Understanding robo-advisor performance | Vanguard (2024)

All investing is subject to risk, including the possible loss of the money you invest.

There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Vanguard Digital Advisor's services are provided by Vanguard Advisers, Inc. ("VAI"), a federally registered investment advisor. VAI is a subsidiary of The Vanguard Group, Inc. ("VGI"), and an affiliate of Vanguard Marketing Corporation ("VMC"). Neither VGI, VAI, nor its affiliates guarantee profits or protection from losses.

Enrollments in Vanguard Digital Advisor require at least $3,000 in each Vanguard Brokerage Account. For each account you wish to enroll, the entire balance must be in certain allowable investment types (based on eligibility screening by Digital Advisor at the time of enrollment) and/or the brokerage account's settlement fund. We'll typically invest your assets in a portfolio of Vanguard ETFs, all of which are commission-free through a Vanguard Brokerage Account. Vanguard Brokerage Accounts are offered through and maintained by VMC, a registered broker-dealer and member FINRA and SIPC. If you decide to manage your investments on your own, you can buy and sell Vanguard ETF Shares through Vanguard Brokerage Services or another broker (which may charge commissions).

Vanguard Digital Advisor is an all-digital service. Digital Advisor charges Vanguard Brokerage Accounts an annual gross advisory fee of 0.20% for its all-index investment options and 0.25% for an active/index mix. The gross advisory fee is reduced by a credit of the actual revenue VGI or its affiliates retain from investments in each managed account, resulting in a net advisory fee that will be the actual fee collected from your account. The actual net fee amount will vary based on your unique asset mix, investment setting, account types, and specific investments in each managed account. Note that this fee doesn't include investment expense ratios—such as fees paid to the funds' third-party managers, which aren't credited. While we generally recommend using low-cost Vanguard funds to build your portfolio, it's important to be aware that actively managed funds will have higher expense ratios than index funds. You should consult your plan fee disclosure notice for the applicable annual gross advisory fees that apply to your 401(k) account. For more information, please reviewVAI's Form CRS and the Vanguard Digital Advisor Brochure.

Understanding robo-advisor performance | Vanguard (2024)

FAQs

How well do robo-advisors perform? ›

Robo-advisor performance is one way to understand the value of digital advice. Learn how fees, enhanced features, and investment options can also be key considerations. Five-year returns from most robo-advisors range from 2%–5% per year.

Do robo-advisors outperform the S&P 500? ›

Do robo-advisors outperform the S&P 500? Robo-advisors can outperform the S&P 500 or they can underperform it. It depends on the timing and what they have you invested in. Many robo-advisors will put a percentage of your portfolio in an index fund or a variety of funds intended to track the S&P 500.

Is Charles Schwab's intelligent portfolio good? ›

Schwab Intelligent Portfolios is a quality robo-advisor with very low expenses. Unlike most competitors, it doesn't charge a monthly advisory fee, making it an excellent option for cost-conscious investors.

Do robo-advisors beat the market? ›

Robo-advisors often build portfolios using a mix of various index funds. But depending on the asset class mix and the particular index funds selected, a robo-advisor may underperform or outperform a broad equity index like the S&P 500.

What is the average return on a robo-advisor? ›

But according to the Robo Report, the five-year returns (2017 to 2022) from most robo-advisors range from 2% to 5% per year. And Wealthfront, one of the best robo-advisors available, also states that customers can expect about a 4% to 6% return per year, depending on their risk tolerance.

What is the biggest downfall of robo-advisors? ›

No Human Contact

This type of personal contact is relegated to the traditional financial advisory models. Most robo-advisors won't hold your hand and comfort you after a significant market drop. By contrast, a human financial advisor can be available to assuage your fears and explain how the investment markets work.

Do millionaires use Charles Schwab? ›

Clients who have more than one million dollars in qualifying assets at Schwab automatically get access to these benefits, including—a dedicated Financial Consultant, access to a wide range of specialists, tailored solutions, and pricing advantages.

Is Charles Schwab a billionaire? ›

As of April 2024, Schwab is worth $10.5 billion, according to Forbes. The Charles and Helen Schwab Foundation was formed in 1987. In 2013, it reported assets of $270 million and made $13 million in grants. He serves as its chairman; his wife is the president.

Is Wealthfront better than Charles Schwab? ›

The Bottom Line. Wealthfront is the winner of Best Overall and a number of other categories in our 2024 Robo-Advisors Review. This makes Wealthfront a solid choice for any investor comfortable with an all-digital investment service. Wealthfront is also the choice for those without the $5,000 minimum required by Schwab.

Do rich people use robo-advisors? ›

Digital Advisor Use Dropped in 2022

High-net-worth investors exited robo-advisor arrangements at the highest rates. Here's how the data broke down along asset levels: $50,000 or less: A drop from 23.6% to 20.6% in 2022, which translates to a decrease of 3 percentage points.

What is the best robo-advisor worldwide? ›

According to our research, Wealthfront is the best overall robo-advisor due to its vast customization options, fee-free stock investing, low-interest rate borrowing, dynamic tax-loss harvesting, and other key features.

What are 2 cons negatives to using a robo-advisor? ›

The generic cons of Robo Advisors are that they don't offer many options for investor flexibility. They tend to not follow traditional advisory services, since there is a lack of human interaction.

Do millionaires use robo-advisors? ›

High-net-worth investors exited robo-advisor arrangements at the highest rates. Here's how the data broke down along asset levels: $50,000 or less: A drop from 23.6% to 20.6% in 2022, which translates to a decrease of 3 percentage points.

Do robo-advisors beat human advisors? ›

The type of advisor that is better for you depends on what your financial needs are. For core investing and planning advice, a robo-advisor is a great solution because it automates much of the work that a human advisor does. And it charges less for doing so – potential savings for you.

Do robo-advisors make money? ›

As with many other financial advisors, fees are paid as a percentage of your assets under the robo-advisor's care.

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