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- The biggest deciding factor between these two robo-advisors: 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 financial planning tools are more robust. Other considerations include the type of account you plan to open, investment portfolios and key features.
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Jan 2, 2024 · Compare two robo-advisors on fees, portfolios, accounts, features and human advisors. Betterment offers tax-loss harvesting and cash management, while Wealthfront has free financial planning tools and smart beta portfolios.
- Account Setup
- Account Types
- Account Services
- Goal Planning
- Portfolio Construction
- Portfolio Customization
- Portfolio Management
- Tax-Advantaged Investing
- Security
- User Experience
- GeneratedCaptionsTabForHeroSec
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. While Betterment does recommend a por...
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 will recommend a core portfolio, informed by your responses to the initial quiz, without requiring potential users to input a Social Security number. The recommendation will be 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...
Account Setup Verdict: Wealthfront
While both Betterment and Wealthfront have smooth account setup processes, Wealthfront has the edge in this category because you can get a deeper preview of the platform and your suggested portfolio without providing your Social Security number. Additionally, anyone can use Wealthfront’s comprehensive goal-planning tools without investing.
Betterment
1. Individual taxable 2. Joint taxable 3. Traditional IRA 4. Roth IRA 5. 401(k) rollover IRA 6. SEP IRA 7. Trust 8. 529 college savings plan (only available through an employer) 9. Cash reserve and checking
Wealthfront
1. Individual taxable 2. Joint taxable 3. Traditional IRA 4. Roth IRA 5. 401(k) rollover IRA 6. SEP IRA 7. Trust 8. 529 college saving plan 9. High-interest cash
Account Types Verdict: Tie
Both Betterment and Wealthfront offer the typical account types, including cash management, but neither offers custodial accounts. 1 Wealthfront previously had an edge with its 529 college savings account, however, Betterment recently added this feature. 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.
Cash Management
Betterment offers two account types for fee-free cash management: checking and Cash Reserve accounts. The Cash Reserve account is a high-yield cash account, currently offering 5.00% APY and an introductory rate of up to 5.5% APY for new customers for the first three months. The checking account includes a Visa cashback debit card and ATM fee reimbursement in the U.S. and internationally. There are no overdraft fees or minimum balance requirements.The company also offers automatic sweeps into...
Account Services Verdict: Tie
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 reimbursements and offers a slightly higher interest rate for new customers. Wealthfront has a large ATM network along with the ability to pay bills with its cash account while investors will enjoy paying $0 in fees. Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to p...
Betterment
At Betterment, clients can set up multiple goals and enable distinct asset allocations in line with the goal type and time horizon.Betterment gives investors the option to set potential timelines for the following goal types: 1. Major Purchase 2. Education 3. Retirement 4. Retirement Income 5. General Investing 6. Emergency Fund Additionally, investors can set goals within their cash and crypto accounts as well. Based on the expected time horizon–except for the Emergency Fund, which doesn’t h...
Wealthfront
Wealthfront's goal planning is integrated with its excellent Path digital financial planning tool. This goal planning tool is completely free, and you don’t even have to invest with Wealthfront to access it; however, you do need to enter your personal information. The company also offers the ability to link your accounts in order to get a comprehensive picture of your current financial situation and run scenarios on future financial goals to see how one goal will affect another and the tradeo...
Goal Planning Verdict: Wealthfront
While both platforms excel with goal-planning tools, reporting, and scenario analysis, Wealthfront takes this category due to its more comprehensive analysis of all your synced data to determine your current financial health. Investors will also appreciate the Path feature and find it to be an incredible tool.
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 ESGoptions, and additional customization options through flexible portfolios.
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 gives investors the ability to build and automate their investment portfolio. Investors can choose from recommended portfolios, adjust the recommendations, build their own portfolio, or transfer their portfolio over from another brokerage firm. Wealthfront also offers investors the ability to automate features such as tax-loss harvesting, intelligent dividend reinvestment, and tax-sensitive rebalancing. Additionally, investors can choose from hundreds of funds in categories such a...
Portfolio Customization Verdict: Wealthfront
Although Betterment has upped its game in this area, Wealthfront still has the edge when it comes to portfolio customization.
Betterment
Betterment’s algorithms check for portfolio drift. Portfolio rebalancing will occur automatically with each cash inflow or outflow. When you deposit cash into your account, the money will be used to buy asset classes that are underweight; likewise, when cash is withdrawn from your account, Betterment will sell asset classes that are overweight. If no cash is flowing in or out of the account, rebalancing will automatically occur once your portfolio drifts 3% from the targets.
Wealthfront
Wealthfront monitors your portfolio daily and rebalances when there are significant differences between your desired asset allocation and the actual asset class balance.However, there are no specific parameters based on time or percentage of portfolio drift that trigger a rebalance, so it can be unclear for investors exactly when this will take place. After linking your accounts, the Path digital financial advisor can use all of your investment information to project your finances and net wor...
Portfolio Management Verdict: Tie
Both Wealthfront and Betterment offer regular rebalancing, although Betterment offers clear guidelines as to when portfolio rebalancing will occur, while Wealthfront does not. This is a personal preference that investors will want to take into account; however, this category remains a tie.
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...
Betterment
Betterment offers high levels of data and identity protection to investors, including: 1. TLS data encryption 2. Two-factor authentication for logging in 3. Biometric authentication for mobile devices 4. Limited data access for employees 5. Fraud protection procedures 6. Protected password storage for third parties 7. Dedicated, in-house security team Additionally, Betterment offers investors FDIC and SIPC insurance: 1. Cash Reserve accounts are eligible for up to $2 million ($4 million for j...
Wealthfront
Wealthfront offers the following security to platform users: 1. Two-factor authentication 2. Scanning for unusual behavior related to transactions and linked accounts 3. Limited data access for employees 4. Internal security team that evaluates risks across Wealthfront’s platform In addition, Wealthfront also offers FDIC and SIPC insurance to investors: 1. Wealthfront Cash Accounts are eligible for $250,000 coverage from a single financial institution, up to $8 million of FDIC insurance for c...
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 and can monitor and adjust goals from there as well.
Betterment
Betterment offers both iOS and Android apps for mobile users. Reviews on Google Play give the app a high rating of 4.7 stars and Apple users come in even better with a 4.7-star ranking.This all-in-one app allows users to have access to all of the Betterment accounts under a single login, as well as have all the capabilities that desktop users have.
Wealthfront
Wealthfront also offers both iOS and Android apps for mobile users. Reviews on Google Play and Apple come in even higher than Betterment, scoring a 4.9-star ranking on Google Play and a 4.8-star ranking on the App Store.The simplicity of use and access to all accounts under one login gives investors the mobile experience that they are looking for on the go.
Compare two popular robo-advisors based on account minimum, fees, portfolio options, and account services. Learn the pros and cons of each platform and find out which one suits your investing needs.
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