Schwab Intelligent Portfolios vs Vanguard: Which Robo Advisor Should You Pick?

Updated November 12, 2021

Schwab and Vanguard are two of the largest investment firms in the U.S. Vanguard is known for its low costs and unique shareholder-owned company structure, which means investors who own Vanguard funds, own the company. Schwab is known for its large selection of investment funds, as well as low trading fees. Both companies have introduced automated investment services, known as robo-advisors, to help investors save for retirement and other financial goals, without the need to hire a financial advisor.

Schwab Intelligent Portfolios offers automated investment management with no annual fee, making it one of the best low-cost robo-advisors available. Vanguard Digital Advisor offers a simple investing process using low-fee Vanguard funds and a user-friendly dashboard to track financial goals. 

We’ve compared both Schwab and Vanguard’s robo-advisory services, breaking down their pricing, investment options, security, and user experience.

Schwab Intelligent Portfolio vs Vanguard Overview

Features

Schwab Intelligent Portfolio

Vanguard Digital Advisor (and Personal Advisor Services)

Account Fees 

$0 for standard accounts

$30/month for Schwab Intelligent Portfolios Premium

Digital Advisor: 0.15% of assets under management

Personal Advisor: 0.05% - 0.30% of assets under management

Expense Ratios 

0.00% to 0.60%, depending on portfolio and funds selected

0.05% - 0.07% average weighted expense ratio

Account Minimums 

$5,000 for Schwab Intelligent Portfolios

$25,000 for Schwab Intelligent Portfolios Premium

Digital Advisor: $3,000

Personal Advisor: $50,000

Investment Options/Choices 

Over 50 ETFs in 20+ asset classes, including commodities

3 investment strategies and 6 risk profiles available

4 ETFs, globally diversified

Investment Account Options 

Individual investment accounts

IRA, Roth IRA, SEP IRA, Simple IRA, Rollover IRA, Inherited IRA

UTMA/UGMA accounts

Joint accounts


Trusts

Individual investment accounts

IRA, Roth IRA, Rollover IRA

Joint accounts

401(k)s held through Vanguard

Portfolio Construction

Automatic portfolio rebalancing on all accounts

Automatic portfolio rebalancing on all accounts

Tax Strategy 

Tax-loss harvesting (only available for clients with $50,000 taxable balance)

Tax-efficient investing and withdrawal strategy.

Customer Service and Support 

Phone support and live chat online available 24/7. Customer service agents are licensed financial advisors, but cannot give investment advice.

Phone support, 8am - 8pm EST, Monday - Friday. 

Mobile Compatibility 

Mobile app available

Website is mobile-friendly

Mobile app available

Website is mobile-friendly

Account Setup 

Simple online account setup

Sign up for an account online, select account type, answer a few questions, select portfolio, and fund the account with a minimum of $5,000.

Sign up for an account online, select account type, answer a few questions, select portfolio, and fund the account with a minimum of $3,000 ($50,000 for Personal Advisor accounts).

Security

Bank-grade data protection, two-factor authentication. FDIC insurance ($250,000), SIPC insurance ($500,000)

Bank-grade data protection, two-factor authentication. FDIC insurance ($250,000), SIPC insurance ($500,000)

Ease of access 

Schwab offers a mobile app and full-featured website with a customer dashboard.

Vanguard offers a mobile app and full-featured website with a customer dashboard.

Vanguard and Schwab both offer digital robo-advisory services, as well as a hybrid plan that gives users access to a licensed financial advisor. Both provide low-cost exchange-traded funds (ETFs) that are globally diversified, as well as a financial planning dashboard to help users reach their financial goals.

But while Vanguard focuses on four core ETFs to build portfolios for clients, Schwab offers over 50 ETFs in 20 asset classes, as well as multiple types of portfolios for clients to choose from. Vanguard, on the other hand, builds a classic portfolio that is adjusted based on a user’s risk tolerance (or the ability to tolerate seeing their investments lose value). 

While the approach is different, both companies operate based on modern portfolio theory (MPT). The basic idea behind MPT is to create an investment strategy that keeps costs low, while investing in a variety of different asset classes. This helps reduce the overall risk for investors, while offering market average investment returns.

About Schwab Intelligent Portfolio

Schwab Intelligent Portfolio is Schwab’s robo-advisory service that offers no-fee management of taxable and retirement investment accounts. Clients can quickly build a diversified portfolio using a mix of ETFs and Schwab funds in over 20 asset classes, choosing from 3 different investment strategies and six user risk profiles. Schwab will then manage the account, automatically rebalancing as needed to keep the asset allocation intact. Schwab also offers tax-loss harvesting on some accounts, which helps lower the overall taxes of a user’s investments.

Schwab Intelligent Portfolio Premium offers access to human financial advisors for a one-time setup fee of $300, and $30 per month subscription. This allows users to set up one-on-one meetings with a Certified Financial Planner™ for professional investment advice.

Both levels of service also offer Schwab Intelligent Income, a retirement income service that’s included at no additional charge. This service helps strategize user withdrawals in retirement in order to lower taxes and protect user portfolios.

About Vanguard

Vanguard is one of the largest investment firms in the U.S., with some of the most widely invested-in mutual funds and ETFs in the world. Vanguard offers its digital advisor service for a low 0.15% annual management fee, automatically investing in a blend of globally-diversified ETFs based on a user's goals and risk profile. It offers automatic rebalancing, tax-efficient investing and withdrawals, and access to a simplified user dashboard to track progress.

