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Betterment vs. Wealthfront: Which robo-advisor is right for you?

Each company uses passive-investing strategies to grow your money.


Fact checked
Betterment vs. Wealthfront
Betterment and Wealthfront both bring core benefits that separate them from traditional wealth management firms, such as low costs, automated investing and tax savings. But you’ll find features that differentiate the two, such as a $500 minimum deposit.
Name Product Minimum deposit to open Available asset types Annual fee
Mutual funds
Real estate
0.25% on balances up to $99,999

0.4% on balances of $100,000+
Betterment's automatic investment site aims to improve your returns and support good financial habits with passive investing and financial planning support.
Mutual funds
Index funds
Wealthfront builds a free financial plan for the life you want and automate your investments at a low cost.

Compare up to 4 providers

Betterment and Wealthfront: At a glance

Betterment and Wealthfront are relatively new companies, each founded in 2008. But they’re growing at a rapid pace.

If you’re looking for an edge, Betterment manages more assets.

Assets under management (AUM)$16.4 billion$20 billion
Number of accounts444,000250,000
HeadquartersNew York CityRedwood City, CA

How they work

Betterment and Wealthfront are robo-advisors. That means they use computer algorithms to manage your investments.

In a nutshell, computers follow specific rules when choosing where to invest your money, constantly rebalancing your portfolio to match your risk tolerance.

What does it mean to rebalance your portfolio?

“Rebalancing” is adjusting your holdings to match the amount you want in certain investments.
Say you want your portfolio to hold 50% stocks and 50% bonds.

  • In this case, you’d buy an even value of each — say, $5,000 in stocks and $5,000 in bonds. Your portfolio is worth $10,000.

After a few months, the prices of your stocks go up. At this point, your portfolio’s value might be 60% in stocks and 40% in bonds.

  • For example, you might have $7,500 in stocks and $5,000 in bonds. Your portfolio is now worth $12,500.

If you decide to rebalance your portfolio, match your 50/50 mix of stocks and bonds.

  • You might sell some stocks and buy bonds — enough so each type once again makes up 50% of your holdings. In the end, you have $6,250 in stocks and $6,250 in bonds.

Robo-advisors follow a unique premise: That computers can choose investments better than humans can.

Cost-wise, these machines save robo-advisors a lot of money that would otherwise go to human financial advisers. They can pass on those savings to you.

Fees, minimum deposits and expense ratios

When evaluating a wealth manager, it’s often smart to start with fees. Betterment and Wealthfront offer good news, as they’re less expensive than many traditional firms.

Advisory fee for basic plans

  • 0.25%
  • 0.25%

In wealth management, 1% is a common advisory fee. Betterment and Wealthfront beat that figure handily, charging just 0.25% of your portfolio a year.

Advisory fee for premium plans

  • 0.4%
  • N/A

Betterment offers an optional upgraded plan, open to customers with accounts worth $100,000 or more.

The plan includes professional guidance for managing your investments outside of Betterment, such as stocks, 401(k)s and real estate. Furthermore, you can talk to Betterment’s certified financial planners if you need help with big life events, like having a child, getting married or retiring.

Wealthfront doesn’t offer a premium plan.

Minimum deposit

  • None
  • $500

Betterment requires no minimum deposit, whereas Wealthfront requires a $500 minimum.

If you have less than $500 to invest, Betterment is your default choice. But once you hit the $500 mark, your decisions expand considerably.

Expense ratios

An expense ratio is an annual fee charged by an ETF or mutual fund. You’ll pay expense ratios on the investments you hold with Betterment and Wealthfront.

Neither company charges additional transaction fees to buy ETFs or mutual funds on your behalf.

What’s the average expense ratio?

For actively managed mutual funds, expect to pay an expense ratio of 0.5% and 1% on average.

For ETFs, the average expense ratio is 0.44%.

Wealthfront offers its own Risk Parity Mutual Fund, which invests in assets based on risk, instead of returns. The company charges a 0.25% expense ratio for the fund, which is lower than the industry average.

According to Wealthfront, this increases your portfolio’s weighted expense ratio. That means you’ll pay slightly more in fees. However, the company says your portfolio’s weighted expense ratio will increase by no more than 0.03%.

