Vanguard Digital Advisor Review 2024: Pros, Cons and How It Compares
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Our Take
4.9
Reviewed in: Nov. 2024
Period considered: Aug. - Nov. 2024
The bottom line:
on Vanguard's website
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Pros & Cons
Pros
Access to Vanguard’s investing expertise and ETFs.
Low portfolio management fee.
Low investment expense ratios.
Cons
Portfolios use only Vanguard ETFs.
No human advisors through Digital service.
Compare to Other Advisors
Fees 0.15% per year (approximately) | Fees 0.25% management fee | Fees 0.25% management fee | Fees 0.25% with a balance over $20K or qualifying recurring deposit. Otherwise, $4/month. |
Account minimum $100 | Account minimum $50 | Account minimum $500 | Account minimum $0 $10 to start |
Promotion No advisory fees your first 90 days of Vanguard Digital Advisor investment management (Enrollment requires a Vanguard account with a minimum of $100) | Promotion 1% match on rollovers and contributions Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits. | Promotion Get a $50 customer bonus when you fund your first taxable investment account | Promotion Get 1% match of your net Roth and traditional IRA contributions until December 30, 2024. Terms apply. |
Learn more on Vanguard's website | Learn more on SoFi Invest's website | Learn more on Wealthfront's website | Learn more on Betterment's website |
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NerdWallet doesn’t invest its money with this provider, but they are our referral partner – so we get paid only if you click through and take a qualifying action (such as open an account with or provide your contact information to the provider). Most importantly, our reviews and ratings are objective and are never impacted by our partnerships. Our opinions are our own. Here is a list of our partners and here’s how we make money.
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Full Review
In this review of Vanguard Digital Advisor
Where Vanguard Digital Advisor shines
Lower fees: As one of the oldest and largest investment firms in the world, Vanguard capitalizes on its investment expertise and global scale, using its size to reduce fees for investors.
Low-cost ETFs: Vanguard Digital Advisor, an all-digital robo-advisor service, gives investors the ability to create a personalized retirement plan with an all-index portfolio and the ESG portfolio for a mere 0.15% advisory fee.
Hands-off investing: For investors who prefer to learn and aren’t fazed by a do-it-yourself approach, Vanguard Digital Advisor provides an affordable, personalized portfolio with ongoing, automated investment management. For those who prefer guidance from human financial advisors, consider Vanguard’s flagship offering, Vanguard Personal Advisor.
Free trial: Try it without paying any advisory fees for your first 90 days.
Where Vanguard Digital Advisor falls short
Limited ETFs: Vanguard Digital Advisor uses its own proprietary ETFs within its portfolios. While these ETFs are well-diversified, some clients may desire additional investment choices and the ability to customize their portfolios.
No human advisors. Vanguard Digital Advisors does not provide access to licensed financial advisors.
Alternatives to consider:
For more ETF selections. E*Trade and Wealthfront.
For access to financial advisors. Vanguard Personal Advisor, SoFi and Titan.
What type of investor should choose Vanguard Digital Advisor?
Those who value low-cost offerings.
Investors desiring a personalized plan to reach retirement or other goals, such as debt payoff, education or emergency savings.
Investors who are comfortable leveraging technology instead of receiving guidance from a human advisor.
What the Nerds think 🤓
June Sham, lead investing writer
"Vanguard Digital Advisor is an ideal option for the hands-off investor. Its low, flat-rate management fee stands out against competitors, although it can be higher depending on selected investment options."
Vanguard Digital Advisor at a glance
Reviewed: Nov. 2024.
Period considered: Aug. - Nov. 2024.
