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Vanguard Digital Advisor Review

Vanguard Digital Advisor helps you build your portfolio using a blend of ETFs, mutual funds, and bonds. We review the tool in this guide.

Vanguard is a financial services firm based in Malvern, Pennsylvania. It provides both financial advisor and brokerage services. It’s registered with the SEC as a registered investment advisor (RIA). In 2019, the firm launched a robo-advisor tool, Vanguard Digital Advisor, which acts as a discretionary automated portfolio manager for clients that invest at least $3,000.

In this article, we’ll review Vanguard Digital Advisor and what you can expect from the service. This includes looking at what types of clients it’s ideal for, how it works, and its fee structure. Additionally, you’ll learn other important information about the firm, including its disclosure history and points of contact.

Assets Under Management

$7.7 trillion as of 2023

Date Founded

May 1, 1975

CEO

Mortimer J. Buckley

Fee Structure

Fee-only

Headquarters Address

100 Vanguard Boulevard Malvern, PA 19355

Phone Number

(877) 662-7447, Mon-Fri, 8am-8pm EST

Pros and Cons of Vanguard Digital Advisor

Pros

  • Low account minimum
  • Inexpensive fees
  • Can invest in ETFs, mutual funds, and bonds
  • Offers tax-loss harvesting
  • Only three disclosures

Cons

  • Limited investment strategy options
  • No access to an in-person advisor

Types of Clients

Vanguard Digital Advisor allows retail clients to enroll if they’re able to meet the $3,000 minimum investment. Because of this relatively small requirement, most people should be able to take advantage of the firm’s services. However, those who are already using Vanguard Personal Advisor, the firm’s in-person advisor service, may not sign up.

Besides the initial investment, you must also meet the following criteria before you can enroll:

  • Be a United States resident
  • Be at least 18 years of age (19 in Alabama or 21 in Nebraska)
  • Not be or live in a household with someone who can influence policy within a publicly traded company, such as a board member or executive

In addition to the above requirements, you must also have an eligible account type. Personal accounts, including IRAs, and employer-sponsored accounts, such as 401(k)s, Roth 401(k)s, 401(a)s, and 403(b)s, are eligible. If your account is ineligible, Vanguard may allow you to use its tools for forecasting, but it won’t manage your investments on a discretionary basis.

How Vanguard Digital Advisor Works

Vanguard Digital Advisor is a discretionary investment management and advisory service offered by The Vanguard Group. After enrolling, you’ll gain access to a variety of tools through the firm’s website, including for tax-loss harvesting. Additionally, you’ll grant access to the firm’s robo-advisor to buy and sell securities on your behalf based on your goals, time horizon, and risk tolerance.

Once you create an account, it’ll be up to you to choose one of three portfolio options – all-index investment option, active/index investment option, and ESG investment option. These will dictate the types of securities your robo-advisor will invest in. Below is a more specific breakdown of what each approach includes:

All-Index Investment Option

With this option, your robo-advisor will invest in a mix of low-cost exchange-traded funds (ETFs) that aim to broadly diversify your portfolio. These are typically funds that track the U.S. and international markets. Additionally, the firm claims that it will use tax-exempt investments “for your US bond allocation” if you’re in a higher income tax bracket.

Active/Index Investment Option

This approach emphasizes investing in both ETFs and mutual funds that seek to diversify your portfolio and gain higher returns. Vanguard’s website mentions that this option is especially for individuals who are patient during times of poor performance and are able to take risks. When you choose this option, it typically refers to the following funds:

  • VHCAX Capital Opportunity Fund Admiral™ Shares
  • VADGX Advice Select Dividend Growth Fund
  • VZICX International Core Stock Fund Admiral Shares
  • VAGVX Advice Select Global Value Fund
  • VAIGX Advice Select International Growth Fund
  • VCOBX Core Bond Fund Admiral Shares
  • VTI Total Stock Market ETF
  • BND Total Bond Market ETF
  • BNDX Total International Bond ETF
  • VXUS Total International Stock ETF

ESG Investment Option

Finally, Vanguard offers an environmental, social, and governance (ESG) investment strategy. With this approach, your automated portfolio manager will only invest in Vanguard ETFs that are selected via a “pre-screened ESG criteria.” Keep in mind that it may also invest in bonds that don’t fit these criteria to achieve a certain level of diversification within your portfolio.

