Empower vs. Vanguard Personal Advisor Services
Vanguard Personal Advisor Services and Empower (formerly Personal Capital) are two hybrid automated investment advisors that aim to serve investors with larger nest eggs to invest. Both Vanguard Personal Advisor Services and Empower have high account minimums that may put them out of reach for newer investors. If you can clear the account minimum, these two digital investment managers will customize your portfolio to meet your goals, financial situation, and risk tolerance. However, the way they construct their portfolios is distinct. Vanguard uses predominantly proprietary funds, while Empower includes individual stocks in the U.S. equity portion of their portfolios. We looked at the similarities and differences between each of these investment management services to help decide which is best for you.
- Account Minimum: $100,000
- Fees: 0.89% to 0.49% for accounts over $1 million
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Best robo-advisor for portfolio management
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Free net worth tracking, financial tracking, and retirement planning software
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Every paying Advisor client can access a financial advisor
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Provides comprehensive tax-minimization strategies, including tax-loss harvesting
- Account Minimum: $50,000
- Fee: 0.30% of assets under management (excluding cash) for up to $5 million; management fee tiers down to 0.16% for assets over $25 million
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You can collaborate with a financial advisor to create your personal portfolio
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Active and passively managed exchange-traded funds (ETFs) and mutual funds are available
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PAS offers tax minimization
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Private equity investments are available
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Clients can also access Vanguard’s other services, like self-directed trading
Empower vs. Vanguard: Account Setup
The Vanguard Personal Advisor requires a $50,000 minimum. Like many robo-advisors, setup begins with a quiz to determine whether the platform is a fit for you. If you don’t have $50K, you might consider Vanguard Digital Advisor, which requires a $3,000 minimum. The advisor-driven process begins when you answer a few questions related to your finances, time until retirement, and advisory goals. You may schedule an appointment with an advisor before enrolling to discuss your portfolio plan and your investing needs.
During the financial advisory meeting, you’ll work with the consultant to create a plan. Once the plan is created, you set up an account and transfer cash or securities to begin investment management. The customized portfolio consists predominantly of Vanguard funds. The investments are rebalanced and managed digitally. Clients can link external accounts for planning and review, but these accounts aren’t considered in the portfolio construction or for rebalancing.
The Empower signup requires an email, password, phone number, and date of birth. Anyone can use the Empower free financial management tools after creating an account and linking their investment, banking, and lending accounts. The Empower managed investment service is for those with $100,000 or more seeking comprehensive financial management and unlimited access to certified financial planners (CFPs).
The advisory account setup proceeds with a call with a financial advisor. As is customary with most financial advisors, you’ll answer questions related to your financial situation, goals, and risk comfort level. In accordance with your responses and financial information, the advisor presents a written personal financial strategy for discussion. After that, you open an account and fund it with cash or transfer securities. You’re able to discuss potential portfolios and multiple investment strategies with the financial advisor at any time, including prior to opening an account.
Both Vanguard and Empower’s hybrid investment managers offer a personal touch and customized portfolios. Empower offers unlimited access to CFPs during and after the process, but we found the actual account setup to be equivalent at both digital investment managers.
Empower vs. Vanguard PAS: Goal Planning
Vanguard’s goal planning begins when you set up your account and includes time horizon and risk tolerance. Vanguard Personal Advisor Services supports multiple goals and may recommend separate accounts for distinct goals. The goal-planning tools enable you to test various scenarios and it also measures 10,000 scenarios to calculate the possibility of reaching your goals. In addition, the planning tool incorporates the impact of inflation and fees on your investment scenarios. The goal planning tools consider both Vanguard and linked external accounts when analyzing your current status and the likelihood of success in the future. You can contact the financial advisors at any time to discuss your goals and progress.
Similar to Vanguard, Empower investment services’ goal planning includes conversations with your financial advisor. Clients can opt to set up multiple goals with Empower as well. Both advisory clients and those using the Empower free tools are eligible to use the customizable retirement planner. This simulator considers your income and spending before and after retirement and projects the likelihood of meeting your retirement goals.
