Investing > Betterment vs Vanguard

Betterment vs. Vanguard

In this Betterment vs. Vanguard comparison, we evaluate the two investment platforms on virtually all aspects. Does Betterment edge out Vanguard? The answer might surprise you.

Reviewed by
Updated January 08, 2024

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Welcome to the Betterment vs. Vanguard extravaganza.

Betterment might have pioneered the robo-advisor revolution, but it was only a matter of time before big-name brokerages started looking for ways to get into the profitable automated-advisor landscape.

Vanguard was already a juggernaut in financial investment services before it decided to create its own online advisor, Vanguard Personal Advisor Services. Like Betterment, Vanguard has disruption etched in its DNA, having revolutionized the investment industry by embracing the radical notion back in 1975 to become a “client-owned* mutual fund company with no outside owners seeking profits.”

Vanguard has risen to become one of the world’s biggest investment companies, providing investors with some of the lowest expense funds in the ETF and mutual fund universe. By leveraging the considerable heft of its parent company, Vanguard Personal Advisor Services has currently become the biggest dog in the digital wealth management yard.

In terms of size alone, a head-to-head confrontation between these two would be a mismatch.

Accounts & Fees
Management fees


0.05% - 0.3%

Account Minimum



Account Types
  • Cash account
  • Traditional, Roth, SEP, & rollover IRAs
  • Joint and individual and non-retirement accounts
  • Trusts
  • Brokerage accounts - individual and joint
  • Traditional, Roth, SEP, rollover, & SIMPLE IRAs
  • Trusts
Best for
  • Hands off investors
  • Retirement accounts
  • Acounts with high balances
  • Human advisors

1 year of free management, with qualifying deposit


Human advisor?

Yes, but only with Betterment Premium (0.40% fee)

Accounts & Fees

Management fees


0.05% - 0.3%

Account Minimum



Account Types

  • Cash account
  • Traditional, Roth, SEP, & rollover IRAs
  • Joint and individual and non-retirement accounts
  • Trusts
  • Brokerage accounts - individual and joint
  • Traditional, Roth, SEP, rollover, & SIMPLE IRAs
  • Trusts

Best for

  • Hands off investors
  • Retirement accounts
  • Acounts with high balances
  • Human advisors


1 year of free management, with qualifying deposit


Human advisor?

Yes, but only with Betterment Premium (0.40% fee)

Fortunately, while size matters, especially in terms of financial assets under management, it is equally important for investors to know the investing platform that is a better fit for their individual profile and investing strategy.

Nevertheless, to borrow a prizefighting analogy, styles make fights, and a head-on confrontation (sorry, comparison) between these two presents interesting contrasts.

However, while Vanguard is a juggernaut, Betterment is no slouch either, possessing a set of features that provide it with a competitive advantage across the robo-advising landscape. With the robo-advisor aspect — many ask: is Betterment better than Vanguard? Well, this question must be answered from several aspects, which we’ll cover.

Importantly, Betterment levels the playing field in this match up by utilizing the Modern Portfolio Theory (MPT) as the basis of its asset allocation in order to achieve worldwide diversification.

Let’s take a closer look at the two.

General Comparison and Overview 🔍

Both of these robo-advisors share something in common: they supplement their digital investment algorithms with human-assisted advisors, with a caveat applying to the type of Betterment account acquired.

A common question that besets robo-advisors like Betterment is why anyone should use them to buy a portfolio essentially built out of Vanguard index funds, when they could proverbially eliminate the “middleman” and go directly to the source. Wait — is that right? Does Betterment use Vanguard funds?

Surprising as it may be, yes.

In fact, it isn’t far-fetched to assume that this is one of the reasons Vanguard decided to establish Vanguard Personal Advisor Services. It is therefore no surprise that this online advisor builds on Vanguard’s reputation of offering low-fee investments from a wide range of products.

Just as Betterment is a pioneer in its own right, Vanguard literally inaugurated the present investing era by creating the first-ever index fund. For those who aren’t sure what an index fund is — well, they’re now a staple in the world of investing.

