Vanguard vs. Etrade: what’s the difference?
Compare E*TRADE and Vanguard’s contrasting financial advisory offerings, investment philosophies, fee structures, breadth of investment options, platform features, and customer support.
Summary
Vanguard emphasizes low-cost, passive investing, while E*TRADE, a subsidiary of Morgan Stanley, focuses on active management and personalized financial guidance.
Vanguard's fees are generally lower and more transparent, while E*TRADE charges a percentage of assets under management.
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Etrade vs. Vanguard: what are the differences?
When comparing E*TRADE and Vanguard, it’s evident that these are two full-service brokerages that cater to distinct investor needs.
E*TRADE empowers active traders with its robust platform, real-time data, and advanced tools. Conversely, Vanguard champions long-term investors with its focus on low-cost index funds and ETFs.
E*TRADE is known for its powerful trading platform, and it offers a range of financial advisory services, including robo-advisors and access to a network of independent advisors.
Vanguard advocates a buy-and-hold philosophy, offering diversified funds for long-term wealth accumulation. Additionally, Vanguard financial advisors are considered some of the best in the industry.
What fees can I expect from Vanguard & Etrade?
When seeking financial guidance with firms like Vanguard and E*TRADE, you can expect various fees, including trading fees, inactivity fees, and non-trading fees.
Advisor fees also apply for those seeking professional guidance, varying depending on the chosen service and assets managed. It’s worth noting that robo-advisors typically have lower fees than human advisors.
Here’s how Vanguard and E*TRADE fees compare:
Vanguard fees
Vanguard advisor fees: 0.15% for Digital Advisor, 0.30% for Personal Advisor Services.
Account fees: Most accounts charge a $25 annual fee, which is waived with $5 million in assets or e-delivery.
Investment fees: Low expense ratios, averaging 0.08%, and a $20 fee for buying/selling Vanguard ETFs (many are commission-free).
Additional fees: Wire transfer and potential account closure fees.
E*TRADE fees
E*TRADE advisor fees: 0.30% for Core Portfolios, 0.30% to 0.90% for Personalized Investing, varies for their Advisor Network.
Trading fees: Stocks, ETFs, and options are commission-free. Options contracts are $0.65 or $0.50 for active traders. Fees apply for futures, bonds, and OTC stocks.
Non-trading fees: $50 annual inactivity fee, wire transfer fees, potential account closure fee, and margin interest.
Is Vanguard or Etrade better?
Vanguard and E*TRADE are both well-established entities in the investment world. They offer a range of services to help individuals achieve their financial goals.
While their core offerings are similar, they cater to different types of investors due to their distinct approaches and strengths.
Pros of Vanguard
Low-cost index funds and ETFs: Vanguard is renowned for its vast selection of low-cost index funds and ETFs, making it ideal for long-term, passive investors.
Retirement accounts and advice: Vanguard provides a comprehensive suite of retirement accounts and access to financial advisors for those seeking personalized guidance.
Strong reputation and stability: With a long history and focus on investor interests, Vanguard financial advisors have a solid reputation for trust and stability.
Cons of Vanguard
Limited active trading tools: Vanguard's platform may not be the best fit for active traders who require advanced charting and analysis tools.
High minimum investment requirements for some funds: Certain Vanguard funds have high minimum investment requirements, which may be a barrier for some investors.
Basic trading platform: The trading platform is somewhat basic, and limited access to research or data is available.
Pros of E*TRADE
Robust trading platform and tools: E*TRADE boasts a powerful platform with advanced charting, research, and tools ideal for active traders.
Commission-free stock, ETF, and options trading: E*TRADE offers commission-free trading on a wide range of securities, appealing to frequent traders.
Extensive educational resources: E*TRADE provides a wealth of educational resources, including webinars, articles, and tutorials, beneficial for investors of all levels.
Sought-after by industry professionals: E*TRADE careers are sought after by various professionals within the industry.
Cons of E*TRADE
High margin rates: E*TRADE's fees and margin rates can be higher than those of its competitors, which may impact active traders relying on leverage.
Limited access to fractional shares: E*TRADE does not offer fractional share trading, potentially limiting investment opportunities for those with smaller budgets.
Complex fee structure: E*TRADE's fee structure can be complex and confusing, with various fees for different services and account types.
Vanguard or Etrade: which should I choose?
The E*TRADE vs. Vanguard debate hinges on your individual needs and investment style. Consider your need for financial advice, trading frequency, investment preferences, and comfort level with technology.
In addition to considering the fees, investment strategy, and various pros and cons, here are some other questions you should ask yourself when choosing between them.
How do Vanguard and Etrade remain competitive and adapt to changing market conditions?
Vanguard financial services remains competitive through its low-cost leadership, expanding investment options, enhancing its digital platform, and offering financial advice.
E*TRADE competes with commission-free trading, advanced tools, educational resources, and diversified services beyond trading.
Which platform provides better customer service and support?
While both Vanguard and E*TRADE offer customer service and support, Vanguard's customer service tends to receive higher ratings for overall customer satisfaction. Their representatives are often praised for their knowledge and helpfulness.
E*TRADE customer service is offered through phone, email, and chat, but user experiences can be mixed. Some customers report long wait times and less-than-ideal interactions with representatives.
Can I access my Vanguard or Etrade accounts through their websites and mobile apps?
Both Vanguard and E*TRADE offers easy access to your accounts through their user-friendly websites and mobile apps.
You can view balances, track performance, place trades, and access resources from anywhere.
What are Vanguard & Etrade’s specific investment strategies?
Both firms use unique investment strategies to benefit their clients.
Here are what the Vanguard and E*Trade strategy options look like:
Vanguard investment strategies
The Vanguard strategy focuses on low-cost, passive investing via index funds and ETFs, aiming to match market performance over the long term.
To maximize returns, Vanguard emphasizes diversification, long-term holding, and cost-efficiency.
Though traditionally passive, Vanguard now offers actively managed funds to cater to a wider audience.
Etrade investment strategies
On the other hand, the E*TRADE strategy assists traders with commission-free trades, extensive research tools, and a broad selection of investments for diversified portfolios.
They focus on providing access and flexibility for self-directed investors to implement various strategies and capitalize on market opportunities.
Find the right financial advisor
While both E*TRADE and Vanguard offer extensive advisory services, E*TRADE is a versatile online brokerage platform tailored for active traders. In contrast, Vanguard is a stalwart for long-term, passive investors seeking low-cost options.
Let Unbiased match you with an SEC-regulated financial advisor to provide you with tailored financial guidance that best suits your needs.
Writers
Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.