Vanguard Digital Advisor uses algorithms to manage client portfolios. This is a 100% digital experience, as there are no human advisors involved. When you sign up for the service, you’re asked a series of questions about your income, how much you save towards retirement each month and how much you have saved already. They then dig deeper, asking about your retirement goals and offering a risk assessment test to determine your investing style — i.e. if you’re a more moderate investor or like to take risks.
Based on this information, the algorithm constructs a portfolio that aligns with your goals for retirement. The portfolios are comprised of varying combinations of four Vanguard ETFs based on the appropriate asset allocation for the investor:
- Vanguard Total Stock Market ETF
- Vanguard Total International Stock Market ETF
- Vanguard Total Bond Market ETF
- Vanguard Total International Bond Market ETF
In order to use Vanguard Digital Advisor, there is an account minimum of $3,000. You can only open three different types of accounts: an individual brokerage account, joint taxable brokerage account, and IRA (Traditional and Roth). However, if your employer’s 401(k) is through Vanguard, you can also enroll your 401(k) account in Vanguard Digital Advisor, but only if your employer offers this as an option.
Once you’ve established your retirement goal and your risk profile, the service will produce your customized portfolio.
There are a few additional restrictions to using the service:
- Users must be U.S. residents or have an American mailing address such as one for active military service members, foreign service employees, etc.
- The investor cannot be enrolled in Vanguard Personal Advisor Services, a quasi-robo and human advisory service offered by the company.
- The investor cannot be a company insider.
- The investor cannot be retired or within one year of retirement.
Vanguard also offers a version of its Digital Advisor service to retirement plan participants whose employer’s plan is administered on the Vanguard platform. This would be implemented by the employer’s plan administrator.
Vanguard has an online FAQ service to help you navigate investing and find answers to any question you might have. They also have a toll-free number for customer service issues, which is available Monday through Friday from 8:00 a.m. to 8:00 p.m. ET.