Both Vanguard and Empower are well suited to provide goal-based financial guidance and adjust your investments based on your personal situation. At each platform, you’ll receive information detailing goal-based progress, along with helpful recommendations to overcome potential shortfalls. Although these two digital investment advisors are very close when it comes to goal planning, we give a slight edge to Empower for providing an excellent suite of free tools to investors who can’t meet the firm’s high account minimum.
Empower vs. Vanguard PAS: Account Types
Vanguard Personal Advisor Services and Empower each offer the most commonly used account types. The only distinction between the two is the availability of the Empower Cash account. Vanguard users will need to create a separate cash account, outside of Vanguard Personal Advisor Services.
Vanguard accounts:
Empower accounts:
- Taxable individual and joint
- Traditional IRA
- Roth IRA
- SEP IRA
- IRA transfers and 401(k) rollovers
- Trust
- High yield cash
Empower vs. Vanguard PAS: Account Services
Vanguard Personal Advisor Services’ account services are lean. Automatic deposits from external accounts are straightforward, but traditional banking, stock trading, and margin are not available within the investment management service. That said, you can access cash management and self-directed trading within the wider Vanguard brokerage services.
The services offered by Vanguard PAS vary based on account value:
| Account Value | Services |
|---|---|
| $50,000 | Access to an advisor, personalized financial plan, investment coaching, ongoing portfolio advice, real-time goal tracking, access to actively managed funds |
| $500,000+ | All of the above plus a dedicated advisor, and access to trust services |
| $5,000,000+ | All of the above with wealth and estate planning, a reduction in advisory fees (0.20% $5-$10 million, 0.10% $10-$25 million, 0.05% above $25 million) |
Empower wins our best for portfolio management designation and goes above and beyond in the account services department. Advisory clients receive all of the expected features of a traditional financial planner and more. The firm offers automated deposits. Like Vanguard Personal Advisor, individual stock and fund trading are not available at Empower.
Empower’s free budgeting, saving, and investment management tools are available for a range of financial management activities. The Financial Roadmap product, available only to advisory clients, considers all of your financial information and, as the name suggests, creates a personalized list of financial steps to take.
Empower services vary based upon account value:
| Account Value | Services |
|---|---|
| $100,000 | Access to a financial advisor, an automatically managed portfolio with reviews upon request, and Empower’s digital tools |
| $250,000+ | All of the above and two dedicated financial advisors, specialists in real estate, stock options, and other asset classes, customized portfolios with regular reviews, and tax optimization through individual stock investments |
| $1,000,000+ | All of the above and priority access to Empower’s investment committee, support from retirement and wealth planning specialists, and access to private equity investments |
Cash management
Users need to open a separate brokerage account to receive cash management services at Vanguard.
Empower Cash is a fee-free high-yield savings account with no minimum investment amount. Money is placed in several participating member banks and FDIC insured up to $5 million, surpassing the standard $250,000 offered by a single bank. Clients can access bill pay, direct deposit, and unlimited deposits and withdrawals.
Empower vs. Vanguard PAS: Portfolio Construction
All Vanguard Personal Advisor Services portfolios follow the tenets of Vanguard investing which includes using low-cost, passively-managed index funds. Portfolios are broadly diversified with the ratio of stock funds to fixed income determined by the client’s risk tolerance, goals, and time frame. Vanguard believes in allocating funds to niche market segments such as mid- and small-capitalization, growth, and value companies in addition to the typical market weight diversified U.S. and global stock and bond funds. A stand-out feature at Vanguard Personal Advisor Services is the portfolio construction, which doesn’t fall into a predetermined template and might add actively managed ETFs, mutual funds, and private equity in addition to the passively managed funds.
