Advertiser Disclosure

Betterment vs. Wealthfront: Which Is Right for You?

July 13, 2020
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.

The robo-advisor industry was pioneered by Betterment and Wealthfront, and while the companies started out with very similar models, they’ve slowly made changes to differentiate themselves.

The biggest deciding factor at this point: If you want to work with a human, you’ll find that option only at Betterment. If you’re after only digital advice, Wealthfront’s offering may be more robust.

Other considerations include the type of account you plan to open, investment portfolios and key features. Here’s how to choose the best match for your money.

Jump to:

Key facts about each advisor
Management fees
Investment portfolios

Comparison: Betterment vs. Wealthfront

Quick facts
  • Management fee: 0.25%.
  • Account minimum: $500.
  • Accounts offered: Individual and joint investment accounts; IRAs; 529 college savings accounts; high-yield savings account.
  • Management fee: 0.25% to 0.40%.
  • Account minimum: $0.
  • Accounts offered: Individual and joint investment accounts; IRAs; high-yield savings account.
Best for
  • Free management of $5,000.
  • Taxable accounts with balances of $100,000 or more.
  • Saving for college.
  • Digital-only financial planning.
  • No minimum deposit requirement.
  • Retirement accounts.
  • Socially responsible investing.
  • Access to human financial advisors.
Human advisors available
$5,000 managed free for NerdWallet readersUp to 1 year of free management with qualifying deposit
How to open an account

Management fees

Betterment and Wealthfront both charge an annual fee of 0.25% for digital portfolio management.

For those who want human interaction, Betterment has a second tier, Betterment Premium. It includes a team of financial advisors available via phone and email and costs 0.40%, with a minimum $100,000 investment.

Some other bits of pricing information you might consider, though they’re unlikely to sway your account one way or the other: Wealthfront offers NerdWallet readers free management of the first $5,000 invested — a savings of $12.50 a year that, while small, makes it slightly less expensive than Betterment overall.

On the other hand, large-balance investors may save at Betterment: For portions of an account balance over $2 million, Betterment reduces its fee to 0.15% for Digital and 0.30% for Premium. (Customers who funded their accounts before Sept. 18, 2018 are grandfathered into an old policy that offered free management on the portion of any balance that tops $2 million.)


The basic offerings at Betterment and Wealthfront are similar and fit the standard robo-advisor mold. Both include automatic (and free) portfolio rebalancing, tax-loss harvesting and portfolios of low-cost exchange-traded funds. Both can integrate — but not manage — outside accounts so you get a picture of your finances in one place.

Automatic rebalancing
Human advisors
Tax-loss harvesting
Stock level tax-loss harvesting
SRI portfolio
Fractional shares
Retirement tools
College savings management
Charitable giving assistance
Portfolio line of credit
Cash management account

Notable at Wealthfront

  • PassivePlus. This suite of portfolio-enhancing features includes stock level tax-loss harvesting, a tax-optimization service offered at no extra charge to taxable accounts with balances of $100,000 or more. Stock level tax-loss harvesting is like a souped-up version of tax-loss harvesting: It mimics an index fund by buying individual securities. The company says it can add as much as 2.03% to annual investment performance.
  • College savings. Wealthfront offers 529 college savings plan management through the Nevada state plan. The plan has all-in fees (investment expenses and management fees) of no more than 0.46%.
  • Digital financial planning. Path, an intuitive planning tool, is designed to grow with you and help you understand how life changes will impact your future needs. The tool is offered to clients at no extra cost and can help plan for long-term goals like retirement, college and a home purchase.
  • Wealthfront Cash Account: Wealthfront offers a free savings option that currently pays 0.35% interest, competitive with many online banks. The account carries up to $1 million in FDIC coverage, four times more insurance than the average bank account. The money deposited in a Wealthfront Cash Account is not subject to investment risk, and the balance is not charged Wealthfront’s management fee. Read our review of Wealthfront’s Online Cash Management Account.

