Betterment Vs. Wealthfront: Better Robo-Advisor in 2024

Looking to start investing with robo-advisors but not sure where to start? Say hello to Betterment and Wealthfront.

In this post, I’m looking at what sets these platforms apart, from the personal touch of human advisors to innovative strategies like automated investing and tax-loss harvesting.

I’ll also explore how they compare in terms of socially responsible investing and other perks offered by each robo-advisor.

Get ready to find out which platform is the perfect fit for your investing and wealth management needs!

Key Takeaways

Investing involves risk, but robo-advisors try to take some of the guesswork out of investing by doing the work for you.
Betterment and Wealthfront are the main robo-advisors that people are using today!
Betterment and Wealthfront cater to different needs: Betterment offers diverse portfolios and chats with financial planners; Wealthfront focuses on digital perks and direct indexing for larger accounts.
Betterment is user-friendly, with low fees starting at 0.25%, various investment options including eco-friendly and crypto, and access to financial planners in premium plans.
Wealthfront stands out with Self-Driving Money™, the free Path planning tool, and tax-efficient investing, though it requires a higher initial investment and lacks human advisors.

Final Verdict: Betterment Vs. Wealthfront

Picking between Betterment and Wealthfront is a little tough. But after a lot of thinking, I’m leaning towards Betterment, and here’s why:

With Betterment, you can start investing for just $10. That’s more accessible for everyone to use whatever money they have to grow their wealth.

Betterment’s platform is easy to navigate, so you’ll feel like a pro in no time. And with fees that start really low (only 0.25%!), you can start investing without emptying your wallet.

Plus, the investment choices are pretty sweet – from doing good with socially responsible investments to getting in on the crypto trend, Betterment’s got options that fit what you care about.

I also love the Premium account- it’s only .40%, and you get access to human advisors and planners, which Wealthfront doesn’t offer with any account!

While Wealthfront has its perks for those, who love a full-on digital experience and have a bit more cash to start with, Betterment’s wallet-friendly investments and personal touches make it my favorite pick.

Betterment

Since its launch in 2008, Betterment has been one of the go-to robo advisors for new and experienced investors seeking automated investing.

With a whopping $45 billion managed for over 850,000+ as of February 29, 2024, it’s clear they’re doing something right.

What’s really great about Betterment is that they’ve got something for everyone. Whether you’re risky or want consistent dividends, Betterment can create a portfolio to your liking.

But what makes me like them so much is how you don’t need a treasure chest of cash to get started and put your money to work.

And if you’re worried about navigating their platform, don’t be. Their app is as friendly as it gets, making the whole investing thing a piece of cake.

Want the full scoop on Betterment? Check out my complete Betterment Review to get the lowdown.

Key Features

When you’re looking into Betterment, you’re checking out one of the top dogs in the robo-advisor show. Here’s what makes them stand out:

Different Types of Investments: Betterment has got you covered with investment strategies that range from super safe to let’s go-for-it aggressive portfolios.
Start Small, Dream Big: There’s no minimum balance, and the minimum investment is only $10, so even if you’re just dipping your toes in or your budget’s tight, you don’t need thousands to start.
Smart and Automatic: Betterment uses an algorithm to manage your investments, keeping everything in line with what you want out of your money without you having to fuss over it.
Goals Front and Center: Betterment helps you set financial goals and then tailors your investments to chase them down for you.
Keep It Tax-Smart: They’ve got tricks like Tax-Loss Harvesting to keep taxes from nibbling too much on your investment gains- more money in your pocket, less for the taxman.
Cash Reserve Program: Imagine a savings account, but way better. Betterment’s cash reserve offers a sweet interest rate, making your money work harder for you.
Set It and Forget It: With automatic deposits, you can keep your investments growing steadily in a hands-off way. 

Investment Options

Betterment manages your investments using smart algorithms, so you don’t have to worry about the details after deciding your investment strategy.

Betterment’s got a whole buffet of investment options that are pretty much designed to suit whatever financial goals you’ve got or how daring you feel about your money.

