Betterment vs. Vanguard Personal Advisor Services: Which Is Best for You?

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Traditional investment management services are being challenged by innovative robo-advisors, resulting in an increasing number of smart, automated portfolio solutions. Betterment was one of the first robo-advisors, launched in 2010. Starting with portfolio automation, Betterment continues to evolve by adding cash management, advice, and crypto investing thanks to the acquisition of crypto manager Makara in 2022. Vanguard started much earlier in 1975 when it established one of the first index funds and grew into one of the largest asset managers in the world. Vanguard’s Personal Advisor Services was born out of these vast company resources to provide an automated solution for investors. We’ll explore both robo-advisors in detail so you can determine which is right for you.

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• Account Minimum: $0, $10 minimum to start investing
• Fees: 0.25% (annual) for investing plan accounts with at least $20,000 or at least $250 per month in recurring account deposits. Otherwise, the fee is $4/month. An additional 0.15% (annual) fee on accounts with at least $100,000 in assets provides account holders with unlimited access to certified financial planners. This additional fee is applied to assets in the investment and cryptocurrency accounts, but not cash accounts. For accounts with at least $2 million, there is a fee discount of 0.10%.

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• Betterment is our best robo-advisor for beginners and best for cash management.
• Comprehensive financial calculators and digital tools help you plan for a variety of goals.
• External account syncing lets you review and analyze your financial data.
• Straightforward onboarding process allows you to start managing your money quickly.
• Premier tier comes with human financial guidance for a wide range of planning goals.

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• Account Minimum: $50,000
• Fee: 0.30% of assets under management (excluding cash) for up to $5 million; management fee tiers down to 0.16% for assets over $25 million

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• Extensive goal- and financial-planning capabilities to support your financial journey.
• More extensive portfolio customization lets you tailor your allocation towards your preferences and financial situation.
• Human financial advice is included for all investors on the service.
• Financial accounts outside of Vanguard can be synced for a holistic financial overview.
• Lack of tax-loss harvesting, high minimum of $50,000 excludes some investors.

Account Setup

Getting started with Betterment is fast and easy. A guided onboarding process will prompt you to share more about your background, investment knowledge, and personal financial situation so your portfolio aligns with your needs. This portfolio is generally based on modern portfolio theory (MPT) and passive investing principles, held in exchange-traded funds (ETFs) with crypto allocations available as well. Each account you open can have a separate goal and portfolio assignment, ensuring the allocation matches your timeline and risk preferences. Human financial guidance can also be purchased as a separate package but is included once you’ve deposited at least $100,000. 

Similarly, getting your Vanguard PAS account setup is relatively straightforward. However, the experience is geared toward human financial advice which necessitates a longer onboarding timeline compared to a purely digital option. You’ll begin by answering questions to assess your readiness for the platform, including your initial investment amount and what types of financial guidance you’re seeking. Next, you’ll connect with a financial advisor to discuss your situation more fully so that your portfolio can be further tailored if necessary. After your portfolio is finalized, you’ll do a final walk-through with an advisor before moving forward. While this entire process can take a few weeks to complete, it is in line with Vanguard’s strategy of blending a digital robo-advisor solution with a more typical human financial advisor experience. 

Although each digital investment manager’s onboarding process stays true to their portfolio and financial advice philosophies, Vanguard PAS also requires a $50,000 minimum to qualify for the platform. With a faster setup timeline and no account minimum required and $10 to invest, Betterment gets the edge in this category.

Goal Planning

Betterment has made goal planning a key focus of the experience, resulting in a powerful range of calculators, tools, and goal functionalities available for use. You’ll set goals based on key life events such as retirement, major purchases, creating a safety net, education, and general investing. Helpful prompts are included as well, with nudges to adjust deposits if you fall behind your goals. Betterment also provides the capability to sync other financial accounts to your dashboard so you can have more insight into your financial situation. Leveraging all these features gives you a real, tangible understanding of the ability to reach your ultimate financial destination. 

Vanguard PAS also has a wide array of goal planning features that can be utilized, including market simulation tools, calculators, how-to articles, and checklists. These planning tools can be applied to a range of goals such as education savings, building a rainy day fund, retirement, and saving for a house. You’ll also receive digital guidance on your dashboard that recommends ways to improve the likelihood of financial success based on your situation and goals. As with Betterment, Vanguard PAS offers the ability to link other financial accounts to your dashboard, giving you more awareness of your current financial standing. Human financial advisors are available to you at no additional cost for additional questions and planning opportunities.

When it comes to goal planning, Betterment and Vanguard PAS are essentially even given the extent of goal planning features available and incorporating external accounts into your full financial planning picture. 

Account Types

Vanguard PAS and Betterment both support a wide range of commonly used account types that will cover most financial goals. The main outlier is that neither service offers custodial accounts, such as Uniform Gifts to Minors Act (UGMA) and Uniform Transfer to Minors Act (UTMA) accounts. That said, the majority of investors will find the accounts provided on either platform suitable for their investment goals.

