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Vanguard Digital Advisor is a low-cost robo-advisor that stands out with its time-tested index fund approach that carries on the brokers long history of cutting fees for investors. In this Vanguard Digital Advisor review, we'll take a closer look at the pros and cons and how the robo-advisor works so you can decide if it's a fit for you.
With a low fee structure, this to the point platform is a great option for investors with at least $3,000 to start.
0.15% to 0.20% fee
$3,000
On Vanguard Digital Advisor®'s Secure Website.
This advisor is a good fit for: Hands-off investors seeking a low-cost investment solution.
Vanguard Digital Advisor®'s all-in costs are 0.15% for investors who choose an all-index fund investment portfolio or 0.20% for the active/index option that combines Vanguard ETFs and actively managed mutual funds. Vanguard Digital Advisor®'s costs are among the lowest we've seen among robo-advisors. New members also get no advisory fees for the first 90 days.
Vanguard pioneered the passive index fund over 45 years ago with the idea that you don't need to do anything extraordinary (or pay extraordinary fees) to achieve sound investment results. Vanguard has been able to deliver on this approach with its popular index funds.
If you want access to a real-live investment advisor or personal financial planner, you may be better off with one of Vanguard's more feature-packed competitors. Several other robo-advisors have human advisors, though they're generally far more expensive than Vanguard Digital Advisor®.
To be fair, a $3,000 minimum investment isn't high from a historical perspective. Though it is on the higher end of the spectrum in the current age of zero-minimums. This isn't an obstacle if you have $3,000 or more you're ready to invest, but Vanguard's price of admission is one of the highest among our top robo-advisors.
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To enroll in Vanguard Digital Advisor®, you'll need a Vanguard brokerage account with at least $3,000 in it that is either a standard individual (taxable) account or a traditional or Roth IRA.
Once you enroll in the all-index option, Vanguard will invest your assets in a portfolio of four different Vanguard exchange-traded funds (ETFs). Allocations are custom-matched to your age, risk tolerance, and other factors. Vanguard Digital Advisor's four ETFs are:
Vanguard also offers an active/index investment option and an ESG investment option. These offer different funds and charge slightly different fees, though never more than 0.20% annually.
Vanguard Digital Advisor® has a $3,000 minimum initial investment, which is on the higher end for robo-advisors we've seen. Many of its competitors have much lower minimums -- or none at all.
Vanguard Digital Advisor® is just a robo-advisor in the purest sense of the word. It offers some excellent automated features like tax-loss harvesting and automatic rebalancing. Competitors offer services like virtual meetings with financial planners, and other types of financial counseling. But, like most Vanguard products, Vanguard Digital Advisor® isn't intended to be a full-featured robo-advisor. For a bare minimum of expense, Vanguard will construct a portfolio of basic index funds and/or mutual funds that will be a good match to your investment needs.
That said, Vanguard also offers several personal finance resources that clients might find valuable. It has a debt payoff calculator tool that can help customers get on the path to paying off credit card and other types of debt. In short, Vanguard Digital Advisor® aims to keep investing simple, but focuses on its clients' overall financial well being.
In addition to standard individual and joint brokerage accounts, Vanguard Digital Advisor® is available in both traditional and Roth IRA accounts for retirement savers who want to put their investment strategies on auto-pilot.
Vanguard Digital Advisor® doesn't only consider your age, it also uses other factors to construct your portfolio, like your personal risk tolerance. Essentially, Vanguard Digital Advisor® creates a custom-allocated portfolio of Vanguard index funds and mutual funds, which are known for their low costs.
Vanguard Digital Advisor® doesn't include access to human financial advisors, which isn't so surprising considering the ultra-low fee structure. Some of Vanguard's competitors offer financial advisors, typically with a somewhat higher fee structure or a premium membership.
Vanguard is known for its low-cost investment options, and Vanguard Digital Advisor® is no exception. The index-only option has a 0.15% advisory fee, which means that on a $10,000 investment portfolio, you'll pay $15 in fees. There's an ESG portfolio option with a 0.15% management fee, as well as a portfolio that combines index funds and some of Vanguard's mutual funds for a 0.20% advisory fee.
Vanguard offers customer service by phone Monday-Friday from 8 a.m. to 8 p.m. EST. While robo-advisory clients tend to need less support than standard brokerage clients, some of Vanguard Digital Advisor®'s competitors offer 24/7 phone support, as well as app-based, email, or other forms of customer service. However, it's worth noting that Vanguard has a user-friendly app that allows for easy account management and has a 4.7 out of 5-star rating in the App Store.
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Vanguard Digital Advisor is an excellent low-frills robo-advisor that can help you put your investments on auto-pilot with top quality Vanguard ETFs and mutual funds. If you have at least $3,000 to invest and want a passive way to invest, Vanguard Digital Advisor can be well worth it.
To use Vanguard Digital Advisor, you'll need a Vanguard brokerage account with at least $3,000 (or you can open a new one). You need to be a United States resident and at least 18 years old in most states.
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Vanguard disclosures
Visit vanguard.com to obtain a prospectus or, if available, a summary prospectus, for Vanguard and non-Vanguard funds offered through Vanguard Brokerage Services. The prospectus contains investment objectives, risks, charges, expenses, and other information; read and consider carefully before investing.
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 that targets an annual net advisory fee of 0.15% across your enrolled accounts, although your actual fee will vary depending on the specific holdings in each enrolled account. To reach this target, Vanguard Digital Advisor starts with 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 managed portfolio by Digital Advisor (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 "https://personal.vanguard.com/pdf/vanguard-digital-advice-brochure.pdf" Form CRS and the Vanguard Digital Advisor brochure.
Vanguard funds not held in a brokerage account are held by The Vanguard Group, Inc., and are not protected by SIPC. Brokerage assets are held by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA and SIPC.
Vanguard Marketing Corporation, Distributor of the Vanguard Funds
J.P Morgan Disclosure
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