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Betterment vs. Vanguard Personal Advisor: Which One Is Right For You?

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While Betterment is the largest and most popular independent robo-advisor in the industry, Vanguard Personal Advisor is the largest robo-advisor of all. In fact, Vanguard Personal Advisor has nearly 10 times the assets under management that Betterment does, which speaks volumes about the niche that robo-advisor occupies.

But when it comes to Betterment vs. Vanguard Personal Advisor, niche is the operative word. While there are some similarities between the two robo-advisors, each appeals to a very different investment market segment.

Betterment is oriented toward new, small and medium investors, who are looking for comprehensive low-cost investment management. Vanguard Personal Advisor is more suited to very large investors, and those who already invest through Vanguard, and are looking for a low-cost managed investment option.

Betterment vs. Vanguard Personal Advisor

Before we get to a deep dive into the various offerings by the two investment platform, the table below summarizes and compares the basic service levels and other features offered by both Betterment and Vanguard Personal Advisor:

Features Betterment Vanguard Personal Advisor
Minimum Initial Investment $10 to get started $50,000
Accounts Available Individual and joint taxable accounts; traditional, Roth, SEP and rollover IRAs; trusts and non-profits Individual and joint taxable accounts; traditional, Roth, SEP, SIMPLE and rollover IRAs; trusts
Advisory Fees Digital: 0.25% to $2 million; 0.15% over $2 million; Premium: 0.40% to $2 million; 0.30% over $2 million 0.30% up to $5 million; 0.20% on $5 million to $10 million; 0.10% on $10 million to $25 million; 0.05% above $25 million
Tax-loss Harvesting Yes On a client-by-client basis only
Rebalancing Yes Yes
Dividend Re-investing Yes Yes
Mobile App Android & iOS devices Android & iOS devices
Socially Responsible Investing Yes No
Smart Beta Yes No

Betterment is not a licensed tax advisor. Tax Loss Harvesting+ is not suitable for all investors. Investing involves risk. Performance not guaranteed.

About Betterment

Betterment is the largest independent robo-advisor in the industry, with $33 billion in assets under management. It’s a pure robo-advisor, meaning it isn’t a subsidiary of a larger general investment brokerage platform.

A good option for new and small investors

Betterment targets new and small investors, who can open accounts with $10 to get started, then take advantage of very low-cost automated investment management.

That includes everything from portfolio design to investment management, such as:

  • Automatic reinvesting of dividends
  • Periodic rebalancing of asset allocations to maintain portfolio targets
  • Tax-loss harvesting for all clients, regardless of portfolio size. (Many robo-advisors offer this service only to clients with larger account balances.)

Betterment uses Modern Portfolio Theory (MPT) to create and manage your investment portfolio. MPT emphasizes asset allocation as a way to maximize returns and minimize portfolio risk.

Signing-up for Betterment

When you sign-up for Betterment, you’ll need to complete a questionnaire that determines your investment goals, time horizon, and investment risk tolerance.

Your portfolio is then constructed of 12 individual exchange traded funds (ETFs), each representing a unique asset class. These can include US and foreign stocks, and US and foreign bonds. Using just a handful of funds, your Betterment portfolio can be invested across thousands of different securities.

To learn more about Betterment, read our full review or visit their website.

About Vanguard Personal Advisor


Vanguard Personal Advisor is the robo-advisor service offered by investment giant, The Vanguard Group. One of the largest investment firms in the world, Vanguard has more than $5.3 trillion in assets under management.

Vanguard is the largest mutual fund company in the world, and ranks second only to BlackRock’s iShares as the largest provider of exchange traded funds (EFTs). Vanguard’s ETFs are so efficient and well-regarded that they are commonly included in portfolios provided by the majority of robo-advisor services, as well as other investment management services.

Like many other large investment firms and brokerages, Vanguard is offering its own robo-advisor, in Vanguard Personal Advisor. In fact, Vanguard Personal Advisor is the world’s largest robo-advisor with $112 billion in assets under management.

Vanguard Personal Advisor caters to larger investors by virtue of the very low fees charged on multi-million dollar accounts.

To learn more about Vanguard visit their website.

