Betterment Review 2024: Pros, Cons and How It Compares

Betterment’s goal-oriented tools and helpful tax strategies should appeal to investors of all types. Access to human advisors is available with the Premium plan, or by purchasing a standalone advice package.
Alana Benson
By Alana Benson 
Edited by Pamela de la Fuente

Paid non-client promotion. NerdWallet doesn’t invest its money with this provider, but they are our referral partner – so we get paid only if you click through and take a qualifying action (such as open an account with or provide your contact information to the provider). Most importantly, our reviews and ratings are objective and are never impacted by our partnerships. Our opinions are our own. Here is a list of our partners and here's how we make money.


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Our Take

5.0

NerdWallet rating 

Reviewed in: Oct. 2023

Period considered: Aug. - Oct. 2023

The bottom line:

Betterment is a clear leader among robo-advisors, offering two service options: Betterment Digital provides automated portfolio management at $10 to start an account; Betterment Premium provides unlimited phone access to certified financial planners for a $100,000 account minimum.

Betterment
Fees
0.25%
with a balance over $20K or qualifying recurring deposit. Otherwise, $4/month.
Account minimum
$0
$10 to start
Promotion
None
no promotion available at this time
Learn more

on Betterment's website

AD

Paid non-client promotion

Pros & Cons

Pros

  • Multiple portfolio options, including customization.

  • Low account minimum and fees

  • Fractional shares allow all cash to be invested.

  • Robust goal-based tools.

Cons

  • No direct indexing.

Compare to Other Advisors

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Fees 

0.25%

with a balance over $20K or qualifying recurring deposit. Otherwise, $4/month.

Fees 

Varies by Advisor (free initial consultation)

Fees 

0%

management fee

Fees 

0.25%

management fee

Account minimum 

$0

$10 to start

Account minimum 

$150,000

Account minimum 

$0

Account minimum 

$500

Promotion 

None

no promotion available at this time

Promotion 

3-Month Satisfaction Guarantee

Promotion 

SoFi will match 2% of your contributions to your IRA

Offer lasts through Tax Day, 4/15/24. Only offers made via ACH are eligible for the match. ACATs, wires, and rollovers are not included.

Promotion 

Get a $50 customer bonus

when you fund your first taxable investment account

Learn more

on Betterment's website

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on Zoe Financial's website

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on SoFi Invest's website

Learn more

on Wealthfront's website

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Paid non-client promotion

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Paid non-client promotion

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Paid non-client promotion

NerdWallet doesn’t invest its money with this provider, but they are our referral partner – so we get paid only if you click through and take a qualifying action (such as open an account with or provide your contact information to the provider). Most importantly, our reviews and ratings are objective and are never impacted by our partnerships. Our opinions are our own. Here is a list of our partners and here’s how we make money.

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Full Review

Where Betterment shines

Lots to like: Betterment offers multiple portfolio options, has a low minimum investment, and charges a very reasonable annual management fee of just 0.25% for those who qualify. Otherwise, it's $4 per month.

Fractional shares: Fractional shares mean all your cash is invested.

Where Betterment falls short

No direct indexing: While Betterment does offer tax-loss harvesting, the firm does not offer direct indexing. This is where Betterment falls short of competitor Wealthfront, where direct indexing is available for free on accounts of $100,000 or more.


Betterment is best for:

  • Hands-off investors.

  • Retirement investors.

  • Users with low balances.

  • Those who want automatic rebalancing.

  • Users who like goal-based tools.

Betterment at a glance

Reviewed: Oct. 2023

Period considered: Aug. - Oct. 2023

Account minimum

$0 ($10 to start investing).

Account management fee

0.25% annual fee on balances over $20,000 or if you set up recurring monthly deposits totaling $250 or more. Otherwise, $4 per month.

Investment expense ratios

Average expense ratio of 0.05% to 0.24% for Betterment Core Portfolio as of August 2023.

Account fees (annual, transfer, closing)

$75 outbound transfer fee.

Portfolio mix

Core portfolio uses ETFs from 13 asset classes. Portfolio options include: Betterment Core, Goldman Sachs Smart Beta, Blackrock Target Income, Betterment Flexible Portfolio (where clients can adjust the weights of asset classes) and Innovative Technology. Portfolio mix is well-diversified but lacks exposure to non-market correlated assets like real estate investment trusts (REITs) and commodities.