However, Betterment has done a marvelous job building portfolios aligned to the risk, comfort level, and goals of its clients through index and exchange-traded traded funds (ETFs), it is frankly an unfair battle of options when compared with Vanguard.

This is because the Betterment has to simplify its portfolio by whittling its investment choices down to about 12 ETFs, which it subsequently uses to build a variety of portfolios, obviously comprising of varying levels of risk.

Vanguard, on the other hand, can provide its investors with a prime selection of over 3,000 no-transaction-fee mutual funds, around 1,800 commission-free ETFs, not counting access to other individual stocks, plus option contracts and bonds.

What is Betterment ? 💡

Betterment aligns your investment strategy to life-oriented goals. So no matter what stage of life you’re in — Betterment appeals to all types of investors. They’re one of the few robo advisors to offer a Premium plan with access to top-tier human advisors.

Fast Facts

  • Account Minimum: $0
  • Fees: 0.25%
  • Best for: Hands-off investors and retirement accounts
  • Highlight: Automated management with optional human advisor


  • Account Types: 10/10
  • Investment Options: 9/10
  • Fees & Account Minimums: 9/10
  • Responsible Investing: 8/10
  • Human Advisor: 8/10
  • Overall:9.5/10
Visit Betterment on Betterment’s website

Investor Warning: Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and Betterment LLC’s charges and expenses.

We have already published a comprehensive Betterment review, so we aren’t going to regurgitate the same thing, except for a quick preview of the critical facts and features.

What is Vanguard? 🤔

We’ve also completed an in-depth Vanguard review, but the following outlines a brief summary:

Vanguard Personal Advisor Services is under the auspices of Vanguard, one of the world’s largest investment companies. Vanguard provides clients with a complete suite of investment management advice and services such as personal investment coaching, asset allocation, along with investing that is tax-efficient.

Vanguard uses its size and economies of scale that come from that advantage to reduce fees for investors. In like manner, it is also leveraging this advantage for its Personal Advisor Services.

Its overriding objective is to provide personalized investment management at a lower cost to customers than its competitors. But perhaps affordable is quite the relative concept to Vanguard because its services do not come cheap to the investor just starting out.

Part of this goal is hamstrung by the fact that it has one of the highest minimum balance requirements in the market, at $50,000.

While this account minimum is on the high end for a robo-advisor, this has to be counterbalanced with the fact that its service spans a wide array of hybrid services that aren’t easily replicated or provided by other platforms.

But if you look more closely at the market and overall business strategy, it is difficult to beat Vanguard’s low investment fees in their mutual fund and ETF lineup.

What is Vanguard? 💭

A very reputable company that has been around for quite some time.

Fast Facts and Features

  • Account Minimum: $50000
  • Fees: 0.05% – 0.3% annually.
  • Ideal for: Acounts with high balances
  • Automatic rebalancing: Yes
  • Tax-loss harvesting: Yes
  • Advice: Has human-assisted consultations


  • Expense Ratios:9.5/10
  • Account Types:10/10
  • Investment Options:8.5/10
  • Fees & Account Minimums:7/10
  • Responsible Investing:6/10
  • Human Advisors:0/10
  • Rebalancing:8/10
  • Tax Loss Harvesting:10/10
  • Overall:6/10
Visit Vanguard on Vanguard’s website

Vanguard and Vanguard Personal Advisor Services: A Different Breed 📋

Vanguard Personal Advisor Services and Vanguard are so intertwined that it wouldn’t do the reader justice not to highlight some of the gains the online service derives from the umbrella company.

Although Vanguard is one of the biggest brokerage services, both Vanguard and Vanguard’s advisor service are a bit unconventional and quite different from most traditional big-broker advisors.

Vanguard Personal Advisor Services
Vanguard’s personal advisor services provide users with both automated and human advisors services.

As can be gleaned from its website, Vanguard has its own particular philosophy and focus surrounding the business of investment: unlike other investment and brokerage firms that trumpet their prowess in beating the market year-in, year-out, Vanguard doesn’t pretend to have predictive powers.

