Vanguard leads in new ranking of robo firms

In the latest edition of its Robo Report, which ranks robo advisors based on a two-year assessment period, Backend Benchmarking gave the top spot to the low-cost king Vanguard’s investment platform.

According to the study, Vanguard’s platform delivered a two-year annualized return of 9.11% with management fees of only 0.3%, reported ThinkAdvisor. And while the platform required an account minimum of US$50,000, it also offered professional management, rebalancing, live advisors, and full-service financial planning. With all those offerings, the Vanguard robo managed to amass three times the AUM of the runner-up Betterment.

However, the Vanguard platform “lagged in transparency and conflicts of interests” category because it offered only proprietary funds and didn’t make the performance and construction of its model portfolios available online publicly. Backend Benchmarking also took points for its online experience, which they said lacked “innovative digital planning and other tools” that were available from other winning providers.

“User experience and technology” were two of the features that earned Betterment second place in the robo rankings. The platform has no minimum account size for digital-only customers, but requires a US$100,000 minimum for its premium service. Digital-only users are charged a 0.25% management fee; premium users have to pay 0.4%, though that comes with unlimited chats and calls with advisors. Over the two-year comparison period, Betterment achieved an annualized return of 8.61%.

“Although Betterment’s performance has lagged behind the group over the long term, their breadth of services and features propelled them to the second overall score in our ranking,” the report said.

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