Betterment vs. Vanguard Personal Advisor: Investment performance

In our investment platform comparison reviews we like giving at least an approximation of a head-to-head comparison of investment returns. Unfortunately, while investment performance information was previously available for Betterment, none is published by Vanguard Personal Advisors.

But in the interest of at least partial disclosure, we’re going to show Betterment’s investment performance since its founding. We will then make certain assumptions about the returns for Vanguard Personal Advisors. It’s not much to go on, but at least you’re getting half the story.


Note: Betterment’s historical performance tool has been deprecated. The information below was collected by Money Under 30’s editorial team via the tool in 2019.

Betterment once provided a historical performance tool with limited data on investment returns. Looking at its performance from its launch date of January 2008, through the end of July 2018, we see in the screenshot below that a portfolio comprised of 80% stocks and 20% bonds returned exactly 86%:

Betterment Allocation

Over a space of 79 months from January 2012 through July 2018, the 86% return translates to an average annual return on investment of an incredible 9.9%. That’s especially impressive when you consider 20% of the portfolio was invested in low yielding bonds.

Vanguard Personal Advisor

Unfortunately, Vanguard Personal Advisor doesn’t publish performance data, so we’re unable to show any reasonable comparison with Betterment on this front.

Betterment vs. Vanguard Personal Advisor Investment performance conclusion  

Because of the lack of investment performance data from Vanguard Personal Advisors, we are unable to make a conclusive comparison with the performance of Betterment. However, it’s worth noting that many of the funds in Betterment’s portfolios, particularly the stock funds, are Vanguard ETFs.

That being the case, it’s reasonable to guesstimate that Vanguard Personal Advisors turned in a similar performance to Betterment with an 80/20 stock/bond asset allocation.

Betterment and Vanguard Personal Advisor pros


  • $10 to get started investing, which is perfect for new and small investors
  • Simple, low cost fee structure of 0.25% on balances up to $2 million, and 0.15% on larger accounts
  • Betterment portfolios include tax-loss harvesting on all account balances, reducing the tax liability from long-term capital gains
  • All portfolios include allocations in value type investments – this is one of the most time-honored investment strategies in the industry, and one frequently practiced by Warren Buffett
  • Smart beta and socially responsible investing (SRI) options available
  • Human assisted investment advice available, as well as access to a dedicated personal financial advisor on account balances of $100,000 or more, or by purchasing a financial advisor package for accounts with balances less than $100,000.

Vanguard Personal Advisor:

  • Use of Vanguard funds, which are some of the most popular and lowest cost funds available, so much so that they are commonly employed by most robo-advisors (including Betterment) and other investment management services
  • The ability to engage in self-directed investing through the Vanguard brokerage platform, while also taking advantage of professional management through Vanguard Personal Advisor
  • Access to a live financial advisor, particularly with an account balance of $500,000 or more
  • Lower fees on larger portfolios – Vanguard Personal Advisor fees drop down to 0.05% on portfolios of $25 million or more
  • Use of mutual funds in your portfolio, which offers an opportunity to outperform the market, rather than merely match it the way most robo-advisors do

Betterment and Vanguard Personal Advisor cons


  • Betterment’s fee structure bottoms out at 0.15% on account balances over $2 million, which means it’s not competitive with Vanguard Personal Advisor on account balances in excess of $10 million
  • Betterment portfolios are limited strictly to stocks and bonds, and don’t diversify into alternative investments, like real estate or natural resources

Vanguard Personal Advisor:

  • The minimum initial investment requirement of $50,000 will eliminate new and small investors
  • The annual advisory fee of 0.30% is higher than the 0.25% charged by Betterment
  • Since Vanguard Personal Advisor doesn’t use non-Vanguard funds in the construction of its portfolios, it may be leaving some important investment options out of the equation
  • While Betterment employs tax-loss harvesting as a general strategy, Vanguard Personal Advisor uses it only on a case-by-case basis
  • No smart beta or SRI equivalent portfolios

Why choose Betterment?

Investing in value stocks

This is a strategy involving investing in stocks of companies that are out-of-favor with the investment community. Typically, such companies are being overlooked due to past events, which have since been resolved. Such companies typically have strong fundamentals, and can represent one of the best long-term investments available.

