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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
As an investor, the most important decision you need to make is how to divide your money between stocks, bonds, and other types of investments. Your investment mix accounts for over 90% of your total investment returns, so it’s important to get it right now and in the years to come.2
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.
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
Let's start with target-date investments. They offer a pre-set mix of stocks, bonds, and short-term reserves. The amount of risk you take on is based on the year in the investment's name. Many investors choose the target-date investment with the year that's closest to when they’ll reach age 65.
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.
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.
Example glide path.
A glide path just for you
You made a great choice by selecting advice in your retirement plan. But if you haven’t personalized your Digital Advisor investor profile, you aren’t getting all the benefits available to you. When you complete your profile, the service will create a unique financial plan that fits you and your goals. Your plan will include investments that hold a mix of stocks, bonds, and short-term reserves.
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
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
Both target-date investments and advice from Vanguard can help make investing easier. But understanding the differences between them will help you see why personalized advice offers you greater value as an investor.
Check out the table below for the key differences.
Check out the table below for the key differences.
Get more value from your advice service
Once you complete your Digital Advisor investor profile, you’ll get advice and investment management tailored to your unique financial needs. Plus, you’ll unlock our suite of powerful financial planning tools that can help set you up for retirement success.
Whenever you invest, there’s a chance you could lose the money.
Before you invest, get the details. Consider the fund’s objective, risks, charges, and expenses. The fund’s prospectus (or summary prospectus, if available) will tell you these important facts and more. So read it carefully. Call Vanguard at 800-523-1188 to get one. Or you can find one at vanguard.com.
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.
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.
1For a broader discussion of advice value from a financial, emotional, and time perspective, see Weber et al. The Value of Personalized Advice. Vanguard, 2022.
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.
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.
