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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, and launched a strictly digital, lower-cost option, Vanguard Digital Advisor, in 2020. So how does Vanguard Personal Advisor compare with 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.
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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
Reviewed: Oct. 2023
Period considered: Aug. - Oct. 2023
Account minimum | $0 ($10 to start investing). |
Account management fee | 0.25% annual fee on balances over $20,000 or if you set up recurring monthly deposits totaling $250 or more. Otherwise, $4 per month. |
Investment expense ratios | Average expense ratio of 0.05% to 0.24% for Betterment Core Portfolio as of August 2023. |
Account fees (annual, transfer, closing) | $75 fee to transfer investments out of Betterment. No fee for cash withdrawals. |
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 (where clients can adjust the weights of asset classes) and Innovative Technology. Portfolio mix is well-diversified but lacks exposure to non-market correlated assets like real estate investment trusts (REITs) and commodities. Betterment also offers four cryptocurrency portfolios: Universe, Sustainable, Metaverse and Decentralized Finance. |
Socially responsible portfolio options | Three socially responsible investing portfolio options: Broad Impact, Climate Impact, and Social Impact. |
Accounts supported | Individual and joint taxable brokerage accounts. Roth, traditional, inherited, rollover and SEP IRAs. Trusts. Ability to link external accounts for better-informed advice (but not direct management). |
Tax strategy | Tax-loss harvesting.* Tax-Coordinated Portfolio (asset location) tool. Tax Impact Preview tool. Charitable giving tool. |
Automatic rebalancing | Free on all accounts. Rebalancing generally triggered when drift passes 3%, considering tax impact. 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 start at $299. |
Savings account/cash management option | Cash Account** with no fees or minimum balance requirements, unlimited transfers and FDIC coverage of up to $2 million in individual accounts or up to $4 million in joint accounts at program banks. 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. The cash account offers an interest rate of 5.00%. *Current promotional rate; annual percentage yield (variable) is 5.50% as of 4/2/24, plus a .50% boost available as a special offer with qualifying deposit. Terms apply; if the base APY increases or decreases, you’ll get the .75% boost on the updated rate. Cash Reserve is only available to clients of Betterment LLC, which is not a bank; cash transfers to program banks conducted through clients’ brokerage accounts at Betterment Securities. |
Customer support options (includes how easy it is to find key details on the website) | Phone support Monday-Friday 9 a.m.-6 p.m. Eastern time. Email support and questions also answered through social media. |
» Read our full review of Betterment
Vanguard Personal Advisor is best for
Access to financial advisors.
Comprehensive financial planning.
Larger account balances.
Vanguard Personal Advisor at a glance
Reviewed: Oct. 2023
Period considered: Aug. - Oct. 2023
Account minimum | $50,000 |
Account management, planning or subscription fee | 0.35% for all-index investment options, or 0.4% if you choose a mix of actively managed and passive index fund strategies. |
Other account fees | None. |
Setup or onboarding fee | None. |
Advisor access and credentials |
|
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 | Average expense ratio is 0.06%. |
Portfolio construction | Vanguard Personal Advisor creates customizable portfolios on a client-by-client basis. It uses low-cost Vanguard index funds and ETFs, which are diversified with tight tracking. Vanguard Personal Advisor also 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 |
Note: Personal Advisor will consider and provide guidance for other accounts types (e.g. 529s, UGMA, UTMA, non-Vanguard record-kept 401(k)s), but does not directly manage them. |
Tax strategy |
|
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. |
» Read our full review of Vanguard Personal Advisor
» Want to check out other providers? See our top picks for robo-advisors.
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NerdWallet’s comprehensive review process evaluates and ranks the largest U.S. brokers and robo-advisors. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.
We collect data directly from providers through detailed questionnaires, and conduct first-hand testing and observation through provider demonstrations. The questionnaire answers, combined with demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across more than 20 factors. The final output produces star ratings from poor (one star) to excellent (five stars).
For more details about the categories considered when rating providers and our processes, read our full broker ratings methodology and our full robo-advisor ratings methodology
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