Betterment vs Vanguard 2024

Jeremy Biberdorf
By: Jeremy Biberdorf
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You’re usually better off with a diversified portfolio than by investing in a few individual stocks. That’s because, according to modern portfolio theory, making excellent returns while minimizing risk boils down to proper diversification. When it comes to Vanguard vs Betterment, read on to find out the best way to achieve solid diversification and solid returns.

Betterment is Better for:Vanguard Digital is Better for:
Lower Net Worth InvestorsUltra-High Net Worth
Human Financial AdvisorsExisting Vanguard Investors
New InvestorsExperienced Investors
Premium OptionsPassive Investing
Socially Responsible PortfoliosSimplicity
Customizing Asset AllocationLong-term Firm Performance
Tax-Loss HarvestingLow Management Fees
Investors of all Experience LevelsDiscounted ETF Fees

The Vanguard Group is an all-encompassing investment advisor with over $8 trillion in assets under management (AUM). Vanguard mutual funds are more prevalent than any other company globally, and Vanguard is second only to BlackRock iShares in terms of exchange-traded funds (ETFs). Its Vanguard Target Retirement Fund has been helping people save for retirement for decades.

In other words, no matter who your brokerage is, you are likely already invested in a Vanguard security.

Therefore, Modest Money considered how Betterment stacks up against Vanguard Digital Advisor for this comparison post. Both are robo-advisors, and signing up for both is as easy as downloading an app to your smartphone. But which is better for you?

Let’s look at some comparisons:

Betterment Vanguard
Management Fees (AUM)

0.25% (0.15% for balances > $2 million)


Premium Subscription

0.40% AUM (0.30% for balances > $2 million)


Other Fees



Security Types

Stock and bond ETFs

Stock and bond ETFs

Investment Portfolio Styles

Betterment Core Smart Beta Innovative Technologies Broad Impact Climate Impact Social Impact Betterment Cash BlackRock Target Impact Flexible Portfolio

Vanguard Portfolio

Investment Portfolio Risk Levels

Conservative, Moderate, Aggressive

Very Conservative, Conservative, Moderate, Aggressive, Very Aggressive

Active or Passive?

Passive with some customizations in asset classes

Purely Passive

Education Plan?



Investment Advice from Traditional Advisors?

Yes, with a Premium subscription or by paying $199/$299


Minimum Opening Balance

$0 ($10 for high-yield cash)


Tax-Loss Harvesting



Supported Accounts

Traditional, Roth, SEP, Inherited IRA Individual taxable accounts Joint taxable accounts with rights of survivorship Trust accounts Cash reserve Checking Account

Traditional, Roth IRAs Individual taxable accounts Joint taxable accounts with rights of survivorship

Earned APY on Cash Accounts

(0.10% on cash reserve)


Crypto Investing

Yes, expert-managed crypto portfolios


Best Use

Passive investors who want to choose by portfolio type

Passive Investors who don't want to customize

Current Promotion

More Info

More Info

Modest Money Overall Rating
4.9 rating based on 5 ratings
3.1 rating based on 5 ratings

Vanguard vs. Betterment: Determining Factors?

Betterment and Vanguard are two giants in diversification enabled by index investing.

Vanguard invented index investing, thanks to John C. Bogle, the Vanguard fund manager who originally conceived that mutual funds are underwhelming compared to broad stock market indexes in terms of returns. Thus, the index fund was born on August 31, 1976, 25 years after Bogle first observed that mutual funds were underwhelming in their performance.

Betterment came along much later in 2008. The world’s first robo-advisor, Betterment’s goals were like those of Vanguard, low-cost passive investing geared towards maximized returns.

Betterment and Vanguard have grown stronger with time, and you would do well to invest your hard-earned money with either of them. But which one is better for you?

To answer this, we will look at the core value of the Betterment vs Vanguard digital advisor, examining their various features and the value they are likely to bring to you as an investor.

Factor 1: Investment Fees

Betterment and Vanguard Digital Advisor charge a management fee equivalent to a percentage of your annual average balance, also known as assets under management (AUM).

