It was attractive at first because it was set to adjust my percentage of stocks to bonds every decade or so starting from 65/35.
On Jun 9, just before a big 6% S&P decline, Digital Advisor changed to this wacky thing where my portfolio was suddenly 98/2 instead of 65/35 and set to gradually adjust toward 50/50. I assume the constant adjustment brings them a little bit more money through trade fees.
I'm pretty sure that is not how it is supposed to work. You should probably call and check on that.
My understanding is that digital advisor is supposed to work like Personal Advisor minus the advisor. Both pick your asset allocation based on your goals and risk tolerance, and they both get more conservative as you get closer to your goal. Both use Vanguard's investment philosophy... which means lot of index funds and no market timing.
Unless your goal or risk tolerance justified a move from 65/35 to 98/2 I don't see why it would do that. It isn't built for market timing. Given that this is a forum for people seeking FIRE, did you by chance run what if scenarios comparing retiring in 5 years VS 20 years? Changing that variable would justify a switch from 65/35 to 98/2.
As it's been said, Vanguard doesn't charge for trading, but trading does cost them money. That means, if anything, they have a financial incentive to trade less in your account, not more.
@OP: DA is kind of like Betterment, but in more Vanguard flavor. It builds a custom portfolio, rebalances it, and gets more conservative over time. In other words, it's like a target retirement fund, but it takes asset location(optimizing where each investment should be for taxes) into account. If you are only looking at 1 account type, like a 401k or pretax IRA as opposed to a combination of account types(IRA+Roth+taxable) you are probably better off with a target retirement fund.
