Vanguard Personal Advisor Services vs. E*TRADE Core Portfolios

Both Vanguard Personal Advisor Services and E*TRADE Core Portfolios benefit from name recognition, as the mutual fund giant and the discount broker are already well-known to most investors. Vanguard and E*TRADE have created solid robo-advisor options for their customers, but there are different advantages to each.

While Vanguard Personal Advisor Services is geared toward more experienced traders, requiring $50,000 in minimum assets to enroll and offering limited customer service availability, E*TRADE Core Portfolios is better suited for beginners and active traders with its $500 account minimum and variety of ways to reach customer service. Read on to learn more about each provider and how to choose the best one to handle your investment portfolio.

OPEN AN ACCOUNT

• 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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Pros

• Ample goal-planning resources for large expenses
• Portfolios are annually reviewed by a human advisor
• "Hybrid" advice service not completely automated

Cons

• Minimum account size is a substantial $50,000
• Account setup process is cumbersome
• Customer service is not available 24/7

OPEN AN ACCOUNT

• Account Minimum: $500
• Fee: 0.3%

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Pros

• Easy to enroll and get started
• Easily convert E*TRADE account into Core Portfolios
• Great for newer investors with limited funds

Cons

• Limited goal-planning options
• No tax-loss harvesting
• No consolidation of external accounts

Vanguard Personal Advisor Services vs. E*TRADE Core Portfolios: Goal Setting

At Vanguard Personal Advisor Services, the site provides ample goal-planning resources that include checklists, how-to articles, and calculators. Clients can apply these tools to estimate their total costs of retirement, perform a top-down review of assets, and plan major life goals that include college savings, homeownership, or a rainy-day fund. Long-term forecasts and recommendations in the account interface coach you on how to better meet investing objectives, based on life situations and goals outlined during the lengthy onboarding process. Of course, the option to discuss your goals and portfolios with an advisor necessarily limits how much is done automatically through the platform. 

On the flip side, E*TRADE’s robo-advisory service isn’t as driven by goal planning as other robo-advisories. Clients create a single pot of money to fund all their goals, rather than a separate portfolio for each distinct goal. Reporting on the progress you’re making toward your single goal is well-designed, but the platform doesn’t suggest strategies for shoring up the account if you’re falling behind. This lack of goal-planning support may be a negative for a younger investor who needs a little help to stay on track.

Vanguard Personal Advisor Services vs. E*TRADE Core Portfolios: Retirement Planning

Both Vanguard Personal Advisor Services and E*TRADE Core Portfolios offer a few options for retirement accounts, including traditional and Roth IRAs, SEP IRAs, and 401(k) rollovers.

As mentioned, Vanguard’s website features a variety of tools and calculators to help clients determine how much money needs to be set aside to reach goals (such as retirement) within realistic time frames. Vanguard also offers a snapshot of your outside investments as a part of your total portfolio and offers metrics on the likelihood of achieving your goal. More importantly, all Vanguard PAS clients have access to certified financial planners for all their retirement questions, and a human advisor reviews your portfolio on a regular basis.

In contrast, E*TRADE Core Portfolios allows only the one aforementioned goal per account, based simply on how long you’re planning to invest the money and your risk tolerance. Clients have access to all of E*TRADE’s research and educational offerings, which include retirement calculators and other planning tools, but these functions aren’t built into the Core Portfolios experience.

Vanguard Personal Advisor Services vs. E*TRADE Core Portfolios: Account Types

Vanguard Personal Advisor Services and E*TRADE Core Portfolios have very similar account offerings. The key difference is that E*TRADE handles custodial accounts, and Vanguard PAS does not.

