Vanguard Digital Advisor review: Automated ETF portfolios with a $3,000 minimum

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  • Vanguard Digital Advisor® is an automated investing service that manages your portfolio for you.
  • The service has a $3,000 minimum and 0.15% annual net advisory fee.
  • Vanguard Digital Advisor centers its personalized portfolios on Vanguard ETFs®.
  • Click here to open an account with Vanguard Digital Advisor.

Is Vanguard Digital Advisor right for you?

Established in 1975, Vanguard has long positioned itself as a behemoth in the online brokerage and trading arena. The investment platform offers a range of wealth-building products, including self-directed brokerage, retirement,  and automated accounts.

Among those is its Vanguard Digital Advisor automated service. This account — unlike its hybrid Vanguard Personal Advisor Services account — uses an algorithm to create and manage a personalized portfolio that’s centered on Vanguard ETFs on your behalf.

If you’re new to investing or simply prefer to take the automated route, keep reading to see if Vanguard Digital Advisor is right for you.

How does Vanguard Digital Advisor compare?

Vanguard Digital Advisor and Fidelity Go both create and manage personalized portfolios for you. The two differ, however, when it comes to minimum account requirements, fees, and investment choices. There’s no minimum requirement with Fidelity Go, and you won’t have to pay any advisory fees if you have a balance below $10,000.

With Vanguard Digital Advisor, on the other hand, you’ll run into a $3,000 minimum and 0.15% annual net advisory fee regardless of your balance. In addition, Vanguard uses its own ETFs while Fidelity Go relies on its own mutual funds. While Vanguard’s ETFs have expense ratios (costs), Fidelity Go’s mutual funds don’t.

Wealthfront’s advisory fee is slightly higher than Vanguard’s, but it has a lower minimum requirement. This investment app could be a good option if you’re solely looking for automated advice. However, Vanguard and Fidelity might be reasonable options for investors interested in opening other wealth-building accounts.

If you’re interested in Vanguard Digital Advisor, though, keep reading to see if it’s right for you.

Learn more about Vanguard Digital Advisor at Vanguard.com »

Ways to invest with Vanguard Digital Advisor

Automated investment management 

Vanguard Digital Advisor is best for passive investors who like the idea of having their investments managed for them. The automated advisor creates a portfolio that aligns with your investment timelines, risk tolerance, and goals.

When it comes to account types, Vanguard Digital Advisor manages the following:

  • Individual or joint tenants with rights of survivorship (JTWROS)
  • Traditional IRAs
  • Roth IRAs
  • Rollover IRAs
  • Eligible Vanguard-administered 401(k) retirement accounts

Though Vanguard Digital Advisor only manages these types of accounts, the automated advisor also lets you connect other Vanguard and external accounts to generate more accurate goal growth projections. If you’re wondering which instruments the automated platform uses, though, it centers your portfolio on a mix of broadly diversified Vanguard ETFs compatible with your risk tolerance. More on that below.

Investment choices

Vanguard Digital Advisor’s ETF investment selection includes the following:

  • Vanguard Total Stock Market ETF (0.03% expense ratio)
  • Vanguard Total International Stock ETF (0.08% expense ratio)
  • Vanguard Total Bond Market ETF (0.035% expense ratio)
  • Vanguard Total International Bond ETF (0.08% expense ratio)

Note: Expense ratios above accurate as of 5/24/2021.

Expense ratios represent the annual operating expenses of assets like ETFs and mutual funds. As shown above, you’ll mainly incur a couple of fees: The annual 0.15% net annual advisory fee (estimated) and the expense ratio costs (ranges from 0.03% to 0.08%).

Account setup and user interface

Vanguard asks multiple questions about your investment timelines, risk tolerance, and financial goals when determining how to design your portfolio. The automated advisor also uses an assessment tool to measure your risk profile (the amount of risk you’re willing to take on with your portfolio).

Its risk tolerance measurement falls into five different risk attitudes: Very conservative, conservative, moderate, aggressive, and very aggressive.

When it comes to navigability, the Vanguard Digital Advisor interface is quite simple to use. It not only lets you view progress toward financial goals (eg. retirement), but it also offers a financial outlook feature that shows you how much you’ll need to invest to meet those goals.

Vanguard Retirement Outlookv2

Vanguard

In addition, the platform allows you to connect external accounts so you can view all of your assets at once.

Is Vanguard Digital Advisor trustworthy?

Personal Finance Insider evaluates company trustworthiness by reviewing each company’s Better Business Bureau profile. Vanguard Digital Advisor is affiliated with Vanguard Advisers, Inc., which doesn’t currently have a BBB profile.

However, Vanguard Marketing Corporation, Vanguard’s affiliated broker-dealer, has an A rating with the Better Business Bureau.

But as mentioned on the BBB website, the bureau’s ratings don’t ensure a company will be reliable or perform well. This is why it’s always important to do your own due diligence.

Disclosure: Vanguard Digital Advisor’s services are provided by Vanguard Advisers, Inc. (“VAI”), a federally registered investment advisor. VAI is a subsidiary of VGI and an affiliate of VMC. Neither VAI nor its affiliates guarantee profits or protection from losses.

Vanguard Digital Advisor is an all-digital service. Digital Advisor’s annual net advisory fee is approximately 0.15% across your enrolled accounts for a typical ETF investment portfolio, although your actual net fee will vary depending on the specific holdings in each enrolled account. Vanguard Digital Advisor charges a 0.20% annual gross advisory fee to manage Vanguard Brokerage Accounts. However, we’ll credit you for the revenues that The Vanguard Group, Inc. (“VGI”), or its affiliates receive from the securities in your Digital Advisor managed portfolio (i.e., at least that portion of the expense ratios of the Vanguard funds held in your portfolio that VGI or its affiliates receive). Your net advisory fee can also vary by enrolled account type. The combined annual cost of Vanguard Digital Advisor’s annual net advisory fee plus the expense ratios charged by the Vanguard funds in your managed portfolio will be 0.20% for Vanguard Brokerage Accounts. For more information, please review Form CRS and the Vanguard Digital Advisor brochure.

For more information about Vanguard funds, visit vanguard.com to obtain a prospectus or,if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.Vanguard Marketing Corporation, Distributor of the Vanguard Funds.

Rickie Houston, CEPF

Wealth-Building Reporter

Rickie Houston is a wealth-building reporter for Business Insider, tasked with covering brokerage products, investment apps, online advisor services, cryptocurrency exchanges, and other wealth-building financial products. He is also a Certified Educator in Personal Finance (CEPF). Previously, Rickie worked as a personal finance writer at SmartAsset, focusing on retirement, investing, taxes, and banking topics. He’s contributed to stories published in the Boston Globe, and his work has also been featured in Yahoo News. He graduated from Boston University, where he contributed as a staff writer and sports editor for Boston University News Service. Learn more about how Personal Finance Insider chooses, rates, and covers financial products and services »

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team. Read our editorial standards.

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