Vanguard and Edward Jones are both household names in the brokerage world. It’s hard to discuss finances without hearing these names. Although they are both brokerages that offer similar services, they do have some differences.
What’s the main difference between Vanguard and Edward Jones? Vanguard is best known for its flagship mutual funds and ETFs with extremely low fees. They offer wealth management as well as self-managed accounts. Edward Jones is best known for its financial advisory services and charges higher fees for there funds and wealth management services.
Often when people sign up for Vanguard, they are signing up for their low fee mutual funds that focus on Index Funds. They offer lower rates than any other funds including Edward Jones.
When people sign up for Edward Jones, they do so because they want someone to manage their money for them and with a hands-on approach. Often people that want to set and forget their wealth, will find solace in knowing that an Edward Jones’ Financial Advisor is at the helm. So, let’s dig into the major differences between these two popular firms.
Edward Jones vs Vanguard
When it comes to history, Edward Jones takes the lead. It started out in 1922 and has grown into one of the largest full services brokerages today. There is a degree of trust when people hear the name but that familiarity doesn’t necessarily match up to their customer satisfaction as we’ll see later.
Vanguard was established in 1975 with the vision of helping investors keep more of their own money in their own pockets. They have proven this will the lowest fees in industry and boast that they beat the industry average by up to 80%. We’ll check out the numbers when we compare funds side by side.
All of Vanguard’s services are available online so investors can get started on their own from the comfort of the kitchen table.
Edward Jones’ services on the other hand require first talking to a financial advisor for almost all of their services. You need to go on their website and locate a financial advisor near you to contact and set an appointment.
What Services Do They Provide?
|Individual Brokerage Accounts||Yes||Yes|
|Traditional Individual Retirement Account||Yes||Yes|
|Roth Individual Retirement Account||Yes||Yes|
|Wealth Management Services||Yes||Yes|
|529 Education Savings Accounts||Yes||Yes|
When seeing the chart, it would appear that Vanguard and Edward Jones are very similar. They do offer almost identical services but how they go about these services is what separates them.
Vanguard is known for its low fees and signature funds with low rates. Anyone can create their own account and start adding to funds as long as they meet the deposit minimums.
Edward Jones allows no self-directed accounts. In fact, I couldn’t even open an account on my own from their website. Everywhere I turn, they direct me to calling one of their 11,000 offices to speak to a financial advisor.
Although Edward Jones offers more services, Vanguard does so with much more flexibility and you can choose to go it alone by opening an account online. For those that need an in-person consultation, Edward Jones may be the winner. For those that are little savvier on a computer, Vanguard may be the winner
Since Edward Jones doesn’t offer self-directed investing, there is no point in comparing it against Vanguard as far as trade commissions and fees go. Let’s compare the two based on their similar services and I’ll throw in some additional fees that may be unique to each company.
Vanguard offers two advisory services that can help you manage your wealth. For accounts less than $50,000, they offer a Digital Advisory Service. In order to sign up for this service, you must have at least $3,000 in the account that you would like help managing. This service is very similar to other Robo-Advisors that you may have heard about such as Betterment and Acorns.
For accounts that have at least $50,000, Vanguard offers its Personal Advisory Service which uses one of their financial planners to develop an investment plan based on your goals.
All financial advisors are salary-based rather than commission-based so you know they are offering you recommendations that are best for your goals.
Let’s compare the fees:
|Digital Advisory Service||Personal Advisory Service|
|$3,000 – $50,000||About 0.15%||Not available|
|Up to $5 million||About 0.15%||0.30%|
|$5 million – $10 million||About 0.15%||0.20%|
|$10 million – $25 million||About 0.15%||0.10%|
|Greater than $25 million||About 0.15%||0.05%|
Both of these services are far below the industry standard which can be greater than 1.00%.
Edward Jones’ Services
Edward Jones has 2 signature services for wealth management. How much is Edward Jones’ Management fees? That depends on which one you choose and I’ll go over that below.
Guided Solutions Accounts are hands-on so you have a say in the buying and selling of assets. There are two types of Guided Solutions Accounts
- Guided Solutions Flex Account
- Guided Solutions Fund Account
The Guided Solutions Flex Account is designed for portfolios that consist of a mix of any or all of the following: stocks, bonds, ETFs, Mutual Funds, and CDs.
The Guided Solutions Fund Account builds a portfolio with Mutual Funds and ETFs and uses automated re-balancing to ensure the correct risk tolerance for the investor.
Advisory Solutions Models allow investors to be more hands-off and allow a Financial Advisor or Team of Advisors to manage your portfolio. There are two types:
- The Advisory Solutions Fund Model
- The Advisory Solutions UMA Model
Advisory Solutions Fund Models allow investors to give the reigns of their portfolio to their Financial Advisor rather than be involved in the day to day management. For these types of services, an additional fee will be added for that advisory expertise known as a Portfolio Strategy Fee.