Vanguard Personal Advisory Services account types:

• Taxable accounts (individual, joint, and trust)
• Traditional IRA accounts
• Roth IRA accounts
• SEP IRA accounts (for self-employed individuals and small businesses)
• IRA transfers
• 401(k) rollovers

E*TRADE Core Portfolios account types:

• Taxable accounts (individual, joint, and custodial)
• Traditional IRA accounts
• Roth IRA accounts
• SEP IRA accounts (for self-employed individuals and small businesses)
• IRA transfers
• 401(k) rollovers

Vanguard Personal Advisor Services vs. E*TRADE Core Portfolios: Features and Accessibility

Vanguard Personal Advisor Services has the edge on E*TRADE Core Portfolios in terms of features, but there is always the looming accessibility issue of the $50,000 minimum. E*TRADE Core Portfolios is not as feature rich, but it does let you in for just $500.

Vanguard Personal Advisor Services:

• Dedicated advisor for large accounts: While accounts up to $500,000 are assigned to a group of advisors, accounts above that level get a dedicated advisor.
• Cross-company application: Some 80% to 90% of applicants to this advisor have other Vanguard accounts, and the $50,000 investment minimum can be applied across all Vanguard assets.
• Whole-picture advice: Although Vanguard Personal Advisor Services can’t include your other accounts (employer-sponsored retirement plans, college savings plans, etc.) under this advisor umbrella, planners will take those holdings into account when they design your portfolio and offer advice.
• Access to advisors: Although the on-ramp is slow, each client’s portfolio is designed by a certified financial planner (rather than auto-generated by your answers to a questionnaire), and it’s possible to reach a planner—during business hours—who can answer any questions you have. On this point, Vanguard considers itself a “hybrid” advice service, marrying robo-advising with the ongoing guidance of a human advisor.

E*TRADE Core Portfolios:

• Easy funding for E*TRADE clients: If you’re an existing E*TRADE client, you can use the intra-firm transfer tool to easily move money from another account into your Core Portfolios account.
• Low minimum investment: Clients can get started with E*TRADE Core Portfolios with just $500.
• Great mobile app: The app's seamless experience makes it our pick for the best robo-advisor for mobile experience.
• Account customization: Clients have the option of customizing a portion of their portfolio by selecting either a socially responsible ETF or a smart beta ETF.

Vanguard Personal Advisor Services vs. E*TRADE Core Portfolios: Fees

Vanguard Personal Advisor Services charges a competitive 0.30% advisory fee, paid quarterly, but hidden costs may add up since clients also pay transaction fees. The broker has also entered into payment for order flow deals with third-party mutual funds, and the client foots the bill for those fees as well. The average expense ratio of underlying investments is 0.11%.

E*TRADE Core Portfolios also charges 0.30% annually for assets under management, though this fee is paid monthly. In addition, the underlying ETFs have management fees that average 0.07% to 0.08%.

Vanguard Personal Advisor Services vs. E*TRADE Core Portfolios: Minimum Deposits

Minimum deposits are one of the main areas impacting Vanguard PAS. We’ve touched on it multiple times, but an investor must have 100 times the cash on hand to open a Vanguard PAS account compared to an E*TRADE Core Portfolios account.

• E*TRADE Core Portfolios: $500
• Vanguard Personal Advisor Services: $50,000

Vanguard Personal Advisor Services vs. E*TRADE Core Portfolios: Portfolios

At Vanguard Personal Advisor Services, the up-front work is straightforward, but the timeline is lengthy. Clients answer questions about age, assets, retirement dates, risk tolerance, and market experience, and the platform generates a proposed portfolio filled with Vanguard funds and other securities. Most of the portfolio design is done by algorithm, but you must speak with a financial advisor to complete your customized plan, and the fine print states that the final investment plan will be created within “a few weeks” after the consult. The client must agree to the new plan via another consult before implementation. 

At E*TRADE, you’ll fill out a quick Investor Profile Questionnaire, and the program uses an algorithm to determine your recommended portfolio, most heavily considering answers on time horizon and risk. The algorithm doesn’t consider outside assets, your holdings in other accounts, or multiple investment goals. Sample portfolios include Conservative, Conservative Growth, Moderate Growth, Growth, and Aggressive Growth. If you like the recommended portfolio, you can customize it further with either socially responsible ETFs or smart beta ETFs.

