You’re looking to start investing and you’re not sure if a simple robo advisor is enough or if a certified financial planner is too much.
That’s why we’re here. We’re going to do a comparative review of Wealthfront vs Vanguard; two very effective but very different platforms for investing.
Wealthfront vs Vanguard: An Extensive Look
Vanguard and Wealthfront are two very dominant trading platforms with very different features. Their fees, features, services, and support vary greatly between the two platforms.
Before we dissect the ins and outs of these two services, it’s important to know what you’re dealing with first.
Wealthfront is a robo advisor with extremely simple investing options. You don’t have to have financial or investment experience to use Wealthfront to begin investing and build a portfolio.
Vanguard is slightly different in that you get more freedom to choose your involvement with investing and building your portfolio. While Vanguard is still a robo advisor, they offer more options for investors who want to be more involved in the investment process.
The Fees and Minimums
Wealthfront charges an annual fee of 0.25% on the total amount of your assets in your account. It doesn’t charge any trade-based fees or other management fees for maintaining your investments and portfolio. You also don’t have to worry about paying hidden fees for inactivity, withdrawals, or deposits. This makes it easy to know that your only Wealthfront fee per year will be for 0.25% of all your assets in your investment account.
Wealthfront requires a minimum account balance of $500.
Vanguard is not as fee-friendly but that’s because Vanguard is more than just a robo advisor. Vanguard is a full-service trading platform that makes its money through specific trades. Not all trades on Vanguard cost a fee, either.
Free trades include the following:
- Stock trading
- ETFs and Vanguard ETF
- Vanguard mutual fund
- Mutual funds on the Vanguard approved mutual fund list
Trades that cost investors a fee include the following:
- Mutual funds that are not on the approved mutual fund list
- $20 per trade
- $1 contract per trade
There is no account minimum requirement to use Vanguard and its services.
The Services and Features
Both Wealthfront and Vanguard are robo investors that are designed for investors who prefer to have a platform that does most of the work for them. You can be a beginner, young adult, or just someone who wants to start saving for retirement. No matter what the reason is, Wealthfront and Vanguard both have services that will help you achieve your financial goal.
There are some differences, however, with their services.
Wealthfront
Wealthfront is the more simplistic platform. Your risk factors and investment amounts are based on the questions you answer when you create an account. You will need to answer questions regarding your age, income, personal goals, and risk tolerance. After those questions have been answered, Wealthfront will analyze the data and come up with a computer-based algorithm to determine where to make investments and for how much.
Your Wealthfront portfolio will be comprised of a mixture of ETFs, equities, bonds, and real estate. This creates a diversified portfolio that will continue to grow to help you meet your financial goals.
The downside to Wealthfront is that you can’t make your own investments or trade any stocks yourself. If you’re looking for a robo advisor that will give you some control, Wealthfront is limited. Wealthfront does not give investors the ability to directly trade any stocks or funds.
What Wealthfront lacks in being able to directly trade, it makes up for with its broad range of financial planning options. You can create a savings plan for virtually any goal you choose. It can be as basic as a retirement account or as specific as a milestone goal like paying for a wedding or purchasing a house.
Vanguard
Vanguard is a full-service trading platform so you will have more flexibility and control when it comes to your investments and portfolio, but only if you want. You can easily choose to let the robo advisor handle your portfolio without having to do anything. However, if you want to make contributions or trades, Vanguard gives you this option.
You can directly trade stocks, bonds, ETFs, and mutual funds. You can also directly trade currencies but not cryptocurrency.
Arguably the most beneficial feature of using Vanguard is its immeasurable list of mutual funds that you can choose to trade or invest in on their platform. This reason alone gives Vanguard the edge when it comes to benefits, especially if you are an investor who wants to be involved in the investment and trading process.
Websites, Applications, and Online Support
Most robo advisors offer a smartphone application for you to quickly and easily check your portfolio while on the go. Wealthfront and Vanguard are no different. They each have a smartphone application and website for you to monitor your investment accounts.
Because Vanguard gives its users more control over their investments, it has a more detailed website and application. This also means more online support with a human, personal advisor.
Wealthfront doesn’t lack in the website department, however. It has a website tool called Path that helps investors put their investment vision to real life.
It really comes down to the type of investor you plan to be. If you’re going to be involved with your investments and portfolio, Vanguard will have a better website, application, and online support for your needs. However, if you are looking for a simple and basic robo advisor that you don’t plan to be involved with, then Wealthfront is more than enough for your needs.
Conclusion
The question you need to ask yourself is what type of investor you will be. If you’re going to be more involved in your investment portfolio, you will likely want to choose Vanguard. If you need a simple, minimal-fee robo advisor, you should choose Wealthfront.
For more information about how Wealthfront stacks up against other investment applications, check out our articles where we compare Wealthfront to other investment applications including Robinhood Vs Wealthfront, Personal Capital Vs Wealthfront, and Wealthfront Vs Ally.