Betterment account types:

• Individual taxable 
• Joint taxable 
• Traditional individual retirement account (IRA) 
• Roth IRA
• Simplified employee pension (SEP) IRA 
• Rollover IRA
• Trust 
• High-interest cash reserve account

Vanguard account types:

• Individual taxable 
• Joint taxable 
• Traditional IRA
• Roth IRA
• SEP IRA 
• Rollover IRA
• SIMPLE IRA
• Trust 

Account Services

Betterment makes it easy to move money into and out of the platform. You can link your bank account directly to the site to initiate deposits and withdrawals, and investment account transfers from other institutions can be initiated without fees. You can also utilize cash management and crypto investing features, helping round out the service so more of your finances can be handled in one place. However, you won’t find margin accounts, lending services, and stock trading available. Human financial advisors are accessible for an additional fee or once you’re on the premier service with $100,000 invested. 

While you’ll have more than just portfolio management services with Betterment, Vanguard PAS streamlines the experience to focus on the investment management process and financial planning capabilities. Due to this, bank services, margin accounts, and individual stock trading are not available, and only limited cash management features are included. Linking your bank for deposits and withdrawals is simple, as is transferring outside investment accounts over with no fees incurred. Financial advice is available regardless of the amount you have invested, as all investors have advisor access with $50,000 deposited. This is further enhanced by a dedicated planner assigned once $500,000 is invested and a full wealth management team provided once $5 million is on the service. 

Cash Management

Betterment won our Best for Cash Management award for robo-advisors due to a strong lineup of available products. With Betterment, you have access to a debit card, checking account, and high-yield savings account. Once you factor in smart portfolio management, advice options, crypto investing, and financial planning features, you’ll find the wide variety of money management features makes it easier to potentially consolidate your finances in one place.

Compared to Betterment, Vanguard PAS offers substantially less in terms of cash management features. Since banking services are not provided, debit cards, high-yield savings accounts, and checking accounts won’t be available for use. Instead, cash management is limited to the scope of your portfolio. Dividend reinvestment occurs automatically, excess cash is swept to money market accounts, and remaining portfolio cash balances held without a fee. 

Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities. For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance. 

Checking accounts and the Betterment Visa Debit Card provided and issued by nbkc bank, Member FDIC. Checking made available through Betterment Financial LLC. Neither Betterment Financial LLC, nor any of their affiliates, is a bank. Betterment Financial LLC reimburses ATM fees and the Visa® 1% foreign transaction fee worldwide, everywhere Visa is accepted.

Portfolio Construction

Betterment constructs your portfolio using ETFs exclusively, with an opt-in to crypto allocations available. The portfolio strategies are subdivided into several general categories:

• Core Portfolio with basic diversification and weightings 
• Goldman Sachs Smart Beta portfolio attempting market outperformance
• Socially responsible allocations that score highly for social and environmental factors
• Flexible Portfolios that feature general asset classes weighted by investor preferences
• Income-focused portfolio built with BlackRock ETFs

Vanguard PAS offers a broader range of investment options than what you’d typically expect to find in the robo-advisor space. While crypto isn’t offered, you can invest in a strong selection of low-cost proprietary mutual funds and ETFs, which includes using ESG only allocations as well. Non-proprietary funds can be supported if held elsewhere in Vanguard’s product ecosystem. However, where Vanguard PAS really stands out is by giving you access to active fund selections as well. While much of the offering focuses on low-cost, passive investing, this unique element appeals to a wider range of potential investors. 

Portfolio Customization

Betterment’s portfolio customization is highlighted through Flexible Portfolios, a feature that allows you to have more control over the allocation of your account.  Using this portfolio option, you can direct specific allocations towards distinct asset classes in your account. While all Betterment portfolios allow you to adjust your allocation’s risk level, this function lets you further tailor the investment strategy to your preference. 

Vanguard PAS approaches portfolio customization through a financial advisor, a distinctive feature compared to other robo-advisor offerings. Unlike Betterment, customizations are first discussed with a financial advisor before being implemented. While this process isn’t digital, investors seeking a tailored portfolio but need additional guidance before proceeding will find this an especially useful experience. 

Portfolio Management

Automatic rebalancing is a hallmark of robo-advisor platforms. This strategy helps keep your portfolio on track by not letting you drift too far away from your initial allocation as the market moves. Manual rebalancing can be time-consuming, costly, and ineffective if not done consistently, so automating this approach can really streamline your investment process. Betterment and Vanguard PAS both offer rebalancing but have different approaches here.

Betterment will rebalance your allocation automatically once the portfolio drifts beyond your target allocation threshold using several different methods. By linking other investment accounts, you’ll also receive guidance based on your entire financial picture, but these holdings won’t be auto-rebalanced for you. Vanguard PAS evaluates your portfolio for rebalancing opportunities on a quarterly basis and moves forward if the target allocation has drifted more than 5% from the initial allocation. Like Betterment, external financial accounts linked to Vanguard PAS won’t be auto-rebalanced on your behalf. 