Vanguard Has a Lower Management Fee than Betterment

  • Betterment charges 0.25% AUM for balances less than $2 million
  • Vanguard charges 0.20% AUM
  • Vanguard has cheaper management fees than Betterment by 0.05%

Betterment Fees

Betterment fees vs Vanguard is higher. It charges an annual management fee of 0.25% AUM. If you have $10,000 under management, this will equal $25.

For accounts above $2 million, Betterment discounts the management fee to 0.15%. The annual management fee would be $3,000 on an account with an average annual balance of $2 million.

The average cost of accounts managed by human advisors is around 1%; this saves you approximately $75 on a balance of $10,000 vs human management and about $17,000 annually on an account with an average $2 million balance.

Betterment also has tax-loss harvesting, which you can read more about here. For example, tax-loss harvesting can help you maximize returns by offsetting management fees and capital gains taxes.

To open a Betterment account with a rock-bottom management fee, you can click here to receive current promotions.

Vanguard Fees

Vanguard somehow manages to go even lower than Betterment with its ultra-low management fee of 0.20%. On a balance of $10,000, your Vanguard management fees would be $5 cheaper per year than they would be at Betterment.

For a balance of $2 million, fees with Vanguard Digital Advisor would be $1,000 more annually than they would be at Betterment.

But they might be even cheaper because while Vanguard’s advertised management fee is 0.20%, that’s the maximum you will pay. Vanguard credits you the fees that its securities and affiliates earn.

On a balance of $2 million, if you were invested solely in Vanguard ETFs, this credit would work out to $1,000. Under these circumstances, the management fees between Betterment and Vanguard would be roughly the same. Vanguard ETFs already have low average expense ratios.

To open a Vanguard Digital Advisor account with low management fees and discounts on Vanguard securities that can drive it even lower, you can click here to get the first 90 days fee-free.

Betterment’s Fees Are Cheaper for Beginning Investors

Is it better to choose Vanguard or Betterment in terms of fees? Any way you spin it, Vanguard offers cheaper fees than Betterment, except for balances over $2 million when your portfolio consists of non-Vanguard securities. This difference of 0.05% is minimal for lower balances, but you should consider it when comparison shopping.

Factor 2: Portfolio Types

Robo-advisors are attractive to many investors because they flourish on autopilot. You only have a few decisions to make initially, and usually, robo-advisors coach you about properly determining your risk tolerance levels.

But having the ability to customize your portfolio is also a feature that many investors want. For example, you may wish to tweak your portfolio to make it more socially responsible or adjust the weights of different asset classes.

Here’s what the customization options look like at Betterment and Vanguard:

Betterment Tops Vanguard in Portfolio Choices

  • Betterment has nine portfolios plus three risk tolerances
  • Vanguard has one portfolio plus five risk tolerances
  • Betterment has more portfolio diversity than Vanguard

Betterment Portfolios

Betterment has nine portfolios to choose from, including a core portfolio, a flexible portfolio, and three socially responsible portfolios. Here are the offerings you can choose from:

  • Betterment Core
  • Goldman Sachs Smart Beta
  • Innovative Technologies
  • Broad Impact
  • Climate Impact
  • Social Impact
  • Betterment Cash
  • BlackRock Target Impact
  • Flexible Portfolio

Furthermore, Betterment will suggest conservative, moderate, or aggressive allocations within each portfolio type according to your answers to their risk tolerance questions. With their Flexible Portfolio, you can override Betterment’s pre-chosen recommendations to customize your portfolio according to your preferences.

You cannot customize your portfolio by choosing individual ETFs, though you can adjust percentages allocated to broad asset classes.

If you are into socially responsible investing, Betterment has three choices: their Climate Impact, Social Impact, and Broad Impact portfolios. Most robo-advisors with a socially responsible option usually only have one available portfolio, so Betterment’s availability of three puts them at the top of the robo-advisor field in terms of socially responsible choices.

Betterment recently acquired Makara, the leader in the field of diversified crypto portfolios, so you can expect to see those options added to Betterment soon.

