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Wealthfront and Betterment are two robo-advisors that were among the earliest entrants into the industry. They are well known for pioneering many of the features that have become standard in the digital investment advisory space. Additionally, both companies are among the winners in our list of the best robo-advisors of 2023, with Wealthfront winning best overall, best for goal planning, best for portfolio construction, and best for portfolio management, while Betterment is best for beginners and cash management.
On the surface, Betterment and Wealthfront look similar, but there are some key differences. For example, Betterment offers human financial advisors for an additional fee and has a premium version that includes unlimited access to human advisors, while Wealthfront has a stellar digital financial planner without any human touch. Investors seeking human financial advisor access might prefer Betterment. On the other side, Wealthfront is better suited for investors who are seeking more customization and are comfortable with an all-digital platform.
- Account Minimum: $500
- Fees: 0.25% for most accounts; no trading commission or fees for withdrawals, minimums, or transfers
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Key Takeaways of Wealthfront
- Great for those looking to customize their portfolio with additional ETFs and cryptocurrency funds
- Access to a portfolio line of credit for those interested in a loan
- Single stock and risk parity portfolios are available for clients with more than $100,000
- Account Minimum: $0, $10 minimum to start investing. Crypto minimum $50. $50 minimum for rebalancing.
- Fees: 0.25% (annual) for investing plan accounts with at least $20,000 or at least $250 per month in recurring account deposits. Otherwise, the fee is $4/month. An additional 0.15% (annual) fee on accounts with at least $100,000 in assets for Betterment Premium account holders with unlimited access to certified financial planners. Crypto accounts are charged a monthly fee of 1% plus trading expenses. There are no management fees for Betterment Checking or Cash Reserve. For accounts with at least $2 million, there is a fee discount of 0.10% for balances greater than $2,000,000.
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Key Takeaways of Betterment
- Great for beginners due to no account minimum
- Certified financial planners accessible to all users for an additional fee
- Sustainable, income, and cryptocurrency portfolios available
Account Setup
Betterment
Betterment's account setup is smooth—just input your name, email, and password, and then complete basic profile information, including your name, address, and Social Security number. After creating an account, you can complete the brief goals, timeline, and risk questionnaire. The platform provides investment portfolios comprised of diverse U.S. and international stock and bond ETFs, and recommends an allocation based on your responses to the initial quiz.
Investors can also adjust recommended asset percentages and opt for a fixed income, smart beta, or environmental, social, and governance (ESG) sustainable portfolio. Betterment also provides access to diversified cryptocurrency and decentralized finance through curated portfolios.
There’s a $10 minimum deposit required to fund the account, so you can get started investing with small dollar amounts. You can also view portfolio options before funding, which is a plus. Unfortunately, you can’t view potential allocations without creating an account in a process that requires a Social Security number. Investing plan clients can purchase low-fee financial planning packages, while Premium users with $100,000 or more have unlimited access to certified financial planners at no additional cost. Phone customer service representatives are available to help with questions.
Wealthfront
At Wealthfront, you can create an account, take the initial questionnaire, and view potential portfolios by inputting your name, email address, phone number, and password. Wealthfront doesn’t require potential users to input a Social Security number initially, which makes it easier than Betterment to check out the platform. Wealthfront will recommend a core portfolio, informed by your responses to the initial quiz, comprised of diverse U.S. and international stock and bond ETFs, as well as a real estate investment trust (REIT) fund. You can also view other investment portfolio options before funding your account.
Wealthfront requires a $500 minimum investment and only offers a digital financial planner—no human advisors. That said, customer service representatives all have a minimum of Series 7 investment licenses. Customers can customize premade portfolios from a choice of over 200 ETFs and two Grayscale cryptocurrency funds. All account holders, even those who haven’t funded their account, can use Wealthfront’s free and comprehensive goal-planning tools.
Final Verdict
While both Betterment and Wealthfront have smooth account setup processes, we prefer Wealthfront in this category because you can get a deeper preview of the platform and your suggested portfolio without providing your Social Security number.