Here are the investment options you’ll have to pick from:

Retirement Accounts Galore: Thinking about the golden years? Betterment’s got your back with IRAs and 401(k) rollovers.
Different Portfolio Options:  Betterment uses ETFs from 13 asset classes, with other options, including Goldman Sachs Smart Beta, Blackrock Target Income, and a Flexible Portfolio.
Investing with a Conscience: If you’re all about making the world a better place, Betterment offers three socially responsible portfolios – Broad Impact, Climate Impact, and Social Impact.
Crypto Curiosity: Betterment offers four cryptocurrency portfolios: Universe, Sustainable, Metaverse, and Decentralized Finance.

Portfolio Management

Betterment’s portfolio management is all about keeping your investments tailored to you and your end goals.

They use this approach called modern portfolio theory, which means they spread your investments across different types of assets.

Betterment doesn’t just set up your investing account and call it a day.

They have an automatic system that checks in on your portfolio, making sure it stays in line with how much risk you’re comfortable taking.

It also helps you maximize tax efficiency with your tax-deferred and taxable accounts, so you ultimately lose less to the taxman.

Just remember, investing comes with its ups and downs. There’s always a bit of uncertainty, and the returns you’re hoping for might not always pan out.

But that’s the nature of investing, whether you choose Betterment like me or another platform.

With Betterment, you’ll have support to help with investing, making it as smooth as possible and helping you develop better strategies to prevent and recover from losses.

Pricing & Fees

Now that I’ve shared all the good stuff that Betterment does right let me tell you about their pricing and fees:

Investing: $4 per month or 0.25% annual fee (if investing over $20K or depositing/transferring $250+ per month)
Premium Plan: 0.40% annual fee ($100,000 to join)
Crypto Account Fees: 1% + .15% per trade; 1.15% for Premium accounts
Moving Your Money Out: $75 transfer fee
Got More Than $2 Million? Betterment offers a deal if your balance is that big. The fee drops to 0.15% for Digital plans and 0.30% for Premium.

Overall, it’s not too bad—at exactly $20K, you’re only paying $4.17 per month!

But if you’re thinking of investing over $20K and you’re worried about fees, visit the pricing link above and use their price calculator to get an estimate.

Premium Account

If you’re looking to elevate your investment game and invest $100K per year, Betterment Premium might just be your golden ticket without super high costs.

This tier of service is where Betterment truly shines, offering personalized advice from certified financial planners who are just a phone call away.

For only .40% (15% extra compared to the regular account), you can get expert advice tailored to your unique financial situation anytime you need it.

Betterment Premium also opens the door to crypto investing. With access to specialized cryptocurrency portfolios, you can diversify your investments even further and stay ahead of the tech curve.

Customer Service

Betterment is all about making sure you can get the help you need when you need it. They’ve got real folks ready to chat on the phone from Monday to Friday, 9 a.m. to 6 p.m. Eastern Time.

I’m more of a chat person when I need help, and it’s perfect for those times when you’ve got something you want an answer for quickly.

And if you’re not in a rush or you’re more of an email person, they’ve got you covered with email support, too. It’s handy for those less pressing questions about your account.

Now, if you’d like personalized advice from human financial advisors, the Premium account offers that perk.

So, if that’s something you’re into, going Premium is the way to go.

Betterment Pros & Cons

Pros

Low management fees
No required minimum balance
Wide selection of investments
Interest-bearing cash reserve
Effective tax-loss harvesting for taxable accounts
Automatic rebalancing for all accounts

Cons

Portfolio choices may have higher expense ratios.
1% management fee for crypto investing plus .15% trading fees
No custodial accounts are offered
Personalized advice is only available with a Pro account

Wealthfront

Wealthfront is another option if you want a robo-advisor. It uses advanced algorithms to provide investment management and financial planning.

Wealthfront Advisers LLC indeed got its start in 2008. Back then, it was setting the stage for what would become a big shift in how people manage their money.

The real shift in popularity came in 2011 when Wealthfront launched its automated investing services.

Here’s how it works: you sign up and answer some questions about your financial goals and how much risk you’re willing to take.

