Vanguard Digital Advisor Review 2024: Pros, Cons and How It Compares
Paid non-client promotion. 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.
The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Our Take
4.8
Reviewed in: Oct. 2023
Period considered: Aug. - Oct. 2023
The bottom line:
on Vanguard's website
AD
Paid non-client promotion
Pros & Cons
Pros
Access to Vanguard’s investing expertise and ETFs.
Low portfolio management fee.
Low investment expense ratios.
Cons
Limited portfolio options and customization.
$100 account minimum.
Compare to Other Advisors
Fees 0.15% per year (approximately) | Fees Varies by Advisor (free initial consultation) | 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 $150,000 | 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 3-Month Satisfaction Guarantee | 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 Zoe Financial's website | Learn more on SoFi Invest's website | Learn more on Wealthfront's website | Learn more on Betterment's website |
AD Paid non-client promotion | AD Paid non-client promotion | AD Paid non-client promotion | AD Paid non-client promotion | AD Paid non-client promotion |
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.
Get more smart money moves — straight to your inbox
Become a NerdWallet member, and we’ll send you tailored articles we think you’ll love.
Full Review
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.
Vanguard Digital Advisor is best for:
Those who value low-cost offerings.
Investors desiring a personalized plan to reach retirement goals.
Investors who are comfortable leveraging technology instead of receiving guidance from a human advisor.
Vanguard Digital Advisor at a glance
Reviewed: Oct. 2023
Period considered: Aug. - Oct. 2023
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 and the ESG portfolio, Digital Advisor clients will pay a net advisory fee of approximately 0.15%. For clients with an active/index portfolio, 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 | Average is 0.05% for retail clients with Vanguard brokerage accounts; fees vary for 401(k) plan participant accounts. |
Account fees (annual, transfer, closing) | None. |
Portfolio mix | Digital Advisor clients now have the opportunity to select from three investment portfolio options: All-Index, Active/Index and ESG. Each portfolio investment option is made up of Vanguard funds and ETFs. 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 |
|
Tax strategy | Vanguard Digital Advisor clients have access to automated tax-loss harvesting as of March 2023. |
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. |
Bank account/cash management account | Within Digital Advisor, all clients can now establish short-term goals. As a client’s shorter-term goals near maturity, Vanguard will gradually allocate a portion of the portfolio to a money market fund to help protect against short term market volatility. Through Vanguard's self-directed experience, clients can also access additional cash offerings with Vanguard Cash Deposit, an FDIC-insured program bank product, and Vanguard Cash Plus, an alternative to a high-yield savings account to eligible clients. The Cash Plus Account offers clients a competitive APY, enhanced FDIC coverage ($1.25M for individuals, $2.5M for joint) and additional options to access savings including a dedicated routing and account number to pay bills or taxes. |
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. |
» Want to check out other providers? See our top picks for robo-advisors.
More details about Vanguard Digital Advisor's ratings
Account minimum: 4 out of 5 stars
A robo-advisor’s account minimum refers to how much money or securities you must deposit to open an account on its investment platform. Higher account minimums could be a barrier for people just getting started with investing.
In Sept. 2024, Vanguard Digital Advisor lowered its required account minimum from $3,000 to $100. This 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.
Account management fee: 5 out of 5 stars
Considering the range of robo-advisors we review, Vanguard Digital Advisor’s 0.15% management fee is on the lower end. However, some of these robos provide access to human advisors, so it makes more sense to compare Vanguard’s fees with other similar offerings without human guidance.
Both Wealthfront's and Betterment's entry-level tiers charge a 0.25% management fee. Fidelity Go has a tiered fee structure in which all balances above $50,000 carry a 0.35% advisory fee. Ally Invest Managed Portfolios also has a tiering component, but its clients who want full market exposure pay a 0.30% management fee.
In comparison, Vanguard's low, flat fee is attractive.
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.
Investment expense ratios: 5 out of 5 stars
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.
Account fees: 5 out of 5 stars
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.
Portfolio mix: 3 out of 5 stars
Clients complete Vanguard Digital Advisor's online financial profile to create their personalized retirement plan. The service asks for details about household income and tax-filing status, with the option to link outside accounts.
Next, Vanguard’s risk-tolerance tool figures out a client's attitude toward risk by posing various scenarios. Then, the client moves on to establish their retirement goal, taking into consideration contributions to retirement accounts, time horizon, Social Security benefits and more to produce their retirement outlook.
Based upon the client’s plan, Vanguard Digital Advisor customizes a portfolio aligned with their retirement goals and provides ongoing management.
Each portfolio investment option 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.
Socially responsible portfolio options: 4 out of 5 stars
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 positive and sustainable impact or exclude those making 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.
Accounts supported: 3.5 out of 5 stars
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) and 401(k)s for those eligible defined-contribution plans on Vanguard’s full-service record-keeping platform.
Tax strategy: 4 out of 5 stars
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: 5 out of 5 stars
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.
Human advisor option: 1 out of 5 stars
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.
Savings account/cash management options: 1.5 out of 5 stars
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.
Customer support options: 3 out of 5 stars
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 right for you?
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.
How do we review robo-advisors?
NerdWallet’s comprehensive review process evaluates and ranks the largest U.S. robo-advisors. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. Our highest priority is maintaining editorial integrity.
We collect data directly from providers through detailed questionnaires, and conduct first-hand testing and observation through provider demonstrations. The questionnaire answers, combined with demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across 16 factors. The final output produces star ratings from poor (one star) to excellent (five stars).
For more details about the categories considered when rating robo-advisors and our process, read our full methodology.
on Vanguard's website