Vanguard’s all-embracing mantra is to “focus on those things within your control.”

Vanguard Personal Advisor Services integrates automated portfolio management with human financial advisors, not as an option like Betterment does, but as an essential feature of its service.

These human advisors do not normally come cheap and often provide services such as personal investment coaching, which could be invaluable during scary times in the market.

As stated earlier, while Vanguard’s minimum balance is at the high-end of the price spectrum for robo-advisors, bear in mind that the other traditional big-brokers commonly charge 1% or more for their market-beating expertise.

When it comes to Betterment vs. Vanguard’s fees, the 0.30% that Vanguard charges for its annual management fee is much cheaper than a traditional financial advisor.

Vanguard Pros & Cons 📊


  • Remarkable low fees for the type of services provided.
  • Personal advice with a live person or team helping you manage your account.
  • Provides customers with access to Vanguard Funds, especially the very low-fee Admiral class mutual funds without the high per-fund minimums.


  • The high minimum deposit of $50,000 is an absolute showstopper, especially for beginner investors.
  • A corollary to the first, Vanguard isn’t your all-round cheapest investment platform, with rival services such as Wealthfront and WiseBanyan providing less expensive alternatives, especially at higher deposit amounts.
  • Vanguard doesn’t have any physical offices, therefore there are no in-person meetings or consultations.
  • Doesn’t provide any tax-loss harvesting. Nevertheless, Vanguard does a good job of allocating very efficiently between taxable and tax-deferred accounts inside its service.

Goal Setting and Planning 📅

With regard to finances, goal setting simply means that you want your money to do something in the future and you currently want to find a smart way to help accomplish this effectively.

If it can’t be quantified, then it can’t be measured. Therefore, for an investment goal to be appropriate and clear, it should be measurable in order to be attainable.

Practical measurable goals enables an investor to be realistic about the ways and manner in which they can be achieved.

Betterment 💎

Betterment approaches goal setting with a methodical focus on “asset-liability management.” This investment technique attempts to align a client’s future assets with their future expenditures.

This is just a fancy way of saying that the method aims to ensure you have enough money that you require when you plan to spend it in the future.

To pull this off, Betterment bases their strategy on clearly defined goals.

Betterment uses five types of financial goals namely: retirement (savings and income for retirees making withdrawals), general investing (investing without being sure or specific of the future expenditure or purpose), major purchase (to save for big ticket future expenditure), safety net (to grow and serve as an emergency fund), and education.

Betterment is even capable of analyzing accounts outside of Betterment (once you sync them) to help you get a sense of your full financial picture. This way, you can always see how you’re tracking over time.

Vanguard 🛡️

Partnering with a Vanguard financial advisor can accelerate and help you reach your goals faster. Providing accurate information so that the advisor can have the requisite knowledge about your unique financial situation is crucial.

You start online or by phone to communicate to them about your investment objectives. Typically for most people, these include things such as funding for a college education, retirement, paying off debts, home buying; and supplying an anticipated timeline for each goal.

To round out the final picture, the prospective client will need to supply their current income plus an estimate of their spending needs, along with non-Vanguard assets and income. When all these are provided, an appointment is then set for an advisor.

Consequently, the adviser partners with you to create a custom-made plan. The Vanguard advisor would likely use their expertise to iron out issues connected to asset allocation, goal prioritization, rebalancing, and taxes on the client’s portfolio.

Once you’re satisfied with the final plan, the adviser puts it into action, helping to build your portfolio with a mix of low cost diversified bond investments based on the goals you established.

Vanguard provides you with progress reports each quarter to enable you to gauge the progress you’ve made over a period of time.

Betterment vs. Vanguard Roth IRAs 🆚

Vanguard’s target-date retirement fund attempts to simplify retirement – or at least make it less complex – by providing clients with a straightforward approach to a sophisticated issue. In fact, we rank Vanguard as the #1 broker for Roth IRAs. In this sense, when it comes to Betterment vs. Vanguard for Roth IRAs — Vanguard is the clear winner.

