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

Wealthfront and Vanguard Personal Advisor Services are among the top robo-advisor options in our review, with both scoring highly. However, finding the right one for you depends on your digital-versus-human preference, the amount you have to invest, and your desire to fine-tune your portfolio.

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• Account Minimum: $500
• Fees: 0.25% for most accounts, no trading commission or fees for withdrawals, minimums, or transfers.

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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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Although Wealthfront and Vanguard Personal Advisor Services are robo-advisors, their offerings and services will appeal to (and be appropriate for) different audiences.

If you’re newer to the investing game, Wealthfront’s top-notch planning tools and small minimum investment make it a good choice, despite a portfolio with limited customization options. It also scored the highest ratings in our robo-advisor reviews, with 4.8 stars and some great advantages.

For mature investors looking to place capital at a financial institution with a long and stable history, Vanguard Personal Advisor Services may be an excellent fit as long as clients are prepared to pay extra for transaction costs and third-party relationships.

Wealthfront vs. Vanguard Personal Advisor Services: Goal Setting

Vanguard and Wealthfront both offer goal planning and tracking, but Wealthfront has a clear edge.

Wealthfront’s planning tools are excellent. The dashboard displays your assets and liabilities, giving you a quick look at the likelihood of attaining your goals. The company connects to Redfin to help prospective homeowners determine how much a school will cost in their desired neighborhood. College savings scenarios have cost estimates for numerous U.S.-based universities, and expense projections include room and board, tuition, and other costs. This company also allows you to determine how long you could take a sabbatical from work to travel while still meeting your other goals. There’s a wedding planning goal and a database that tells you how much your ideal car will cost.

At Vanguard Personal Advisor Services, the site provides ample goal-planning resources, including 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, home ownership, or a rainy day fund. Long-term forecasts and recommendations in the account interface coach clients on better meeting investment objectives based on life situations and goals outlined during the lengthy onboarding process. The client can make changes at any time by altering the risk profile.

Wealthfront vs. Vanguard Personal Advisor Services: Retirement Planning

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

At Wealthfront, the robo-advisor uses your information to estimate your net worth at retirement and what you could comfortably spend per month during your golden years. Their Path planning tool helps you compare your projected retirement income against your current spending habits to see whether you can maintain your lifestyle later. You can change various inputs such as retirement age, savings, target retirement spending, and life expectancy to see how they affect the outcome.

Vanguard’s website features an impressive variety of tools and calculators to help clients figure out how much money needs to be set aside to reach goals (such as retirement) within realistic time frames.

Wealthfront vs. Vanguard Personal Advisor Services: Account Types

Wealthfront and Vanguard Personal Advisor Services offer a similar mix of taxable and retirement accounts. Here again, however, Wealthfront has a broader offering, with 529 college savings plan accounts being a key difference. Currently, neither Vanguard nor Wealthfront offers custodial accounts known as Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) accounts.

Wealthfront account types:

• Taxable accounts (individual, joint, and trust)
• Traditional IRA accounts
• Roth IRA accounts
• SEP IRA accounts (for the self-employed and small businesses)
• IRA transfers
• 401(k) rollovers
• 529 college savings plan accounts
• High-interest cash accounts (individual, joint, trust)

Vanguard Personal Advisor Services account types:

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

Wealthfront vs. Vanguard Personal Advisor Services: Features and Accessibility

Wealthfront and Vanguard Personal Advisor Services vary quite a bit in terms of features, which reflects the different customers each is targeting. Wealthfront focuses on a younger crowd that is comfortable with technology. Vanguard Personal Advisor Services has features aimed at higher net-worth clients who may need more human contact when it comes to being confident in managing their portfolio. 

Wealthfront

• 529 college savings: Wealthfront allows you to open a 529 college savings account, which is rare among robo-advisories. (Fees are slightly higher for 529 accounts than other Wealthfront accounts because these plans include an administrative fee.)
• Wealthfront cash account: Wealthfront offers a high-interest cash account, unlimited transfers, and FDIC insurance up to $5 million.
• Portfolio line of credit: Once you reach $25,000 in your individual, trust, or joint investment account at Wealthfront, you have access to a line of credit at relatively low-interest rates. There’s no credit check or credit score impact, and you can borrow up to 30% of your account.
• PassivePlus investing. This is Wealthfront’s term for their rules-based investment strategies, which aim to maximize client investments using tax-loss harvesting. At higher asset levels ($100,000+), the company offers stock-level tax-loss harvesting and risk parity. At $500,000 and up, the strategy includes Smart Beta, which weights the stocks in your portfolio more intelligently.

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: Many of the 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) under this advisor umbrella, planners will consider those holdings 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.

Wealthfront vs. Vanguard Personal Advisor Services: Fees

Wealthfront and Vanguard are both competitive in the industry when it comes to fees, but here again, Wealthfront has the edge.

