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Which Online Advisor Is the Best Fit for You?

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As more and more people turn to the Internet to manage their money, an increasing number of Web-based personal finance services have sprung up to accommodate them. Within the past few years, companies like Wealthfront, Betterment, FutureAdvisor and Personal Capital have all offered to help consumers manage their money in a more wallet-friendly way, and industry standards like Vanguard have used technology to reach more investors. All of these companies have important similarities, promising low-cost investments and mobile access. However, their differences are just as important and may make one a better fit for you than the others.

Personal Capital
Vanguard Personal Advisor Services
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with FutureAdvisor

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with Vanguard

Real advisors available?YesNoYesYesYes
Account minimumNone$500$10,000$100,000$50,000
Pricing0.25% to 0.40%, depending on planFirst $5,000 managed free for NerdWallet readers; 0.25% after that.0.50% (for paid account) 0.49-0.89% (for advisor service)0.30%
Automatic RebalancingYesYesYesYesNo
Tax strategyOffers automated, daily tax-loss harvesting, invests in tax-efficient securities, uses cash and dividends to rebalance, when possible Minimizes sales and capital gains using DRIPs and index funds, uses tax-loss harvesting and tax allocationProvides automated tax-loss harvesting, minimizes trades and holds positions with significant, unrealized gainsUses “smart indexing,” a combination of gain deferral, loss harvesting, tax allocation and strategic withdrawal. Available for account balances $200,000+. Uses tax-efficient portfolio design and distribution strategies
Manages 401(k)s?NoNoNoYesYes
Standout feature“Goal” featureDirect Indexing for $100,000+ accounts.Premium features at $10,000Human Registered Investment AdvisorsHuman advisors – at a very low rate
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In operation since 2010, Betterment currently has over $9 billion in assets under management. Betterment’s software generates personalized recommendations for investors based on their risk tolerance and time horizon, using index ETFs representing 12 asset classes. The software will then carry out these trades on behalf of investors, effectively managing their portfolio for them.

Read our full Betterment Review

Requirements: No minimum balance requirement for Betterment Digital.

Account types: Taxable accounts (individual, trust); IRAs (traditional, Roth); 401(k) rollovers.

Pricing: Betterment has two service plans. Betterment Digital, its original and strictly online offering, charges a flat 0.25% management fee. Customers receive access to financial advisors via in-app messaging, with answers provided in about 24 hours. Betterment Premium charges 0.40%, requires a minimum balance of $100,000 and includes unlimited access to financial advisors via phone and email.

Features: Automated deposits, automatic rebalancing, dividend reinvestment, tax efficiency, tax-loss harvesting+ (automated, daily tax-loss harvesting for accounts over $50,000), fractional shares, human financial advisors.

Pros: Clients can designate pieces of their account for specific purposes, or “goals.” These subsets have their own time horizon and allocation. Clients can also analyze Betterment’s recommendations with site-based tools – and ignore them, if they choose.

Cons: Betterment can’t take outside accounts into consideration.

Who should sign up for Betterment? Betterment’s no minimum means beginners can get management for portfolios too small for other firms, as well as online access to advisors. Investors who meet the Premium account balance requirement can get phone access to human financial advisors from an independent robo-advisor.

Invest with Betterment


Launched in 2011, Wealthfront currently has more than $4 billion in assets under management. Like Betterment and FutureAdvisor, it manages client portfolios using software and index ETFs representing different asset classes. And, like Betterment and FutureAdvisor, its software takes risk tolerance and time horizon into account.

Read our full Wealthfront Review

Requirements: Users must have at least $500 in their accounts.

Account types: Taxable accounts (individual, joint, LLC, trust); IRAs (traditional, Roth, transfer, SEP); 401(k) rollovers

Pricing: For NerdWallet readers, Wealthfront will manage your first $5,000 for free. After that, it’ll charge 0.25% per year, assessed monthly. Customers aren’t charged trading commissions, but will pay fund expense ratios.

Features: Automated deposits, automatic rebalancing, dividend reinvestment, daily tax-loss harvesting for all accounts, offers a Direct Indexing Platform, which allows you to buy the S&P directly for taxable accounts over $100,000.

Pros: Wealthfront offers a single-stock diversification service for Twitter employees, ex-employees and investors. Those with at least $500,000 in their accounts can invest in individual stocks. The company also provides free investment management for nonprofits up to $1 million.

Cons: The site can’t currently take outside accounts (like 401(k)s) into consideration when making recommendations.

Who should sign up for Wealthfront? Wealthfront is a great fit for those with smaller accounts (especially those who can use services for free) and less complicated financial lives – provided they don’t mind giving up control of their investments. While Wealthfront has great features, appealing to those with larger accounts, it’s by no means a one-stop-shop for older clients’ money management needs. DIYers will be disappointed.