Wealthfront then builds a diversified investment portfolio for your first investment account.

They manage your brokerage accounts automatically, making adjustments based on your goals and market conditions.

You can read my in-depth Wealthfront Review for all the nitty gritty, but let’s get into how it overlaps with Betterment and what sets them apart:

Key Features

A Wealthfront Automated Investing Account figures out a mix of investments for you based on how risky or safe you want to play it and what you’re aiming for financially.

Wealthfront comes with some pretty neat features that can help make your investing journey a breeze.

Let’s break them down:

Tax-Loss Harvesting: Wealthfront does this for all taxable accounts to ensure that you pay less taxes on your investments than you need to.
Direct-Indexing: Wealthfront uses direct indexing to create a personalized index that mirrors the performance of a broad market index, allowing you to own individual stocks directly.
Portfolio Line of Credit: If your investment account reaches over $25,000, Wealthfront lets you borrow money at very competitive rates to continue investing.
Wealthfront Cash Account: Their cash accounts offer high interest and zero fees, and you can move money in and out as much as you like. Plus, it’s insured by the FDIC.
Joint Accounts: You can combine accounts under one log in if you decide to merge finances with a partner.
Financial Planning Tools: Wealthfront’s Path tool helps you plan for the big stuff – like buying a house, dreaming of a big trip, or figuring out when you can retire.
529 College Savings Plan: 529 College Savings Plans are special investment accounts in which money can grow tax-free and later be used for school costs.

Investment Options

Wealthfront offers a variety of investment options to cater to different investor needs.

Cash Cash Account: Get a cash management account with a 5% APY and earn passive income as your savings grow.
Bonds: Start investing in bonds with an automated, diverse portfolio that’s all set up for you. There is no need to stress about picking and choosing.
Automated Investing: Choose from cool options like socially responsible investing accounts, retirement accounts, or saving up for your kid’s college (529 plans).
Stocks: Fancy yourself a bit of a stock picker? Go ahead and invest in individual stocks. Build your own custom portfolio that’s totally you.

Portfolio Management

With Wealthfront’s portfolio management, investing becomes a breeze. They do all the heavy lifting, leaving you free to focus on what matters most to you.

Here’s what they bring to the table:

Tailor-Made Portfolios: Think of Wealthfront uses modern portfolio theory and fancy algorithms to create a portfolio that’s just right for you.
Smart Tax Moves: Have you heard of Stock-level Tax-Loss Harvesting? Wealthfront strategically sells off underperforming assets to lower your tax bill, leaving more money in your pocket.
Hands-Free Portfolio Care: Wealthfront’s clever software keeps an eye on your portfolio and automatically tweaks things as needed to keep investments on point.

Pricing & Fees

The fees depend on which accounts and features you use.

Annual advisory fee: 0.25% (all account types)
529 account fee: 0.42% to 0.46% per year
Minimum investment amount: $500

Customer Service

When it comes to customer service, Wealthfront takes the usual approach.

If you have some quick questions you want answered, head over to Wealthfront’s Help Center, where you can search for answers to all your burning queries.

Need to chat with a real person? You can reach out to Wealthfront support by calling (844) 995-8437 or emailing support@wealthfront.com.

If you shoot them an email, Wealthfront aims to get back to you within 24 business hours. Some issues might take a bit longer to resolve, but they’re on it.

Wealthfront Pros & Cons

Pros

Tax-efficient investing
Tax-loss harvesting for taxable accounts
Automated financial management
Access to a portfolio line of credit
Free financial planning with the Path tool
High-yield cash account
Account fee only .25%

Cons

Higher initial contribution ($500)
No human financial advisor
Complex features- can be complicated for beginners
Lack of fractional share trading with automated investing

FAQs

What does a Robo-advisor do?

A robo-advisor is an automated online platform that provides algorithm-driven financial planning services with little to no human help.

Here are the main features of robo-advisors (and benefits!):

Automated Investing: They use fancy algorithms to build and manage your investment portfolio based on your goals and how much risk you’re cool with.

