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Wealthfront vs. Vanguard
Consider your investing budget and type of financial planner when choosing between these two platforms.
Wealthfront and Vanguard are two investment platforms with competitive fees. Wealthfront is solely a robo-advisor, while Vanguard offers a few financial services. But how much you invest may determine which platform is better for you.
Which one is better?
Choose Wealthfront if you’re investing between $500 and $3,000.
Choose Vanguard if you’re investing at least $3,000.
Wealthfront and Vanguard have similar offerings — even down to the account types. They both curate securities with low expense ratios for your portfolio based on research, your risk tolerance and your financial goals.
While Wealthfront has a lower minimum account requirement of $500, it has a higher annual robo-advisor fee — 0.25% to Vanguard’s of 0.15%. Having a higher account balance unlocks a few fancier investment strategies, but you end up paying more in fees. For example, an account with $500 has an annual fee of $1.25, but a $500,000 account, which qualifies for a smarter weighting strategy, costs $1,250 per year.
Vanguard rivals Wealthfront with a low fund fee and a lower advisory fee for its robo-advisor service. But you’ll need a minimum account of $3,000. And unlike Wealthfront, that only supplies financial advice through its software, Vanguard lets you call an adviser and discuss your financial situation if you can afford $50,000 in managed assets. Your advisor implements tax-savings strategies as an added perk.
Wealthfront is an investment firm that removes the guesswork from investing. It helps you build a financial plan and reach your goals with the help of automated investments.
Vanguard is an investor-owned brokerage that specializes in low expense ratio ETFs. Its tiered investment services are best suited to long-term investors with high account balances, as it offers a personal advisor service for investors with at least $50,000 on hand. Investors that purchase its mutual funds and ETFs don’t pay commissions and become part-owners of the company.
Annual fee
0.25%
0%
Minimum deposit to open
$500
$0
Benefits
Competitive expense ratio. Fund fees range from 0.06% to 0.13% depending on your risk level. Since this cost is usually taken straight from your fund’s performance, a lower expense ratio means more profit.
Tax-loss harvesting. All investment accounts have automatic daily tax-loss harvesting to capture losses in your portfolio, which can lower your tax bill.
SIPC-insured. Your cash and securities are protected up to $500,000 in case the company is liquidated.
Competitive expense ratio. Expense ratios across its mutual funds averaged 0.1% compared to the industry’s average of 0.63% in 2018.
Investor-owned company. Vanguard operates differently from most major investment firms that are publicly traded. Investors become shareholders or part-owners of the company when they invest in a mutual fund or ETF.
Fractional shares. Buy fractional shares of mutual funds, making your money work even if you can’t afford the entire share price.
Securities insurance. The SIPC insures your securities up to $500,000. Vanguard also has additional coverage from Syndicates of Lloyd’s of London.
Tax-loss harvesting. An adviser can help you reduce your tax burden throughout the year by selling securities that have experienced a loss.
Drawbacks
Minimum deposit. While Wealthfront’s $500 minimum is considerably less than Vanguard’s robo-advisor’s requirement, it’s relatively high compared to its competitors, such as Betterment or Fidelity.
Annual advisory fee. Although Wealthfront’s 0.25% annual fee is lower than the industry standard of 1%, it’s still higher than Vanguard’s robo-advisor’s 0.15%.
No fractional shares. Since Wealthfront fills your portfolio with ETFs, you can’t purchase partial shares, which could leave some of your money sitting in your portfolio.
High account minimums to access extra features. You’ll need at least $100,000 to unlock stock-level tax-loss harvesting and risk parity, an advanced asset allocation strategy. And you’ll need deeper pockets to use Wealthfront’s more intelligent weighting algorithm, which is only available to accounts starting at $500,000.
High account minimum. To enroll in Vanguard’s robo-advisor, you’ll need at least $3,000 in your brokerage account — much higher than Wealthfront’s $500 minimum deposit.
Basic mobile app. Many customers feel that Vanguard’s original app is clunky, unintuitive and forced users to log in repeatedly. Its new app, Vanguard Beacon, released in 2020, but doesn’t have all its features yet.
Tools and research
Educational resources. Wealthfront’s blog offers information from investing to financial planning to help you get a handle on money management.
Banking. For short-term savings goals, the Wealthfront Cash Account earns 0.35% APY, which is five times the national average of 0.06% for a savings account. While Wealthfront has a network of no-fee ATMs, there are no physical branches that you can visit.
Financial planning. Get software-based financial advice built by a research team of PhDs on Wealthfront’s mobile app — and you don’t have to open an investment account.
Screener and profiles. Active traders get stock info and analyses from independent experts such as Standard and Poor’s.
Investor education. Comb through Vanguard’s articles to get a foundation in investing.
Financial adviser. Vanguard advisers are fiduciaries and must act in your best interest. They don’t receive commissions and create goal-oriented — instead of market-driven — investment plans based on your needs. But you’ll need $50,000 in managed assets and it’ll cost you an annual fee of 0.3%.
Wealthfront and Vanguard are two robo-advisors with advisory fees lower than the industry standard. And their low expense ratios may make them attractive options for buy-and-hold investors.
Wealthfront also offers banking services and a diverse suite of investment accounts. It might be a good option if you want a low-fee portfolio with a relatively low account balance.
Vanguard is better suited for investors with higher account balances. Fractional shares make sure all your money is working for you, and a financial advisor can keep you on track with your financial goals.
You can deposit, withdraw and transfer funds as often as you like, but Wealthfront has specific rules about moving money. For example, you can withdraw cash from a no-fee network ATM, but you can’t deposit cash at an ATM.
You’ll need to meet a few criteria to open an account:
Be at least 18 years old
Have a Social Security number
Have a permanent US residential address
Reside in the US
Have a US phone number that accepts SMS text messages
No, you can’t be enrolled in Digital Advisor, Vanguard’s robo-service, if you’re enrolled in Personal Advisor Services.
Kimberly Ellis is a writer at Finder. She hails from New York City with a BA from Queens College and a New York State teaching certificate. After teaching in both public and private schools, Kimberly decided to take the world by storm and dive into the media industry — where she covers everything from home loans and investing to K–12 education and shopping. She’s also an aspiring polyglot, always in a book and forever on the hunt for the perfect classic red lipstick.
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