Empower has a unique portfolio construction method based on 19 personal factors including time horizon, goals, net worth, income, risk tolerance, retirement age, growth rate needed, and more. The Personal Strategy portfolio includes six asset classes, including the typical U.S. and international stocks and bonds as well as alternatives, and cash. Portfolios follow the time-tested modern portfolio theory (MPT) asset allocation model with a unique equal sector weighting for the equity portion of the investments.
The U.S. equity portion of portfolios includes a diversified mix of 80 to 120 individual stocks. Individual stocks, in lieu of ETFs, allows Empower to apply its tactical weighting strategy and better implement tax optimization. Like Vanguard, Empower includes size and strategy allocations that tap mid- and small-capitalization along with value and growth companies.
| Vanguard | Empower | |
|---|---|---|
| Individual Stocks | No | Yes |
| Mutual Funds | Yes | No |
| Fixed Income | Funds only | Funds only |
| REITs | Yes | Yes |
| Socially Responsible or ESG Options | Yes | Yes |
| ETFs | Yes | Yes |
| Non-Proprietary ETFs | No—in most cases Vanguard ETFs and mutual funds are used | Yes |
| Forex | No | No |
| Crypto | No | No |
Portfolio customization
Vanguard is known for its broad customization options, implemented in collaboration with your financial advisor. You and your advisor can use the available Vanguard products to customize any aspect of the portfolio including adding environmental, social, and governance (ESG) investing and a modicum of company stock or individual securities. These additional investments are allocated on a case-by-case basis. The private equity options at Vanguard are offered in partnership with private equity provider HarbourVest. Investors who want extensive customization, including actively managed funds, might gravitate towards Vanguard.
In collaboration with your financial advisor, Empower portfolios are customized according to your financial situation and goals. After calculating the rate of return needed to reach your goals, and reviewing all of your investments, Empower designs a customized asset allocation. Socially responsible investing (SRI) is available for those that desire to invest with their values as well. At Empower, private equity is only available to those with $1 million or more.
In collaboration with a financial advisor both Vanguard and Empower offer customized portfolios, although the assets and strategies are unique to each investment manager.
Portfolio management
Vanguard Personal Advisor Services manages your portfolio like most other robo-advisors and reviews the asset allocation quarterly. Assets are rebalanced back to your preferred asset mix when they deviate 5% from the target range. Although external accounts might be linked, they don’t influence rebalancing and are only considered for goal planning.
At Empower, rebalancing occurs when your financial situation changes or assets drift too far from the predetermined asset allocation. Changes in asset mix might also occur when the Empower investment committee changes course due to a shift in the economy.
At both Vanguard and Empower, portfolio adjustments can be implemented in conjunction with your financial advisor.
Tax-advantaged investing
Vanguard Personal Advisor Services strives to implement tax-efficient strategies when managing your portfolio. These might include adding municipal bond funds to a taxable account or strategically allocating assets among taxable and retirement accounts. Tax-loss harvesting is now offered with this service as well.
Empower’s tax minimization strategies are more comprehensive than those at Vanguard. Tax-loss harvesting is offered as are other tax optimization strategies. Empower avoids mutual funds and claims that they are tax-inefficient. Empower populates the U.S. equity portion of the portfolio with individual stocks to improve tax-loss harvesting opportunities. Empower also uses asset location strategies to minimize taxes.
When it comes to tax minimization strategies, Empower is a step ahead of Vanguard Personal Advisor Services.
| Key Portfolio Management Features | ||
|---|---|---|
| Vanguard PAS | Empower | |
| Automatic Rebalancing | When portfolio drifts 5% from target | Yes—as needed |
| Reporting Features | Online dashboard, annual checkups, monthly statements, annual tax reporting | Online dashboard with scores of budgeting, saving, investing reports, monthly statements, annual tax reporting |
| Tax-Loss Harvesting | Yes | Yes |
| External Account Syncing/Consolidation | Yes—used for goal planning, not portfolio management or rebalancing | Yes—including investment, bank, debt, and custom. Yields comprehensive financial reports |
Empower vs. Vanguard PAS: Security
Security protocols are up-to-date at both PAS and Vanguard.