Betterment also offers four cryptocurrency portfolios: Universe, Sustainable, Metaverse and Decentralized Finance.

Socially responsible portfolio options

Three socially responsible investing portfolio options: Broad Impact, Climate Impact, and Social Impact.

Accounts supported

Individual and joint taxable brokerage accounts. Roth, traditional, inherited, rollover and SEP IRAs. Trusts. Ability to link external accounts for better-informed advice (but not direct management).

Tax strategy

Tax-loss harvesting.*

Tax-Coordinated Portfolio (asset location) tool.

Tax Impact Preview tool.

Charitable giving tool.

Automatic rebalancing

Free on all accounts. Rebalancing generally triggered when drift passes 3%, considering tax impact. 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 start at $299.

Savings account/cash management option

Cash Account** with no fees or minimum balance requirements, unlimited transfers and FDIC coverage of up to $2 million in individual accounts or up to $4 million in joint accounts at program banks. Includes a feature that enables customers to save in separate buckets for different goals. Checking account that reimburses ATM fees and foreign fees and has a debit card with cash back. The cash account offers an interest rate of 4.75%. *Current promotional rate; annual percentage yield (variable) is 4.75% as of 7/31/23, plus a .75% boost available as a special offer with qualifying deposit. Terms apply; if the base APY increases or decreases, you’ll get the .75% boost on the updated rate. Cash Reserve is only available to clients of Betterment LLC, which is not a bank; cash transfers to program banks conducted through clients’ brokerage accounts at Betterment Securities.

Customer support options (includes how easy it is to find key details on the website)

Phone support Monday-Friday 9 a.m.-6 p.m. Eastern time. Email support and questions also answered through social media.

More details about Betterment's ratings

Looking for access to financial advisors? Jump to Betterment Premium.

Account minimum: 5 out of 5 stars

Betterment doesn’t require any minimum investment to open an account, but there is a $10 minimum to start investing.

Account management fee: 5 out of 5 stars

Betterment’s digital investing tier charges a 0.25% annual fee on balances over $20,000 or if you set up recurring monthly deposits totaling $250 or more. If you don't meet those criteria, you'll be charged $4 per month.

Most robo-advisors charge a fee of around 0.25% across all account balances. But if you have a $10,000 balance and you're paying $4 per month you're essentially paying a 0.48% fee.

If you have a high account balance, for the portion of your household balance above $2 million, you'll receive a 0.10% discount. This means that on the Digital plan, you'll pay just 0.15% for the portion of your balance above $2 million, and on the Premium plan, you'll pay 0.30% for the portion of the balance above $2 million.

Investment expense ratios: 4 out of 5 stars

An expense ratio is an annual fee charged by mutual funds, index funds and ETFs, as a percentage of your investment in the fund. If you invest in a mutual fund with a 1% expense ratio for example, you’ll pay the fund $10 per year for every $1,000 invested. If high, these fees can significantly drag down your portfolio returns, but the expense ratios of the funds used in Betterment portfolios are fairly low, ranging from 0.05% to 0.24% for the Betterment Core Portfolio. Expense ratios are paid in addition to Betterment’s management fee (but since they are deducted from your account, you won’t see it as a separate fee).

Account fees: 4 out of 5 stars

In addition to its account management fee and expense ratios, Betterment charges a $75 outbound transfer fee. The crypto portfolios may carry separate fees, but they top out at about 0.15% per trade. That is on the lower end of the spectrum among crypto exchanges reviewed by NerdWallet.

Portfolio mix: 4 out of 5 stars

Like many robo-advisors, Betterment bases its investment philosophy on modern portfolio theory, which highlights the benefits of diversification. In its core portfolio, the company uses exchange-traded funds that represent about 13 asset classes for different levels of risk tolerance and your goals. Customers who want a bit more control over their investment portfolio can utilize Betterment’s Flexible Portfolio to adjust the weights of their asset classes.

Investors can choose from several portfolio options: a smart beta portfolio that seeks higher-than-average returns by embracing systematic risks, and an innovative technology portfolio that focuses on industries such as semiconductors, virtual reality and artificial intelligence and a Blackrock Target Income portfolio. Betterment also offers several socially responsible portfolios (more on this below).

Betterment also offers a distinctive cryptocurrency product, through which it allows customers to buy a diversified portfolio of digital assets focused on particular sectors of the blockchain space.