Account Types
Betterment
- Individual taxable
- Joint taxable
- Traditional IRA
- Roth IRA
- 401(k) rollover IRA
- SEP IRA
- Trust
- 529 college savings plan (only available through an employer)
- Cash reserve and checking
Wealthfront
- Individual taxable
- Joint taxable
- Traditional IRA
- Roth IRA
- 401(k) rollover IRA
- SEP IRA
- Trust
- 529 college saving plan
- High-interest cash
Final Verdict
Both Betterment and Wealthfront offer the typical account types, including cash management, but neither offers custodial accounts. Wealthfront previously had an edge with its 529 college savings account, but Betterment added this feature as well in 2023. The main difference is that Betterment's 529 plan is only available through an employer via Betterment at Work, whereas Wealthfront's is a regular account offering but comes with a higher management fee of 0.42% to 0.46%. The fact that we are this far in the weeds to differentiate an account that isn't offered by many other robo-advisors shows how evenly matched they are in terms of account choice.
Account Services
Cash Management
Betterment offers two account types for fee-free cash management: checking and Cash Reserve accounts. These accounts can be opened separately from the Betterment Investing account. The checking account includes a Visa cashback debit card and ATM fee reimbursem*nt in the U.S. and internationally. There are no overdraft fees or minimum balance requirements. Cash Reserve is a high-yield cash account with funds deposited across several program banks†.
Wealthfront Cash is fee-free and similar to an interest-bearing checking account. Wealthfront Cash requires a separate sign-up from the investing service and is available to individuals whether they sign up for the investing services or not. Top features include goal-based saving, an ATM debit card, automated transfers to the investment account, bill pay, and direct deposit. Wealthfront Borrow also offers lending options for users, which is something Betterment doesn’t have.
Final Verdict
Overall, Wealthfront and Betterment are evenly matched in terms of cash management, but for different reasons. Betterment has two choices for your cash management and ATM fee reimbursem*nts while Wealthfront has lending in addition to a solid checking account. So if you want borrowing options, Wealthfront has an edge, but if you are just looking for cash management, Betterment may make more sense.
Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities. For Cash Reserve (“CR”), Betterment LLC only receives compensation from program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.
Checking accounts and the Betterment Visa Debit Card provided and issued by nbkc bank, Member FDIC. Checking made available through Betterment Financial LLC. Neither Betterment Financial LLC, nor any of their affiliates, is a bank. Betterment Financial LLC reimburses ATM fees and the Visa 1% foreign transaction fee worldwide, everywhere Visa is accepted.
Goal Planning
Betterment
At Betterment, clients can set up multiple goals and enable distinct asset allocations in line with the goal type and time horizon. For example, your home down payment goal will be invested conservatively with more short-term bonds, while your retirement goal portfolio will own greater percentages of stock ETFs, suitable for long-term investing. The goal-tracking tool enables you to determine when you might reach the goal. Users can also connect outside accounts for a complete view of all their assets.
Wealthfront
Wealthfront's goal planning is integrated with its excellent Path digital financial planning tool. As with Betterment, users can link outside accounts for comprehensive financial planning. Users select from six initial goals. Your goal progress is automatically updated on thedashboard and you can test out various goal-based scenarios. Wealthfront explains that Path is equipped to answer more than 10,000 financial planning questions such as “how much home can I afford,” “when can I retire,” and “can I take time off to travel.”
Final Verdict
It was a tight race between the two in the goal-planning category, as each platform excels with goal-planning tools, reporting, and scenario analysis. Wealthfront takes this category here as well due to its more comprehensive analysis of all your synced data to determine your current financial health.
Portfolio Construction
Both Betterment and Wealthfront employ modern portfolio theory (MPT) principles, yet each digital investment advisor modifies the low-fee, diversified ETFs in its core portfolios to suit specific investment research theories. They each offer core portfolios, sustainable ESG options, and additional customization options as well through flexible portfolios.
