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Investing strategies

Understanding automated investment management performance

Understand robo-advisor performance with Vanguard. Learn how these automated services work and evaluate their effectiveness for managing your investments.
3 minute read   •   July 07, 2025
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Investing strategies
Choosing advice
Financial management
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Five-year returns from most automated investment managers range from 2% to 5% per year.1 The performance of these services can vary based on asset allocation, market conditions, and other factors. With so many options available, how do you decide which automated investment advice services offers the most value?

When assessing value, start by looking beyond performance and focusing on the parts of the service you can control.

Low costs

One of the perks of using an automated advisor is access to convenient, personalized advice at a low cost, especially when compared with human financial advisors. Among 20 leading digital investment advice providers Morningstar reviewed, the median yearly advisory fee was 0.25% of assets.2 And while that's cheaper than most human advisors, management fees and commissions can eat into your total returns and decrease the value of your advisory service. High minimum investment requirements can also make some automated investment management inaccessible, so pay attention to the required initial investment.

Personalization

A key component of advice is personalization. Does the service understand your current financial situation and goals? Generally, digital advisors begin by asking about your financial profile (like income and spending), what you're looking to achieve, and how much risk you're willing to take. Your answers to these questions allow the service to personalize your portfolio management and help uncover and refine your financial goals and objectives.

An automated advisor's investment options and tools can affect the level of personalization and value it's able to offer. For instance, your financial goals and attitudes toward risk may change as you move through your financial journey. Does the automated advice service offer diversified investment portfolios catered toward different risk tolerances, investment preferences, and tax brackets?

You may also benefit from personalized tools that can add value to your portfolio, such as an account aggregator to paint a more complete picture of your finances, or an emergency savings tool to help calculate how much money you should save for rainy days.

Underlying philosophy and values

Automated advisors provide financial advice using computer algorithms. Algorithms are step-by-step programs that follow predetermined investment philosophies and rules to recommend investments. So when you're evaluating an automated advisor, you're also considering the company's investing philosophy and commitment to clients and how that's reflected in the service it provides.

By considering costs, personalization, and underlying philosophies, you can weigh the value of automated advisors beyond performance and help to find the service that's best for you.

Learn about the value Vanguard Digital Advisor® offers.

Find out more

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1Condor Capital Wealth Management, 2023. The Robo Report.

2Morningstar, 2023. Robo-Advisor Report. 

All investing is subject to risk, including the possible loss of the money you invest. Diversification does ensure a profit or protect against a loss.

Vanguard Digital Advisor's services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor.

The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochure here for an overview. 

VAI is a subsidiary of The Vanguard Group, Inc., and an affiliate of Vanguard Marketing Corporation. Neither VAI nor its affiliates guarantee profits or protection from losses.