Betterment offers this strategy on all portfolios, with its small-, medium-, and large-cap US stock allocations all based on value stocks. This strategy gives regular Betterment investors an opportunity to outperform the general market over the long-term.

Unlimited access to financial advisors for accounts over $100,000

Betterment offers unlimited access to a team of financial advisors on portfolios of $100,000 or more, and it has an annual fee of 0.40%. On account balances of $2 million or more, the advisory fee drops to 0.30%. 

Flexible Portfolios

This option is available to all Betterment clients. The platform designs a portfolio for you, but you have an opportunity to adjust the asset allocations, giving you some measure of control over your final portfolio.

Smart Beta

This is a specialized portfolio offered on accounts of $10.0 or more. It’s managed by Goldman Sachs, and offers investments with the potential to outperform the market.

It does this through active portfolio management, but does involve higher risk, as well as the potential for higher reward. There is no additional fee for this option.

Socially Responsible Investing (SRI)

Betterment gives you an opportunity to move at least some of your portfolio into SRI. You can do this by replacing the large-cap US stock and emerging stock allocations with three different SRI ETFs. It will give you an opportunity to invest at least some of your portfolio according to your personal beliefs.

Betterment Cash Reserve

Betterment Cash Reserve is a top-of-the-line savings account that offers a 2.25% APY. You won’t need a minimum balance to get this APY, plus you’ll pay no monthly fees. Finally, you’ll also be able to make an unlimited number of withdrawals (typically, you can only make six).

Betterment Vs. Vanguard Personal Advisor - Which One Is Right For You? - Mobile Check Deposit

Betterment Cash Reserve APY Disclosure – Annual percentage yield (variable) is as of 9/26/2022. Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities.
For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.

Betterment Checking

Betterment also offers a checking account that comes with no fees, mobile check deposits, no minimum balance, and reimbursed ATM fees.

Your checking account comes with a Betterment Visa® Debit Card that you can use for all your online and in-store purchases. The best part, however, is that Betterment, through a partnership with Dosh, offers cash back on purchases at thousands of retailers worldwise when you use your debit card. These rewards are deposited into your account automatically, with no work required on your part. 

To earn cash back on your purchases, you can go straight to the app or website to find merchants currently offering cash back. The app will help you locate nearby eligible retailers and restaurants if you want to earn rewards in person. If you want to earn cash back online, you’ll need to shop through Betterment’s “Earn Rewards” section. When you earn cash back on a purchase, the app will immediately notify you and the cash will show up in your checking account soon after.

If you don’t want to go to the trouble of using the app’s locator, no problem. Betterment will remember where you shop most and present you with the best offers based on your spending habits.

And no need to worry about security – Betterment does not provide Dosh any personally identifiable information, including your name and account number.

Why choose Vanguard Personal Advisor?

Work with a Vanguard Advisor

This is a unique service among robo-advisors, who more commonly look to minimize human contact in the drive to minimize fees. But when you work with Vanguard Personal Advisor an advisor is available from the very beginning.

The advisor will begin by getting to know you, your goals, and your financial situation. He or she will then work to create a custom designed financial plan.

Your portfolio will then be managed with a combination of human and automated management. The advisor will stay on top of your financial plan’s progress, and make revisions as necessary. Rebalancing will take place on a quarterly basis, or when a major asset allocation strays from the target by more than 5%.

Use of mutual funds

One of the fundamental differences between Vanguard Personal Advisor and most other robo-advisors is that Vanguard doesn’t rely entirely on index-based ETFs. ETF-only portfolios are designed to be strictly passive investments. That is, while they’ll match the underlying market, they can never exceed it.

But by including mutual funds, Vanguard Personal Advisor portfolios hold the potential to outperform the underlying market. That’s because mutual funds are typically actively managed. Fund managers trade stocks within the portfolio in an attempt to maintain positions in stocks of companies that are outperforming the market. It doesn’t work that way 100% of the time, but it does offer that potential.

Lower fees for larger portfolios

Vanguard Personal Advisor’s base annual advisory fee of 0.30% is admittedly higher than Betterment’s 0.25%. But Vanguard’s fee works on a sliding scale, dropping down to 0.20% on accounts over $5 million, 0.10% on accounts over $10 million, and 0.05% for account balances of $25 million or more.