Vanguard Target Retirement Funds provides account holders with a structure to put all their money into a single mutual fund. This is to all intents and purposes, like obtaining a complete portfolio in a single fund.

The objective of this fund is essentially to help you manage risk as your retirement savings grow. This fund is subsequently broken down into four parts: one for domestic (US) stocks, one for foreign bonds, one for foreign stocks, and one for US bonds.

This fund both lessen risk via diversification and shift investments to a more conservative assets as the time for your retirement draws near. This normally involves gradually changing your asset allocation so that the tilt more towards favoring bonds.

Features and Accessibility 🧰

Betterment has features that will allow an investor to sync assets that are across accounts outside its immediate jurisdiction, so that it can serve the client by providing an integrated and holistic approach to their investments.

Similarly, Vanguard through its website and mobile apps gives its clients the ability to view all their portfolio holdings in order to enable them to keep track of their goals and monitor their investment performance.

Betterment vs. Vanguard: Fees Compared ⚔️

It’s all fun and games until we come to pricing and fees, let’s take a look at our in-depth analysis of Betterment and Vanguard pricing packages and fees.

Betterment Pricing and Fees 💰

Two types of investment accounts are available with Betterment that determines the fee structure an investor will pay. The first is the Digital plan, and this requires an annual fee of 0.25%. The convenient thing with this plan is that it requires nothing more than a $0 minimum balance. However, clients will have no access to expert human consultations with this plan.

Betterment Pricing Plans
New investors may find Betterment’s low fees engaging.

For a heftier, 0.40% annual fee and a substantial $100,000 minimum balance, an investor who wants a human financial advisor to be added to the mix can have it with the Betterment Premium plan.

However, unlike Vanguard, this is not a financial planner dedicated to them alone, but rather a team of financial advisors who are available through phone and email communications, which isn’t something to sneeze about.

Savings on Costs 💸

Without argument, building and managing a portfolio by yourself will definitely save you money, especially if it is strictly on a fee basis. But paying that extra fee for an online advisor for most investors is definitely worth it, especially the level-headed advice that might prevent you from behaving reactionary and say, selling stock at a moment of panic.

Vanguard Pricing and Fees 🤑

Vanguard has a fixed fee (0.30%) that it charges for all assets under management. But unlike the practice of a couple of other wealth managers, this flat fee doesn’t vary since it provides no discounts for bigger accounts.

To put this into perspective, this fee will amount to only $150 annually for a $50,000 account. Or $1,500 yearly for half a million dollars. However, this isn’t the only fee a Vanguard client will be paying. The underlying mutual funds and ETFs that comprise a Vanguard client’s portfolio also accrue costs in the form of expense ratios. These usually varying as low as 0.04% for index funds, then rise up to 0.12% or more for a few actively managed funds.

Security 👮

Vanguard Security Page Screenshot
High net-worth clients will benefit form Vanguard’s outstanding security services.

Accounts at Vanguard have SIPC insurance which covers up to $500,000, plus excess coverage from Lloyd’s of London up to $50,000,000 for each account.

In addition, the advantage of being a behemoth like Vanguard is that you can become a one-stop-shop for related services. Vanguard does this by utilizing self-clearing through Vanguard Brokerage Services for all its trades and transactions.

Quality of Human Advisor 👔

We believe Vanguard’s human advisors is such a competitive advantage that differentiates it from competitors like Betterment that we felt compelled to dedicate a topic to give it some emphasis.

Apart from the crucial service that these advisors perform in customizing a client’s portfolio to uniquely suit their financial situation, Vanguard advisor also assists these customers to develop a feasible financial plan by giving substance to life goals in measurable, quantifiable terms.

In the process, they review their client’s current investments, try to make determination of future income needs and then plan accordingly. This partnership with a Vanguard human advisor can therefore give you the assurance that you are doing the right things that will enable you to reach your target goals.

You can email or call an advisor at your convenience. Their video conferencing service allows you the privilege of communicating from the comfort of your home. In order to participate with Vanguard Advisors, a customer must have at least $50,000 in assets held with Vanguard.