Betterment
Betterment's core portfolios include the basic market-cap weight diversified U.S. and international stock and bond ETFs. Unlike Wealthfront, Betterment lacks REIT ETFs in the standard portfolios, but you can add them in a customized flexible portfolio. Additionally, the firm includes value and small cap equity funds, found to outperform over long periods of time, according to factor research. Betterment also adds international bond funds to its other fixed income offers. Betterment’s specialty portfolios include BlackRock Target Income, Goldman Sachs Smart-Beta factor, and three ESG portfolios, suitable for specific types of investors. Cash accounts are good for short-term goals.
Wealthfront
Beyond diversified U.S. and international stock and bond funds, Wealthfront’s core portfolio asset classes differ from those at Betterment. Wealthfront adds commodity and emerging market bond ETFs along with REITs. Anyone can open a cash account. Investors with more than $500,000 can opt for a Smart Beta portfolio. Those with $100,000 can choose a risk parity option which allocates capital across multiple asset classes in an attempt to outperform a market-matching portfolio.
| Available Assets | ||
|---|---|---|
| Betterment | Wealthfront | |
| Individual Stocks | No | Yes—portfolios worth more than $100,000 are eligible for direct stock indexing to replace U.S. stock ETFs |
| Mutual Funds | No | No |
| Fixed Income | Yes—ETFs | Yes—ETFs |
| REITs | Yes—only in flexible portfolios | Yes |
| Socially Responsible or ESG Options | Yes | Yes |
| ETFs | Yes | Yes |
| Non-Proprietary ETFs | Yes | Yes |
| Forex | No | No |
| Crypto | Yes | Yes |
Portfolio Customization
Betterment
Betterment’s overall account offerings now include exposure to cryptocurrency and you can use flexible portfolios. Flexible portfolios allow you to tweak asset class weightings and access other asset classes that aren’t in the core portfolio, including commodities, high-yield bonds, and REITs. Unlike Wealthfront, Betterment doesn’t provide customers the opportunity to add individual ETFs to their portfolios, nor direct stock investments.
Wealthfront
Wealthfront has more than 200 ETFs and two Grayscale cryptocurrency funds that you can use to its offering. Users can add these funds to existing portfolios or create their own for Wealthfront to manage. Wealthfront has also added an automated bond portfolio that is currently yielding 5.59% over 30 days and works with all its tax logic to minimize taxation. Those with more than $100,000 can choose direct indexing which includes individual stocks. The ESG portfolios can be created by selecting from the many sustainable ETFs available.
Final Verdict
Although Betterment has upped its game in this area, Wealthfront still has the edge when it comes to portfolio customization.
Portfolio Management
Betterment
At Betterment, rebalancing is set to occur when assets veer 3% above or below the desired asset percentage, or when your account balance is at or past the minimum threshold. You can link outside accounts to get a holistic look at your assets, and the platform will offer suggestions based upon your total assets.
Wealthfront
Wealthfront monitors your portfolio daily and rebalances when there are big differences between your desired asset allocation and the actual asset class balance. After linking your accounts, the Path digital financial advisor can use all of your investment information to project your finances and net worth over time and make recommendations regarding spending, saving, and investing.
Final Verdict
Both Wealthfront and Betterment offer regular rebalancing and the opportunity to link outside accounts. Based on the fact that there’s no indication that linked account data is used for asset allocation recommendations for either service, this category is a tie.
Tax-Advantaged Investing
Both Wealthfront and Betterment offer tax-loss harvesting for taxable accounts, while making sure to avoid wash sales. This process minimizes taxes by selling losing investments to offset capital gains and income. Wealthfront and Betterment both have frequent automated tax-loss harvesting to gain the greatest financial benefit from the strategy. Here again, the two digital investment advisors are tied.
