Vanguard Activates Robo Advisor for Retirement Plan Participants

Vanguard robo advisor

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While there has been no official announcement, Vanguard recently launched a new robo advisor platform—Vanguard Personal Advisor—that is specifically aimed at participants of employer-sponsored retirement plans, a company spokesperson confirmed to 401k Specialist recently.

“Vanguard constantly evaluates our approach to best support advised clients and recognizes that retirement plan participants are facing increasingly complex financial situations and life events that can impact their retirement savings efforts. As such, Vanguard is evolving participants’ access to its industry-leading hybrid advice service, Personal Advisor,” the spokesperson said in an emailed statement.

“As a discretionary service, Personal Advisor will help to support more clients’ needs and ultimately seek to improve participants’ retirement readiness,” the statement continued. “Personal Advisor is uniquely positioned to assist retirement savers, providing sophisticated technology and a diversified, holistic approach to personalized portfolio design alongside the unique coaching capabilities of a human advisor.”

The new service, which requires a relatively steep minimum investment of $250,000 per participant and charges a net advisory fee of 30 basis points depending on settings and holdings, has launched to select defined contribution plans and will roll out to additional plans over the coming months.

Vanguard offers a spectrum of advice services to help investors achieve better financial outcomes, and this marks the company’s third robo platform. Vanguard Personal Advisor Services, the firm’s hybrid advice service for retail investors with a $50,000 minimum that charges 30 bps, launched in 2015 and combines sophisticated and customized portfolio management, extensive financial planning capabilities, and the behavioral coaching of a financial advisor.

In 2020, the firm introduced Vanguard Digital Advisor to deliver personalized, convenient, and affordable advice in an all-digital format. It manages an account with a minimum of $3,000 for 15 bps.

With the advancement of technology in areas such as advanced analytics, artificial intelligence, and natural language processing, the effectiveness of robo-advisory platforms is expected to increase. 

But interestingly, Vanguard research found that while more than 90% of human-advised clients say they would not consider switching to a digital service, 88% of robo-advised clients would consider switching to a human advisor in the future.

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