USAA vs Vanguard

Vanguard or USAA Investments - which is better in 2020? Compare IRA/Roth accounts, online investing fees, stock brokerage mutual fund rates, and differences.

Charles Schwab have acquired USAA Investments service and it will be terminated. Visit Charles Schwab vs Competitors instead.

USAA versus Vanguard Pricing

Broker Fees Stock/ETF
Mutual Fund
Annual IRA
USAA $0 $45 $0.75 per contract $0 $0
Vanguard $0 $20 $1.00 per contract $20* $20*
TD Ameritrade $0 $49.99 $0.65 per contract $0 $0


Broker Review Cost Investment Products Trading Tools Customer Service Research Overall Rating
TD Ameritrade

Vanguard vs USAA Overview

Regardless of your level of experience, if you’ve spent any time researching investment accounts or insurance providers, you’ve likely come across a wealth of information about USAA and Vanguard. Both companies earned reputations for providing exceptional service to customers and both caused major shifts in their respective industries. USAA, a company that bills itself as being founded on military values, dominates the insurance space with affordable insurance and highly responsive customer service. Primarily serving customers who deploy in defense of our freedoms, USAA’s full product line and brokerage services are made available almost exclusively through telephone support, a well-designed phone application, and a user friendly website.

Vanguard’s reputation is hard to ignore. Founded by Jack Bogle in 1975, Vanguard is the second largest provider of Exchange Traded Funds (ETFs) and the largest mutual fund provider in the world. What drives their success? Vanguard created the passive investing business model. Its founder argued that there was little evidence showing that technical analysis or stock picking produced better returns than what was delivered by investing in the entire S&P 500. Bogle argued that high management fees and commissions meant that actively managed funds offset any limited advantage of expert stock pickers and did little more than generate avoidable fees.

An established reputation for putting the investor before all else pairs well with Vanguard’s extensive product line. Whether trying to maximize tax efficiency, low fees, or broad market exposure, Vanguard clients are afforded tremendous latitude and support when working to hit their financial goals. There is a reason why Vanguard is experiencing enormous inflows of new capital

If you were to open an account with only one of these two giants, which one does more for your money? Which offers better brokerage services and client support for retail investors - Vanguard or USAA Investments? Let's find out.

USAA vs Vanguard Fees and Cost


USAA is by no means a discount brokerage, as USAA blends several low fee index fund offerings with many high fee, actively managed funds. Unlike Vanguard, USAA’s fee structure charges all clients the same prices regardless of their asset levels. Stocks and options may be purchased or sold for $0 per transaction. Broker assisted trades will cost clients $50.00 and newly issued U.S. savings bonds will cost $45.00 to trade. While many of these fees are competitive, the expenses associated with bond trading are far above industry average. Not only can government bonds be purchased online free of charge from the Treasury Department, many online brokerages offer access to free bond purchases. If you foresee making bonds a major portion of your portfolio, USAA is not the brokerage for you.

USAA does offer proprietary, house branded mutual funds. These funds are far more expensive than their Vanguard equivalents and several feature high sales fees and ongoing expenses. These funds’ history of performance is not sufficiently compelling to justify their fees. USAA needs to modernize their fund offerings and overhaul their fees if it is to stay competitive in an environment that is increasingly emphasizing reduced fee investment plans.

Not everything about the USAA brokerage platform is dated or uncompetitive. USAA clients can trade the entire Fidelity fund portfolio without any added commissions or fees. This specifically includes many of the low fee Fidelity index funds, like FUSVX (S&P 500). The addition of the Fidelity family of funds makes USAA far more competitive and for those strongly favoring keeping all their financial services under one roof, these funds offer an exceptional reason to keep investing with USAA.

USAA vs Vanguard


Investors focusing on fee reduction and avoidance should consider Vanguard. The broker provides retail investors with competitive fee schedule and forced other massive brokers, like Schwab, to evolve to remain competitive. The resulting industry shift is saving retail investors billions of dollars in avoided fees and other expenses. As Vanguard’s fees continue to decrease, actively managed funds are seeing record setting cash outflows. What makes Vanguard’s fee schedule so appealing to so many?

First, their entire platform assumes that most clients will limit their transactions to the purchase and sale of the ultra-low fee offerings found in the Vanguard family of mutual funds and ETFs. These products have expense ratios that routinely fall below 0.1% and can be purchased or sold without any transaction fee. Most of Vanguard’s house branded mutual and index funds require minimum investments of $3,000 and will automatically upgrade to their “Admiral” class of fund once a position’s balance exceeds $10,000. Admiral funds have expense ratios that are like the Vanguard ETFs and the typical Vanguard fund’s expense ratio is 83% lower than the industry average. No Vanguard fund charges front loads, back loads, or sales commissions.

Investors looking to supplement a balanced index fund portfolio with individual stocks, bonds, and options can do it with Vanguard. Investors pay $0 to buy and sell stock.

USAA vs Vanguard Advisory Services

Regardless of whether you’re a new investor just starting out or an established professional with complicated tax and estate planning considerations, the value of a trusted and competent advisor can hardly be denied. Between USAA and Vanguard, who offers better advisory services?


USAA’s advisory services need to be considered as part of the brokerage and overall client benefits program. Brokerage advice is provided almost entirely through the USAA Wealth Management network and through their own in house advisory service. If you are looking for USAA to actively manage your investments, you will be paying a fee that ranges between 0.9% and 1.1% of your total account balance for the service. That fee is in addition to fund fees and can consume a huge portion of your expected returns. While the fee is in line with the offerings of more expensive traditional wealth managers, lower fee brokerages like Vanguard and Schwab offer more attractive options.