It’s clear Vanguard is targeting high net worth individuals with Vanguard Personal Advisor. The ability to manage a portfolio of $25 million or more for just 0.05% per year is practically like providing a professional investment management service for free.

Investments are held in Vanguard funds

This is something of a mixed bag. The negative is that Vanguard does not take advantage of some of the many good funds offered by competing brokers. But there’s no question Vanguard funds occupy a prominent place in the robo-advisor universe.

They are included in most robo-advisor portfolios. Not only are they some of the most widely recognized and used funds, but their ETFs have a very low annual expense ratio, averaging just 0.08%.

Access to Vanguard’s other investment options

One of the most fundamental differences between Betterment and Vanguard Personal Advisor is in the overall organization. Betterment is a robo-advisor – period. Vanguard, on the other hand, is a major investment brokerage firm, in which Vanguard Personal Advisor is just one component. That will give you the ability to maintain self-directed investments in stocks, ETFs, and mutual funds, while also having part of your portfolio professionally managed through Vanguard Personal Advisor.

One caveat however is that while Vanguard is one of the major providers of both mutual funds and ETFs, it isn’t the most cost effective or efficient brokerage platform for the average investor. Its trading fees are higher than the average for the industry, and its trading tools are more limited.

Final thoughts on Betterment vs. Vanguard Personal Advisor

For most investors, who may just be looking for a low-cost automated investment platform, Betterment will easily be a good choice. Not only does it have a lower base fee, at just 0.25%, but it has a $10 minimum requirement to get started investing. This is in dramatic contrast to Vanguard Personal Advisor, which requires a minimum initial investment of $50,000.

But where Vanguard Personal Advisor excels is in catering to those with larger investment portfolios. With $50,000, you can get more hands-on help from a Vanguard financial advisor. And with a portfolio of at least $500,000, you can get a dedicated financial advisor.

Vanguard Personal Advisor also certainly makes sense for very large investors, those with portfolios in excess of $10 million or $25 million, due to the extremely low annual advisory fees.

Finally, Vanguard Personal Advisor will work better for those who prefer to mix a robo-advisor option with self-directed investing. Vanguard isn’t one of the top investment brokerage firms from an individual trading perspective, but it does give you the option of including different types of investing with the same platform.


Perhaps the main dividing line between Betterment and Vanguard Personal Advisor is the size of your portfolio. For most investors, Betterment will be the better choice. But for those with multi-million dollar portfolios, Vanguard Personal Advisor will be the go to platform.

Betterment Cash Reserve Disclosure – Betterment Cash Reserve (“Cash Reserve”) is offered by Betterment LLC. Clients of Betterment LLC participate in Cash Reserve through their brokerage account held at Betterment Securities. Neither Betterment LLC nor any of its affiliates is a bank. Through Cash Reserve, clients’ funds are deposited into one or more banks (“Program Banks”) where the funds earn a variable interest rate and are eligible for FDIC insurance. Cash Reserve provides Betterment clients with the opportunity to earn interest on cash intended to purchase securities through Betterment LLC and Betterment Securities. Cash Reserve should not be viewed as a long-term investment option. Funds held in your brokerage accounts are not FDIC‐insured but are protected by SIPC. Funds in transit to or from Program Banks are generally not FDIC‐insured but are protected by SIPC, except when those funds are held in a sweep account following a deposit or prior to a withdrawal, at which time funds are eligible for FDIC insurance but are not protected by SIPC. See Betterment Client Agreements for further details. Funds deposited into Cash Reserve are eligible for up to $1,000,000.00 (or $2,000,000.00 for joint accounts) of FDIC insurance once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity—e.g., individual or joint—at up to four Program Banks). Even if there are more than four Program Banks, clients will not necessarily have deposits allocated in a manner that will provide FDIC insurance above $1,000,000.00 (or $2,000,000.00 for joint accounts). The FDIC calculates the insurance limits based on all accounts held in the same insurable capacity at a bank, not just cash in Cash Reserve. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through Cash Reserve may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Cash Reserve, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit Deposits held in Program Banks are not protected by SIPC. For more information see the full terms and conditions and Betterment LLC’s Form ADV Part II. 

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