Betterment vs. Wealthfront: 2024 Comparison - NerdWallet (2024)

FAQs

Betterment vs. Wealthfront: 2024 Comparison - NerdWallet? ›

Betterment and Wealthfront both charge 0.25% for digital portfolio management. But Wealthfront also offers digital financial planning tools, while Betterment offers access to financial advisors for an upgraded fee. Arielle O'Shea leads the investing and taxes team at NerdWallet.

Additionally, both companies are among the winners in our list of the best robo-advisors of 2023, with Wealthfront winning best overall, best for goal planning, best for portfolio construction, and best for portfolio management, while Betterment is best for beginners and cash management.

M1 Finance offers two account types unavailable to Wealthfront customers: margin accounts and checking accounts. While Wealthfront does offer a cash management account, M1 Finance is the best option for anyone hoping to open a dedicated savings account under the same roof as their brokerage account.

One of the biggest downsides to using Betterment is that you can't pick your own investments, as the only option is to use the automated investing services. And while Betterment's fees are quite reasonable, there are other platforms with lower fees.

Your cash is insured by the Federal Deposit Insurance Corporation (FDIC). This coverage protects your cash in the event that a bank goes out of business. Wealthfront uses multiple partner banks to ensure FDIC coverage of up to $8 million for your cash deposits.

The main con of Wealthfront is that its required $500 minimum deposit is higher than other free robo-advisors like SoFi Invest and Betterment Investing.

Betterment's top competitors include Folio, BrightPlan, and Magnus. FOLIO provides an algorithm-based service, which acts as an automated money manager for lower fees and less initial capital than traditional services but also provides … Betterment's Analyst Briefing includes information on: Pricing.

Wealthfront is not a bank, but the funds in your Wealthfront Cash Account are FDIC insured up to $8 million through our partner banks where we sweep your deposits. This means you can benefit from more FDIC insurance without the hassle of dealing with multiple banks yourself.

Schwab doesn't charge management fees but requires you to hold cash in the portfolio. Wealthfront offers greater customization options and excellent digital financial planning tools at a lower account minimum and competitive fee.

Limited Software Compatibility: One notable drawback of the M1 chip is its limited software compatibility with legacy applications designed for Intel-based Macs. While Apple's Rosetta 2 translation technology helps run some x86 applications, not all programs work seamlessly, potentially leading to user inconvenience.

What happens if Betterment goes out of business? ›

Your portfolio is insured up to $500,000, with up to $250,000 maximum for uninvested cash. But SIPC insurance only reimburses you if Betterment goes bankrupt. It doesn't cover investment losses.

Betterment's alleged failures were related to “tax-loss harvesting,” a technique common among financial planners whereby taxes on investment profits are reduced or eliminated by offsetting them with losses from other investments.

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.

The SEC's order also found that Wealthfront improperly re-tweeted prohibited client testimonials, paid bloggers for client referrals without the required disclosure and documentation, and failed to maintain a compliance program reasonably designed to prevent violations of the securities laws.

The bottom line is: we've been good for our clients' bottom lines. Investors in Wealthfront's Classic Automated Investing Account, with a risk score of 9, watched their pre-tax investments grow an average of 7.99% every year since we started.

Is Betterment Worth It? Betterment can be worth it if you want to help build and manage your investment portfolio without paying the full cost of a human financial advisor. A human advisor could charge 1% or more per year, roughly four times Betterment's robo-advisor fee.

The Wealthfront Automated Bond Portfolio account is an intriguing way to earn yield on short-to-medium term savings that aren't a good fit for investing in CDs or stocks. Betterment is a better choice for simple, automatic investing, and if you like Betterment's assortment of expert-built ETFs.

Yes, and there are no fees to transfer from your Wealthfront account to another broker. You can transfer in-kind from your Wealthfront Automated Investing Account (including IRAs) or your Wealthfront Stock Investing Account to another broker via the ACATS system.