Betterment has four crypto portfolios, including Universe, a broad crypto offering, Sustainable, a more energy efficient crypto option, Metaverse, which focuses on emerging digital experiences, and Decentralized Finance, a portfolio that features decentralized financial services.

One notable aspect of Betterment’s offerings include a “golden rule” feature that encourages overall portfolio diversification by encouraging customers not to put more than 5% of their investable assets into crypto.

Socially responsible portfolio options: 5 out of 5 stars

Betterment not only has a socially responsible portfolio option, it has three. Broad Impact doesn’t focus on any one particular issue, but is intended for those who are interested in Environmental, Social and Governance investing at large. Climate Impact invests in companies with lower carbon emissions, the funding of green projects and divestment from fossil fuels. The Social Impact portfolio focuses on supporting minority empowerment and gender diversity.

Accounts supported: 5 out of 5 stars

Betterment supports individual and joint taxable brokerage accounts, Roth, traditional, inherited, rollover and SEP IRAs, and trusts.

» Want to check out other providers? Here are our top picks for best robo-advisors.

Betterment will allow you to link external accounts for personalized advice (but it will not manage those accounts directly).

Tax strategy: 5 out of 5 stars

Betterment offers tax-loss harvesting on taxable accounts.* The platform reviews your investments to reduce tax exposure, and if certain conditions are met, takes action in your account. But it doesn’t have direct-indexing like Wealthfront, which provides this service on taxable accounts with balances of $100,000 or more. Direct indexing buys the single securities held by an index, rather than the ETF tracking that index. That can help single out tax-loss harvesting opportunities.

Betterment's Tax-Coordinated Portfolio is a solid attempt to bridge this gap. This is an "asset location" strategy that automatically puts tax-efficient investments into taxable accounts and investments that have a heavy tax burden into tax-advantaged accounts that will shelter them. (You need to have both taxable and tax-advantaged retirement accounts at Betterment for the strategy to work.)

Betterment offers a Tax Impact Preview tool that lets you see the potential tax hit of any portfolio moves before you make them. Betterment also has a charitable giving tool that gives customers a tax-efficient way to donate appreciated securities to charities directly on the Betterment platform.

Note: In April 2023, the Securities and Exchange Commission charged Betterment for misstatements related to its tax-loss harvesting service that impacted 25,000 accounts between 2016 and 2019. The SEC found that Betterment failed to disclose to clients a change in how frequently its tax-lost harvesting software scanned accounts, and had two coding errors that resulted in some clients missing out on the tax-loss harvesting benefits. Betterment has agreed to pay a $9 million penalty to settle the charges and the company tells NerdWallet it has resolved these issues

.

Automatic rebalancing: 5 out of 5 stars

Automatic rebalancing is regular rebalancing of your portfolio in response to market fluctuations or other factors that shift your portfolio out of its intended investment allocation. The market moves and over time, your allocation will move, too. So if your target was having 60% in stocks and 40% in bonds and your stocks are doing well, you could end up having 70% in stocks, which may be more risk than you are comfortable with. With automatic rebalancing, the computer monitors your allocation and will automatically adjust your investment if it gets out of line. Betterment’s algorithms automatically check your portfolio and rebalance them when cash flows in or out — in the form of dividends, contributions or withdrawals — or when the allocation to a particular asset class drifts 3% or more from its target level.

Human advisor option: 2 out of 5 stars

Betterment offers advice packages targeted to specific life events. A $299, 45-minute “getting started” call with a CFP helps new clients set up their Betterment account, make the most of Betterment tools and features, and start investing. The other packages each cost $399 and include advice geared toward college planning, marriage, retirement, crypto and general financial health. With all of the packages, you're speaking with a CFP.

Betterment’s sign-up process takes you through a goal-setting exercise, asking for your age and current annual income. Then it suggests a series of goals based on your answers, estimating a safety net of three to six months of expenses, a retirement savings target and a general investing goal. Each goal comes with a recommended target and asset allocation, which you can adjust. You can also add other, personalized goals that will dictate the account types used and the way your money is invested. And you can set up auto-deposits into each goal.