How does weighted expense ratio work?

It’s fairly easy to find the expense ratio for one mutual fund. For example, the Wealthfront Risk Parity Mutual Fund charges 0.25%.

But what if you have multiple mutual funds in your portfolio — how do you calculate the overall expense ratio you’re paying?

You use the weighted expense ratio.

To calculate it, you need:

  • The amount you’ve invested in each mutual fund.
  • The expense ratio for each mutual fund.

Let’s say you find three mutual funds and invest $10,000 in each of them. The mutual funds have expense ratios of 0.70%, 0.60% and 0.50%.

FundAmount investedExpense ratioExpense ratio in dollars
Fund A$10,0000.70%$70
Fund B$10,0000.60%$60
Fund C$10,0000.50%$50

In total, you’re paying $180 in expense ratios:

  • $70 + $60 + $50 = $180

You have $30,000 invested in your portfolio. That means you’re paying $180/$30,000 = 0.006 of your portfolio in expense ratios. So, your weighted expense ratio is 0.6%.

The bottom line on fees

Betterment and Wealthfront offer similar fee structures. But one may be better for you, depending on how much you have to invest.

  • Under $500. If you want to get started for less than $500, then Betterment is the default choice. Wealthfront requires a minimum deposit of $500.
  • Over $100,000. If you have $100,000 or more to invest and want a high-touch management firm, Betterment could be a better choice. You can upgrade your plan for more hands-on service and phone-based advice from human advisers.

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Winner: Betterment

Our top pick: Betterment

  • Automatic, passive investing
  • Customized retirement planning
  • Low management fees

Our top pick: Betterment

Betterment's automatic investment site aims to improve your returns and support good financial habits with passive investing and financial planning support.

  • Automatic portfolio rebalancing
  • Retirement planning tools & custom advice
  • Automatic microsavings with SmartDeposit

What types of accounts can I open?

Both Betterment and Wealthfront offer these accounts:

  • Taxable (individual and joint). Build long-term wealth.
  • Trust. Hold assets on a beneficiary’s behalf.
  • Traditional IRA. Avoid taxes until you withdraw during retirement.
  • Roth IRA. Pay taxes on contributions, but future withdrawals are tax-free.
  • SEP IRA. Save for retirement as a self-employed contractor or sole proprietor.

Wealthfront also offers a 529 college savings plan, an account that helps you save for higher education expenses. Your withdrawals aren’t subject to federal taxes.

The bottom line on account types

Both companies offer virtually the same account types. The biggest difference is whether you want to open a 529 plan for college expenses, which only Wealthfront offers.

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Winner: Wealthfront

What can you invest in?

Betterment and Wealthfront will invest your money into exchange-traded funds (ETFs) of different asset classes. You’ll specify how much risk you want with your portfolio, then Betterment or Wealthfront periodically rebalances your portfolio to match the target allocation.

Betterment asset classes

Betterment invests in ETFs from up to 12 asset classes.

  • US high-quality, low-duration bonds
  • US low-duration, inflation-protected bonds
  • US municipal bonds
  • US total bond market
  • International bonds
  • Emerging market bonds
  • US total stock market
  • US large-cap value stocks
  • US mid-cap value stocks
  • US small-cap value stocks
  • International developed stocks
  • Emerging market stocks

Wealthfront asset classes

Wealthfront invests in ETFs from up to 11 asset classes.

  • US government bonds
  • Corporate bonds
  • Emerging market bonds
  • Municipal bonds
  • Treasury inflation-protected securities (TIPS)
  • US stocks
  • Foreign developed market stocks
  • Emerging market stocks
  • Dividend growth stocks
  • Real estate
  • Natural resources

How they differ

Betterment offers additional portfolios:
  • Betterment SRI. A socially responsible investing (SRI) portfolio investing in companies that seek to improve the world with their business practices.
  • Goldman Sachs Smart Beta. Seek higher returns while taking on slightly more risk. It’s a hybrid of passive and active investing.
  • BlackRock Target Income. A portfolio consisting entirely of bonds. It carries low risk.
Wealthfront invests in real estate, natural resources and Treasury inflation-protected securities; Betterment doesn’t.