Vanguard Portfolios

Established in 2015, Vanguard Digital Advisor is a relatively recent entrant to the robo-advisor cadre. As a robo-advisor, Vanguard only has one portfolio choice and, in that portfolio, only has these four assets:

  • Vanguard Total Stock Market
  • Vanguard Total International Stock
  • Vanguard Total Bond Market
  • Vanguard Total International Bond Index Fund

This is limited in terms of portfolios and the investments that comprise those portfolios. Comparatively, Betterment will give you access to at least these 14 ETFs.

If you transfer your accounts to Vanguard Digital Advisor, you may be able to keep some of the investments that were already in your account, but the list is limited.

When you enroll in digital advisor, Vanguard will ask you some questions and recommend one of the following portfolio types:

  • Very conservative
  • Conservative
  • Moderate
  • Aggressive
  • Very aggressive

You will have an opportunity to override Vanguard’s suggestions and choose a different risk level, but that is as far as customizations go with Digital Advisor.

Vanguard does not currently have socially responsible or other portfolio choices available.

Betterment Wins in Portfolio Diversity

Betterment is superior to Vanguard Digital Advisor in terms of portfolio choice. It also provides access to socially responsible investing, which Vanguard does not.

With four portfolios to choose from and a few customization options, Vanguard Digital Advisor has one of the least customizable portfolio selections, while Betterment offers one of the best.

Factor 3: Account Types

The availability of multiple account types is another essential factor to consider when choosing a digital advisor. Having numerous options in account types can help you achieve different investment goals, such as saving for retirement and education.

Betterment Tops Vanguard in Account Types

  • Betterment has nine different account types
  • Vanguard Digital Advisor has four account types
  • Betterment has five more types of accounts than Vanguard

Betterment Account Types

While it lacks an education account option, Betterment has an optimal spread of retirement and taxable accounts. Here are their choices:

  • Traditional IRA
  • Roth IRA
  • Inherited IRA
  • Individual taxable accounts
  • Joint taxable accounts with rights of survivorship
  • Trust accounts
  • Cash reserve
  • Online Checking Account

Betterment’s account types allow you to set up one of four retirement accounts, multiple taxable accounts, as well as trust accounts. Trust accounts are not available with many robo-advisors, another critical Betterment advantage.

The availability of two cash accounts with Betterment is another crucial feature. Its cash reserve account works like a savings account, except without restrictions on monthly withdrawals.

Its checking account is another convenience, and with its Smart Deposit feature, you can set your accounts to sweep cash towards your investments once your cash accounts reach certain levels.

Vanguard Account Types

Vanguard’s available account types are comparatively limited. With Vanguard, you can open:

  • Traditional IRAs
  • Vanguard Roth IRAs
  • Individual taxable accounts
  • Joint taxable accounts with rights of survivorship

These might be plenty of accounts for your retirement goals, but it is still limited when it comes to other robo-advisors, including Betterment.

Betterment Has More Account Types

Betterment has more account types available than Vanguard. Its two cash accounts are especially advantageous. For example, the cash reserve account allows your money to earn a modest annual percentage yield (APY) of 0.10%.

Both Betterment and Vanguard lack options for education planning, so if you are looking to open that type of account, you can try one of Acorns’ UTMA/UGMA accounts.

Factor 4: Minimum Investment Requirements

Most beginning investors don’t have thousands or hundreds of dollars lying around, but that doesn’t mean you shouldn’t invest your money.

Even with robo-advisors, which are supposed to democratize diversified investing, finding options with low or no minimum investment requirements can be challenging.

Betterment and Acorns Do Not Have Minimums

  • Betterment’s investment accounts do not have account minimums
  • Vanguard requires minimum accounts balances of $3,000
  • Betterment has lower account minimums than Vanguard

Betterment Minimums

The minimum required to open a Betterment Cash Reserve account is $10, but you can open every other account type without a minimum deposit.

This gives you control over how you want to start investing and lets you try Betterment out before putting your entire life’s savings into it.

At Modest Money, we are firm believers that firms without or with low minimum investment requirements will go the extra mile to take care of their small investors. That’s why, even if you have a higher net worth, you should consider doing business with a robo-advisor that does not require minimum account balances.

