Personal Capital vs Betterment vs Vanguard
Over the last decade, a handful of services calling themselves automated roboadvisors have emerged.
These platforms offer multiple service types, investments, and added features like tax-loss harvesting and automatic rebalancing.
With so many options available it can be difficult to find the platform that best fits your needs.
In this article, we compare Personal Capital vs Betterment vs Vanguard.
Betterment vs Vanguard vs Personal Capital (Summary)
The number-one reason many investors are turning to roboadvisors is the offer of prebuilt portfolios that may offer consistent returns without the need to actively trade the stock market.
The three platforms reviewed above all offer similar features, but they differ in multiple ways.
- Betterment is the best for young investors with smaller account balances because Betterment does not have a minimum account balance to begin investing.
- Personal Capital is best for the heavy hitters with over $100,000 to invest who want to work closely with a financial advisor to develop their strategy.
- Finally, Vanguard puts its status as King of low-cost ETFs and mutual funds to work with a platform that offers the ability to work with an advisor for medium to high net worth investors.
Best Platform for Beginners (Betterment)
We all know how intimidating it can be to start investing in the stock market.
As beginners, it is easy to begin investing, but intimidating to find the right investments that fit your goals.
Luckily Betterment has beginner investors’ backs. There are no account minimums and low fees, so new investors can feel free to test out the service without making a big commitment.
Best Platform for Higher Net Worth Individuals (Personal Capital)
Even wealthy people can find the stock market intimidating.
For the wealthy investor looking for a moderate level of personal advice, Personal Capital is the answer.
Anyone with over $200,000 to invest may want to consider using Personal Capital. Investors will gain access to personal financial advisors who can help them with a variety of financial questions and dilemmas.
Best Platform for those who Don’t Need a Financial Advisor (Vanguard)
Vanguard offers the best of both worlds with its digital advisor. Clients with accounts above $500,000 have the option to interact with an asset manager.
The service has much lower fees than Personal Capital but still offers the option to work with a human advisor if need be. Vanguard has over $5 trillion in assets under management and is one of the largest asset managers in the world.
Personal Capital Review
Higher net-worth individuals can turn to Personal Capital for a service that offers a combination of roboadvisor strategies and personalized investment management.
There is a minimum initial investment of $100,000, but the platform is useful for wealthier investors who want access to a human advisor. Personal Capital is clearly geared towards larger accounts and offers a variety of prebuilt and custom investment portfolios.
Personal Capital Investment Strategy
The Personal Capital platform deploys several different investment strategies for its investors based on the size of their account. At the $200,000 level and below, investors can select from a basket of ETFs.
Investors with more than $200,000 but less than $1,000,000 are able to select individual stocks. With over $1,000,000 investors receive the ability to purchase individual bonds. Any account with over $200,000 is entitled to work with two personal advisors.
Personal Capital Top Features
The biggest selling point for Personal Capital is its dedicated financial advisors for higher net worth investors. Personal Capital seeks to attract wealthier clients who want a way to grow their wealth steadily without taking on large risks or obsessing over daily positioning of trades and market fluctuations. The company’s fees come in much lower than an advisor at a private firm or fund. With Personal Capital, it’s all about getting an extra human touch with the platform.
Personal Capital Fees
Personal Capital’s fees are based on the total value of an investment account. The fees are calculated on an annual basis:
- First $1 million – 0.89%
- $1 million to $3 million – 0.79%
- $3 million to $5 million – 0.69%
- $5 million to $10 million – 0.59%
- Over $10 million – 0.49%
Personal Capital Pros
Personal Capital is a great option for wealthier investors who want the stress-free investment of a roboadvisor and an extra human touch for peace of mind.
Personal Capital Cons
Personal Capital has lower fees than a personal advisor at a brokerage, but higher fees than all other roboadvisors. For investors with less than $200,000 in their Personal Capital account, the fees remain high, but there is no additional access to personalized investment advice.
The beautiful thing about roboadvisors is that they are tailor-made for beginning investors.
It takes minimal effort to invest, and there is no requirement to monitor the day-to-day movements of the stock market.
Betterment has built one of the best platforms for new investors, with no account minimums and fees starting at just 0.25% per year for the basic Betterment Digital Service.
