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Vanguard Personal Advisor Services Review 2019

Feb. 15, 2019
Advisors, Investing
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Vanguard is famous for pioneering low-cost mutual funds. As one of the biggest players in investment management, Vanguard has for years used its size to reduce fees for investors. Its online advisory offering Vanguard Personal Advisor Services continues the tradition, combining human financial advisors with robo-advisor technology at a reasonable cost, starting at just 0.3% of assets under management.

With $120 billion under the service’s management, Vanguard ranks among the largest players in the robo-advisor space. It hasn’t done that by casting a wide net, however. Vanguard requires a $50,000 account minimum, among the highest of any robo-advisor, making the service suitable only for higher-net-worth folks. Clients are able to speak with certified financial planners, so that minimum does earn you some personalized advice.


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Quick facts

  • Management fee: 0.3%, with lower fees at higher balances.
  • Account minimum: $50,000.
Get started on Vanguard's secure site
Get started on Vanguard's secure site

Vanguard Personal Advisor Services is best for:

  • Large account balances.
  • Low-cost access to financial advisors.
  • Comprehensive financial planning.

Vanguard Personal Advisor Services at a glance

Overall
4.5 NerdWallet rating
Account minimum
$50,000
Account management fee
Depends on account balance:
0.30%: Less than $5 million
0.20%: $5 million to less than $10 million
0.10%: $10 million to less than $25million
0.05%: Greater than $25 million
Investment expense ratios
0.04% - 0.12%; weighted average is 0.08%
Account fees
$20 account service fee, can be waived by signing up for e-delivery service; may incur transaction costs for non-Vanguard products
Portfolio mix
Portfolios are created by advisors on an individual basis. Core holdings are Admiral Shares of Vanguard index funds. ETFs and active funds are incorporated if needed.
Accounts supported
  • Non-retirement accounts.
  • Roth, traditional, rollover and SEP IRAs.
  • Trusts.
Tax strategy
Assets are allocated strategically among taxable and tax-advantaged accounts to optimize for taxes. Tax-loss harvesting done on client-by-client basis.
Automatic rebalancing
Quarterly; Advisors can also review and alter the automatic rebalance trades at any time
Human advisor option
Available Monday-Friday, 8 a.m. to 8 p.m. Eastern; certified financial planners available
Tools
High-quality tools, including simulators, calculators, retirement-planning and educational materials
Customer support options (includes website transparency)
Phone and email support available Monday-Friday, 8 a.m. to 8 p.m. Eastern; some information difficult to find on website.
Promotion
None

Where Vanguard Personal Advisor Services shines

Low management fee: In the grand scheme of things, is a 0.30% management fee that low for a robo-advisor? Not really. Wealthfront charges a flat 0.25%, while other services, like Schwab Intelligent Portfolios and WiseBanyan, are free of management costs altogether — though as with all robo-advisors, the investments carry expense ratios paid by the investor.

But it may be more reasonable to compare Vanguard’s fees with similar hybrid services like Betterment and Schwab Intelligent Advisory. Vanguard’s in good competition here: Betterment charges 0.40% for its service that’s most similar to Vanguard, offering unlimited access to a team of financial advisors with a $100,000 minimum balance. Schwab’s hybrid robo charges 0.28% (with a $25,000 minimum balance), offering 24/7 access to certified financial planners. The difference Vanguard offers is a tiered fee schedule, whereby its management fees drop for account balances in excess of $5 million.

Compared with Personal Capital, Vanguard is much cheaper. Personal Capital charges 0.89% for accounts up to $1 million, though clients get access to one or two dedicated financial advisors, depending on their account balance. Vanguard provides a dedicated advisor only to clients with $500,000 or more and who opt in to the service for a low fee. The fee is waived for clients with $1 million or more. Clients with lower balances have access to a team of more than 100 advisors but won’t work with the same one regularly.

Investments: Vanguard Personal Advisor Services builds portfolios on a client-by-client basis, using primarily Vanguard funds. In many ways, that benefits investors. Vanguard funds carry some of the lowest expense ratios available, and many competitor robo-advisors also use them as the base of their portfolios. However, it allows Vanguard to take a cut twice; once with the management fee and again with fund expense ratios, which range from 0.04% to 0.12%.

Vanguard’s portfolios are primarily constructed of index funds and, in some cases, actively managed funds. Clients also can include a money market fund for access to liquidity. Core portfolio holdings include Admiral Shares of Vanguard’s total stock market index fund; total bond market index fund; international stock market index fund; international bond market index fund; and limited-, intermediate- and long-term tax-exempt funds, which invest in municipal bonds.