Betterment is not a licensed tax advisor. Tax Loss Harvesting+ (TLH+) is not suitable for all investors and is subject to certain conditions. Read more athttps://www.betterment.com/legal/tax-loss-harvestingand consider your personal circ*mstances before deciding whether to utilize Betterment’s TLH+ feature. Investing involves risk. Performance not guaranteed.
| Key Portfolio Management Features | ||
|---|---|---|
| Betterment | Wealthfront | |
| Automatic Rebalancing | Yes—when assets veer above or below the selected asset allocation and meet the minimum balance requirement | Yes—monitored daily, rebalanced when assets drift from target by large amounts |
| Reporting Features | Monthly and tax statements available; goal progress viewable online | Monthly and tax statements available; goal progress viewable online |
| Tax Loss Harvesting | Yes | Yes |
| External Account Syncing/Consolidation | Yes—automated updates and only available for analysis | Yes—automated updates and only available for analysis |
Security
Both Betterment and Wealthfront enable top-level financial institution-grade security protocols. Betterment Cash Reserve is insured for up to $2 million ($4 million joint) with the FDIC through program banks†, which is above the standard limit. Wealthfront's cash account has up to $8 million in FDIC insurance through its partner banks ($16 million for joint accounts). Betterment checking is FDIC insured up to $250,000 per depositor. Investment accounts at Wealthfront and Betterment are covered by $500,000 of SIPC insurance, including $250,000 for cash claims. Losses caused by normal investment value volatility are not insured. Overall, Wealthfront and Betterment are evenly matched when it comes to security.
User Experience
Desktop
Betterment and Wealthfront each offer easy-to-navigate websites, as you might expect from these legacy digital investment managers. Users can access most features with one or two clicks from the dashboard. Betterment investors can monitor and adjust goals from the dashboard.
Mobile App
Both Wealthfront and Betterment offer Android and iOS apps with the ability to use most desktop features on the mobile devices. The Google Play store reviews were unimpressive for both apps, while the iOs app users had more favorable experiences. Overall, we found both apps were equally well-designed and could be used as the sole platform for mobile-only investors.
Customer Service
At Wealthfront, the phone customer service number is less publicized and there is no online chatbot. Overall, we found Betterment’s customer service to be a notch ahead of Wealthfront’s.
| Betterment | Wealthfront | |
| Phone & email available | Yes, 718-400-6898, weekdays, 9 a.m. to 6 p.m. ET | Yes, technical support available weekdays at 877-910-4232, from 7 a.m. to 5 p.m. PT |
| Pre-funding phone consultation with a certified advisor | No | N/A |
| Online chat available | Yes—available for prospective clients, virtual assistant bot only | No |
| Website FAQ section | Yes—comprehensive | Yes—comprehensive |
Fees
Wealthfront and Betterment are similar when it comes to the base fee, and neither charges any additional trading fees. However, there is a caveat. If you are below $20,000 across your Betterment accounts and do not commit to depositing at least $250 per month, you move to a monthly fee of $4 which works out to $48 a year versus 0.25% with Wealthfront. This subscription-style option makes for an odd quirk where, between $500 and $19,200, Betterment on $4 a month basis would cost you more than Wealthfront before being mathematically cheaper from $19,200 to $19,999 and tied thereafter.
The basic fee structure is 0.25% of assets under management (AUM) for Wealthfront. Betterment Investing's fee is also 0.25% annually or $4 per month for accounts under $20,000 that don't meet deposit thresholds. If you have $100,000 in assets under management at Betterment, you can opt for Betterment Premium which charges an additional 0.15% of AUM (total fee of 0.40%) and includes unlimited access to certified financial planners. This additional fee is applied to assets in the investment and cryptocurrency accounts, but not cash accounts. For accounts with at least $2 million, there is a fee discount of 0.10%. Crypto accounts are charged a annual fee of 1% plus trading expenses. If you don’t opt for the Premium tier at Betterment, then there is no difference in fees between it and Wealthfront. It is important to note that the features that kick in at a $100,000 balance with Wealthfront, like direct stock indexing, do not change the management fee at all.