In addition to investment portfolios, Betterment also offers a useful suite of financial tools to monitor your overall financial picture. For those with more money to invest, Betterment will offer personalized investment services for accounts with more than $100,000 in the market.
Betterment Investment Strategy
Betterment offers investors a choice of exchange-traded funds, or ETFs, that encompass 12 different baskets of stocks and bonds.
Investors have the ability to determine how they want their money allocated to each asset class, similar to a 401(k). This allows individual investors to vary their risk tolerance and goals within Betterment’s platform.
As investments change value over time, Betterment will automatically rebalance back to the original target percentages.
Betterment Top Features
On top of its roboadvisor services, Betterment also offers a host of tools that are extremely useful to investors of all ages. A list of the top features is broken down below:
- Betterment Cash Reserve: Betterment allows users to access what amounts to an interest-yielding savings account with their Betterment Cash Reserve account. They pay a high yield and have zero minimums or fees attached to the account.
- Two-Way Sweep: With its Two-Way Sweep function, Betterment will monitor a user’s checking and savings account to make sure they are never over-allocated to their investments compared to cash in their bank account. The program has the ability to transfer funds back and forth, maintaining a minimum amount set by the user in their checking and savings accounts.
- RetireGuide: Users can link their 401(k) and Roth IRA accounts to Betterment, which then monitors their progress to its retirement goals.
The Betterment platform charges a 0.25% management fee for its basic Betterment Digital accounts and a 0.40% fee for its Betterment Premium service.
Betterment markets itself as the go-to roboadvisor to young investors who are just beginning to dip their toes into the market. The biggest selling point going for Betterment is that it does not have an account minimum. You can start with any amount you feel comfortable investing and will still receive all of the sophisticated investment strategies and features like automatic rebalancing and tax-loss harvesting.
It is difficult to find anything negative to write about Betterment. It is a solid overall platform for investments of all walks of life. The one negative worth mentioning is the fact that there is no direct index investing when using the Betterment platform. Another negative for certain investors is that withdrawals from Betterment Cash Reserve can take up 3-4 days to complete.
Vanguard is one of the biggest player in the financial game.
In 1976 Vanguard released the Vanguard 500 Index Fund, which was the first index fund available to the masses. Though the initial offering of the fund was quite underwhelming, raising just $11 million versus a target of $150 million, the concept eventually took off.
Now Vanguard, the king of low cost investing, has entered the roboadvisor game with a middle-ground option between the beginner-oriented Betterment and the high net-worth clients of Personal Capital.
Vanguard’s Digital Advisor platform has low fees and a human advisor working behind the scenes to guide the machines. The minimum to get started with Vanguard Personal Advisor Services is $50,000.
Vanguard Investment Strategy
Vanguard’s Digital Advisor draws from the long list of funds managed by the company. If you are investing with any other roboadvisor service, you likely already have some exposure to Vanguard funds.
For example Betterment and M1 Finance use Vanguard funds on their platforms. Vanguard has a wide variety of funds ranging from passive strategies to actively managed tactical funds.
Vanguard Top Features
The Vanguard platform operates in the hybrid space between pure roboadvisor and typical asset manager. It has taken the lead in the race to provide this type of service from Schwab and Fidelity, who also have similar products.
With the Vanguard Digital Advisor, an actual asset manager works with you to develop a plan of attack for your investments. You then provide as much or as little input as you like, while the manager actively rebalances the portfolio as needed.
Once you have over $500,000 to invest you can work with a devoted Vanguard human advisor.
- First $5 million – 0.30%
- $5 million to $10 million – 0.20%
- $10 million to $25 million – 0.10%
- Over $25 million – 0.05%
Vanguard is the best in the business when it comes to index funds. There’s a reason so many investors and asset managers recommend them. If you invest with Vanguard, you have one of the titans of the industry investing for you. If you have over $500,000 to invest you can work with an individual human advisor.
There is a somewhat hefty minimum investment to get in the door with Vanguard at $50,000 but it’s not as high as Personal Capital. The most glaring con with the service is the fact that investors are only offered Vanguard funds. This isn’t necessarily a reason not to invest with Vanguard, but investors should know that their options are limited to the given set of Vanguard funds.