Vanguard is piloting a digital-only robo-advisor aimed at mass affluent investors and defined contribution plan participants, according to news reports.
The discount brokerage has soft-launched Vanguard Digital Advisor for invited investors and is looking for input from them before a full launch planned for later this year, FA-IQ sister publication Ignites writes, citing a Vanguard spokesman. The new service is aimed at investors with as little as $3,000 in investable assets and at 401(k) plan participants, according to Ignites.
First announced in September, the new service is similar to Vanguard’s Personal Advisor Services in that both invest in only a few exchange-traded funds, the publication writes. However, unlike PAS, the new robo-advisor doesn’t give clients access to individual financial advisors, according to Ignites.
While PAS starts at 30 basis points and has a $50,000 minimum, however, the new service has a $3,000 minimum and costs around 20 bps before fee waivers, the publication writes.
The new program will also allow Vanguard to service a range of accounts with a tax-efficient approach, says William Trout, an analyst at Celent, according to Ignites. Digital Advisor’s “asset allocation” tool can put tax-efficient funds, such as stock funds, into taxable accounts and less efficient funds into tax-deferred accounts, the publication writes, citing the service’s brochure.
The success of the soft-launch remains to be seen, according to Ignites: The S&P 500 has lost a third of its value since its peak in the middle of last month, with many investors lacking the cash to place into investments. Meanwhile, some investors will likely be looking for “a little human hand-holding,” wrote Dan Wiener, chairman of Adviser Investments and editor of the Independent Adviser for Vanguard Investors, according to Ignites.
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