Wealthfront vs. Vanguard vs. E*TRADE

Daniel Penzing
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About Wealthfront

Wealthfront is a digital platform created with the goal of democratizing finance and making investment management accessible to everyone. To accomplish this, they use a sophisticated investment algorithm which optimizes for your goals and your risk tolerance. They also provide financial advice from a team of investment professionals. The advisors on their platform are some of the top professionals in the entire financial industry, and they vote for the stocks that are purchased for you. As members make deposits into their account, the algorithm grows with them and becomes better and better.

Wealthfront has just entered the robo advisor market and is already making a big name for itself. Their mission is the same as any other robo advisor, but their approach is much different. The advice you receive from Wealthfront is based on machine learning and computer science, unlike most other robo advisors who base their strategies on a set of rules, or rules that must be changed. Wealthfront automatically adjusts based on the data they receive, which makes Wealthfront different and much more efficient than other robo advisors.

About Vanguard

Vanguard, a well-known investment asset management company that is held in high esteem by investors everywhere, doesn’t just provide mutual funds: they provide ETFs and a variety of investment and retirement plans such as 401(k)s and 403(b)s.

Vanguard Personal Advisory Services is also known as the firm’s advisory service. Through the advisor service, Vanguard can pretty much give any guidance you need. The service includes advice on financial planning, taxes, investment strategies, and asset allocation.

If you choose to go with Vanguard for personal financial services, your advisor will be a registered rep since they are registered with the SEC. The advisor will also be able to manage and evaluate your investment portfolio by assessing the overall risk and fostering a personalized asset allocation strategy. You can request a custom portfolio for any number of goals that you are looking to achieve, such as retirement or a child’s education. You can also find information on past performance and returns.

Your advisor will be able to relate with you on a personal level, but since they are registered reps, they are also paid on commission. Typically, reps are compensated through the financial products they sell. This means that they are paid a commission based on the earnings they generate for your portfolio.

The Vanguard Personal Advisory Services offers three sets of services:


ETRADE was founded in the 1980s as an online trading platform. Today, it’s owned by the E*TRADE Financial Corporation, a publicly-held company that trades its stock on the New York Stock Exchange under the ticker symbol ‘ETFC.’

In addition to individual investors, E*TRADE serves clients ranging from small businesses to some of the world’s largest investment firms. They’re part of the reason so many investors love E*TRADE, since they provide low-cost investment options for diverse needs.

Versus Vanguard

Vanguard first launched as a financial management company in 1975. As of 2014, it was the largest mutual fund company. Nationally, at least 50% of 401(k) plans offered Vanguard funds alone.

Its roots were in value investing. Its founder, Jack Bogle, believed the average investor was better off putting money into index funds. In Bogle’s view, accurately picking stocks was a loser’s game.

Vanguard is known as a low cost leader when it comes to mutual funds. It charges its clients among the lowest fees because of its use of passive management. Rather than rely on stock pickers, it invests in market indexes.

How Are They the Same?

All of the firms have similar types of investment portfolios with options like individual and joint accounts with a 401k, IRA CDs, and retirement, education, and taxable accounts. With all three companies, you will be able to diversify your portfolio and invest in individual stocks, bonds, mutual funds, and ETFs. Wealthfront does offer financial planning and comprehensive portfolio management, which Vanguard and E*TRADE don’t offer.

Since all three firms offer similar products, you can expect similar charges and fees. All three firms are low-cost investment firms.

How Are They Different?

When it comes to investing, there are basically two worlds: industry-specific guidance and do-it-yourself index investing.

Industry-specific guidance includes financial advisors, fund managers, and investment bankers, and they are the industry experts. People rely on this guidance to help them make investment decisions. No one denies that industry-specific guidance is important – even a novice investor knows that he must seek the help of industry professionals if he wants to make a purchase of stocks.

An investment board of your own can help you invest your money without relying on anyone else. Index investing is no-frills, low maintenance, and hands-off investing. Investing this way may require some work, but the process is uncomplicated when you choose to make your own investment board. It could be the way for you to invest your money.