The more assets under management (AUM) that an investor has, the more dedicated consultation they receive. Investors with between $50,000 to $500,000 AUM have a team assigned to them.

As a result, they may not get the same individual or speak with the same person each time they call in with a question. Nevertheless, all Vanguard advisors are usually in agreement with regard to the low-cost index fund investing playbook, and therefore tend to give out advice following the same contours.

However, those possessing $500,000 or more have a dedicated Vanguard account representative assigned to them.

Minimizing Conflict of Interest and Sales Pressure 💳

What really ups the ante on the quality of advice that an investor receives at Vanguard is that they aren’t paid based on commissions and they have a fiduciary responsibility to act in the client’s best interest within the framework of applicable laws and regulations.

In addition, Vanguard happens to be in a unique position because its funds are owned by its investors. Therefore, human advisors are also shielded from conflict of interests because Vanguard has no outside owners compelling them to push certain investment products at the expense of others.

Portfolios 👤

A portfolio is a collection of financial investments like stocks, bonds, commodities, cash, and more. Learn with us how to create an optimized portfolio.

Automatic Rebalancing ⚙️

“The difference between the target allocation for your portfolio and the actual weights in your current portfolio (e.g. your actual allocation) is called portfolio drift.”

Even the best designed portfolio can become adrift as a result of ETFs in the portfolio moving up and down as their values are buffeted by market forces. For example, since stocks tend to rise faster than bonds in the long-run, it is usually inevitable that the stock portion of your portfolio will eventually increase relative to the bond part of your portfolio.

As these assets move away from the target ratios and weights that helped ensure their diversification, thereby changing the original complexion and complexity of your portfolio, rebalancing becomes necessary.

Tax-loss Harvesting 🧾

Tax-loss harvesting is a method of reducing taxes by deftly taking advantage of assets that have declined in value. The strategy involves selling those distressed investments but replacing them with profitable, highly-correlated investments that are identical to the holdings that were sold off.

The overall objective is to allow the investor to maintain the risk and return characteristics of their portfolio while generating a loss that can be applied to lower your their taxes.

While there is a lot of value in tax-loss harvesting, it tends to be more beneficial to high-income earners because they tend to have a taxable investment account.

Portfolio Strategy 👥

Figuring out the best portfolio strategies on your own is no easy task, however, you needn’t worry about it as we have prepared an overview of the most important portfolio strategies.

Betterment’s Portfolio Strategy 📈

Betterment’s portfolio strategy is eclectic. It features stock investments in both developed and emerging markets and bond investments, mixed in with both corporations and government agencies around the globe.

To provide more return on investment for their customers, Betterment states that they employ the concepts of evidence-based optimizations in order to skew a recommended portfolio towards value investing.

This involves the practice of buying companies at a discounted price with the aim of reaping value from their perceived higher intrinsic value.

Betterment’s Automatic Rebalancing 📉

Unlike Vanguard, Betterment takes an automatic approach with rebalancing. Betterment performs this rebalancing by algorithmic means as needed, while simultaneously searching daily for tax-loss harvesting opportunities.

An Example of Betterment Approach to Portfolio Drift Rebalancing
Betterment’s automated rebalancing features outperform Vanguard in the area of automated rebalancing services.

However, this rebalancing isn’t entirely digital for those enrolled in the Betterment Premium as their account is monitored for rebalancing by a team of financial advisors. Still, Betterment’s robo-advisor rests at the #1 spot in our list of the top robo-advisors available.

Vanguard’s Portfolio Strategy 🏛️

Are Vanguard portfolio’s worth the risk of investment? Well, according to Vanguard “Over the past 10 years, 83% of Vanguard ETFs beat the returns of their peer-group averages.”

Funds held by Vanguard Personal Advisor Services’ Portfolio 🚀

A Vanguard Personal Advisor Services’ portfolio is a combination of low-cost assets consisting of diversified stock and bond investments, all based on the client’s individual goals.

To build the client’s portfolio, Vanguard advisors typically select from an offering that comprises of about 100 Vanguard mutual funds and ETFs, which are based on the investment objectives of the client.