| Category | Betterment | Wealthfront |
| Management fees for $5,000 account | Investing: $48 | $12.50 |
| Management fees for $25,000 account | Investing: $62.50 | $62.50 |
| Management fees for $100,000 account | Investing: $250 Premium: $400 | $250 |
| Termination fees | $0 | $0 |
| Expense ratios | Core portfolios average between 0.05% to 0.13%, depending on your allocation | Average 0.08% |
| Mutual funds | N/A | N/A |
Final Verdict
The decision to open an account with Betterment or Wealthfront's digital investment advisor is not as clear-cut as it appears. The basic fee structure is nearly identical and neither Betterment nor Wealthfront includes access to financial advisors in the basic fee. The Betterment Investing account does provide low-fee financial planning packages for topics like college planning and investment review. If a human financial advisor is really important to you and you have $100,000 to invest, then Betterment Premium is your answer. If you are uninterested in having a human face deliver financial advice, however, Wealthfront’s Path digital financial planner is tough to beat. It approximates the services you get from a human financial planner and does it quite well.
Investors with different levels of experience can all be confident that their portfolios will be well-managed by either robo-advisor. There are a lot of little differences between the two, of course. Wealthfront is best if you want more control of the ETFs in your portfolio and are seeking lending. Betterment’s cryptocurrency exposure is arguably better diversified than Wealthfront for people looking for broader exposure. Of course, new investors who can’t swing the $500 minimum at Wealthfront should opt for Betterment to get started.
If none of these specifics swayed you either way, then we recommend Wealthfront overall. You have to be willing to let go of the human element, but you get an incredibly powerful financial analysis platform wrapped inside a customizable digital investment advisor in exchange.
Can I Lose Money at Betterment or Wealthfront?
Yes. When investing in financial markets, your account value goes up and down with the market value of the investments. If you sell with a drawdown in your account, you will lose money. Historically, over decades, the returns on a well-diversified portfolio have been positive. The portfolios constructed by both Wealthfront and Betterment are meant to show positive growth over time, but they can experience periods of negative returns depending on when they were funded and how the market has performed since.
Does Betterment or Wealthfront Have Better Returns?
The returns for each platform depend upon when you invest and which portfolio you choose. It is difficult to compare returns in a head-to-head comparison. In general, digital investment managers have returns that align with those of the ETFs included in the portfolio. More aggressive portfolios at either robo-advisor will have generally higher returns than the more conservative ones, but they also come with more risk.
Methodology
Providing readers with unbiased, comprehensive reviews of digital wealth management companies, more commonly known asrobo-advisors, is a top priority of Investopedia. Over a period of two months, our team of researchers, data collectors, and industry experts conducted an exhaustive review process that included in-depth industry research, company survey data collection, and hands-on demonstrations and evaluations of 19robo-advisor platforms.
We then developed a quantitative model that scored each company to rate its performance across nine major categories and 57 criteria to find the bestrobo-advisors. The score for each company’s overall star rating is a weighted average of the criteria.
Many of the companies we reviewed also performed live demonstrations of their platforms and services in video calls with our research and editorial teams. Our team of expert writers and editors was also granted access to live accounts so they could perform hands-on testing. Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the toprobo-advisors.
Read our fullMethodologyfor reviewingrobo-advisors.
The above material and content should not be considered to be a recommendation. Investing in digital assets is highly speculative and volatile, and only suitable for investors who are able to bear the risk of potential loss and experience sharp drawdowns.Digital assets are not legal tender and are not backed by the U.S. government. Digital assets are not subject to FDIC insurance or SIPC protections.
Dotdash Meredith receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. Dotdash Meredith is not a Wealthfront Advisers client, and this is a paid endorsem*nt. More information is available via our links to Wealthfront Advisers.
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.
Jill E. Fisch, et al. (editors Julie Agnew and Olivia S. Mitchell), via ScholarlyCommons, University of Pennsylvania. “The Disruptive Impact of FinTech on Retirement Systems. Chapter 2: The Emergence of the Robo-Advisor,” Pages 16–17. Oxford University Press, August 2019.
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