Notable at Betterment

  • Access to human advice. Betterment’s Premium plan offers unlimited access to financial advisors, but if you’re not ready for the 0.40% price or the $100,000 minimum, you can talk with a financial advisor by purchasing one of Betterment’s advice packages targeted to specific life events, such as marriage or retirement. Packages include one phone call with an advisor, plus an action plan with recommendations. Prices range from $199 to $299.
  • Charitable giving service. This tax-smart giving feature allows clients to gift appreciated shares to charity directly through Betterment’s platform.
  • Tax-Coordinated Portfolio. Betterment practices asset location by allocating assets across multiple accounts, putting the most tax-efficient in taxable accounts and investments that are taxed highly in IRAs.
  • Stash your savings: Like Wealthfront, Betterment offers a high-yield cash management option. Called Betterment Cash Reserve, it comes with a 0.40% APY. There’s no minimum account balance, and Cash Reserve balances aren’t subject to Betterment’s management fee. The product comes with $1 million in FDIC insurance coverage. Read our review of Betterment’s cash management account.
  • Two-Way Sweep. This tool runs a daily algorithm to identify excess money in a linked checking account (or your Betterment checking account), and moves that money into your Betterment Cash Reserve account. If your checking account balance dips too low, it will transfer money back out of savings to replenish it. You can set the target balance for your checking account, and Betterment notifies you before each sweep.

Investment portfolios

Both companies use portfolios composed of low-cost ETFs; the differences in expense ratios are negligible.

Wealthfront offers exposure to alternative asset classes such as natural resources and real estate, and it buys individual securities through its stock level tax-loss harvesting service for investors who qualify. Those clients can also add individual stocks they don’t want to invest in to a restrictions list, creating a socially responsible portfolio if they wish.

» Need more info? Learn about socially responsible investing

Wealthfront also has a proprietary mutual fund, the Wealthfront Risk Parity Fund, which is used to achieve higher risk-adjusted returns and carries an expense ratio of 0.25%. Taxable accounts of $100,000 or more may opt to have up to 20% of their portfolio allocated to the fund, bringing the weighted average expense ratio of the portfolio to 0.11% (the weighted average expense ratio of a Wealthfront taxable portfolio without risk parity is 0.08%). Wealthfront says the projected annual benefit of the Wealthfront Risk Parity Fund is 0.24%.

Betterment offers fractional shares — which can reduce uninvested cash — and allows investors to select a socially responsible investment portfolio. That portfolio uses ETFs that hold companies whose business practices are in line with social causes and exclude companies with poor records on social issues. Betterment also offers a BlackRock Target Income portfolio for investors primarily looking to generate income from their portfolios.

U.S. stocksVanguard Total Stock Market ETF (VTI)Vanguard Total Stock Market ETF (VTI)
Dividend growth stocksVanguard Dividend Appreciation ETF (VIG)
Large-cap stocksVanguard Value ETF (VTV)
Mid-cap stocksVanguard Mid-Cap Value ETF (VOE)
Small-cap stocksVanguard Small-Cap Value ETF (VBR)
Foreign stocksVanguard FTSE Developed Markets ETF (VEA)Vanguard FTSE Developed Markets ETF (VEA)
Emerging market stocksVanguard FTSE Emerging Markets ETF (VWO)Vanguard FTSE Emerging Markets ETF (VWO)
U.S. government bondsVanguard Total Bond Market ETF (BND)
U.S. high-quality bonds (government and corporate)iShares Barclays Aggregate Bond Fund (AGG)
U.S. corporate bondsiShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)
International bondsVanguard Total International Bond ETF (BNDX)
Emerging market bondsiShares JPMorgan USD Emerging Markets Bond ETF (EMB)
Municipal bondsVanguard Tax-Exempt Bond ETF (VTEB)iShares National Muni Bond ETF (MUB)
Treasury inflation-protected securities (TIPS)Schwab U.S. TIPS ETF (SCHP)Vanguard Short-Term Inflation-Protected Securities ETF (VTIP)
U.S. short-term treasury bondsiShares Barclays Short Term Treasury Bond ETF (SHV)
Real estateVanguard Real Estate ETF (VNQ)
Natural resourcesEnergy Select Sector SPDR Fund (XLE)
Risk parityWealthfront Risk Parity Fund (WFRPX)

* Note that the investments included in each client portfolio may vary and are subject to change.

Which is right for you: Wealthfront or Betterment?

Wealthfront and Betterment are strong choices for a robo-advisor; there’s a reason they are NerdWallet’s top picks in our list of the best online advisors. Both offer low-cost, diversified ETF portfolios, automatic rebalancing and low ongoing management fees.

At Betterment, we like the option to purchase financial-advice packages, the retirement and goal-oriented saving features and the choice of socially responsible investment portfolio. Wealthfront stands out for college savings accounts, its digital financial planning software and tax optimization services, especially on taxable accounts of $100,000 or more.

About the author