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Bottom line: Wealthfront Investing is best for hands-off investors who prefer automated portfolio management and want access to crypto trusts. Vanguard, however, serves a wider range of investors by offering both DIY and automated/managed accounts.
Wealthfront vs. Vanguard: The biggest differences
Wealthfront and Vanguard offer multiple investment choices and account types for retail investors. But while Vanguard is an online brokerage, with both DIY and automated investing, Wealthfront mainly provides automated portfolio management.
You’ll pay less to set up an automated investing account at Wealthfront (it has a $500 minimum; Vanguard Digital Advisor and Vanguard Personal Advisor Services require $3,000 and $50,000, respectively), but your overall investment selection will be more limited compared to Vanguard’s.
Vanguard is best for most types of investors, as it offers access to stocks, ETFs, options, mutual funds, and much more. If you’re a hands-off investor strictly in search of robo-advice, Wealthfront is the better choice. The platform also offers an investment type that Vanguard’s equivalent accounts don’t: crypto trusts.
Wealthfront
Vanguard
Account types
Individual
Joint
Trust
Traditional IRA
Roth IRA
SEP IRA
401(k) rollover
529 College Savings plan
Cash
Account types
Individual and joint taxable accounts
Individual retirement accounts (IRAs)
Small business retirement plans
529 plans
Trusts
Custodial accounts
Investment choices
ETFs, index funds, and crypto trusts
Investment choices
Stocks, ETFs, options, bonds, mutual funds, and CDs
Account perks
Goal-based investing; crypto trust investments
Tax-loss harvesting, US direct indexing, risk parity, and smart beta strategies
Socially responsible investing and automated 529 College Savings plans available
High-yield cash account; portfolio lines of credit
Account perks
Self-directed investment accounts
Tax-efficient managed portfolios
Automated investing; margin trading
Automatic withdrawals
Investment research and analysis
Human advisors available?
No
Human advisors available?
Yes — unlimited access to financial advisors with Vanguard Personal Advisor Services account
Robo-advice?
Yes
Robo-advice?
Yes — Vanguard Digital Advisor and Vanguard Personal Advisor Services
Is Wealthfront right for you?
Pros
Low fees; can customize your ETF allocationTax-loss harvesting, direct indexing, risk parity, and smart beta strategies availableCash account lets you earn 0.85%; Wealthfront only lets you have an allocation of crypto trusts up to 10% of your portfolio to protect you against riskMobile app and investing and retirement tools
Cons
You need at least $100,000 to utilize additional investment strategiesNo human advisor access
Wealthfront Investing is an automated investing platform (aka “robo-advisor“) offering individual and joint investment accounts, IRAs, 529 plans, trusts, and cash accounts.
It stands out from other popular automated accounts because its investment selection is made up of more than just ETFs; Wealthfront also offers crypto trusts (e.g., the Grayscale Bitcoin Trust [GBTC] and the Grayscale Ethereum Trust [ETHE]) and index funds. And it employs several strategies — including tax-loss harvesting, US Direct Indexing, Risk Parity Funds, and Smart Beta investing — to build wealth for its users.
Plus, you can customize your portfolio’s ETFs if you don’t like Wealthfront’s initial allocation.
Keep in mind, however, that you’ll need a minimum balance of $100,000 to use US direct indexing (formerly known as stock-level tax-loss harvesting) and risk parity. You’ll need at least $500,000 for smart beta strategies. Wealthfront says smart beta aims to increase your returns by weighting your portfolio’s investments more strategically.
With tax-loss harvesting, the robo-advisor aims to minimize taxes you owe by capturing losses in your portfolio. The same goes for its US direct indexing strategy, except this strategy strives to capture losses on stocks within an index, according to Wealthfront. The risk parity fund, however, strictly aims to increase your risk-adjusted returns.
Is Vanguard right for you?
Pros
No commissions on stocks, ETFs, and optionsVanguard-managed index funds, all-in-one retirement funds, and mutual funds available; several retirement planning resources and toolsSelf-directed, automated investing (robo-advice), and advisor-managed accounts availableExpert insights and market analysis
Cons
No other trading platforms besides website and mobile appOptions contract fees are high compared to other brokerages
Dating back to 1975, Vanguard is an online brokerage with individual and joint accounts, automated investing accounts and managed portfolios, trusts, custodial accounts, IRAs, and much more.
Unlike Wealthfront, Vanguard offers a vast selection of self-directed investment accounts. This means that you’ll make the trading decisions for your account, as opposed to those using robo-advisors.
The online brokerage also offers commission-free stocks, ETFs, and options, and you don’t need to meet a minimum account size requirement to trade with a self-directed account. You’ll mainly run into account minimums for Vanguard’s automated and advisor-guided accounts, Vanguard Digital Advisor and Vanguard Personal Advisor Services.
Wealthfront vs. Vanguard — Frequently asked questions (FAQ)
Is Vanguard better than Wealthfront?
Vanguard offers both a wider range of investment types and accounts than Wealthfront. Plus, its product selection includes both self-directed investment accounts and automated or advisor-guided accounts. It’s a better option for many investors.
Wealthfront Investing, on the other hand, best suits robo-forward investors who want to build wealth through automated investing accounts. In addition (and because Wealthfront is solely designed for robo-advice), you’ll be able to utilize tax-loss harvesting, direct indexing strategies, crypto investments, and much more.
The best choice for you depends on your investing goals and preferences.
Is Wealthfront worth the fee?
That depends on what you’re looking for. If you want the option to invest in assets like ETFs, index funds, and crypto trusts (and you don’t mind its $500 minimum and 0.25% fee), Wealthfront is a competitive choice. The platform also provides tax-loss harvesting, direct indexing, and much more.
Costs also include its fund fees which range from 0.06% to 0.13%. Interest rates for portfolio lines of credit (this product lets you borrow up to 30% of your investment account) span from 3.15% to 4.40%.
If you’re planning on saving for your child’s education costs, you can open up its automated 529 plan. Fees for these accounts can be as high as 0.46%, but you’ll get tax-free withdrawals in the process.
Can you lose money with Wealthfront?
Yes. Like any investment platform that offers investments, no security you purchase is immune to market fluctuations and volatility.
How much money do you need to open a Vanguard account?
You don’t need to meet a minimum to open a Vanguard self-directed brokerage account. When it comes to automated investing, though, you’ll need at least $3,000 for Vanguard Digital Advisor and a minimum of $50,000 for Vanguard Personal Advisor Services.
Is Vanguard good for beginners?
Both accounts are great options for beginners or those who don’t want to trade without the insights of an expert. The first, Vanguard Digital Advisor, invests your money into a diversified blend of Vanguard ETFs. Expense ratios represent the additional annual fees funds charge investors, and Vanguard’s ETFs have an average 0.6% expense ratio. In addition, this account has a $3,000 account minimum and 0.20% annual fee.
Vanguard Personal Advisor Services, on the other hand, combines automated portfolio management with one-on-one advisor guidance. The account gives you access to a Vanguard fiduciary advisor, and it has a $50,000 minimum and 0.30% annual fee.
On the retirement side, Vanguard one-ups Wealthfront. Wealthfront only offers traditional IRAs, Roth IRAs, and SEP IRAs. Vanguard offers those accounts in addition to SIMPLE IRAs, individual 401(k)s, and multiple All-in-One retirement funds.
Plus, it has several resources — such as an investor education library and “News & Perspectives” hub — that help newcomers and beginners get acclimated to investing.