Betterment and Wealthfront both offer low-fee automated investing and tax-loss harvesting options. But one of these robo-advisors offers a wider range of investment services and support than the other.
Which one is better?
Choose Betterment if you’d like access to financial advisers.
Choose Wealthfront if you need to open a 529 college savings account.
While each platform offers a respectable lineup of services, Betterment has more to offer investors, including fractional investing, a premium service tier and more robust customer support.
Both platforms have common offerings, including many account options, a 0.25% annual management fee and over 10 asset classes apiece. But Wealthfront’s customer support is limited to email inquiries and its investors are required to deposit $500 to open an account. It also lacks the premium service tier of its competitor, which offers unlimited access to certified financial planners.
Betterment is an online financial advisor that makes investing easy by creating a portfolio just for you, based on your preferences and financial goals. It’s a solid choice for those new to investing.
Wealthfront is an investment firm that removes the guesswork from investing. It helps you build a financial plan and reach your goals with the help of automated investments.
Minimum deposit to open
Fractional shares. Allocate funds to fractional shares to reduce cash drag and optimize their portfolio.
No minimum for socially responsible investing. Unlike its competitor that requires an account minimum of $100,000, Betterment encourages investors to join its socially responsible investing (SRI) portfolio no matter the balance of their portfolio.
Charitable giving. Investors can save on capital gains taxes by donating shares to Big Brothers Big Sisters of NYC, UNICEF and World Wildlife Fund
Certified financial planners. Through its premium service tier, Betterment offers access to certified financial planners.
Automatic rebalancing. Betterment adjusts your portfolios daily, and each time you make a contribution, make a withdrawal or when you receive a dividend.
Robust support. Support is available seven days a week.
Path investment plan. Wealthfront analyzes your financial habits to help you devise a long-term retirement investment plan.
Portfolio line of credit. If you have at least $100,000 in your portfolio and don’t hold a tax-advantaged retirement account, you gain automatic access to a line of credit that allows you to borrow up to 30% of your account value with rates from 4.05% to 5.3%.
Risk Parity. Investors with $100,000 or more can opt into Wealthfront’s Risk Parity feature to minimize investment risk by diversifying across multiple asset classes.
529 accounts. Investors can open a 529 college savings plan — an account that helps you save for higher education expenses.
Automatic deposits. Schedule weekly, biweekly, monthly or quarterly deposits into your account.
No direct indexing. While Betterment uses tax-loss harvesting to increase tax efficiency, it doesn’t offer direct indexing.
Limited accounts supported. Unlike its competitor, Betterment lacks access to 529 accounts.
Minimum balance for Betterment Premium. Investors who want access to Betterment’s certified financial planners need at least $100,000 to open a premium account.
Withdrawal delays. Some reviews complain of delays when withdrawing money from their accounts.
Minimum deposit. While its competitor has no minimum deposit requirement, Wealthfront investors need at least $500 to open an account.
No fractional shares. With no fractional investing, investors may be left with unallocated funds sitting in their portfolio, limiting their earning potential.
Limited support. Wealthfront’s customer support is only available by email.
Tools and research
Advice packages. Outside its Premium service tier, investors can also connect with one of its certified financial planners for a flat fee of $199 to $299.
Investing calculators. Interactive quizzes and calculators help investors identify portfolio opportunities and streamline their savings goals.
Article library. Educational articles written by experts on banking and investment topics.
Educational blog. Provides a suite of educational resources to help new investors familiarize themselves with key terms and strategies.
Financial planning. Its Path tool analyzes your bank accounts, credit cards, loans — even your Social Security — to provide a customized savings plan.
Reputation and customer reviews
Reviews are: Mixed
Customers praise: User-friendly platform and automatic rebalancing
Customers complain about: Account withdrawal delays and unresponsive customer service
Reviews are: Mixed
Customers praise: Tax-loss harvesting and polished platform
Customers complain about: Account transfer delays
Apple App Store reviews
Google Play Store reviews
Phone. Call 646-600-8263
Email. Send a request to Betterment’s customer service Monday through Friday, 9 a.m. to 6 p.m
Live chat: Available Saturday and Sunday, 11 a.m. to 6 p.m. ET.
Phone. Log in to your account to set up a phone call.
Email. You can send an email through the Wealthfront website.
“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.
If you 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.
Betterment and Wealthfront use tax-loss harvesting. This means they strategically sell ETFs at a loss so 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.
Betterment and Wealthfront are two of the top robo-advisors on the market, but Betterment’s $0 minimum deposit requirement, fractional shares and premium service tier makes it the more robust of the two. Unless you’re seeking a 529 account, Betterment stands as the better-equipped robo-advisor for passive investors.
No, Betterment investor portfolios are made up of ETFs.
Transferred funds are available within one to two business days.
Betterment investors can deposit between $10 to $300,000 every two business days. IRA Rollover account withdrawals can only be made after 60 days. You can only make one allocation change daily.
Investors can make withdrawals of $250 or more as often as they’d like as long as their account balance stays above $500.
Yes, new investors must select the transfer option during signup to move assets to Wealthfront. Existing investors simply follow the steps after clicking “Transfer/rollover” on their account dashboard.
Shannon Terrell is a writer for Finder who studied communications and English literature at the University of Toronto. On any given day, you can find her researching everything from equine financing and business loans to student debt refinancing and how to start a trust. She loves hot coffee, the smell of fresh books and discovering new ways to save her pennies.
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