Wealthfront offers SRI for accounts worth at least $100,000 and Smart Beta for accounts worth at least $500,000.

The bottom line on asset classes

Both companies offer a similar assortment of asset classes. However, your portfolio may be more diversified with Wealthfront, because the company offers a few additional asset classes that Betterment doesn’t.

On the other hand, Betterment offers more portfolio options that allow you to pursue different investment strategies.

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Winner: Tie

Tax savings

Betterment and Wealthfront use tax-loss harvesting. This means they strategically sell ETFs at a loss so that you can offset income on your taxes.

Both companies rebalance your portfolio with the dividends you earn. And because the companies invest mostly in index funds, they sell investments in your portfolio sparingly. This helps you save on capital gains taxes.

Extra features: Wealthfront

  • If you have $100,000 to $500,000 in your account: Access stock-level tax-loss harvesting. Wealthfront strategically sells individual stocks at a loss for tax savings.
  • If you have $500,000 or more in your account: Access Smart Beta, a strategy that adds securities to your portfolio beyond market-capitalization criteria.

Extra features: Betterment

Betterment offers its Tax-Coordinated Portfolio service. The company distributes highly taxed assets to your IRAs, which offer significant tax advantages. It distributes low-taxed assets to your taxable accounts.

The bottom line on taxes

Tax-loss harvesting is a key feature of both companies, and in this sphere they’re evenly matched. Take a close look at Wealthfront’s tax-saving features if you have $100,000 or more in your account.

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Winner: Tie


Android app ratingiOS app rating

Betterment’s app earns a 4.0 rating in the Google Play Store and a 4.8 in the App Store. Users say it is easy to use but they are experiencing difficulties in opening up the app and creating an account after its most recent update.

Wealthfront’s app enjoys better ratings, with a 4.9 in the Google Play and the App Store. Users say the app is easy to use, offers great account-linking options and presents a sleek interface.

Bottom line on apps

Both companies’ apps are highly regarded, though Wealthfront earns a higher user rating.

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Winner: Wealthfront

Customer support

PhoneWeekdays from 9 a.m. to 6 p.m. ESTWeekdays from 11 a.m. to 8 p.m. EST
Email supportYesYes
Live chatNoNo
Speak with a financial adviserYesNo

Bottom line on customer support

With Betterment, you can call a financial adviser. Wealthfront doesn’t offer this option. This could be a major differentiator if you think you’ll have questions about your portfolio.

Both companies offer phone support if you need technical assistance.

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Winner: Betterment

Special benefits

Here are a few more factors that separate each company.


  • Fractional shares. Betterment will invest all of your money without leaving a cash balance in your account. This reduces cash drag, where some of your money isn’t growing in the market because it’s sitting in your account as cash.
  • No minimum for socially responsible investing. All Betterment members can join its socially responsible investing (SRI) portfolio. Wealthfront offers SRI options only through stock-level tax-loss harvesting and Smart Beta, meaning your account must be worth at least $100,000.
  • Charitable giving. Donate shares from your account to charities such as Big Brothers Big Sisters of NYC, UNICEF and World Wildlife Fund. This can help you save on capital gains taxes.


  • Path. A program that helps you plan for retirement. Wealthfront analyzes your financial habits, determines how much money you need for retirement, tells you how much you can save for a better retirement and guides you to the right investments.
  • Portfolio Line of Credit. If you have at least $100,000 in your portfolio, you can take out a line of credit with Wealthfront. Your portfolio serves as collateral, and interest rates are from 4.05% to 5.30%.
  • Risk Parity. If you have at least $100,000 in your portfolio, you’ll qualify for the Risk Parity Fund. According to Wealthfront, it helps you balance your risk in a variety of market environments.

Bottom line

Betterment and Wealthfront are two of the top robo-advisors on the market. Neither is head and shoulders above the other, which may be a good thing: You have two solid options to choose from.

As the services are evenly matched, try looking for specific differences between the two that might tip the scales. You may want to get started for a very low dollar amount, for example, in which case Betterment may be right for you. Or you may want a 529 plan for college, making Wealthfront the better choice.

If you’re not ready to decide, consider comparing other robo-advisors.

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