Vanguard also offers a hybrid service called Vanguard Personal Advisor Service, offering automatic investment management and access to a licensed financial professional for personalized financial advice. 

The personal advisor service charges a 0.30% annual management fee for the first $5 million invested, with rate tiers that drop as low as 0.05% for more than $25 million invested. Most users will fall into the first fee category. While the minimum for Vanguard Personal Advisor Services is $50,000, the 0.30% fee on that balance equates to only $12.50 per month, far lower than Schwab’s $30 per month.

Main Features of Schwab Intelligent Portfolio vs Vanguard

Both Schwab and Vanguard offer valuable features to help investors build an investment portfolio while keeping costs to a minimum. Here are a few of the features that set each service apart:

Schwab ETF Selection

Schwab offers a huge selection of ETFs in over 20 different sectors, giving users exposure to a wide range of non-correlated assets within their portfolios. Schwab is one of the few robo-advisors that offers access to real estate and commodities, such as gold and other precious metals. Schwab also offers many socially-responsible investment (SRI) options, as well as an SRI-focused portfolio.

Schwab Zero Management Fees

Schwab is one of the few robo-advisors that does not charge an annual management fee for its services. While some robo-advisory services charge up to 0.35% of assets under management, Schwab maintains a $0 management fee for all account balances. That being said, Schwab does make money by lending out the cash balances of portfolios (similar to a bank), as well as via the expense ratios of Schwab funds held within portfolios. The expense ratios are paid annually, and Schwab collects those fees.

Vanguard ETF Fees

Vanguard has always maintained some of the lowest fees in the industry for its mutual funds and ETFs. The ETFs available in its Digital Advisor service offer low expense ratios, averaging 0.05% annually. In addition to the 0.15% management fee, portfolios average about 0.20% in fees for the year. And while Schwab doesn’t charge a management fee, expense ratios for some of the funds in its portfolios can be as high as 0.60%.

Vanguard Debt Payoff Tool

The Vanguard Digital Advisor dashboard offers a simple summary to help users track their investments, and also offers a debt payoff tool to help estimate your debt payoff timeline and choose the best payoff method.

Schwab and Vanguard Access to Financial Advisors

Both services offer a premium version that includes access to licensed financial advisors for personalized advice. 

Schwab offers this service for a one-time setup fee (currently $300) and a $30 per month flat rate. A minimum investment of $25,000 is required for access to their service. 

Vanguard offers access to a financial advisor via the Vanguard Personal Advisor Services, and charges a 0.30% fee on assets under management. Clients can set up video calls with licensed financial advisors, and build a more customized investment and financial plan than through the regular Digital Advisor service. Vanguard does not charge a set up fee for this service.

While both services offer similar access to financial advisors, Schwab may be more expensive for those with lower account balances. Here’s a quick comparison of an investment account with $50,000 invested:

Schwab Intelligent Portfolio Premium = $30/month. This equates to a 0.72% annual management fee.

Vanguard Personal Advisor Services = 0.30% management fee. This equates to $12.50 per month.

Higher balances may find a more favorable rate with Schwab, but it would require $125,000 or more to cause Schwab’s management fee to be lower than Vanguard's management fee.

Who Schwab Intelligent Portfolio is Best for

Schwab Intelligent Portfolio is ideal for clients who want access to a wide range of ETFs and multiple portfolio options with no management fees attached. Schwab Intelligent Portfolios requires a $5,000 minimum deposit for opening an account, so it is better suited for investors that have these funds available to invest.

Schwab also offers a great strategy for managing retirement withdrawals, with its free add-on service, Schwab Intelligent Income. Schwab does give clients the option to upgrade for access to licensed financial planners, but this service is more expensive than Vanguard for account balances below $125,000.

Who Vanguard is Best for

Vanguard is great for investors who want a simple portfolio that includes diversified ETFs. Vanguard's extremely low expense ratios and user-friendly investment dashboard make it an approachable way to track retirement savings progress. Vanguard Digital Advisor requires a $3,000 minimum deposit to open an account, so it is ideal for investors that have those funds available to invest. 

Vanguard also offers access to a team of financial advisors for a 0.30% annual fee, giving users peace of mind and a bit of guidance in building a personalized financial plan. That being said, Vanguard Personal Advisor Services requires a $50,000 minimum investment, so it is better suited to investors with larger account balances.

Overall, Vanguard offers top-notch service and planning for a low annual fee.

RELATED: Vanguard Digital Advisor Review

RELATED: Vanguard Personal Advisor Services Review

Summary

Both Vanguard and Schwab offer low-fee robo-advisory services, great for beginner investors and those who want a hands-off approach to retirement planning. With the ability to upgrade and consult with a licensed financial planner, and access to globally diversified ETFs, both services help users make investing easy.

Schwab Intelligent Portfolios offers a wider range of ETFs and portfolio options to choose from, and includes options for users who want to build a socially responsible investing portfolio. Schwab is also free of management fees, though it does have higher expense ratios overall.

Vanguard Digital Advisor is a great option for those who want a no-nonsense, simple investment portfolio, professionally managed by Vanguard. With simple financial tools and some of the lowest-cost ETFs around, Vanguard is a great option for investors who want to save for retirement (and other goals) automatically.

RELATED: The Best Robo Advisors

References:

https://www.statista.com/statistics/1181252/largest-etfs-market-cap-global/
https://www.marcus.com/us/en/invest
 

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