Investing this way is not for everyone, however, and not every investor is ready to start a new investment board. Everyone has different financial circumstances, different needs, and different expectations. To address this diversity in the market, many companies offer index investment products.

Most companies, including Vanguard, offer index funds to meet the needs of investors who don’t want to make their own decisions.

Unique Features

Wealthfront is one of the leading robo-advisor services available online. It offers personalized financial advice for people saving for retirement. There are no account management fees, no account minimums, and no trading fees. Wealthfront also provides financial planning advice and investment management for people with sophisticated financial needs. The company does not take on private clients.

How Wealthfront Works

Wealthfront uses algorithms and strategies that are similar to advanced trading algorithms. They use the concept of Modern Portfolio Theory (MPT) in order to determine the asset allocation. The asset class chosen in your portfolio is designed to produce the highest risk-adjusted returns based on historical data. Wealthfront’s target-date retirement funds offer a range of portfolios from conservative to more aggressive growth. Users have access to this information about different outcomes of the suggested retirement investment portfolio in the same investment profile.

Features that Add Real Wealth

Wealthfront is one of the few robo-advisor firms that offer tax loss harvesting. It is an automated service that saves on taxes that result from selling investments at a loss. A tax-efficient portfolio is designed to make mutual funds and stocks with minimal capital gains. It chooses from thousands of open stocks with unrealized losses, which are then sold. After that, the company redeems them at the lowest possible cost.


ETRADE and Vanguard Investment Advice.

With millions of users, the lineup of ETFs at Wealthfront, Etrade and Vanguard can be a bit overwhelming. The good news is that all three services are designed to help you reach your goals. In the following paragraphs, we will take a brief look at the products and offerings from the three services.

Option 1: Vanguard vs. Etrade

Wealthfront offers a number of investment planning services. When you sign up for an account, your Wealthfront advisor will create an investment plan tailored to your individual needs and goals. There is a wealth of information on their website, but…

Option 2: Vanguard vs. Wealthfront

If you’re looking for a number of investment options, the ETRADE platform and platform of financial advisors are ideal. ETRADE provides investors with a comprehensive suite of tools to aid in financial planning and trade execution. There are 319 markets and 3,483 listed products for online trading in the available space. Please note that ETRADE is mostly suitable for experienced investors and that commissions and fees can be pretty steep.

Option 3: Wealthfront vs. Etrade


Vs. E*Trade vs. Wealthfront: Which Is Best?

So you’ve decided to invest some money in the market. Congratulations! You have taken an important first step that will make you financially independent one day. And you don’t want to lose your money.

Something else you don’t want? A hard time managing your account online.

To do this, you have a couple of choices. You can use the traditional brokerages that have been around for decades, or you can go with a younger, more technologically-savvy online broker like Vanguard or E*Trade.

Why not just go with the tried-and-true companies? You’ll get a fully-functional online brokerage account with no fuss. But there’s a trade-off. You’ll pay a lot more in fees than you would a discount broker. Which is a better deal, a no-frills account with a lot of extras and lower costs, or a fully-loaded account with no bells and whistles and higher costs?


Vanguard, and Wealthfront. These three companies are among the biggest names in the financial world.

All three offer a variety of investing and retirement options for their customers, and they’re all worth looking into. But how do you know which is the right fit for you?

This comparison will help you make an informed choice between the three. Stick with me.

Investment Options

All three of these companies work hard to provide individual investors with a wide assortment of investment options. And they all do a good job of it. But if your goal is to invest in individual stocks and bonds, Vanguard, with its low expenses, might be the logical choice for you.

Virtually all Vanguard funds (about 90% of them) are extremely low-cost, but it’s the total expense ratio that really matters. For example, let’s look at two of Vanguard’s most popular funds:

  • Total Stock Market Index Fund
  • Vanguard Total Stock Market Index Fund Investor Shares

Expenses: 0.16%

Vanguard Total Bond Market II Index Fund Investor Shares

Expenses: 0.22%

Minimum Investment

Annual Fees

Standout Features

One of the most striking features of the Wealthfront robo-advisor is its website. The homepage is just a text box where you can input your age, your expected retirement year, and your current income level. The value of the current assets that you hold is displayed below. There’s nothing more to it than that.