Comprehensive management: Vanguard Personal Advisor Services directly manages brokerage and individual retirement accounts, as well as trusts. But the advisors will also take into account other aspects of a client’s portfolio, such as a 401(k), college savings plans or even accounts held at another firm, when developing a financial plan. It’s up to you to tell your advisor about those assets, and they won’t be managed directly by Vanguard advisors. But the advice you get will be comprehensive and fit your full financial picture.

Financial advisors: Part of the value in hiring a financial advisor is that you have someone to turn to when life gets stormy, whether that means the markets take a dive or you’re experiencing personal turbulence. An advisor will help adjust your plan, if needed, or be there to remind you that your plan is sound. Likewise, an advisor can help you plan for and adjust to major milestones, like a marriage or the birth of a child.

Vanguard Personal Advisor Services does that, too, though it does it best for clients with high net worth, something we found the company’s website fails to make clear. If you have assets in excess of $1 million, you can get a dedicated advisor for free. If you have at least $500,000, you can access a dedicated advisor for a fee, or you can access a certified financial planner for specific investment questions at no extra fee.

At lower account balances, you’ll work with Vanguard’s band of certified financial planners rather than one person assigned to your account. The advisors will help you adjust your investments as needed and send you quarterly progress reports. You can schedule time to speak with an advisor via phone or video conferencing, and advisors are also available for quick questions via email.

Where Vanguard Personal Advisor Services falls short

Account minimum: There’s no way around this: $50,000 is a high account minimum. It’s clear Vanguard is limiting its service to balances that, given the low management fee, will make a significant impact on its bottom line. The minimum puts the service out of reach for beginner investors, though that minimum can be spread among multiple Vanguard accounts. The company adds another layer with the $500,000 minimum to access a dedicated financial advisor.

Account and transaction fees: Given the high minimum balance requirement, it’s a bit surprising that Vanguard charges an annual account fee, of $20. That said, the fee can be easily waived, by signing up for electronic delivery of communications.

Customers may be in for additional fees when it comes time to trade. Many robo-advisors swallow the cost of any transaction fees incurred in client accounts, such as trade commissions and mutual fund load or sales charges. (Expense ratios typically are passed on to the investor.) These fees are generally minimal in robo-advisor accounts, which primarily use ETFs and index funds. But Vanguard’s service does use other investments in some cases, and the advisor’s service brochure notes that the client is subject to any transaction fees, brokerage charges, sales charges, commissions or other fees and expenses that stem from the purchase of non-Vanguard investments. The company notes that it typically recommends no-load mutual funds and Vanguard funds.

Tax-loss harvesting: The service is available here, but it isn’t automatic. Rather, tax-loss harvesting opportunities are approached on a client-by-client basis, which the company says is by design. Vanguard’s investment research shows that while tax-loss harvesting can be beneficial, it also carries risk. Clients who want daily monitoring for tax-loss harvesting opportunities may not be happy with this approach.

Vanguard does allocate assets across account types, optimizing for taxes. For example, tax-efficient investments will be placed in taxable accounts, and those that generate a tax burden will go into tax-sheltered retirement accounts, when the client has both types of account.

Customer experience: Vanguard has a pretty no-frills website, and while there are a lot of tools for investors (including simulators, calculators, retirement-planning guides and educational materials), it can be difficult to track down the information you need. Customers who want a robo in their pocket may be disappointed by Vanguard’s app, which racks up a lot of complaints for its usability, especially among Android users. Finally, the hours when advisors are available (12 hours a day, five days a week) are more limited than many other providers.

How Vanguard Personal Advisor Services stacks up

Management Fee

0.30%

0.30%

Account Minimum

$50,000

$50,000

Promotion

None

None

no promotion currently offered

Management Fee

0.25%

0.25%

Account Minimum

$0

$0

Promotion

Up to 1 year

Up to 1 year

of free management with a qualifying deposit

Management Fee

0.40%-0.50%

0.40%-0.50%

Account Minimum

$0

$0

Promotion

$10,000

$10,000

amount of assets managed for free for one year

» Want to check out other providers? Here are our top picks for best robo-advisors.

Is Vanguard Personal Advisor Services right for you?

While Vanguard Personal Advisor Services charges a bit more than the cheapest players, it does offer more, too. Vanguard’s advisors combine the strengths of a robo-advisor with personalized financial planning. Of course, to get in Vanguard’s game, you have to put up $50,000, a high ante for most investors, making Vanguard more suitable for those who’ve already been investing for a while.

For those who can put up that minimum bankroll, Vanguard provides a compelling offering. And those willing and able to deposit $500,000 or more can receive even more personalized advice.

 

Open a Vanguard Personal Advisor Services account

 

James Royal also contributed to this review.

About the authors