Account minimum | $100 for retail brokerage accounts, $5 for eligible 401(k) plan participant accounts. |
Account management fee | Costs will vary depending on the funds and portfolio selected. For an all-index portfolio, Digital Advisor clients will pay a net advisory fee of approximately 0.15%. For clients with an ESG or active/index investment options, the Digital Advisor net advisory fee ranges from 0.11%-0.20%. The net advisory fee is waived for new clients' first 90 days enrolled in the service. |
Investment expense ratios | The average expense ratio will vary based on the portfolio investment options, such as Digital Advisor ESG or Active portfolio. The all-index Digital Advisor portfolio option has an average expense ratio of 0.05%. |
Account fees (annual, transfer, closing) | None. |
Portfolio mix | Digital Advisor clients can select from three investment portfolio options: All-Index, Active/Index and ESG. Each portfolio investment option is made up of Vanguard funds and ETFs. Tax-exempt municipal bond funds are also available. The portfolio mix will be adjusted based on a client's personalized inputs to reach their financial goals. |
Socially responsible portfolio options | ESG portfolio lineup offered at no additional cost. |
Accounts supported |
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Tax strategy | Vanguard Digital Advisor clients have access to asset location; tax-efficient rebalancing; usage of tax-efficient funds, including municipal bond funds for high tax bracket investors and automated tax-loss harvesting. |
Automatic rebalancing | Portfolios evaluated daily to compare against target asset allocation, and rebalanced as necessary when portfolio found to deviate by more than 5% in any asset class. Monitoring in place to rebalance if cash balance is more than $300. |
Human advisor option | None. Vanguard does offer access to advisors through its Personal Advisor platform, which has additional fees and a $50,000 minimum. |
Bank account/cash management account | Vanguard's Cash Plus Account offers clients a competitive APY and enhanced FDIC coverage ($1.25M for individuals, $2.5M for joint). |
Customer support options (includes how easy it is to find key details on the website) | Customer support is available Monday to Friday, 8 a.m. to 8 p.m. Eastern time by phone. Email support is also available. |
How to sign up for a Vanguard Digital Advisor account
You can sign up for a Vanguard Digital Advisor account through Vanguard's website or mobile app. Once your account is created, you'll complete the online financial profile to create a personalized retirement plan. Questions could include your retirement target date, financial goals and risk preference, household income and tax-filing status, and more. You'll also have the option to link outside accounts.
In Sept. 2024, Vanguard Digital Advisor lowered its required account minimum from $3,000 to $100. This is more in line with the minimums required by other robo-advisors — though it is worth noting that there are a number of robo-advisor platforms with no minimum at all.
For eligible 401(k) accounts, the account minimum is $5.
How much does Vanguard Digital Advisor cost?
Annual fees
Vanguard Digital Advisor charges no annual fees, no transfer or closing fees, and no setup or onboarding fees. Low fees benefit investors as the less you pay in fees, the more money you can keep working for you.
Management fees
When it comes to management fees, Vanguard Digital Advisor charges 0.15%. Considering the range of robo-advisors we review, this is on the lower end and is notable for its flat rate. The net advisory fee is also waived for the first 90 days for new clients.
However, this changes depending on the portfolio mix. Clients with an ESG, as well as active or index, investment options, the percentage ranges from 0.11%-.0.20%.
Note that Vanguard Digital Advisor charges a 0.20% annual gross advisory fee but clients are credited for the portion of expense ratios going to The Vanguard Group or its affiliates, which makes the annual net advisory fee approximately 0.15% across accounts. Your actual net fee may vary depending on the specific holdings within your account.
Expense ratios
Investment expense ratios are internal annual fees baked into the cost of almost every mutual fund, index fund or exchange-traded fund to cover the fund manager’s costs.
Vanguard’s All-Index portfolio has an average expense ratio of .05%. That's lower than the competition, with the exception of Fidelity Go, which has zero expense ratios in its Fidelity Flex funds.
Digital Advisor has two additional portfolio options: Active/Index and ESG, and the average expense ratio for those may vary.
Vanguard Digital Advisor's portfolio selection
Each portfolio investment option in Vanguard Digital Advisor is made up of Vanguard funds and ETFs. While Vanguard ETFs do provide investors with a well-diversified and tax-efficient portfolio, some investors may feel constrained without access to smart-beta portfolios provided by other robo-advisors.
Increasingly, investors have wanted to put their dollars toward investments that produce both social change as well as good financial returns. Socially responsible investments might include companies making a positive and sustainable impact or exclude those making a negative impact.
