Betterment vs. Vanguard: 2024 Comparison
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One question facing robo-advisors like Betterment: If these services are simply building portfolios out of index funds and exchange-traded funds — primarily from Vanguard — why wouldn’t investors just go straight to the source?
Vanguard has heard that question, of course. That may be one reason why it created its own successful online advisor, Vanguard Personal Advisor, and launched a strictly digital, lower-cost option, Vanguard Digital Advisor, in 2020. So how does Vanguard Personal Advisor compare with Betterment? This Betterment versus Vanguard comparison shakes that all out to help you decide which company is best for you.
For details on each service, read below.
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Betterment is best for:
Hands-off investors.
Retirement investors.
Those who want automatic rebalancing.
Users who like goal-based tools.
Betterment at a glance
Reviewed: Oct. 2024
Period considered: Aug. - Oct. 2024
Account minimum | $0 ($10 to start investing). |
Account management fee | 0.25% annual fee on balances over $20,000 or if you set up recurring monthly deposits totaling $250 or more. Otherwise, $4 per month. |
Investment expense ratios | Expense ratios of 0.04% to 0.11% for Betterment Core Portfolio. |
Account fees (annual, transfer, closing) | $75 fee to transfer investments out of Betterment. No fee for cash withdrawals. |
Portfolio mix |
|
Socially responsible portfolio options | Three socially responsible investing portfolio options: Broad Impact, Climate Impact, and Social Impact. |
Accounts supported | Individual and joint taxable brokerage accounts. Roth, traditional, inherited, rollover and SEP IRAs. Trusts. Ability to link external accounts for better-informed advice (but not direct management). |
Tax strategy |
|
Automatic rebalancing | Automatic rebalancing is included in the advisory fee at no additional cost. If a client’s portfolio deviates or drifts from its allocation, Betterment will rebalance the portfolio back to its target allocation in certain circumstances. Betterment also uses any cash flow, such as a dividend or deposit, to partially rebalance your portfolio. |
Human advisor option | Betterment Digital doesn't offer access to financial advisors and no longer offers an advice package for purchase. Betterment Premium includes access to a team of financial advisors. |
Savings account/cash management option | Cash Account** with no fees or minimum balance requirements, unlimited transfers and FDIC coverage of up to $2 million in individual accounts or up to $4 million in joint accounts at program banks. |
Customer support options (includes how easy it is to find key details on the website) | Phone support Monday-Friday 9 a.m.-6 p.m. Eastern time. Email support and questions also answered through social media. |
» Read our full review of Betterment
Vanguard Personal Advisor is best for
Access to a team of financial advisors.
Comprehensive financial planning.
Larger account balances.
Vanguard Personal Advisor at a glance
Reviewed: Oct. 2024
Period considered: Aug. - Oct. 2024
Account minimum | $50,000. |
Account management, planning or subscription fee |
|
Other account fees | None. |
Setup or onboarding fee | None. |
Advisor access and credentials |
|
Financial planning services | Can advise and create a custom portfolio for a variety of situations, such as saving for retirement, college or a family vacation home. Services include: Social Security optimization, dynamic spending, tax efficiency, long-term care and medical costs, high-level guidance on estate planning, charitable giving, Roth conversions and trust services. |
Investment expense ratios on portfolios | Average expense ratio is 0.05%. |
Portfolio construction | Vanguard Personal Advisor creates customizable portfolios on a client-by-client basis. It uses low-cost Vanguard index funds and ETFs, which are diversified with tight tracking. Vanguard Personal Advisor also offers three ESG funds (scored on environmental, social and governance factors for sustainable investing). |
Brokerage options | Clients must move money to Vanguard but can keep outside investments if there are embedded gains or other reasons to do so. |
Accounts supported |
Personal Advisor will consider and provide guidance for other account types (e.g., 529s, UGMA, UTMA, non-Vanguard record-kept 401(k)s, and spousal accounts), but does not directly manage them. |
Tax strategy |
|
Customer support options (includes how easy it is to find key details on the website) | Customer support is available Monday through Friday, 8 a.m. to 8 p.m. Eastern time. Ability to schedule appointments with an advisor at any time. |
» Read our full review of Vanguard Personal Advisor
» Want to check out other providers? See our top picks for robo-advisors.
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