Promotion: NerdWallet users can get their first $5,000 managed for free

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Having started in 2012, FutureAdvisor is the youngest and smallest of the five services. Reps note, though, that it has achieved rapid growth since its founding. Similar to Wealthfront, FutureAdvisor generates personalized recommendations based on investor preferences and algorithms, using low-cost index funds.

Read our full FutureAdvisor Review

Requirements: There’s no minimum balance for FutureAdvisor’s free service. Premium accounts – required for services like tax-loss harvesting and trade execution – have a $10,000 minimum. Those older than 68 aren’t eligible for FutureAdvisor.

Account types: Taxable accounts (individual, joint); IRAs (traditional, Roth, rollover, SEP).

Pricing: FutureAdvisor charges 0.5% each year on assets under management, billed quarterly. Customers may incur some transaction fees.

Features: Automated deposits, automatic rebalancing, tax-aware portfolio design, tax-loss harvesting (including historical losses, for accounts over $10,000).

Pros: FutureAdvisor’s software can make recommendations for changes (like switching to lower-fee funds), though it cannot execute trades. The site also allows customers to manage their own money by opting for a free account, which entitles them to FutureAdvisor’s recommendations.

Cons: FutureAdvisor’s maximum age rules out many clients.

Who should sign up for FutureAdvisor? Because of its ability to manage around outside accounts, FutureAdvisor is a great fit for investors further along in their careers. Its minimum for premium services – like tax-loss harvesting – is also relatively low. And DIYers will appreciate the opportunity to access free advice, regardless of their investment. That said, FutureAdvisor is a bad fit for retirees, looking for continued advice and management.

Invest with FutureAdvisor

Personal Capital

As an investment service, Personal Capital takes a more personal approach than algorithm-based companies. Investors can take advantage of a free dashboard which analyzes all of their financial accounts, or consult with a Registered Investment Advisor (RIA) for personalized recommendations and trade executions. Though Personal Capital pledges to lower investment fees, it does deal in individual securities as well as ETFs.

Requirements: Clients can use the dashboard for free but must have a $100,000 account minimum for the wealth management offering.

Account types: Personal Capital’s dashboard aggregates a user’s whole financial life – including bank accounts and credit cards – to give them the best possible advice. Users may also open most types of investment accounts – excluding 401(k)s and 529 plans – through the service.

Pricing: Personal Capital charges one, all-inclusive fee of between 0.49% and 0.89% of assets under management. Customers with less than $1 million invested will pay 0.89%, and, for assets above $1 million, fees decrease progressively toward 0.49% above $10 million.

Features: Automatic rebalancing, tax optimization, tax-loss harvesting.

Pros: Personal Capital provides personal financial advice (from human advisors) for paid users and robust tools for free users. These include a 401(k) fee analyzer and an investment checkup, which helps investors identify small portfolio adjustments that could lead to better performance.

Cons: Members will definitely pay a premium to access Personal Capital’s services. Those with lower balances won’t save much, as compared to an in-person advisor.

Who should sign up for Personal Capital? Though Personal Capital’s free tools are excellent, what really sets it apart is the opportunity to meet with an RIA for a discounted price. Those with less than $200,000 in their accounts – who don’t qualify for a dedicated financial advisor – will probably do better with a robo-manager.

Invest with Personal Capital

Vanguard Personal Advisor Services (VPAS)

Long a player in the investment world, Vanguard was founded in 1975 and operates primarily as a brokerage, which customers can use to trade securities – often (but not exclusively) the firm’s own popular funds. Those interested in DIY trading can use broker assists for no extra charge. And as of early 2013, those who’d prefer more guidance can sign up for Vanguard Personal Advisor Services. The program competes with Personal Capital, offering investors access to a team of advisors who will manage their portfolio, create and carry out personalized recommendations and rebalance when necessary.

Requirements: Clients must have a balance of $50,000 with the firm – this may be across multiple accounts – to take advantage of VPAS.

Account types: Taxable accounts (individual, joint, trust); IRAs (traditional, Roth, SEP, rollover).

Pricing: VPAS customers pay 0.30% each year for management services, assessed quarterly. This figure does not include trading commissions.

Features: Rebalancing, tax efficiency.

Pros: Vanguard offers customers a bit more flexibility in both security and account types than the typical robo-advisor site. Advisors will also provide recommendations about outside 401(k)s for no extra charge, and customers have input on selections. On top of this, the management fee is very low, and many competitors encourage Vanguard funds.

Cons: Vanguard’s minimum is higher than at some other firms, but it’s typical for those that provide in-person management. It may actually be in reach of more customers, since the $50,000 balance can be the sum of multiple accounts. Clients will also pay trading costs, though those with Vanguard accounts can trade Vanguard funds for free.

Who should use Vanguard? It’s very, very hard to get the services of an actual advisor for this price. If you can commit $50,000 and share Vanguard’s investment philosophy – the brokerage is noted for its index funds, though advisors may recommend other securities – the firm is a great fit.

Invest with Vanguard

Want to learn more? Check out our list of Best Robo-Advisors

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