Vanguard Personal Advisor Services (VPAS) is the robo-advisor product offered by the investment management company The Vanguard Group, the world’s largest provider of mutual funds. It offers taxable accounts, traditional and Roth IRAs, and trusts.
While Vanguard itself manages a massive $4 trillion in assets, VPAS specifically manages over $83 billion. As is the case with Schwab and Fidelity, VPAS’s reporting to the SEC is wrapped up with other investment information, so its average account size is not readily available. However, with a $50,000 account minimum, VPAS is obviously more suited to investors with large account balances.
Fees and Investing
At a 0.3% account management fee, VPAS is relatively cheap compared to other hybrid robo-advisors. Additionally, fund expense ratios range from 0.05%-0.19% for its proprietary index funds. Vanguard has some of the lowest expense funds available, but of course the company is essentially paying itself twice: first on the management fee, and then a second time on the expenses for its own index funds.
The account minimum is $50,000, but only clients with over $500,000 have access to personal dedicated advisors. All other clients have access to Vanguard’s team of advisors, but not their own dedicated advisor. This compares with Personal Capital, which offers personal advisors to any clients who invest over $200,000.
Signing up for VAPS first requires you to create a profile with Vanguard if you don’t have an existing account. The site then prompts you to fill out information about yourself, including marital status, current income, investment goals, risk tolerance, and planned retirement age.
After filling out this information, you will be prompted to link to any of your existing bank or brokerage accounts to demonstrate that you can meet the minimum $50,000 required to use the service. If you are able to do so, you will be able to schedule an initial consultation with a Vanguard representative to discuss investment strategy and asset allocation.
What You Get
Vanguard primarily provides Admiral Shares of its core stock market and bond market index funds, but advisors can incorporate exchange-traded funds (ETFs) or money market funds for liquidity if requested. Index funds are meant to track the market instead of trying to “beat it”, so your money grows as the market does. These instruments provide low expense ratios, making them appealing for many robo-advisors.
Clients then receive monthly progress reports that demonstrate portfolio performance and quarterly rebalancing done by advisors to move you closer toward your ultimate investment goals.
Vanguard advisors are available for calls, emails, and video chats through the website.
The 0.3% management fee is very competitive compared to other hybrids. Betterment’s equivalent service charges 0.5%, and Personal Capital charges 0.89% for any accounts under $1 million. However, Personal Capital provides personal advisors for any account over $200,000, not $500,000 like VPAS. As such, investors in the $200-500k range who really value the input of a personal advisor may be better served with Personal Capital, but investors with over $500,000 may be better off sticking with Vanguard’s very low fees. However, that also comes at the cost of a slightly lower level of personalization offered by Vanguard, which primarily limits clients to its own index funds.
For those with the capital to meet its minimum account balance, Vanguard is likely the lowest-fee option for access to personal advisors, the comfort of a very established investment management company, and a solid user experience.