Savings account/cash management options: 4 out of 5 stars

Betterment offers both checking and cash accounts. The cash account is called Cash Reserve and it comes with an interest rate of 4.75%. (*Current promotional rate; annual percentage yield (variable) is 4.75% as of 7/31/23, plus a .75% boost available as a special offer with qualifying deposit. Terms apply; if the base APY increases or decreases, you’ll get the .75% boost on the updated rate. Cash Reserve is only available to clients of Betterment LLC, which is not a bank; cash transfers to program banks conducted through clients’ brokerage accounts at Betterment Securities.) Cash Reserve offers up to $2 million in FDIC insurance coverage for individual accounts, and up to $4 million in coverage for joint accounts at program banks. There's no minimum balance requirement, and you won't pay a fee on your balance. The Cash Reserve account allows you to create separate buckets of cash for specific goals and set up auto-deposits for each.

Betterment’s checking account has no minimum balance, no foreign transaction fees and no overdraft fees. The company reimburses ATM fees worldwide. There is also a joint checking account option.

» Want more details? Read about Betterment's Cash Management Account.

Customer support options: 4 out of 5 stars

Betterment offers phone support Monday to Friday 9 a.m.-6 p.m. Eastern time.

Betterment also has email support and will address questions through social media.

Other Betterment features you should know

Betterment’s retirement planning tool lets you link your non-Betterment accounts, including 401(k)s, giving a full picture of all your savings and investment accounts.

With this information, the tool can offer comprehensive retirement planning advice, including comparing current savings levels with your desired spending levels in retirement, answering questions about whether you’re saving enough money, when you’ll be able to retire, and if you’re using the correct savings vehicles and investments. It updates and syncs to outside accounts daily and allows for Social Security data uploads.

Betterment’s latest move into crypto, which isn't a common offering among robo-advisors, builds off of its recent acquisition of the cryptocurrency investment platform Makara, which focused on selling similar collections of crypto investments. And it seeks to take on a gap in the field of crypto, which has few readily available products that offer diversified access to the sector. 

Another notable aspect of Betterment’s offerings a “golden rule” feature that encourages overall portfolio diversification by pushing customers not to put more than 5% of their investable assets into crypto. 

Betterment says fees for its crypto products can vary, but they top out at about .15% per trade. That is on the lower end of the spectrum among crypto exchanges reviewed by NerdWallet. 

Betterment Premium at a glance

Betterment Premium is Betterment’s upper-tier service. Betterment Premium charges a 0.40% annual fee and requires a minimum $100,000 balance in exchange for unlimited phone access to a team of certified financial planners. You can also get advice on investments held outside of Betterment from your team of CFPs.

» Want to compare options? Check out our roundup of the best wealth advisors

Reviewed: Oct. 2023

Period considered: Aug. - Oct. 2023

Account minimum

$100,000.

Account management, planning or subscription fee

0.40%.

Setup or onboarding fee

None.

Advisor access and credentials

Clients have unlimited access to a team of CFP professionals for no additional fee. Advisors can be reached Monday to Friday, 10:00 a.m. to 7:30 p.m. Eastern They are available via phone and email.

Financial planning services

Premium includes all the features of Betterment's lower-tier offering, including investing portfolios, socially responsible investing options, automatic features, such as portfolio rebalancing, dividend reinvestment, and auto-adjust. Premium CFPs will be able to help you with some financial planning, such as debt reduction and basic estate planning, but not business planning. Premium clients can also receive in-depth advice on investments held outside of Betterment.

Brokerage options

Only manages accounts held within Betterment.

Is Betterment right for you?

Betterment’s goal-oriented tools and features should appeal to retirement investors, and the human advice offering through Betterment Premium is inexpensive compared with other independent hybrid advisors, such as Empower. But Betterment’s CFPs won’t be able to help you with everything a typical financial advisor can, such as business planning. Betterment’s variety of socially responsible portfolios is a great option for socially conscious investors.

How do we review robo-advisors?

NerdWallet’s comprehensive review process evaluates and ranks the largest U.S. robo-advisors. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.

We collect data directly from providers through detailed questionnaires, and conduct first-hand testing and observation through provider demonstrations. The questionnaire answers, combined with demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across 16 factors. The final output produces star ratings from poor (one star) to excellent (five stars).

For more details about the categories considered when rating robo-advisors and our process, read our full methodology.


*Betterment is not a licensed tax advisor. Tax Loss Harvesting+ (TLH+) is not suitable for all investors and certain conditions apply. Read more at and consider your personal circumstances before deciding whether to utilize Betterment’s TLH+ feature. Investing involves risk. Performance not guaranteed.

**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 our 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.

Learn more

on Betterment's website