The investments that the portfolio is usually comprised of normally include assets from three funds from Vanguard brokerage investments such as the Vanguard Total Stock Market Index fund (VTSAX), the Vanguard Total International Stock Index fund (VTIAX) and the Vanguard Total Bond Market Index fund (VBTLX”])

The advantages of alignment with the parent Vanguard Investment company continue, as clients of Vanguard Personal Advisor Services also have access to all of Vanguard’s Admiral class shares of mutual funds – but without the onerous burden of $10,000 per fund minimum.

While Vanguard advisors are savvy enough to recommend any funds, they tend to push for low-cost Vanguard index funds. As a result, the top 7 funds usually held in their clients’ portfolios consist mainly of Admiral shares such as the following:

  1. ☑️ Vanguard Total Stock Market Index Fund Admiral Shares
  2. ☑️ Vanguard Total Bond Market Index Fund Admiral Shares
  3. ☑️ Vanguard Total International Stock Index Fund Admiral Shares
  4. ☑️ Vanguard Total International Bond Index Fund Admiral Shares
  5. ☑️ Vanguard Intermediate-Term Investment-Grade Fund Admiral Shares
  6. ☑️ Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares
  7. ☑️ Vanguard Short-Term Investment-Grade Fund Admiral Shares

Vanguard’s Automatic Rebalancing 🤖

With portfolio rebalancing, we see one of the immense benefits of Vanguard’s hybrid method in action, combining both human and digital implementations of this feature to serve the client’s interests in a more than optimum fashion. Vanguard Personal Advisor Services doesn’t provide automatic rebalancing, but performs rebalancing as needed.

In line with its low-cost index fund investing philosophy, Vanguard reallocates investments when the allocation deviates as much as 5% from targeted goal percentages.

Although it is its portfolio management software that does the bulk of the heavy-lifting of keeping the portfolio on track by monitoring asset allocation, a Vanguard advisor also reviews and rebalances your portfolio on a regular basis to ensure that you are on course to meet your target goals.

Vanguard Personal Advisor Services normally performs rebalancing on a quarterly basis or as specified in each client’s financial plan.

Vanguard’s Tax-loss Harvesting 💵

Just as with rebalancing, no automatic tax-loss harvesting exists at Vanguard. This entails doing the work by yourself, such as identifying all the shares that need to be sold and offloaded in order to bring you to a favorable tax position.

However, for its clients who are transferring their non-Vanguard funds possessing substantial capital gains, Vanguard through its advisors, often decide to keep the non-Vanguard funds in the portfolio to avoid taxation on the gains.

Betterment vs. Vanguard: Is Betterment Better than Vanguard? ⚔️

Just as there are different kinds of brokers for different types of investors, the same logic applies to automated wealth management systems, whether they be hybrid or exclusively digital. An investor’s approach to investing their money, along with their peculiar needs has to match the strengths and core competence of the investing platform they choose.

Betterment and Vanguard appeal to different categories of customers for a variety of reasons.

So finally, we arrive at the age-old question: is Betterment better than Vanguard? If you are a do-it-yourself investor confident in your abilities, then Betterment’s robo-advisor is the way to go. On the other hand. Vanguard Personal Advisor Services are a bonus for those investors who desire access to robust financial advisors.

For example, someone who might have a more than average knowledge of investing may nevertheless feel uncomfortable taking responsibility for their spouse’s retirement portfolio.

If they like the idea of being able to discuss their investment options with a professional, then Vanguard is an ideal option for them.

Betterment has an edge in its automatic rebalancing which it performs daily, and astute tax-loss harvesting. However, some investors might prefer Vanguard Personal Advisor Services’ more personalized approach.

Besides, because of its history and pedigree, it is very difficult to be able to beat Vanguard’s combination of extensive mutual fund and ETF lineup, coupled with their low investment fees.

In spite of its high minimum balance requirement, the 0.30% annual fee is still quite competitive, the Vanguard name is trusted, and the service offering is solid.

Comparison Corner

Find out how Betterment and Vanguard stack up against competition.

All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.