Portfolio Rebalancing: If your investment portfolios get a little out of whack, they’ll shuffle things around to keep them on track with what you’re aiming for.

Taxable Investment Account: Think of them as your tax-saving buddy. They’ll try to minimize how much you owe Uncle Sam by smartly buying and selling investments in your taxable investment accounts.

Low Fees: Unlike traditional advisors, who might charge a premium, robo-advisors usually have reasonable fees, which is good for your wallet.

User-Friendly Interface: They’ve got slick websites and handy apps that make checking on your investments as easy as scrolling through social media.

Financial Planning Tools: Some robo-advisors offer extra tools to help you plan for big things like retirement or saving up for that dream vacation.

Is Betterment the best Robo-advisor to use for investing?

When it comes down to it, the “best” robo-advisor really depends on what you’re after. But in my experience, Betterment is an affordable option for beginners.

Betterment is definitely a solid choice for a robo-advisor, especially if you’re into user-friendly interfaces and goal-based investing.

You also can start investing with $10, no minimum balance, and work your way up to invest more and grow wealth.

Is Wealthfront worth the cost?

Wealthfront does have a .25% management fee, but many folks find it worth the cost of what you get.

They’ve got cool features like tax-loss harvesting and high-yield cash accounts, plus their free financial planning tool called Path is pretty handy.

So, is it worth the money? Well, if you’re all about hands-off investing and like the perks they offer, then yeah, it could be worth the cost.

But hey, it really comes down to what you are looking for in a robo-advisor and how much you value Wealthfront’s extra goodies.

If you don’t have $500 to invest, Betterment may be the better platform to start investing.

Is Betterment better to use than Wealthfront?

Choosing between Betterment and Wealthfront really depends on what you’re looking for in an investing service. Both Wealthfront and Betterment offer an investing account with different asset classes.

Betterment is known for its easy-to-navigate interface and focus on helping you reach your financial goals.

At the same time, Wealthfront investment accounts offer some cool perks like tax-efficient investing and high-yield cash accounts.

So, is a Betterment account the winner over a Wealthfront account? Well, it’s not really about who’s better but more about what suits your investment objectives.

Consider what features matter most to you and which platform aligns best with your investing style.

What investment platforms can I use that aren’t Robo-advisors?

If you’re looking for alternatives to robo-advisors, there are plenty of options:

Robo-Advisor Alternatives: Want a mix of automation and DIY? Check out M1 Finance for customizable portfolios or Acorns for investing spare change from your everyday purchases.
Individual Stocks, ETFs, and Bonds: Feeling confident in your stock-picking skills? Platforms like Robinhood and E*TRADE let you trade stocks, EFTs, options, and bonds commission-free.
Real Estate Crowdfunding Platforms: Fancy dipping your toes into real estate without buying a whole property? Platforms like Fundrise and RealtyMogul let you invest in property projects online, often with lower minimum investments than traditional real estate deals.
Online Brokerages: Think Fidelity, Charles Schwab, and TD Ameritrade. They’re like the one-stop shops for all your investment needs, from stocks and bonds to mutual funds and ETFs.
Direct Mutual Fund Companies: Companies like Vanguard and Fidelity let you buy mutual funds straight from the source, no middleman required.

Final Thoughts

If you’re trying to earn passive income by investing, it’s important to remember that it involves risk.

But robo-advisors like Betterment and Wealthfront are here to help navigate investing based on your risk tolerance.

Betterment is better for hands-off investors who want automatic rebalancing for their portfolios and for investors with fewer funds to invest.

It’s my top pick compared to Wealthfront, though it does have some great features you may want.

Wealthfront offers a mix of DIY and automated investment portfolios, but the $500 minimum investment is what keeps me from suggesting it for beginners.

But the bigger drawback for me is the lack of human advisors- no matter what accounts you’re investing in, you don’t have any options to talk to advisors about your money.

Betterment offers it with their Premium plan, which I recommend for full access to all their features (and it’s only .15% more than the regular plan!).

So, I recommend trying out Betterment for a better-automated investment experience so you can grow wealth without putting in the daily grind.