Charles Schwab and Vanguard are up there with the biggest and best asset management companies in the U.S. Both offer quality robo-advisor services that make investing low-cost and hassle-free for their customers. But how do these services compare side by side? This article covers the key differences between the Schwab Intelligent Portfolio vs Vanguard Personal Advisor Services.
With $3.56 trillion in client assets and 11.4 million in active brokerage accounts, Charles Schwab is the third largest investment firm in the world. Among its many offerings is Schwab Intelligent Portfolios, a fully automated investment advisory service, without the fees that’d you’d expect. You can get started investing with $5,000.
How it works
To open an account, you’ll answer a series of questions about your financial goals and risk tolerance. Schwab’s technology will then recommend a diversified portfolio for you, based on your answers to those questions.
You’ll invest in a range of professionally selected low-cost ETFs and then sit back and relax as the Schwab Intelligent Portfolio automatically monitors and rebalances your portfolio when needed. Other features include tax-loss harvesting and goal planning and tracking.
One highlight of this service is that there are no advisory fees or account management fees to contend with. All you’ll pay is the operating expenses on the ETFs in your portfolio. Note that the cash allocation for Schwab Intelligent Portfolios is between 6% to 29% – the exact amount depends on your risk tolerance – and some investors think this percentage range is too high.
Here are the key facts summarized:
- Account types supported – individual and joint accounts, Traditional, Roth, SEP and SIMPLE IRAs, custodial accounts and trusts.
- Account minimum – $5,000.
- Portfolio mix – ETFs that may contain up to 20 asset classes.
- Fees – none, just operating expenses on the ETFs.
- Tax-loss harvesting – this is available free of charge for taxable portfolios if you have $50,000 or more in assets.
- Customer support – phone and live chat support is available 24/7, 365 days per year.
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Vanguard has more than 20 million investors and holds more than $5.1 trillion in global managed assets, making it the second largest asset management company in the world (with BlackRock being the first).
Vanguard Personal Advisor Services is a hybrid investing service – it offers automated investing, but also personalized human advice too, although you’ll have to pay a fee. To get started investing, you’ll need a hefty $50,000 as a minimum deposit.
How it works
You’ll partner with an advisor who will work with you to develop a personalized financial plan, incorporating the goals you want to meet. Your advisor will recommend a portfolio, designed to achieve your financial goals, and set it up once you’re happy with it.
Your portfolio will be managed and rebalanced by Vanguard when needed, and you can view how your investments are performing online at any time. You’ll get regular progress reports too.
Here are the main points to note about Vanguard Personal Advisor Services:
- Account types supported – taxable individual and joint accounts, Traditional, Roth, Rollover, SEP and SIMPLE IRAs and trusts.
- Account minimum – $50,000.
- Portfolio mix – Vanguard Funds (index funds and possibly some actively managed funds).
- Fees – 0.30% of the assets under management up to $5 million, plus investment expense ratios. There is a $20 annual fee for each of your brokerage and mutual-fund-only accounts.
- Tax-loss harvesting – this isn’t available automatically, but advice is available on tax-efficient investing strategies.
- Customer support – human advice is included. If you have assets of less than $500,000, you’ll get access to a team of Vanguard financial advisors. If your account is worth more than $500,000 in assets, you’ll get an assigned financial advisor.
One advantage of the Vanguard Personal Advisor Service that you won’t get with Schwab Intelligent Portfolios is the valuable support of an advisor. That is unless you choose Schwab Intelligent Advisory – which is also a hybrid advisory service.
With Schwab Intelligent Advisory, you’ll get access to the Intelligent Portfolio plus unlimited guidance from a Certified Financial Planner, by phone or video consultation. This service is slightly cheaper than Vanguard’s, with an advisory fee of 0.28% of assets under management. The minimum requirement to get started is $25,000, and assets can be split over multiple accounts.
Ultimately, it depends on how much you have to invest, how much you’re willing to pay and what kind of service you need, as to whether the Schwab Intelligent Portfolio or Vanguard Personal Advisor Service is right for you.
Other robo-advisors are also worth exploring before you make your decision. Check out our article on Wisebanyan vs. Betterment for starters.
*We hope you find the information in this article useful, but please note that it shouldn’t be construed as investment advice. Always seek advice from a professional financial advisor.
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