Read time: 4 to 6 minutes
When it comes to making decisions about investing, some people like to do it themselves. Others like to get advice from the pros. Vanguard has options that can provide some—or a lot of—guidance depending on your needs. Some take advantage of Vanguard target-date investments. Others, like you, sign up for expert advice and investment management in their retirement plans. Both of these “built-for-you” options are designed to help you reach your financial goals and feel more confident in your investing decisions. But advice works best when it’s personalized, because then it can respond to your unique financial situation by building a customized investing plan that changes with your needs over time. Let's compare these investing options and see why personalized advice may offer you more value.1
Your investment mix matters
Both target-date investments and online advice services like Vanguard Digital Advisor® (or hybrid online advice services like Vanguard Personal Advisor®) can help you choose the right investment mix. And with both advice and target-date investments, your mix will automatically become less risky as you get closer to your goals. But personalization can make advice the more attractive option because it’s not a “one size fits all” approach to investing. Instead, with personalized advice you get a plan that reflects your individual financial circumstances. Read on to find out more.
How target-date investments and advice are alike
One of the most valuable features of these investments is that they follow a “glide path.” That's how your investment mix will change over time to become more conservative as you approach a goal, like retirement. Each target-date investment starts with a higher percentage of stocks and automatically shifts until it has a higher percentage of bonds as the target date approaches. That's because stocks are riskier than bonds but tend to offer greater potential reward over time.
The chart below shows an example of a target-date investment’s glide path.
A glide path just for you
Your investment mix will also be managed by Digital Advisor according to your personalized glide path, becoming less risky as you get closer to those goals. This is one way an advice service like Digital Advisor is similar to target-date investments. But with more than 1,000 potential glide paths, personalized advice from Vanguard can provide a smoother, more gradual transition that's tailored to your particular needs.3
How target-date investments and advice are different
Check out the table below for the key differences.
Target-date investments
Each target-date investment is made up of several diversified index funds.
Advice from Vanguard
Once you complete your Digital Advisor profile, the advice service will select a diversified mix of investments based on your unique goals, comfort with risk, and time horizon.
Target-date investments
The investment mix will automatically adjust as you get closer to retirement.
Advice from Vanguard
Digital Advisor will monitor your investment mix every business day and rebalance for your goals over time.
Target-date investments
Your chosen investment focuses on one goal: retirement.
Advice from Vanguard
Digital Advisor can help you save for multiple goals, like retirement and your next vacation.
Target-date investments
You can switch to a different target-date investment if the year you’d like to retire changes.
Advice from Vanguard
You can update your financial goals at any time and Digital Advisor will adjust your financial plan automatically.
Target-date investments
Most investors choose a single investment for their retirement plan money.
Advice from Vanguard
Digital Advisor will consider assets outside your retirement plan, including Vanguard IRAs and taxable brokerage accounts and non-Vanguard saving and investment accounts. You can also track any debts you currently have.
Target-date investments
You can use our online platform with access to other free online tools and resources to help you manage your money.
Advice from Vanguard
Once you personalize your Digital Advisor investor profile, you can check your progress, adjust your goals, and take advantage of additional resources, like our Rainy-Day tool and Social Security Estimator.
Target-date investments
You pay nothing other than the investment's expense ratio. Vanguard's average expense ratio for a target-date investment is 0.08%.4
Advice from Vanguard
With Digital Advisor, you pay about $15 annually for every $10,000 invested with the service. For Personal Advisor, you pay about $30 annually for every $10,000 invested with the service.5
Get more value from your advice service
Target-date investments are subject to the risks of their underlying funds. The year in the investment's name refers to the approximate year (the target date) when an investor would retire and leave the workforce. The investment will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. A target-date investment is not guaranteed at any time, including on or after the target date.
Diversifying means having different types of investments. It doesn’t guarantee you’ll make a profit or that you won’t lose money.
2Donaldson et al. Vanguard's Framework for Constructing Globally Diversified Portfolios. Vanguard, 2021, and Tactical Versus Strategic Asset Allocation. Vanguard, 2022.
3Rivera, The Value of Personalized Glide Paths for Plan Participants. Vanguard, 2024.
4The expense ratio is what you pay each year to cover the cost of running the fund. To calculate it, fund operating costs are divided by the total amount of money in the fund. The expense ratio is deducted from the fund’s return. You can find it in the current prospectus. With some funds, you may pay additional charges.
For Target Retirement Funds, the expense ratio has been restated to reflect expenses currently being deducted from fund assets. This figure is an average-weighted expense ratio, based on expenses incurred by the Vanguard funds that make up each Target Retirement Fund. This data is as of the most recent prospectus for the funds, dated September 20, 2023. Source: Morningstar, Inc.
5Actual costs vary. Digital Advisor and Personal Advisor will reduce your gross advisory fee by the amount of revenue (such as expense ratio rebates) that Vanguard (or a Vanguard affiliate) collects on your portfolio in order to calculate the net advisory fee. Digital Advisor’s annual net advisory fee is approximately 0.15% across your enrolled accounts for a typical investment portfolio. And Personal Advisor’s annual net advisory fee is approximately 0.30% across your enrolled accounts for a typical investment portfolio. However, your actual net fee will vary depending on the specific holdings in each enrolled account. Your net advisory fee can also vary by enrolled account type. Plan participants’ actual advisory fees will vary depending on your plan’s lineup and the revenue that Vanguard receives from those investments. Please see your plan fee disclosure notices for the applicable annual gross advisory fees that apply to your plan assets.
6Source: Vanguard, as of July 2024.
Vanguard Digital Advisor's and Vanguard Personal Advisor’s services are provided solely by Vanguard Advisers, Inc. (VAI), a registered investment advisor. Please review the Vanguard Digital Advisor and Personal Advisor brochure for important details about these services. Vanguard Digital Advisor’s and Personal Advisor's financial planning tools provide projections and goal forecasts, which are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.