Vanguard Personal Advisor Services Assets

Vanguard Personal Advisor Services offers a personalized portfolio of low-cost Vanguard index funds from a variety of market sectors and asset classes. The program also has the flexibility to work with non-Vanguard assets if a client is holding those assets in another account at Vanguard.

Vanguard reviews accounts quarterly and rebalances them as needed. Vanguard’s methodology follows traditional Modern Portfolio Theory principles, emphasizing the benefits of low-cost securities, diversification, and indexing, driven by long-term financial goals. Stock and bond methodologies increase diversification by including equity funds at different capitalization and volatility levels as well as bond funds with different geographical, timing, and capital risks.

E*TRADE Core Portfolios Assets

E*TRADE offers non-proprietary ETFs from iShares, Vanguard, and JP Morgan. The advisory also offers socially responsible portfolios that include ETFs from iShares, as well as smart beta portfolios designed to outperform index fund investing. E*TRADE also offers a portfolio of tax-sensitive ETFs to clients with taxable accounts.

E*TRADE Core Portfolios rebalances semiannually and when material deposits or withdrawals are made. The weightings of E*TRADE’s sample portfolios are in line with Modern Portfolio Theory, which should offer investors the appropriate amount of diversification, as well as risks and returns tailored to their stated tolerance.

Vanguard Personal Advisor Services vs. E*TRADE Core Portfolios: Tax-Advantaged Investing

There are a variety of ways to efficiently invest money to avoid excessive taxes. One such way, tax-loss harvesting, is used by many robo-advisors. Tax-loss harvesting is the selling of securities at a loss to offset a capital gains tax liability.

Vanguard Personal Advisor Services engages in tax-loss harvesting through the MinTax cost basis method, which identifies selective units or quantities—referred to as lots—of securities to sell in any sale transaction based on specific ordering rules. The MinTax cost basis method will minimize the tax impact of transactions in many cases, but not necessarily in every case. Clients must opt into MinTax.

E*TRADE Core Portfolios does not offer tax-loss harvesting but says they provide a “tax-sensitive investment strategy” that uses municipal bond ETFs to help reduce taxes incurred on interest and dividends.

Vanguard Personal Advisor Services vs. E*TRADE Core Portfolios: Security

Vanguard holds client funds in the Vanguard Marketing Group, providing access to SIPC and excess insurance. Cash, however, is swept into money market funds that are not FDIC-insured. The site uses 256-bit SSL encryption and also provides two-factor authentication.

The E*TRADE website and mobile apps carry a high level of encryption, and mobile apps allow facial recognition or fingerprint unlock technology. Securities in accounts are insured by SIPC, with excess insurance up to $600 million.

Vanguard Personal Advisor Services vs. E*TRADE Core Portfolios: Customer Service

At Vanguard, clients can speak to a financial advisor by scheduling an appointment during customer service hours, which are Monday to Friday from 8 a.m. to 8 p.m. EST. Unscheduled contact attempts produced a variety of lengthy wait times, from over five minutes to more than 13 minutes. There is no live chat for prospective or current clients, and registration is required to send an email through the firm’s secure message application.

At E*TRADE Core Portfolios, online chat is available 24/7 on both the website and the mobile app, and the website states that “interaction with E*TRADE Capital management will generally be limited to the web-based interface.” Telephone support is available, however, on weekdays from 8:30 a.m. to 8:30 p.m. EST, or clients can walk into a brick-and-mortar location for help. Although telephone representatives were knowledgeable and helpful, it took an average of nearly seven minutes on hold before a human was available.

Final Verdict

Choosing between Vanguard Personal Advisor Services and E*TRADE Core Portfolios should be much easier than it is. In our rankings, Vanguard outperformed E*TRADE in key areas like portfolio contents and management, but it fell behind in softer areas like customer service. Overall, Vanguard is the stronger robo-advisor, but it is hampered in this head-to-head by its high minimum deposit. Put simply, if you are choosing between the two and you have $50,000, then the choice of Vanguard is clear. If you don’t have $50,000 and you are choosing between the two, you'll probably want to broaden your search.

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