Wealthfront vs. Vanguard Personal Advisor are two popular, quality wealth management platforms with two different approaches. Wealthfront ranks as the best overall robo-advisor thanks to its excellent technology, portfolio customization options, and low investment minimum of just $500. Vanguard Personal Advisor is a hybrid robo-advisor, giving you access to an automated investment platform and human advisors. In exchange for access to this valuable advice from licensed financial advisors, Vanguard Personal Advisor requires a larger minimum of $50,000. Wealthfront is the better all-digital solution, while Vanguard Personal Advisor is better if you want a human touch. If you’re trying to decide between Wealthfront and Vanguard, here’s what to know about the two options.
- Account Minimum: $500
- Fees: 0.25% for most accounts; no trading commission or fees for withdrawals, minimums, or transfers
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Key Takeaways of Wealthfront
- Excellent technology and goal-planning tools
- Offers customizable robo-advisor investment portfolios
- Low investment minimum of $500
- Account Minimum:$50,000
- Fee: Approximately 0.35% of assets under management (excluding cash) for up to $5 million; management fee tiers down after.
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Key Takeaways of Vanguard Personal Advisor
- Provides unlimited access to human financial advisors
- Competitive fees for a hybrid robo-advisor
- Requires at least $50,000
Account Setup
Wealthfront
Wealthfront provides a faster account setup process. You create an account by picking a username and password and entering your actual name and phone number. You also decide what kind of account you want, like a taxable brokerage account, individual retirement account, or 529 plan.
From there, you gain access to the initial portfolio-building questionnaire. You’ll answer questions about your age, income, net worth, and risk tolerance. You also choose what kind of investment style you want: classic, socially responsible, or direct indexing. From there, you get a portfolio recommendation.
If you are happy with the portfolio recommendation, only then do you need to deposit money. It takes $500 to open a Wealthfront account.
Vanguard Personal Advisor
Vanguard Personal Advisor has a longer account setup process because you need a Vanguard account before you can access the robo-advisor tool. You create an account by entering your contact information, date of birth, Social Security number, and employer. You must also deposit at least $50,000 to meet the minimum to use Vanguard Personal Advisor.
Once you've done that, you will gain access to the Vanguard Personal Advisor account setup. Here, you answer questions about your financial situation and investment preferences to get a portfolio recommendation. Before launching the portfolio, you can schedule a call with a human Vanguard financial advisor to discuss the recommendation.
Account Setup Verdict: Wealthfront
While both Wealthfront and Vanguard Personal Advisor have a standard process for opening an account, Wealthfront has the main advantage here; with its $500 account minimum requirement, it will be more accessible to most investors compared to Vanguard Personal Advisor,which requires $50,000minimum to open an account.
Account Types
Wealthfront
- Individual and joint brokerage
- Roth and traditional IRA
- Rollover IRA
- Simplified employee pension (SEP)
- Trust
- 529 plan
Vanguard Personal Advisor
- Individual and joint brokerage
- Roth and traditional IRA
- Rollover IRA
- Eligible 401(k)
Account Types Verdict: Wealthfront
Wealthfront and Vanguard Personal Advisors offer your standard account types, such as individual, joint brokerage accounts, and IRAs. Wealthfront wins this category as it offers more account types, such as trust accounts and 529 plans.
Account Services
Wealthfront
Wealthfront offers more account services. First, you can invest directly in over 1,500 stocks through your Wealthfront account. You can make your own investment picks to go with the robo-advisor portfolio. Wealthfront also provides a cash management account with a high interest rate of 5.00% APY (5.50% up to three months when you refer a friend). It comes with a debit card that offers free withdrawals at over 19,000 ATMs. Wealthfront Borrow also lets you borrow against the value of your investment account through a line of credit.
Vanguard Personal Advisor
Vanguard Personal Advisor is fairly limited when it comes to account services, as it only provides the robo-advisor investment service. While setting up automatic deposits from an external account is easy, traditional banking options are not available. Borrowing on margin is also not available through digital investment accounts, but customers with self-directed brokerage accounts do have access to this feature.
When it comes to cash management, investors receive monthly dividends from their cash based on the yields of the money market. It is also noteworthy that investors are not required to hold cash balances. If there is a cash balance in the account, however, no fees are charged on those assets.
Account Services Verdict: Wealthfront
Wealthfront is the clear winner for account services; it offers cash management with ahigh interestrate of 5.00% and supplemental features that come with a debit card and allow ATM withdrawals. Vanguard also offers a cash management account, but it does not provide a debit card.
Goal Planning
Wealthfront
Wealthfront and Vanguard Personal Advisor both offer excellent goal planning through their robo-advisors. Wealthfront uses a mobile financial planning experience called Path. Path can answer 10,000 investing and financial planning questions, such as:
- What income will I need in retirement?
- How much home can I afford?
- How much will my child receive in financial aid for college?
