix is well-diversified but lacks exposure to non-market correlated assets like real estate investment trusts (REITs) and commodities. |
Socially responsible portfolio options | Three socially responsible investing portfolio options: Broad Impact, Climate Impact, and Social Impact. |
Accounts supported | Individual and joint nonretirement accounts. Roth, traditional, rollover and SEP IRAs. Trusts. Ability to link external accounts for personalized advice (but not direct management). |
Tax strategy | Tax-loss harvesting. Tax-Coordinated Portfolio tool. Tax Impact Preview tool. Charitable giving tool. |
Automatic rebalancing | Free on all accounts. Monitored daily. Buy/sell rebalancing triggered whenever portfolio drifts, reaches or exceeds 3%. Also, Betterment uses any cash flow, such as a dividend or deposit, to partially rebalance your portfolio. |
Human advisor option | Betterment Digital doesn't offer access to financial advisors. However, for a fee, anyone can buy an advice package that includes a consultation with an advisor, regardless of if they have a Betterment account or not. Prices range from $199 to $299. |
Savings account/cash management option | High-yield savings with no fees or minimum balance requirements, unlimited transfers and FDIC coverage for balances up to $1 million. Includes a feature that enables customers to save in separate buckets for different goals. Checking account that reimburses ATM fees and foreign fees and has a debit card with cash back. |
Customer support options (includes how easy it is to find key details on the website) | Phone support Monday-Friday 9 a.m.-8 p.m. Eastern time for checking/cash reserve inquiries. Monday-Friday 9 a.m.-6 p.m. Eastern time for investing and general inquiries. Email support and questions also answered through social media. |
» Read our full review of Betterment
Vanguard PAS is best for
Access to financial advisors.
Comprehensive financial planning.
Larger account balances.
Vanguard PAS at a glance
Account minimum | $50,000 |
Account management, planning or subscription fee | Starts at 0.30% but tiered (drops at higher balances):
|
Other account fees | None. |
Setup or onboarding fee | None. |
Advisor access and credentials |
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Financial planning services | Can advise and create a custom portfolio for a variety of situations, such as saving for retirement, college or a family vacation home. Services include: Social Security optimization, dynamic spending, tax efficiency, long-term care and medical costs, high-level guidance on estate planning, charitable giving, Roth conversions and trust services. |
Investment expense ratios on portfolios | Asset-weighted average is 0.06%. |
Portfolio construction | PAS creates customizable portfolios on a client-by-client basis to fit their goals, circumstances and preferences. Uses Vanguard index funds and ETFs, which are low-cost and diversified with tight tracking. As potential alternatives to core index options, offers three ESG funds (scored on environmental, social and governance factors for sustainable investing). |
Brokerage options | Clients must move money to Vanguard but can keep outside investments if there are embedded gains or other reasons to do so. |
Accounts supported |
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Tax strategy |
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Customer support options (includes how easy it is to find key details on the website) | Customer support is available Monday through Friday, 8 a.m. to 8 p.m. Eastern time. Ability to schedule appointments with an advisor at any time. |
» Want to check out other providers? See our top picks for robo-advisors.
 |  |  |
|---|---|---|
Fees0% management fee | Fees0.15% per year (approximately) | Fees0.25% management fee |
Account Minimum$0 | Account Minimum$0 | Account Minimum$0 |
PromotionFree career counseling plus loan discounts with qualifying deposit | PromotionNo advisory fees your first 90 days of Vanguard Digital Advisor investment management (Enrollment requires a Vanguard account with a minimum of $3,000) | PromotionUp to 1 year of free management with a qualifying deposit |