Vanguard
- Encryption
- Secure Sockets Layer (SSL) validation
- Username and password protection
- Account activity alerts
- Security questions for user authentication
- Masking digits to protect bank account information
- A member of the Securities Investor Protection Corporation (SIPC) carrying excess insurance
Empower
- Includes two-factor authentication
- Firewalls and perimeter security for data centers in compliance with international standards
- Military-grade data encryption
- Continuous account monitoring with emails for all activity
- A member of the (SIPC)
Investors can be confident that their identity and data receive the highest levels of security protection at both Vanguard and Empower.
Empower vs. Vanguard PAS: User Experience
Desktop
The Vanguard Personal Advisor Services home page is informative and answers most questions regarding their platform. The fee calculator shows how much you’ll pay in management fees at any account value. The account dashboard and reporting are adequate but lack the expansive free financial management tools available at Empower. In general, the Vanguard website is due for a face-lift.
Empower’s website is among the easiest to navigate, with all major categories listed on the menu bar including banking, investing, planning, and wealth management. The wealth management vertical takes you to the fee-based advisory service with easy access to your financial advisor and the educational blog. The main dashboard is your financial roadmap to all of your finances, those managed by Empower and those held outside of the platform. Empower is well-regarded for its free financial tools which offer retirement planning, investment checkup, fee analyzer, spending, debt, and investment account management and reports.
Mobile app
Vanguard has one investment app and does not offer a dedicated mobile app for Personal Advisor Services. Users can view their investments and basic account information on the app. While the iOS app is highly regarded, the Android app is not well-liked by most reviewers.
Both Empower’s iOS and Android apps are well-regarded and include the majority of features found on the desktop version. There are a few of the typical issues mentioned including occasional difficulty syncing accounts. In general, the mobile app is equal to or better than most financial apps.
Those who value superior user experience, on desktop and mobile will gravitate towards Empower. They have the best platform accessibility and their free tools are superb and available to account and non-account holders. Moreover, the Empower app is superior to Vanguard’s mobile offering.
Empower vs. Vanguard PAS: Customer Service
This section compares the accessibility of and the mediums through which customer service is available, as well as whether customers can speak with a financial advisor.
| Vanguard PAS | Empower | |
|---|---|---|
| Phone contact available | Yes—Monday through Friday, 8 a.m. to 8 p.m. | Yes—Monday through Friday, business hours |
| Pre-funding phone consultation with certified advisor | Yes | Yes |
| Online chat available | Yes—video chat available | By appointment, with your financial advisor |
| Website FAQ section | Yes | Yes |
Empower vs. Vanguard PAS: Fees
The fee structure at Vanguard is significantly lower than at Empower, although both firms use low-fee investment funds and don’t levy transaction fees or commissions. Both platforms charge portfolio management fees based on the assets under management (AUM).
Vanguard is among our lowest-priced hybrid digital robo-advisor plus human financial advisor platform. Vanguard charges 0.30% of AUM, and it’s important to note that their financial advisors aren’t paid on commission. This eliminates conflicts of interest. Only SigFig offers lower management fees for a hybrid robo-advisor experience with access to human advisors. Their service for individual investors charges 0.25%. Another option is Schwab’s Intelligent Portfolios Premium which charges a low subscription price of $30 per month, plus a one-time $300 setup fee. Vanguard Personal Advisor fees also go down further after managed assets go beyond $5,000,000, with the service costing 0.20% AUM between $5 and $10 million, 0.10% AUM between $10 and $25 million, and 0.05% above $25 million.