Vanguard Minimums

You will need a minimum of $3,000 to open an account with Vanguard Digital Advisor. This leaves Vanguard out of reach for many small investors starting on their investment journey and people who don’t want to obligate that much money with a Vanguard robo advisor right away.

Another restriction with Vanguard Digital Advisor is that you can’t open an account if you are retired or within a year of retirement.

Betterment Has Lower Account Minimums

With its lack of account minimums and accessibility for people within reach of retirement, Betterment is more accessible to more investors.

Factor 5: Human Advisors

Is Betterment better than Vanguard in terms of human advisors?

Robo-advisors are not known for making human advisors available to investors. After all, it sort of defeats the purpose of paying low management fees in exchange for investment advice optimized by computer algorithms, right?

That is the usual case, but sometimes you might want to speak to a human financial advisor to ensure that you are on track to achieve your savings and investment goals. Human financial advisors can also help you attain other personal finance goals besides investment advice.

Betterment Tops Vanguard for Access to Human Advisors

  • Betterment offers access to human advisors
  • You can’t get access to humans with Vanguard Digital Advisor
  • Betterment is preferable for people who need human advisors

Betterment’s Human Advisor Packages

If you have more than $100,000 deposited with them, you can opt into a Betterment Premium plan. The Premium plan increases the management fee to 0.40% (0.30% for balances over $2 million) but gives you unlimited access to human advisors.

You can also purchase packages to speak with Betterment’s Certified Financial Planners. These packages start at $199.


Vanguard Digital Advisor does not offer access to human advisors. As a company, Vanguard does provide access to advisors via its Vanguard Personal Advisor Services, but this is essentially a different platform.

To access these services, you will have to set up a different type of account. Additionally, to access Vanguard Personal Advisor Services, you will need a minimum of $50,000 to enroll, and your management fee will be 0.30%.

Betterment Tops Vanguard Digital Advisor for Human Advisors

While Vanguard Personal Advisor Services does offer access to human advisors, you cannot get this in conjunction with its Digital Advisor platform.

This is a significant advantage to Betterment, which offers investors of all levels access to Certified Financial Planners via its robo-advisor platform.

Betterment vs Vanguard: The Bottom Line

So, should you choose Betterment or Vanguard? If you have a higher net worth and are already a customer with Vanguard, you may want to consider a robo-managed account through Vanguard Digital Advisor.

Based on Modest Money’s analysis, everyone else is better off with Betterment to achieve their investment and personal finance needs. But, no matter your investment strategy, Betterment has options for you.

Even if you are a big fan of Vanguard funds, like we are, Betterment ironically offers access to more Vanguard ETFs (8) than are available through Vanguard Digital Advisor (4).

Betterment is Better for:Vanguard Digital is Better for:
Lower Net Worth InvestorsUltra-High Net Worth
Human Financial AdvisorsExisting Vanguard Investors
New InvestorsExperienced Investors
Premium OptionsPassive Investing
Socially Responsible PortfoliosSimplicity
Customizing Asset AllocationLong-term Firm Performance
Tax-Loss HarvestingLow Management Fees
Investors of all Experience LevelsDiscounted ETF Fees


As far as the Vanguard robo-advisor vs Betterment goes, the latter is a leader in the robo-advisor field for a good reason—it is the oldest and has had the most time to perfect its robo-advisor services and offerings.

Suppose you are an investor who wants the ability to choose from among nine optimized portfolios with three risk tolerance levels and access to human advisors. In that case, you can open a Betterment Account by clicking here.

Learn More About Betterment


If you are a longtime customer with Vanguard and don’t mind an initial investment outlay of $3,000, you might want to take advantage of Vanguard’s slightly lower management fee.

However, keep in mind that you don’t need to be a Vanguard Digital Advisor customer to benefit from Vanguard’s low-cost ETFs. These are available at virtually every robo-advisor platform, including Betterment.
To open a Vanguard Digital Advisor account where you will get the first 90 days free of management fees, you can click here.

Learn More About Vanguard