NerdWallet's rating: / 5
Quick facts
- Management fee: 0.3%
- Account minimum: $50,000
Vanguard Personal Advisor Services is best for:
- Large account balances
- Low-cost access to a financial advisor
- College savers
- Comprehensive financial planning
Vanguard Personal Advisor Services at a glance
| Overall |
|
|
| Account management fee |  |
0.3% |
| Investment expense ratios | |
0.05% to 0.19% |
| Portfolio |  |
Portfolios are created by advisors on an individual basis. Core holdings are Admiral Shares of Vanguard index funds. ETFs and active funds incorporated if needed. |
| Account minimum |  |
$50,000 |
| Account fees (annual, transfer, closing) | |
Clients may incur transaction fees |
| Accounts supported |  |
• Non-retirement accounts • Roth, traditional, rollover and SEP IRAs • Trusts • 529 college savings plans *Vanguard will also consider 401(k)s and outside assets when creating a client’s financial plan, but does not directly manage those assets. |
| Tax strategy | |
Not daily; tax-loss harvesting provided on a client-by-client basis |
| Automatic rebalancing | |
Portfolios are rebalanced once per quarter |
| Customer support | |
Dedicated financial advisors |
Where Vanguard Personal Advisor Services shines
Low management fee: Is a 0.3% management fee low in the grand scheme of robo-advisors? Not really. Wealthfront charges a flat 0.25% on accounts over $10,000 (management is free on balances under that). Betterment has a sliding scale that gets as low as 0.15% on accounts over $100,000. And there are other services, such as Schwab Intelligent Portfolios and WiseBanyan, that are completely free of management costs (though as with all robo-advisors, the investments used carry expense ratios paid by the investor).
Investments: Portfolios are built on a client-by-client basis, but as you might expect, Vanguard Personal Advisor Services primarily uses Vanguard funds. In many ways, that benefits investors: Vanguard funds carry some of the lowest expense ratios available, and many competitor robo-advisors also use them as the base of their portfolios.
Unlike other robo-advisors, Vanguard’s service doesn’t exclusively use ETFs; portfolios are primarily constructed of index funds and, yes, in some cases actively managed funds. Vanguard says its advisors will incorporate ETFs if the client wants to use them, and clients also have the option of including a money market fund for access to liquidity.
The funds used carry expense ratios ranging from 0.05% to 0.19%. Core portfolio holdings include Admiral Shares of Vanguard’s total stock market index fund, total bond market index fund, international stock market index fund, international bond market index fund, and limited-, intermediate- and long-term tax-exempt funds, which invest in municipal bonds.
Comprehensive management: Vanguard Personal Advisor Services directly manages brokerage and IRA accounts, as well as 529 plans and trusts. But the advisors will also take into account other aspects of a client’s portfolio, like a 401(k) or accounts held at another firm, when developing a financial plan. It’s up to you to report those assets — and they won’t be managed directly by your Vanguard advisor — but the advice you receive will be comprehensive and tailored to your full financial picture.
Dedicated financial advisors: Part of the value in hiring a financial advisor is that you have someone to turn to when life gets rocky, whether that means the markets have taken a dive or you’re experiencing your own personal turbulence. An advisor will help you adjust your plan, if needed, or — more likely — remind you that your plan is still sound and you just need to ride out the waves. Likewise, an advisor can help you plan for and adjust to major milestones, like marriage or the birth of a child.
Vanguard Personal Advisor Services does all of that, too: The advisors will help you make adjustments to your investments as needed. Clients receive quarterly progress reports and can schedule time to speak to their advisor via phone or video conferencing. Advisors are also available for quick questions via email.
Where Vanguard Personal Advisor Services falls short
Account minimum: There’s no way around it — $50,000 is a high account minimum. Clearly, Vanguard is limiting its service to balances that, given the low management fee, will make a significant impact on its bottom line. The minimum puts the service out of reach for many new investors, though the $50,000 can be spread among multiple accounts. Fortunately, there is plenty of competition in the robo-advisor field, which saw many advisors actually lowering their minimums in 2015.
Possible transaction fees: Many robo-advisors swallow the cost of any transaction fees incurred in client accounts, such as trade commissions and mutual fund load or sales charges. (Expense ratios are typically passed on to the investor.) These fees are generally minimal in robo-advisor accounts, which primarily use ETFs and index funds. But Vanguard’s service does use other investments in some cases, and the advisor’s service brochure notes that the client is subject to any transaction fees, brokerage charges, sales charges, commissions or other fees and expenses that stem from the purchase of non-Vanguard investments. The company does note that it typically recommends no-load mutual funds and, as noted above, Vanguard funds.
Tax-loss harvesting: The service is available here, but it isn’t automatic. Rather, tax-loss harvest opportunities are approached on a client-by-client basis, which the company says is by design: Vanguard’s investment research shows that while tax-loss harvesting can be beneficial, it also carries risk. Clients who want daily monitoring for tax-loss harvesting opportunities may not be happy with this approach.
The bottom line
The value in Vanguard Personal Advisor Services is the access to a dedicated financial advisor for a fraction of what you’d pay an advisor directly. If you’re tempted by robo-advisors but worried you’ll miss the human touch, a hybrid service like this is a great solution. It combines the general robo-advisor philosophy — a portfolio constructed of low-cost, diversified funds — with the customization and personalization you can only get by working with a financial advisor. The downside? The service’s high account balance minimum and limited tax-loss harvesting capabilities.
Open a Vanguard Personal Advisor Services Account
Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: aoshea@nerdwallet.com.Twitter: @arioshea.
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