Empower also charges a declining fee schedule based on assets under management. It starts at 0.89% for the first million and works down in steps to 0.49% for accounts over $10 million. The financial advisors are compensated with a base salary and incentives based on actions that their customers take.
| Account Value | Empower Management Fee | Vanguard Personal Advisor Services Management Fee |
|---|---|---|
| $100,000 to $1 million | 0.89% | 0.30% |
| First $3 million | 0.79% | 0.30% |
| $3 million – $5 million | 0.69% | 0.30% |
| $5 million – $10 million | 0.59% | 0.20% |
| Over $10 million | 0.49% | 0.10% |
| Over $25 million | 0.49% | 0.05% |
The management fees at Vanguard Personal Advisor Services are significantly lower than those at Empower.
| Category | Vanguard PAS | Empower |
|---|---|---|
| Management fees for $5,000 account | N/A | N/A |
| Management fees for $25,000 account | N/A | N/A |
| Management fees for $100,000 account | $300 per year | $890 per year |
| Termination fees | N/A | Unknown |
| Expense ratios | Low, based on the fund | Usually low, but with some variation |
| Mutual funds | Low, based on the fund | N/A |
Final Verdict
Although both Vanguard Personal Advisor Services and Empower target higher net-worth investors, it is difficult to compare the two directly. Empower incorporates a number of personal factors when constructing your investment mix. It also uses sector weighting for the equity portion of the portfolio and also employs both tactical and dynamic asset allocation shifts. For those with taxable accounts, both offer tax-loss harvesting. The free portfolio management, retirement planning, and other tools are outstanding. The biggest drawbacks of Empower are the fees. These are lower than most traditional financial planners and investment advisors but are higher than many hybrid robo-advisors, including Vanguard Personal Advisor Services’ fees.
Vanguard PAS charges much less in fees than Empower and offers access to a financial advisor plus digital wealth manager for significantly lower costs and investment minimums than at Empower. If you have between $50,000 and $99,999, then Vanguard is the only choice. Those seeking a wider range of funds, including actively managed ones, will find them at Vanguard as well. Investors can also access private equity at Vanguard Personal Advisor Services at a lower account value compared to Empower, which ultimately makes it our pick.
Frequently Asked Questions
What services do Empower and Vanguard offer?
Empower and Vanguard both offer Personal Advisor Services. The services offered by Vanguard PAS vary based on account value and Empower has free budgeting, saving, and investment management tools available for a range of financial management activities.
How do Empower and Vanguard Personal Advisor Services work?
Empower offers free financial and investment management software including retirement planning tools. The wealth management advisors charge a fee to manage your assets.
Who should use Empower vs. Vanguard Personal Advisor Services?
Both Vanguard Personal Advisor Services and Empower target higher net-worth investors. However, if you have between $50,000 and $99,999, then Vanguard is the only option. Empower has higher fees, but may offer access to a wider array of investment options and strategies.
Methodology
Our mission at Investopedia is to provide investors with reviews and ratings of robo-advisors that are comprehensive and unbiased. Our team of researchers and expert writers, led by Michael Sacchitello, spent months evaluating all aspects of a robo-advisor’s platform, including the account setup process, goal planning tools, account service options, portfolio construction offerings, portfolio management, mobile and desktop user experience, educational content, fees, and security. As part of this evaluation, we extract critical data points that are weighted by our quantitative model that produces a powerful star-scoring system.
With the individual investor in mind, we’ve designed a comprehensive ranking methodology to find the best overall robo-advisors and the best robo-advisors across nine key categories. Each advisor is then scored across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.
Methodology
Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of robo-advisors. Our 2019 reviews are the result of six months of evaluating all aspects of 32 robo-advisor platforms, including the user experience, goal setting capabilities, portfolio contents, costs and fees, security, mobile experience, and customer service. We collected over 300 data points that weighed into our scoring system.
Every robo-advisor we reviewed was asked to fill out a 50-point survey about their platform that we used in our evaluation. Many of the robo-advisors also provided us with in-person demonstrations of their platforms.
Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking robo-advisor platforms for investors at all levels. Click here to read our full methodology.