You can also click on the orange button in the bottom right corner of the page, which leads to another wealth-tracking tool. The orange button will fade away whenever your input has been saved.

This shape of this text box is a throwback to another robo-advisor, Betterment, but Wealthfront has found a way to make it more personalized. The website automatically recognizes your location, and the website changes its appearance to show you personal retirement account numbers depending on your state. Also, the website will suggest multiple retirement plans and account types according to your age, income, and current savings.

Customer Service

Wealthfront and Vanguard are traditional full-service brokerage firms that house their financial advisors and teams in-house. Vanguard opened its doors in 1975, and Wealthfront launched in 2011, which means that Vanguard easily has the longest track record in the business.

Traditionally, brokerage firms provide online access to your account, trade your securities, and help you set up automatic savings and contributions. In addition, a broker acts as a liaison between the client and the company issuing the security, which is sometimes a bank, a mutual fund company, or a government entity.

In other words, using a full-service brokerage firm means you don’t have to worry about a thing. They’ll provide financial advice, tools to manage your portfolio, and invest any cash you’d like to deposit, and their goal is to make you their best client.

As far as customer service goes, Vanguard and Wealthfront are very similar — since they house their teams in-house, they focus almost exclusively on clients. You can reach customer service for both Wealthfront and Vanguard by phone, email, and live chat, and they are just as responsive to inquiries online as they are on the phone.


Something Worthy to Invest in:

One of the important aspects to look into in any investment options is the security of the person’s money with the institution. This is a mistake that many individuals make unknowingly. Many places that advertise online are not insured by the FDIC, so your money is really not secure in that case. This can be a great risk to someone who is not aware of it. That is why you need to do a little research to find out how safe it is to invest at these particular places. If you do not see an FDIC seal, you might want to stay away.

For sure, there are much greater percentage gainers than stocks but for most people, that isn’t the most important issue. The comfort of having a diversified portfolio and a steady return to spend and save on daily basis is what makes stocks a long-term investment option that will definitely skyrocket.

You need not keep checking on the stocks for a constant update on its performance. After you have made the purchase, you only need to sit back, relax, and enjoy your rewards years later.

Who Are They Best For?

There are many different things to consider when switching over to a robo-advisor and choosing the right one. Before deciding on your perfect fit and the different services you are going to receive, you need to first go over your financial situation and assess your needs and goals.

For different financial needs, there are different types of robo-advisors to choose from.

· · Vanguard Personal Advisor Services®

Vanguard charges a management fee of only 0.30%, which is lower than the industry average of 0.89%. It is ideal for those who are looking to grow their assets on a long-term basis. Here are some of its key features:

An extensive selection of low-cost, carefully selected ETFs.

You can make your required minimum distribution (RMD) estimating retirement funds.

It is low cost.

· · Wealthfront

Wealthfront business model is different. You basically pay for its advice, with fee-based options or tax-optimized options. They offer some of the most affordable accounts and low management fees, ranging from 0.25% to 0.40%.

They offer a variety of portfolio options with next to minimum average fees.

Which Is the Best?

The best investment advisor for you is the one that you use. There are a lot of different investment platforms. Some of the biggest are E*Trade, Betterment, Wealthfront and Vanguard. All four have their advantages.

E-Trade seems to be going after the active money management who wants to have a live person managing their money. They started offering advice based on the trader, then they offered advice based on the investor, but the investor portion is not up to snuff.

Betterment is for the person who wants a simple dashboard to look at and basic retirement tools. They cost 1 basis point. One part of Wealthfront is ultra-low cost based upon a simple portfolio that you pick.

Vanguard is for the person who wants digital advice and tools but doesn't want to have to worry about making the active management decisions. They are the largest investment house of any kind in the world.

There are advantages and disadvantages to each program. The most important thing that you need to keep your investment costs low. Don't pay investment costs that you don't have to.

There are no investment advisors out there that have done that better than Wealthfront and Betterment in the last few years. Vanguard is the largest but Wealthfront has higher returns.