Vanguard Digital Advisor Review: A Low Costs Champ

Vanguard Digital Advisor® is a low-cost robo-advisor. Its time-tested index fund approach particularly stands out, and it also carries on the broker's long history of cutting fees for investors.

Vanguard Digital Advisor® could be a good fit for you if:

• You have at least $3,000 to invest.
• You are investing for retirement.
• You want to automate your investments with a low-fee approach.
• You're interested in investing in an index fund.

We believe in comparing options before committing. Vanguard Digital Advisor® might be right for you -- or it might not. Here are two robo-advisors we recommend highly for you to compare side by side with Vanguard Digital Advisor® when deciding which robo-advisor is right for you:

Vanguard Digital Advisor® is set up for hands-off investors seeking a low-cost investment solution. In this Vanguard Digital Advisor® review, we'll take a closer look at the pros and cons and how the robo-advisor works so you can decide if it's a fit for you.

Top perks

Low fees

Vanguard Digital Advisor®'s all-in costs are 0.15% for investors who choose an all-index fund investment portfolio or 0.20% for the active/index option that combines Vanguard ETFs and actively managed mutual funds. Vanguard Digital Advisor®'s costs are among the lowest we've seen among robo-advisors. New members also get no advisory fees for the first 90 days.

Experienced index fund investments

Vanguard pioneered the passive index fund over 45 years ago with the idea that you don't need to do anything extraordinary (or pay extraordinary fees) to achieve sound investment results. Vanguard has been able to deliver on this approach with its popular index funds.

What could be improved

No access to real-live advisors

If you want access to a real-live investment advisor or personal financial planner, you may be better off with one of Vanguard's more feature-packed competitors. Several other robo-advisors have human advisors, though they're generally far more expensive than Vanguard Digital Advisor®.

High minimum investment

To be fair, a $3,000 minimum investment isn't high from a historical perspective. Though it is on the higher end of the spectrum in the current age of zero-minimums. This isn't an obstacle if you have $3,000 or more you're ready to invest, but Vanguard's price of admission is one of the highest among our top robo-advisors.

How Vanguard Digital Advisor® works: To enroll in Vanguard Digital Advisor®, you'll need a Vanguard brokerage account with at least $3,000 in it that is either a standard individual (taxable) account or a traditional or Roth IRA.

Once you enroll in the all-index option, Vanguard will invest your assets in a portfolio of four different Vanguard exchange-traded funds (ETFs). Allocations are custom-matched to your age, risk tolerance, and other factors. Vanguard Digital Advisor's four ETFs are:

• Vanguard Total Stock Market ETF
• Vanguard Total International Stock ETF
• Vanguard Total Bond Market ETF
• Vanguard Total International Bond ETF

Vanguard also offers an active/index investment option and an ESG investment option. These offer different funds and charge slightly different fees, though never more than 0.20% annually.

Minimum investment

Vanguard Digital Advisor® has a $3,000 minimum initial investment, which is on the higher end for robo-advisors we've seen. Many of its competitors have much lower minimums -- or none at all.

Services offered

Vanguard Digital Advisor® is just a robo-advisor in the purest sense of the word. It offers some excellent automated features like tax-loss harvesting and automatic rebalancing. Competitors offer services like virtual meetings with financial planners, and other types of financial counseling. But, like most Vanguard products, Vanguard Digital Advisor® isn't intended to be a full-featured robo-advisor. For a bare minimum of expense, Vanguard will construct a portfolio of basic index funds and/or mutual funds that will be a good match to your investment needs.

That said, Vanguard also offers several personal finance resources that clients might find valuable. It has a debt payoff calculator tool that can help customers get on the path to paying off credit card and other types of debt. In short, Vanguard Digital Advisor® aims to keep investing simple, but focuses on its clients' overall financial well being.

Retirement

In addition to standard individual and joint brokerage accounts, Vanguard Digital Advisor® is available in both traditional and Roth IRA accounts for retirement savers who want to put their investment strategies on auto-pilot.

Vanguard Digital Advisor® doesn't only consider your age, it also uses other factors to construct your portfolio, like your personal risk tolerance. Essentially, Vanguard Digital Advisor® creates a custom-allocated portfolio of Vanguard index funds and mutual funds, which are known for their low costs.

Access to financial advisors

Vanguard Digital Advisor® doesn't include access to human financial advisors, which isn't so surprising considering the ultra-low fee structure. Some of Vanguard's competitors offer financial advisors, typically with a somewhat higher fee structure or a premium membership.

Pricing and fees

Vanguard is known for its low-cost investment options, and Vanguard Digital Advisor® is no exception. The index-only option has a 0.15% advisory fee, which means that on a $10,000 investment portfolio, you'll pay $15 in fees. There's an ESG portfolio option with a 0.15% management fee, as well as a portfolio that combines index funds and some of Vanguard's mutual funds for a 0.20% advisory fee.

Vanguard offers customer service by phone Monday-Friday from 8 a.m. to 8 p.m. EST. While robo-advisory clients tend to need less support than standard brokerage clients, some of Vanguard Digital Advisor®'s competitors offer 24/7 phone support, as well as app-based, email, or other forms of customer service. However, it's worth noting that Vanguard has a user-friendly app that allows for easy account management and has a 4.7 out of 5-star rating in the App Store.