Per Vanguard, your robo-advisor may invest in the following funds with this option:

  • VCEB ESG U.S. Corporate Bond ETF
  • ESGV ESG U.S. Stock ETF
  • VSGX ESG International Stock ETF
  • BNDX Total International Bond ETF

Fee Structure and Cost

For the first 90 days, Vanguard Digital Advisor is free of charge. After this period, the firm charges a flat advisory fee based on a percentage of assets under management (AUM). The percentage you pay depends on the investment option you choose. Here’s what each option costs:

Investment OptionFee Percentage
All-Index Investment Option0.15%
Active/Index Investment Option0.20%
ESG Investment Option0.15%

In addition to an advisory fee, you may also be responsible for costs associated with the securities you buy. This includes both transaction and fund management fees.

Vanguard Digital Advisor Investment Philosophy

When you enroll with Vanguard Digital Advisor, you are putting a level of trust in it to invest in your best interest. Due to the firm’s compliance with the SEC as an RIA, it must act as a fiduciary at all times. However, because each client has unique needs and goals, the company doesn’t follow a singular investment philosophy.

Rather, you will get the opportunity to provide information about your finances, as well as select an approach that works best for you. For example, if you want to keep your portfolio diversified, it may be worthwhile to select Vanguard’s all-index option. On the other hand, you may choose the ESG option if you value securities that adhere to environmental, social, and governance criteria.

Disclosures

Vanguard Advisers, Inc. is registered with the SEC as an RIA. Because of this, it must report any legal events as disclosures on its Form ADV. Currently, Vanguard only has three disclosures on file, which is relatively low compared to some other long-standing advisory firms of a similar size.

Also, keep in mind that when you work with a robo-advisor, you need not worry about any individual advisor’s disclosures. Additionally, because the firm is an RIA, even its software must act as a fiduciary while it handles your investments.

Customer Service

Vanguard provides a couple of different methods for receiving customer service and support. First, you can visit the firm’s technical support page to get help with computer or outside service issues. Alternatively, you can call the corporate customer service phone number at (877) 662-7447. The company’s hours for this number are from 8 am to 8 pm EST.

How to Start an Account

To open a Vanguard Digital Advisor account, you can visit the firm’s website and click either “Get Started” or “Open an Account.” From there, you will be able to follow the signup process and contribute funds to your account. However, before you enroll, be sure you’re eligible by checking the “Types of Clients” section above.

Methodology

This review is based on publicly available information directly from Vanguard’s website and the SEC. Neither the firm nor its representatives have any say on what we’ve included on this page.

Frequently Asked Questions

Is Vanguard Digital Advisor a fiduciary?

Yes, Vanguard Digital Advisor is a fiduciary because the firm, Vanguard Advisers, Inc., is registered with the SEC as an investment advisor. Because of this, the company and all of its representatives must act in your best interest if it conducts advisory activities.

Is Vanguard Digital Advisor worth it?

Vanguard Digital Advisor is a relatively low-cost, low-barrier-to-entry option that affords you access to a robo-advisor. It doesn’t offer as many investment portfolio options as some other firms, but its accessibility may make it a great option, especially if you’re a beginner.

How much money do you need for Vanguard Digital Advisor?

You must invest at least $3,000 in an eligible account to enroll with Vanguard Digital Advisor.

Is Vanguard Digital Advisor FDIC-insured?

No, your brokerage account balance won’t be FDIC-insured, as this protection only extends to bank balances. However, the Securities Investor Protection Corporation (SIPC) does cover these types of accounts.

Does Vanguard Digital Advisor let me talk with an in-person professional?

Unfortunately, you won’t be able to meet with an in-person professional unless you qualify for and enroll in Vanguard Personal Advisors. To do so, you’ll need to invest at least $50,000.

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