With these answers and the Wealthfront platform, you can set financial goals and track your progress. For example, the platform can show how much income you’ll have in retirement based on your current savings and whether that will hit your spending target. You can use the goal planning software to change assumptions and see what impact that makes, like if you increase your savings rate.
Vanguard Personal Advisor
Vanguard Personal Advisor also provides tools for planning financial goals. When you first set up the account, the platform asks for your current earnings, savings, and target retirement date. It then runs 10,000 simulations to see how likely you are to reach your retirement goal.
After you’ve set up your retirement portfolio, you can launch other goals through the platform, like saving for a house down payment. The platform develops an appropriate portfolio recommendation for reaching all your financial goals. The platform doesn’t answer as many questions or run as many scenarios as Wealthfront. However, you can schedule a call with a Vanguard advisor whenever you have a question.
Goal Planning Verdict: Wealthfront
Wealthfront and Vanguard Personal Advisors offer excellent goal-planning capabilities, but Wealthfront inches out the win in this category with the Path feature.
Portfolio Construction
Wealthfront
Wealthfront builds its robo-advisor portfolios using a combination of low-cost index funds and exchange-traded funds (ETFs) from major investment brokers, including iShares, Schwab, and Vanguard. Wealthfront creates these portfolios to follow modern portfolio theory, which aims to generate the highest return for the lowest possible risk level.
When you enroll, you enter your goals and risk tolerance. From there, Wealthfront will build you a portfolio of up to 17 different asset classes, including U.S. stocks and bonds, international stocks and bonds, real estate, and commodities. The greater your risk tolerance, the more your portfolio will be in stock funds vs. bonds. Wealthfront also has you choose from several portfolio investment styles:
- Classic: Wealthfront’s original portfolio focuses on keeping fees low while generating a competitive return.
- Socially Responsible: This style uses ETFs that meet sustainability, diversity, and equity criteria.
- Automated Bond: This style focuses on bond funds to generate income.
- Direct Indexing: Direct indexing puts individual stocks in your robo-advisor portfolio and ETFs. It requires an account minimum of at least $100,000.
- Smart Beta: Smart beta requires an investment of at least $500,000. This style uses more advanced portfolio strategies to try to generate higher returns.
If you want to save for college expenses using a robo-advisor, Wealthfront is a better option as 529 accounts are available. Vanguard does not offer 529 plans for Vanguard Personal Advisor investors.
Vanguard Personal Advisor
Vanguard Personal Advisor builds portfolios using a mix of stock and bond ETFs from Vanguard and cash. The platform designs your portfolio recommendation based on your risk tolerance, investment time horizon, and goals. You can choose from three different investment styles:
- All-Index: This approach only uses low-cost index funds to keep fees as low as possible. It includes both U.S. and international stock and bond funds.
- Active/Index: This approach uses some active funds that try to outperform the market in exchange for a higher fee. It also includes some low-cost funds from the all-index strategy.
- ESG: This approach uses funds that meet environmental, social, and governance (ESG) standards.
Available Assets
| Wealthfront | Vanguard Personal Advisor | |
| Individual Stocks | Yes—portfolios worth more than $100,000 are eligible for direct stock indexing to replace U.S. stock ETFs | No |
| Mutual Funds | No | Yes |
| Fixed Income | Yes—ETFs | Yes—ETFs |
| REITs | Yes | No |
| Socially Responsible or ESG Options | Yes | Yes |
| ETFs | Yes | Yes |
| Non-Proprietary ETFs | Yes | No |
| Forex | No | No |
| Crypto | Yes | No |
Portfolio Customization
Wealthfront and Vanguard Personal Advisor vary quite a bit in terms of features, reflecting the different customers each is targeting. Wealthfront focuses on a younger client base that is comfortable with technology. Vanguard Personal Advisor has features aimed at higher net-worth clients who may require more human contact to manage their more complex financial situations.
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 vs. other Wealthfront accounts because these plans include an administrative fee.)
- Cash account: Wealthfront offers a high-interest cash account, unlimited transfers, and FDIC insurance up to $8 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 its rules-based investment strategies, which aim to maximize client investments using tax-loss harvesting. At higher asset levels ($100,000 and up), 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
- 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 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.
Portfolio Management
Wealthfront and Vanguard Personal Advisor differ significantly in how long it takes to get your portfolio started.
Wealthfront
Getting started with a Wealthfront account is fairly straightforward, though the brokerage won’t show you portfolio allocations before you give 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 Wealthfront, customers can choose from ETFs and mutual funds from Vanguard, Schwab, iShares, and State Street, or they can save cash.
Vanguard Personal Advisor
At Vanguard Personal Advisor, 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—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.
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.
Portfolio Management Verdict: Wealthfront
Wealthfront wins the portfolio management verdict, as it takes less time to create a portfolio. However, investors with larger accounts may appreciate the longer time it takes to set up their portfolio, as it depends on human advice.
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
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
Vanguard Personal Advisor 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.
