- Wealthfront vs. Vanguard: The Biggest Differences
- Is Wealthfront Right for You?
- Is Vanguard Right for You?
- FAQ
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Wealthfront vs. VanguardWealthfront Investing
Vanguard
Bottom line: Wealthfront and Vanguard are two of the best robo-advisor.Wealthfront is best for hands-off investors in search of low-cost automated portfolio management and access to features like tax-loss harvesting, US Direct Indexing, and crypto trusts. Vanguard, however, serves a wider range of investors by offering both DIY and automated/managed accounts. It's also great for passive investors looking for personalized, automated investment portfolios
Wealthfront vs. Vanguard: The Biggest Differences
Wealthfront and Vanguard offer multiple investment choices and account types for retail investors. But while Similar to some of the best online brokerages, Vanguard offers both DIY and automated investing. But Wealthfront mainly provides automated portfolio management. That said, Wealthfront does allow DIY trading for stocks, though, with its stock investment account.
You'll pay less to set up an automated investing account at Wealthfront (it has a $500 minimum; Vanguard Digital Advisor and Vanguard Personal Advisor Services require $3,000 and $50,000, respectively), but your overall investment selection will be more limited compared to Vanguard's.
Vanguard is best for most types of investors, as it offers access to stocks, ETFs, options, mutual funds, and much more. If you're a hands-off investor strictly in search of robo-advice, Wealthfront is the better choice. The platform also offers an investment type that Vanguard's equivalent accounts don't: crypto trusts.
Wealthfront Investing Start investing On Wealthfront's website Insider’s Rating A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star Icon of check mark inside a promo stamp It indicates a confirmed selection. PerksAccount Minimum$1 ($500 for automated investing)
Fees$0 for stock trades. 0.25% for automated investing (0.06% to 0.13% for fund fees)
Pros- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Low annual fee for investment accounts; crypto trust investments available
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Tax-loss harvesting, portfolio lines of credit, 529 college savings plans available
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Cash account
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Mobile app and investing and retirement tools
- con icon Two crossed lines that form an 'X'. You need at least $100,000 to utilize additional investment strategies
- con icon Two crossed lines that form an 'X'. No human advisor access
Wealthfront is one of the best robo-advisor options if you're in search of low-cost automated portfolio management, and one of the best socially responsible investing apps for features like tax-loss harvesting, US direct indexing, and crypto trusts.
Wealthfront Product Details- Consider it if: You're balancing several goals and want to streamline your finances.
- Promotion: Fund your first taxable investment account with at least $500 in the first 30 days of account opening and earn a $50 bonus.
Insider’s Rating A five pointed star A five pointed star A five pointed star A five pointed star A five pointed star Icon of check mark inside a promo stamp It indicates a confirmed selection. PerksAccount Minimum$0 ($3,000 for Vanguard Digital Advisor; $50,000 for Vanguard Personal Advisor Services)
Fees0% (0.20% to 0.30% for professionally managed portfolios)
Pros- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Commission-free stocks, ETFs, and options
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Brokerage, automated, and advisor-managed accounts available
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Thousands of low-cost mutual funds
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Multiple resources with expert analysis and market insights
- Check mark icon A check mark. It indicates a confirmation of your intended interaction. Several retirement accounts and services for retirement plan participants
- con icon Two crossed lines that form an 'X'. Higher options contract fee than other discount brokerages (Vanguard charges $1 per options contract)
- con icon Two crossed lines that form an 'X'. No separate trading platforms for advanced traders; no fractional shares
- con icon Two crossed lines that form an 'X'. No cryptocurrencies
Vanguard is a reasonable low-cost option for all types of investors. Whether you're an active trader, passive investor, or retirement-focused individual, you should be able to find what you're looking for.
Vanguard Product Details- Promotion: None at this time.
- App store rating: 4.7 iOS/ 1.8 Android
- Consider it if: You're a long-term focused investor looking for access to a variety of account types and investment choices.
- Awards: Morningstar gave Vanguard a 'High' assessment in its 2022 Robo-advisor Landscape report, listing it as the #1 platform out of 16 robo-advisors
Is Wealthfront Right for You?
Pros
- Low fees; can customize your ETF allocation
- Tax-loss harvesting, direct indexing, risk parity, and smart beta strategies available
- Cash account lets you earn 0.85%; Wealthfront only lets you have an allocation of crypto trusts up to 10% of your portfolio to protect you against risk
- Mobile app and investing and retirement tools
Cons
- You need at least $100,000 to utilize additional investment strategies
- No human advisor access
Wealthfront is an automated investing platform (aka "robo-advisor") offering individual and joint investment accounts, IRAs, 529 plans, trusts, and cash accounts.
It stands out from other popular automated accounts because its investment selection is made up of more than just ETFs; Wealthfront also offers crypto trusts (e.g., the Grayscale Bitcoin Trust [GBTC] and the Grayscale Ethereum Trust [ETHE]) and index funds. And it employs several strategies — including tax-loss harvesting, US Direct Indexing, Risk Parity Funds, and Smart Beta investing — to build wealth for its users.
