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Betterment vs. Wealthfront: Which Is Right for You?

Jan. 8, 2021
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Comparison: Betterment vs. Wealthfront

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 a quick look at both services to help you choose the best match for your money.

Betterment is best for:

  • Hands-off investors.
  • Retirement investors.
  • Users with low balances.
  • Those who want automatic rebalancing.
  • Users who like goal-based tools.

Read our full review of Betterment.

Betterment at a glance

Account minimum

$0 for Betterment Digital, $100,000 for Betterment Premium.
Account management fee

0.25% for Betterment Digital, 0.40% for Betterment Premium.
Investment expense ratios

Average expense ratio of 0.11%.
Account fees (annual, transfer, closing)

None.
Portfolio mix


  • Core portfolio uses ETFs from 13 asset classes.

  • Portfolio options include: Betterment Core, Betterment Socially Responsible Investing (SRI), Goldman Sachs Smart Beta, Blackrock Target Income, Betterment Flexible Portfolio.

  • Portfolio mix is well-diversified but lacks exposure to non-market correlated assets like real estate investment trusts (REITs) and commodities.

Socially responsible portfolio options

Clients can choose to invest in SRI portfolio options for no additional fee.
Accounts supported

  • Individual and joint nonretirement accounts.
  • Roth, traditional, rollover and SEP IRAs.
  • Trusts.
  • Ability to link external accounts for personalized advice (but not direct management).
  • High yield savings/cash account (not charged management fee).
Tax strategy


  • Tax-loss harvesting

  • Tax-Coordinated Portfolio tool

  • Tax Impact Preview tool

  • Charitable giving tool

Automatic rebalancing

  • Free on all accounts.
  • Monitored daily. Buy/sell rebalancing triggered whenever portfolio drifts, reaches or exceeds 3%.
  • Also, Betterment uses any cash flow, such as a dividend or deposit, to partially rebalance your portfolio.
Human advisor option


  • Betterment Digital doesn't offer access to financial advisors. However, for a fee, anyone can buy an advice package that includes a consultation with an advisor, regardless of if they have a Betterment account or not. Prices range from $199 to $299.

  • Betterment Premium customers get unlimited phone calls and emails with a team of certified financial planners.

Savings account/cash management option


  • High-yield savings with no fees or minimum balance requirements, unlimited transfers and FDIC coverage for balances up to $1 million.

  • New Cash Goals feature enables customers to save in separate buckets for different goals.

Customer support options (includes website transparency)

  • Phone support Monday-Friday 9 a.m.-8 p.m. Eastern time for checking and cash reserve inquiries.
  • Phone support Monday-Friday 9 a.m.-6 p.m. Eastern time for investing and general inquiries.
  • Email support and questions answered through social media as well.

 

 

Wealthfront is best for:

  • Hands-off investors.
  • Taxable accounts.
  • Free financial tools, even if you don’t have a Wealthfront account.
  • 529 college savings plan management.

Read our full review of Wealthfront.

Wealthfront at a glance

Account minimum

$500 for investment accounts, $1 for cash accounts, $0 for financial planning.
Account management fee

0.25% (first $5,000 managed free for NerdWallet readers).
Investment expense ratios

ETF expense ratios average 0.08%.

Portfolios that include the Wealthfront Risk Parity Fund have an average expense ratio of 0.11%.
Account fees (annual, transfer, closing)

None.
Portfolio mix


  • ETFs from 12 asset classes (portfolios generally consist of 6 to 8).

  • Clients can customize their Wealthfront portfolio by adding or deleting certain ETF holdings or building their entire portfolio from scratch.

  • Taxable accounts can opt-in for WFRPX, the Wealthfront Risk Parity Fund. Accounts will hold a mix of three ETFs (VTI, EMB, BND) until balances reach $100,000, at which point the Risk Parity Fund replaces these ETFs.

  • Portfolios over $500,000 are eligible for smart beta.

Socially responsible portfolio options

Clients can choose to invest in SRI portfolio options for no additional fee.
Accounts supported

  • Individual and joint non-retirement accounts.
  • Roth, traditional, rollover and SEP IRAs.
  • Trusts.
  • 529 college savings plans.
  • High yield cash account (not charged management fee).
Tax strategy


  • Daily tax-loss harvesting free for all taxable accounts.

  • Stock level tax-loss harvesting (direct indexing) can be selected. Balances under $100,000 will hold a particular ETF, VTI.

  • TurboTax customers can easily import tax-loss harvesting data from Wealthfront.

Automatic rebalancing

Free on all accounts.
Human advisor option

None.
Savings account/cash management account

The Wealthfront Cash Account offers high interest checking. The cash account offers a competitive yield and is covered by up to $1 million in FDIC insurance. The account requires just $1 to get started.
Customer support options (includes website transparency)

Licensed product specialists (have Series 7 & 66 and some are CFAs/CFPs/CPAs) available to provide support or product information via phone or email (they do not make recommendations or give advice).

Phone support Monday-Friday 8 a.m. to 5 p.m. Pacific; and all emails are responded to within one business day.

 

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