The Advisory Solutions UMA (Unified Management Account) Models allow investors to give the reigns of their portfolio to a team of advisors. The barrier to entry for this type of account is $500,000.
Let’s compare Edward Jones’ Services and compare their Management Fees.
|Guided Solutions Flex Account||Guided Solutions Fund Account||Advisory Solutions Fund Models||Advisory Solutions UMA Models|
|Hands on / Hands off||Hands-on||Hands-on||Hands-off||Hands-off|
|Program Fee||Range: 1.35% to 0.60%||Range: 1.35% to 0.60%||Range: 1.35% to 0.50%||Range: 1.35% to 0.50%|
|Portfolio Strategy Fee||Range 0.09% to 0.05%||Range 0.09% to 0.05%||Range: 0.19% to 0.09%||Range: 0.19% to 0.09%|
Vanguard wins as far as fees go since their highest fee is 0.30% whereas Edward Jones offers their lowest rate of 0.50% to only their most elite customers. Edward Jones however has more flexibility in plans to choose from.
Do these rates even make that much of a difference? After all, what’s 1% when you’re making money? Well, 1% turns out to be a lot of money. Let’s illustrate!
Mara Jade has inherited $50,000 in cash and wants to invest it. She’s heard about Vanguard and Edward Jones but doesn’t know which can provide her better service. She doesn’t really trust advisors fully and decides she wants to be involved. Let’s see how these fees really affect her investment’s returns:
|Edward Jones Guided Flex Account (1.35% Annual Fee)||Vanguard’s Digital Advisory Service (0.10% Annual Fee)|
|After 5 Years 7% Compounded||$65,813.88||$69,800.50|
|After 10 Years 7% Compounded||$86.629.34||$97,442.19|
|After 25 Years 7% Compounded||$197,563.88||$265,101.77|
Even after 5 years, Vanguard would have gained Mara almost $4,000 and after 25 years, it would have gained her more than $67,000 just because of that extra 1.25% fee. Hopefully that puts fees into perspective!
Winner: Vanguard (The lower fees are just too good to ignore.)
Both firms offer similar choices when it comes to transferring money in and out of their accounts.
Edward Jones offers the following ways to transfer money:
- Direct Deposit – Straight from your employer
- Transfer to and from your bank account
- Systematic deposits and withdrawals to Dollar-Cost Average – Done through your advisor
- Mobile Check Deposit
Vanguard also has the ability to transfer funds by calling for assistance. They also offer the following ways to transfer money:
- Send a check
- Mobile Check Deposit
- Direct Deposit – Straight from your employer
- Transfer to and from your bank account
- Setup bill-pay from your bank to deposit money each month
What about transferring to or from another brokerage?
A lot of people want to know how much it costs to transfer their accounts in case they decide to move their assets elsewhere.
Edward Jones charges $95 to transfer out to another brokerage. To transfer to Edward Jones, you must speak to a financial advisor who will walk you through all of the processes.
Vanguard has no fee to transfer your account to or from Vanguard. To transfer to Vanguard, you can fill out a form online and provide them with required documentation such as a statement from the original brokerage as well as some personal information to validate the transaction and the process can take up to 6 weeks. Often the transfer can occur sooner.
Winner: Vanguard (only because of the cheaper and simpler account transfer options)
Ease of Use
I feel like this is completely up to you as the customer. If you feel it is easier to manage your account from home on your computer, Vanguard is the right choice.
If you don’t want to deal with your account directly and you want someone else to manage everything that occurs in your account, Edward Jones is the better choice.
Ultimately, this is completely based on your comfort in dealing with your own investments.
Trust and Customer Satisfaction
Both Edward Jones and Vanguard are registered with the SIPC and FINRA which shows that they are properly regulated and insured to better protect your money.
When we look at the BBB, we do find quite a few complaints filed for each company but both maintain an A rating. Neither is actually accredited by the BBB but it appears they communicate to resolve issues pretty quickly. It should be noted that most people don’t go on BBB.org to rave about how great a company is so I think its a better metric to see that they resolve issues timely.
After stacking these two great investment firms together we can see where each has its strengths.
Edward Jones thrives on its accessibility to foot traffic. There are over 14,000 offices all over the United States that you can walk into and talk to one of their financial advisors. You can develop a tailored plan and let them manage it completely or keep some of the control and be involved in all decisions regarding your portfolio.
Vanguard thrives from its incredibly low-cost services and funds that are unbeatable by any of its competition. They offer flexibility by offering financial advisors or letting you avoid the fees and manage your own finances from the comfort of your home through their online website.
I personally would never invest in Edward Jones because of the fees and the simple fact that I like to have full control over my own investments but I can see how it would be a great service for those that aren’t comfortable managing their own portfolio or just simply choose not to.
I hope you enjoyed this comparison of Edward Jones vs Vanguard. Leave a comment about which seems more appealing to you and why!