You can also open a stock investment account, which allows DIY trading for stocks and fractional shares.
Plus, you can customize your portfolio's ETFs if you don't like Wealthfront's initial allocation.
Keep in mind, however, that you'll need a minimum balance of $100,000 to use US direct indexing (formerly known as stock-level tax-loss harvesting) and risk parity. You'll need at least $500,000 for smart beta strategies. Wealthfront says smart beta aims to increase your returns by weighting your portfolio's investments more strategically.
With tax-loss harvesting, the robo-advisor aims to minimize taxes you owe by capturing losses in your portfolio. The same goes for its US direct indexing strategy, except this strategy strives to capture losses on stocks within an index, according to Wealthfront. The risk parity fund, however, strictly aims to increase your risk-adjusted returns.
Is Vanguard Right for You?
Pros
- No commissions on stocks, ETFs, and options
- Vanguard-managed index funds, all-in-one retirement funds, and mutual funds available; several retirement planning resources and tools
- Self-directed, automated investing (robo-advice), and advisor-managed accounts available
- Expert insights and market analysis
Cons
- No other trading platforms besides website and mobile app
- Options contract fees are high compared to other brokerages
Dating back to 1975, Vanguard is an online brokerage with individual and joint accounts, automated investing accounts and managed portfolios, trusts, custodial accounts, IRAs, and much more.
Unlike Wealthfront, Vanguard offers a vast selection of self-directed investment accounts. This means that you'll make the trading decisions for your account, as opposed to those using robo-advisors.
The online brokerage also offers commission-free stocks, ETFs, and options, and you don't need to meet a minimum account size requirement to trade with a self-directed account. You'll mainly run into account minimums for Vanguard's automated and advisor-guided accounts, Vanguard Digital Advisor and Vanguard Personal Advisor Services.
Wealthfront vs. Vanguard — Frequently Asked Questions (FAQ)
Is Vanguard better than Wealthfront? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.Vanguard offers both a wider range of investment types and accounts than Wealthfront. Plus, its product selection includes both self-directed investment accounts and automated or advisor-guided accounts. It's a better option for many investors.
Wealthfront, on the other hand, best suits robo-forward investors who want to build wealth through automated investing accounts. It could also be good if you want a hands-on approach to investing in stocks, but prefer a robo-advisor for other types of investments. In addition (and because Wealthfront is solely designed for robo-advice), you'll be able to utilize tax-loss harvesting, direct indexing strategies, crypto investments, and much more.
The best choice for you depends on your investing goals and preferences.
Is Wealthfront worth the fee? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.That depends on what you're looking for. If you want the option to invest in assets like ETFs, index funds, and crypto trusts (and you don't mind its $500 minimum and 0.25% fee), Wealthfront is a competitive choice. The platform also provides tax-loss harvesting, direct indexing, and much more.
Costs also include its fund fees which range from 0.06% to 0.13%. Interest rates for portfolio lines of credit (this product lets you borrow up to 30% of your investment account) span from 3.15% to 4.40%.
If you're planning on saving for your child's education costs, you can open up its automated 529 plan. Fees for these accounts can be as high as 0.46%, but you'll get tax-free withdrawals in the process.
Can you lose money with Wealthfront? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.Yes. Like any investment platform that offers investments, no security you purchase is immune to market fluctuations and volatility.
How much money do you need to open a Vanguard account? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.You don't need to meet a minimum to open a Vanguard self-directed brokerage account. When it comes to automated investing, though, you'll need at least $3,000 for Vanguard Digital Advisor and a minimum of $50,000 for Vanguard Personal Advisor Services.
Is Vanguard good for beginners? Chevron icon It indicates an expandable section or menu, or sometimes previous / next navigation options.Both Vanguard accounts are great options for beginners or those who don't want to trade without the insights of an expert. The first, Vanguard Digital Advisor, invests your money into a diversified blend of Vanguard ETFs. Expense ratios represent the additional annual fees funds charge investors, and Vanguard's ETFs have an average 0.6% expense ratio. In addition, this account has a $3,000 account minimum and 0.20% annual fee.
Vanguard Personal Advisor Services, on the other hand, combines automated portfolio management with one-on-one advisor guidance. The account gives you access to a Vanguard fiduciary advisor, and it has a $50,000 minimum and 0.30% annual fee.
On the retirement side, Vanguard one-ups Wealthfront. Wealthfront only offers traditional IRAs, Roth IRAs, and SEP IRAs. Vanguard offers those accounts in addition to SIMPLE IRAs, individual 401(k)s, and multiple All-in-One retirement funds.
Plus, it has several resources — such as an investor education library and "News & Perspectives" hub — that help newcomers and beginners get acclimated to investing.
Rickie Houston Senior Wealth-Building Reporter Rickie Houston was a senior wealth-building reporter for Business Insider, tasked with covering brokerage products, investment apps, online advisor services, cryptocurrency exchanges, and other wealth-building financial products. Before Insider, 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. Read more Read less Top Offers From Our Partners
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