Tax-Advantaged Investing

Another critical element of portfolio management is tax optimization. Betterment automatically offers tax-loss harvesting for investors who have taxable accounts. This strategy helps you offset gains with losses to reduce potential tax impacts. Vanguard PAS doesn’t employ tax-loss harvesting on your portfolio, instead focusing on placing tax-efficient funds strategically in your allocation with a goal to minimize tax effects. 

Security

Both Vanguard PAS and Betterment treat security with paramount importance. Industry standard Securities Investor Protection Corporation (SIPC) coverage is implemented on each service in the event the firm fails, covering up to $500K total or $250K of cash in your account. Vanguard has coverage in excess of SIPC limits through an additional insurer. Data and account access is protected through a variety of methods such as encryption, security questions, fraud detection, and two-factor authentication.

User Experience

Desktop

The Vanguard PAS desktop experience is relatively intuitive, featuring a dashboard with account balances, reporting options, goal statuses, and tabs that make it easy to find what you’re looking for. You’ll also be able to view your overall account health, with suggestions to check-in with an advisor if needed. The account syncing feature is detailed but effective, giving you a good sense of where you stand financially.

Betterment also provides a user-friendly experience, making financial tools, reporting features, calculators, and money movement seamless. You’ll also find the functionality pertaining to performance and account details makes the overall dashboard more impactful and useful. If you decide to link other financial accounts, monitoring your complete financial picture can be done smoothly.

Mobile App 

Vanguard’s mobile app is most beneficial for goal tracking and viewing high level account balance information. While you’ll have access to a large navigational menu, the mobile experience doesn’t quite provide all the functionality the desktop experience does. Still, users will be able to effectively navigate and find most features available.

Betterment ranks highly for their mobile experience, scoring 4.8 for the iOS version and 4.6 on Android. You’ll find the same full feature functionality on the app that you would on the desktop version, which is great news for mobile-first users. 

Customer Service

While neither platform offers access to customer service over the weekend, Vanguard PAS supports a more human experience by letting advisors connect with you for a video chat. Although both services stress financial guidance, it’s clear that Vanguard PAS goes the extra step to ensure you’re comfortable and aligned with the investment strategy. If you’d rather search for answers to your questions online, you’ll find that each platform covers a broad range of FAQs which will address most inquiries. 

Fees

Keeping costs low is a core component of robo-advisors, and both Betterment and Vanguard PAS deliver so you can keep more money invested on your behalf compared to traditional options. Betterment provides two separate experiences with different fee structures. The Investing plan includes digital advice, tax-loss harvesting, automatic rebalancing, and the full suite of accounts and portfolios for a 0.25% annual fee or $4 per month with a balance under $20K. The Premium Investing plan is priced at 0.40% annually and includes the Investing plan features plus unlimited communication with a Certified Financial Planner™. 

Vanguard PAS is more of a hybrid of digital investment management paired with a financial planner than a true robo-advisor. Even so, the fees are low compared to other portfolio management solutions at 0.30% of your portfolio balance per year. There are also tiered management fee discounts that kick-in as your holdings pass major thresholds, with a drop to 0.20% on assets above $5 million, 0.10% above $10 million, and 0.05% above $25 million. This makes Vanguard PAS extremely competitive compared to other digital investment managers targeting high-net-worth individuals. Like Betterment, there are additional expense ratios related to the funds within the portfolio, but these are also low and competitive in the industry.

Our Take

Betterment and Vanguard PAS are both impressive portfolio management solutions that can help you more effectively manage your investments and potentially improve your financial outcomes. Deciding between the two depends on your desire for ongoing financial advisor access, how much you have to invest, and portfolio management preferences. Allocation customization and account services provided are also a critical factor as well. In this case, the most obvious difference between the services is the minimum investment requirement. 

Vanguard PAS has one of the highest minimum deposit thresholds in the robo-advisor space, as you’ll need at least $50,000 to access the service. If you’re just beginning your financial journey or don’t require access to an advisor, Betterment’s service is an obvious choice. Investors with higher balances, who are existing Vanguard customers, or who prefer a strong human element paired with automated investing will find a great landing spot in Vanguard PAS. However, all else being equal, Betterment provides a more well-rounded offering that includes cash management and crypto to go alongside all the features necessary to help power you towards your financial destination.  

Methodology

Our mission at Investopedia is to provide investors with reviews and ratings of robo-advisors that are comprehensive and unbiased. Our team of researchers and expert writers, led by Michael Sacchitello, spent months evaluating all aspects of a robo-advisor’s platform, including the account setup process, goal planning tools, account service options, portfolio construction offerings, portfolio management, mobile and desktop user experience, educational content, fees, and security. As part of this evaluation, we extract critical data points that are weighted by our quantitative model that produces a powerful star-scoring system.

With the individual investor in mind, we’ve designed a comprehensive ranking methodology to find the best overall robo-advisors and the best robo-advisors across nine key categories. Each advisor is then scored across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.

The above material and content should not be considered to be a recommendation. Investing in digital assets is highly speculative and volatile, and only suitable for investors who are able to bear the risk of potential loss and experience sharp drawdowns. Digital assets are not legal tender and are not backed by the U.S. government. Digital assets are not subject to FDIC insurance or SIPC protections.