Wealthfront’s fee structure is simple: 0.25% of your portfolio, assessed monthly. There are no fees charged for cash balances. The ETFs that make up most of the portfolios have annual management fees of 0.08%. Larger portfolios enrolled in the Smart Beta program may be invested in funds with slightly higher management 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. The average expense ratio of underlying investments is 0.11%.

Minimum deposits

Wealthfront has a competitive advantage over Vanguard when it comes to minimum deposits. Vanguard's robo-advisor requires you to have $50,000 as a minimum, whereas Wealthfront requires just $500. Again, this is because the two services have different customers in mind, but it makes Wealthfront the more attractive robo-advisor to try out. Testing out Vanguard requires 100 times more capital. 

• Wealthfront: $500
• Vanguard Personal Advisor Services: $50,000

Wealthfront vs. Vanguard Personal Advisor Services: Portfolios

Wealthfront and Vanguard Personal Advisor Services differ significantly in how long it takes to get your portfolio started.

Getting started with a Wealthfront account is fairly straightforward, though the brokerage won’t show you portfolio allocations before you give them some personal information. You'll need to link a checking account and answer some questions to help pinpoint your financial goals, risk tolerance, and time horizon. You can see the recommended portfolio before funding. Investors can add and remove specific ETFs, build a portfolio from vetted ETFs, and choose investment themes. Customers with more than $100,000 in their accounts can choose a stock portfolio rather than a portfolio of ETFs.

At Vanguard Personal Advisor Services, the upfront work is similar, but the timeline is lengthy. You’ll answer detailed questions regarding age, assets, retirement dates, risk tolerance, and market experience, generating a proposed portfolio allocation filled with Vanguard funds and “other securities.” Most of the heavy lifting is done by algorithms. Still, the new client must speak with a financial advisor to complete the customized plan, and the fine print states that the final investment plan will be created within “a few weeks” after the consultation, marking a major negative compared to the rapid onboarding at its rivals. The client must agree to the new plan via another consult before implementation, which can create further delays.

Wealthfront assets

At Wealthfront, customers can choose from ETFs and mutual funds from Vanguard, Schwab, iShares, and State Street, or they can save cash.

Vanguard Personal Advisor Services assets

Vanguard’s methodology follows traditional Modern Portfolio Theory (MPT) 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.

Wealthfront vs. Vanguard Personal Advisor Services: Tax-Advantaged Investing

There are various 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.

Wealthfront’s primary method of reducing taxes is tax-loss harvesting. It’s available for all taxable accounts. An ETF showing a loss may be swapped out for a similar ETF to reduce your tax bill. Accounts over $100,000 may take advantage of stock-level tax loss harvesting. 

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. You must opt into MinTax.

Wealthfront vs. Vanguard Personal Advisor Services: Security

Wealthfront is a member of the Securities Investor Protection Corporation (SIPC), and client accounts are protected up to a maximum of $500,000. The site actually has an article on why SIPC insurance doesn’t protect investors in the way they think it does, but the company still holds the coverage. Wealthfront also has the option to enable 2-factor authentication for further protection of your account.

Vanguard, on the other hand, 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.

Wealthfront vs. Vanguard Personal Advisor Services: Customer Service

At Wealthfront, customers can call a support phone number if they need help with a forgotten password. You can also pose a support question to them on Twitter; most were answered relatively quickly, although one question took over a week to respond to. There is no online chat capability on the website or mobile apps. However, you can send a message through the website's secure email system.

At Vanguard, clients can schedule an appointment to talk to a financial advisor at any time. Unscheduled contact attempts produced a variety of unacceptable wait times, from over five minutes to more than 13 minutes. There is no live chat for prospective or current clients; registration is required to send an email through the firm’s secure message application.

Final Verdict

Wealthfront has the edge on Vanguard Personal Advisor Services in most categories, with the exception of serving the sophisticated investor crowd. If you are a high-net-worth investor looking to invest your money with a large, well-known firm, Vanguard makes a decent case with its affordable and automatically managed portfolio. The human advisors at Vanguard are another important element that high-net-worth investors may expect from a company they’ve invested millions with.

That said, if you have a more modest bank balance and want a great robo-advisor that will manage your portfolio, help you plan your investing goals, and keep you on track, it is hard to beat Wealthfront. Younger investors will find the goal planning and tracking tools a great help in getting started. Even older investors can benefit from a service that requires just $500 to start and removes the headaches of actively managing a portfolio. Faced with a choice between Wealthfront and Vanguard, most people will find Wealthfront the obvious choice.

Dotdash Meredith receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. Dotdash Meredith is not a Wealthfront Advisers client, and this is a paid endorsement. More information is available via our links to Wealthfront Advisers.

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