Investors with their heart set on socially responsible investments can now opt in to the ESG portfolio option at Vanguard Digital Advisor. Customers can choose from a range of investments including ESG U.S. Stock ETF, ESG International Stock ETF, ESG U.S. Corporate Bond ETF, Short-Term Treasury ETF, Intermediate-Term Treasury ETF and Total International Bond ETF.
Other key Vanguard Digital Advisor features
Tax strategy
Vanguard Digital Advisor now offers automatic tax-loss harvesting service for its accounts. Tax-loss harvesting is a tax minimization strategy where loss-making investments are sold to offset gains made within your portfolio.
Vanguard also optimizes for tax efficiency using asset location, placing more tax-efficient investments in taxable accounts, and those investments with the greater tax burden into tax-sheltered retirement accounts, when the client has both types of accounts.
Automatic rebalancing
When the market moves, the allocation of your investment portfolio will shift. This means that over time, your portfolio allocation may adjust away from its target allocation. Rebalancing your account will bring your allocation back to where it was meant to be by buying and selling investments.
Once a portfolio is active, Vanguard Digital Advisor monitors accounts daily and rebalances if any asset class deviates more than 5% from the target asset allocation.
Accounts supported
Investors often have more than one type of investment account. If you’d like to keep everything under one umbrella, it’s important to know what account types can be supported on your robo-advisor’s platform.
Vanguard Digital Advisor is able to manage individual and joint taxable brokerage accounts, IRAs (traditional, Roth and rollover, as well as SEP and inherited IRAs) and 401(k)s for those eligible defined-contribution plans on Vanguard’s full-service record-keeping platform.
Cash management options
Investors can choose to put cash in Vanguard’s money market fund, which is where Vanguard will gradually allocate a portion of the portfolio.
In the self-guided account, clients can access the Vanguard Cash Deposit, which is an FDIC-insured program bank product. The brokerage sweep product is available to eligible clients if they choose to opt out of the Vanguard Federal Money Market Fund. In 2023, the company also piloted Vanguard Cash Plus, which served as an alternative to high-yield savings account to eligible clients. The Cash Plus Account offered clients a competitive APY, enhanced FDIC coverage ($1.25 million for individuals, $2.5 million for joint) and additional options to access savings including a dedicated routing and account number to pay bills or taxes.
Good to know about Vanguard Digital Advisor
No human advisors
Vanguard’s Digital Advisor platform doesn't provide investors with access to a human advisor for questions or planning purposes. While this is not uncommon among robo-advisors, competitors such as Betterment and Ellevest offer the ability from within their digitally minded offerings to purchase one-off or a la carte access to a human advisor.
Those who want a human’s help can check out Vanguard’s Personal Advisor platform, which provides unlimited access to advisors. However, do-it-yourselfers may gravitate toward Digital Advisor to work things out on their own using Vanguard’s various tools (including a tool on debt-payment strategies) and other investor education.
Customer support options
If you have a question about your investment account, Vanguard Digital Advisor offers customer support via phone from 8 a.m to 8 p.m. Eastern time Monday through Friday, so customers can call outside of typical business hours. Email support is also another option it offers.
Is Vanguard Digital Advisor safe?
Investing in the stock market always carries some risk.
Cash held in the Vanguard Cash Plus account includes FDIC coverage up to $1.25 million for individual accounts and $2.5 million for joint accounts.
When it comes to the Vanguard Brokerage Account, money market funds and other securities do include SIPC coverage. Securities are also covered up to $500,000.
Is Vanguard Digital Advisor worth it?
If you’re comfortable leveraging technology and online tools to create your retirement plan, Vanguard Digital Advisor provides you with the means to do so. Digital Advisor has incorporated additional features, including the ability to plan for multiple, non-retirement goals — such as saving for a child’s college education or new home — to help with a more holistic approach to financial planning. Combined with its low-cost ETFs, Vanguard’s platform guides investors with a personalized, diversified portfolio aligned with their goals, along with ongoing management.
on Vanguard's website