Key Portfolio Management Features
| Wealthfront | Vanguard Personal Advisor | |
| Automatic Rebalancing | Yes—monitored daily, rebalanced when assets drift from target by large amounts | Monitored quarterly, 5% threshold |
| Reporting Features | Monthly and tax statements available; goal progress viewable online | Online dashboard and annual checkups |
| Tax Loss Harvesting | Yes | Yes |
| External Account Syncing/Consolidation | Yes—automated updates and only available for analysis | Yes, for goal planning purposes only; external accounts are not considered with regards to portfolio rebalancing |
Security
Wealthfront
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 two-factor authentication for further protection of your account.
Vanguard Personal Advisor
Vanguard provides 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.
Customer Service
Wealthfront
At Wealthfront, customers can call a support phone number if they need help with a forgotten password. You can also pose a support question on X (formerly Twitter); most were answered relatively quickly, although one question took over a week to receive a response. 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.
Vanguard Personal Advisor
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.
Fees
Wealthfront
Wealthfront and Vanguard are both competitive in the industry when it comes to fees, but here again, Wealthfront has the edge. The Wealthfront 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
Vanguard Personal Advisor 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 0.08%.
Minimum Deposit
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: $50,000
The Bottom Line
Wealthfront has the edge over Vanguard Personal Advisor 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 endorsem*nt. More information is available via our links to Wealthfront Advisers.
What Is the Difference Between Vanguard and Wealthfront?
Wealthfront is primarily a robo-advisor investment platform, whereas Vanguard is a large brokerage firm. Wealthfront is a newer company focused on technology, while Vanguard has been around a lot longer, specializing in creating low-cost index funds. Another major difference is that Vanguard provides access to human advisors while Wealthfront does not.
What Is the Average Return on Wealthfront?
Wealthfront’s Classic robo-advisor portfolio has had an average return of 8.20% per year since its inception in 2013. However, your return will depend on how you design your investment portfolio. Wealthfront offers several different investment styles, such as Classic or ESG. You can also add and subtract funds from the portfolio. The platform will show you the average past return of your investments.
Can You Lose Money With Wealthfront?
Yes, you can lose money with Wealthfront, as with any investment platform. When you sign up for an account, you pick your risk tolerance to set up your portfolio. Stock funds have a higher long-term expected return than bonds but are more likely to face short-term losses. If you are worried about losing money, you can set a low-risk tolerance. Wealthfront will give you a safer portfolio less likely to lose money.
Is Vanguard Good for Passive Investing?
Yes, Vanguard is good for passive investing, where you don’t trade often to keep fees low. Vanguard’s passive index funds charge some of the lowest expense ratios in the country. Vanguard’s founder, John Bogle, is famous for being one of the first promoters of low-cost passive investing using index funds as an alternative to higher-cost funds that try to outperform the market.
How We Review Robo-Advisors
Providing readers with unbiased, comprehensive reviews of digital wealth management companies, more commonly known as robo-advisors, is a top priority of Investopedia. We used our2023 consumer surveyto guide the research and weightings for our 2024 robo-advisor awards. To collect the data, we sent a digital survey with 64 questions to each of the 21 companies we included in our rubric. Additionally, our team of researchers verified the survey responses and collected any missing data points through online research and conversations with each company directly. The data collection process spanned from Jan. 8 to Feb. 9, 2024.
We then developed a quantitative model that scored each company to rate its performance across nine major categories and 59 criteria to find the best robo-advisors. The score for each company’s overall star rating is a weighted average of the criteria:
- Goal Planning - 21.00%
- Portfolio Contents - 17.00%
- Portfolio Management - 17.00%
- Fees - 15.00%
- Account Services - 10.00%
- Security & Education - 5.00%
- User Experience - 5.00%
- Account Setup - 5.00%
- Customer Service - 5.00%
Additionally, during our 2023 research, many of the companies we reviewed granted our team of expert writers and editors access to live accounts so they could perform hands-on testing. Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the top robo-advisors.
Read more abouthow we research and review robo-advisors.
Separately, our research team conducted a survey of 205 U.S. adults aged 18 to 72 who are current clients of one of 18robo-advisors. While the information collected did not influence the development of our ratings model, it was instrumental in gathering the valuable insights published inInvestopedia's 2023Robo-Advisor Consumer Survey.
Participants in our 2023Robo-Advisor Survey opted in to an online, self-administered questionnaire from a market research vendor. Data collection took place between Aug. 30 and Sept. 15, 2023, with 11 video interviews conducted with volunteer respondents from Sept. 7 to Sept. 17, 2023. Multiple quality checks, including screeners, attention gauges, comprehension evaluations, and logic metrics, among others, were used to ensure only the highest quality responses were included.
The above material and content should not be considered to be a recommendation. Investing in digital assets is highly speculative and volatile, and only suitable for investors who are able to bear the risk of potential loss and experience sharp drawdowns.Digital assets are not legal tender and are not backed by the U.S. government. Digital assets are not subject to FDIC insurance or SIPC protections.
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 endorsem*nt. More information is available via our links to Wealthfront Advisers.
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