USAA is responding to the demand for computer driven investment advice by offering a free online retirement planning calculator and a number of financial milestone trackers. Members can set financial goals, tie multiple checking, brokerage, and savings accounts into their USAA monitored portfolio, and watch as they progress towards their own objectives. While this helps savers track their progress towards a goal, these programs do not give meaningful fund allocation advice, analyze position tax efficiency, or do other basic functions.

The additions of the online retirement planning calculator and financial milestone tracker are welcome, but more is needed in terms of financial advising to make USAA competitive. Brokerages like Vanguard and Schwab are offering better services for a fraction of the fee. An investor paying for the USAA advisory service may have upwards of 2.2% of their total assets consumed by fees, while an investor using Schwab’s totally automated advisory service may be paying a net expense ratio of less than 0.05%. USAA’s inability to offer a meaningful alternative to the roboadvisory services needs to be corrected if they are to stay competitive over the long haul.


Vanguard offers clients far better advisory services than USAA. Vanguard offers new investors enormously powerful resources that will help research both mutual funds and ETFs and screen investments based on a number of user defined criteria. Once users invest in funds, they can use Vanguard’s Portfolio Analytics tool to assess the portfolio’s diversification across sectors, countries, and investment types. The tool will also make recommendations to improve tax efficiency.

For clients looking to have more support, Vanguard offers a roboadvisory service called the Personal Advisor Service. Charging just 0.3% of your portfolio’s value, the computer driven Personal Advisor Service competes with services like Wealthfront. Because the service uses Vanguard’s lowest fee ETFs, investors are likely to see a net expense ratio for their entire managed portfolio that is below 0.5%. This is an outstanding deal that will allow a typical investor to set up a monthly deposit and let Vanguard do the investing and rebalancing work. For those seeking a totally hands-off experience, this is something that should be considered. The only drawback to this service is that there is a minimum investment requirement of $50,000. For those with less money, Schwab offers a competing product without such a high minimum.

If you are looking for a human touch, Vanguard offers most investors access to advice from a Certified Financial Planner for higher net worth investors. Those with $1MM or more invested in qualifying Vanguard products are entitled to the full range of the Vanguard Flagship Services suite. These services include access to specialists in trust creation, financial planning, estate planning, and gift giving. Investors with less than $1MM in invested assets can pay a very competitive hourly fee to access similar services from Vanguard’s approved professionals.

With a more robust platform of electronic advising services, a more comprehensive research library, and a better support network of certified professionals, Vanguard wins the fight over advisory services. Because Vanguard’s advisors will serve as true fiduciaries makes their services even more valuable and their ability to offer extremely low fee, computer supported roboadvising means that even small-time investors can reap the benefit of experienced advisors.

Vanguard vs USAA

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USAA Benefits

Range of Services – While Vanguard is mostly about investing, USAA offers members an enormous range of banking and financial services. Credit cards, checking accounts, insurance products, and member discounts on auto purchases are just a few of the options USAA provides to its members. It may not be the best in each category, but the fact that USAA offers a full range of products makes USAA a one-stop-shop for financial matters.

System Integration – USAA’s platform ties into all of USAA’s product lines. You can track annuities, insurance offerings, savings accounts, and other accounts held at any online service through the USAA platform. This makes getting a full picture of your financial health incredibly easy.


Not Purpose Built – Most of the advantages associated with USAA are due to their relationship with National Financial Services and Fidelity. USAA is an insurance and banking service provider first and foremost. There are times when using the brokerage services that the investment side of their house feels like an afterthought or seems like it is stuck in the past.

Fees – USAA’s house branded fund fees are not competitive with Vanguard’s line of products. While Fidelity offers many funds that can be traded with no fee through the USAA platform, Vanguard has far more low fee options.

Few Utilities – If you are looking for roboadvisory services, extensive research, or online tools that really help you make the most of your money, you won’t find it with USAA. More tools are coming online, but the lack of meaningful portfolio advisory services stands out as a major weakness.

Vanguard Pros

Philosophy – Vanguard started the passive investing revolution and helped ensure that money that would have been paid in fees to investment bankers is instead kept by investors. Better returns, lower fees, and steady returns are the hallmark of Vanguard’s investing philosophy. For retail investors, this philosophy not only works, it’s ideal.

Low Fees – There isn’t much to say here. Vanguard started the low fee revolution and is carrying it to new heights. With tons of low fee index funds and ETFs to choose from, investors have the means to make a tailor-made portfolio.

Outstanding Support – Vanguard offers customers access to tons of free tools, portfolio analyzers, and real-world expert advice. Whether you’re starting a Roth IRA for the first time to fund a dignified retirement or are a multimillionaire looking for legacy planning, Vanguard has the depth of knowledge and capacity to support your interests.

USAA vs Vanguard Summary

Vanguard is the clear-cut winner over USAA. It is first and foremost an investment platform that delivers massive market exposure at almost incomprehensibly low prices. Pioneers of the index fund revolution, Vanguard deserves serious consideration by anyone looking to plan for retirement or develop generational wealth.

Anyone looking for lower brokerage fees should take a look at Ally Invest. M1 Finance is an excellent option for more advanced trading platform and investment research tools than at either USAA or Vanguard.