In order to do this, Wealthfront actually buys individual stocks instead of using a single index fund, allowing them to act upon individual stocks instead of entire funds. Betterment also streamlines the entire process. However, it is clear that both platforms leverage low-cost ETFs and historically strong index funds to keep fees down and generate a solid return for investors. Betterment has no minimum initial investment compared to $500 for Wealthfront. Betterment vs. Wealthfront Comparison Costs and Fees. However, Wealthfront also offers stock-level tax-loss harvesting. There is no minimum initial investment to open an account. However, here are the main features and facts to know about each robo advisor: Betterment is a New York based robo advisor that was founded in 2008. With low management fees, reasonable account minimums, and useful features like automatic rebalancing or tax-loss harvesting, robo advisors certainly make investing accessible to any investor. Their digital plan … Betterment's 90% stocks portfolio returned an annual return of 9.3% for the same time period. I using welathfront since 2017. For those who want human interaction, Betterment has a second tier, Betterment … Users pay 0.25% as an account management fee regardless of total balance. Users start by completing a short questionnaire that asks questions about age, annual income, risk tolerance, and investment goals. Additionally, as Wealthfront states in their disclosure, “past performance does not guarantee future results. However, each robo advisor lists their historical returns since inception. Robo advisors create portfolios largely based on your personal investment goals and levels of risk tolerance. My risk score was 9.5/10. For instance, Vanguard’s S&P 500 ETF (ticker: VOO) is one of the worlds largest ETFs. Wealthfront requires a minimum of $500 to invest; Betterment doesn't. Betterment has two plans available: a Digital plan, which assesses an annual fee of 0.25% with a $0 minimum balance, and a Premium plan, with a 0.40% annual fee and a $100,000 minimum … All content on the site is prepared by our staff or by independent contractors. Some of the offers and recommendations that appear on this website are from companies that compensate us. These data sets are the most fair way to compare Betterment vs Wealthfront. We are an independent publisher and financial comparison service supported by advertising. At WealthFam, our top priority is helping readers improve their financial lives. Betterment offers personal investment accounts, Rollovers, trust accounts, Traditional, Roth and SEP IRAs and a Smart Saver account (a low-risk investing account with a 2.00% annual yield). Today we’ll compare two robo advisor titans in our Betterment vs Wealthfront breakdown. Fees vary between Betterment’s Digital and Premium account types. It's like automatic deposits (but more flexible) which can be useful for people who don't have a steady income like freelancers or salespeople earning variable commission. $500 minimum to open an account. Verdict – Betterment. Premium Betterment accounts include all of the features from Digital accounts. As with Betterment, Wealthfront utilizes index-based ETFs in their portfolio composition, selecting low-cost investment funds to help keep expenses low. So we have no clear winner here. Therefore, there isn’t a single explanation or expected rate of return for Betterment or Wealthfront. So who wins the Betterment vs Wealthfront battle? The next step of our Betterment vs Wealthfront debate is to take a quick look at important features like account minimums and fees. In contrast, Wealthfront is appealing to higher net worth investors that can meet the minimum and who will benefit from features like stock-level tax-loss harvesting. Some links herein may be from our partners. In summary, not worth it if you can manage yourself since you can get more by managing by own! WealthFam.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com. Betterment and Wealthfront cater to people that understand the importance of investing but want to invest in largely in a ‘hands off’ way. Betterment vs Wealthfront: Fees Compared Betterment’s Pricing and Fees. This estimate also reflects daily tax-loss harvesting. Tax-loss harvesting involves selling a security that has experienced a loss in order to offset taxes on gains and income. Cooper is a former equity research professional/finance analyst who holds an MBA in Financial Instruments and Markets from New York University's Stern School of Business. ETFs are a wonderful low-cost way to get financial diversification as your investment dollars are spread across a number of companies. Either way, if you want to automate wealth management, getting started with either robo advisor is the perfect way to start improving your finances and invest your money. Both robo advisors have a large market share in the world of robo advisors, and this is for good reason. There are plenty of reasons for Wealthfront to be the second most popular robo advisor on the market. Spoiler Alert – We hate to disappoint but if you’re asking yourself which platform is objectively better there really isn’t a one-size-fits all answer. But because both Betterment and Wealthfront use ETFs, you can basically track their returns by tracking … He left the investment banking world in 2015 to become a full-time investor. Wealthfront charges the same 0.25% annual advisory fee that Betterment charges, but it also charges a fund fee of 0.07% to 0.16%, depending on the funds your money goes into. This enhanced version of tax-loss harvesting analyzes individual stock movements to harvest more tax losses (which can be counted against more capital gains). Our goal is to help you make wiser financial decisions by providing you with personal stories, objective research & data, financial calculators, and interactive comparison tools. Offers increased asset allocation choices including a REIT (Real Estate Investment Trust) and natural resources ETF (exchange traded fund) as well as a single-stock diversification service so you can have increased portfolio diversification. That said, Wealthfront provides a full whitepaper that shows how robust their methodology is in dealing with taxable events. Each platform has unique elements, and we’re going to take a closer look at both Betterment and Wealthfront to help you make the right choice. In two years my side hustle grew into a 7 figure business. After selling the business and becoming financially independent, my wife and I started WealthFam. Betterment compares their low-cost, ETF-focused investment strategies to more actively managed, higher-fee portfolios in this example. However, this compensation does not influence the reviews that you can find on this site. I got my robinhood returns ~65% vs wealth front … According to Betterment’s historical performance page, Betterment “would have outperformed the average investor with an investment advisor in 88% of all periods over the last decade.”. Wealthfront is slightly better for you in terms of fees; even though Betterment has the same fee amount, because Wealthfront waives its fees on the first $10,000 so you'll pay slightly less. This one is a near tie as the account types are fairly similar between each robo advisor and will suit the needs of most all investors. It’s clear there is a market for this type of investing solution given robo advisors have been growing in popularity. Your level of risk tolerance and investment time-frame will be the main factors that influence your investment performance. Like Betterment, Wealthfront focuses on minimizing fees, lowering taxes, and managing risk for their investors. Investing in fractional shares is an efficient way to ensure that your entire portfolio is utilized and that you don’t sit on idle cash. Or read our detailed Wealthfront review here. Verdict – Wealthfront. Both Betterment and Wealthfront operate completely online and have you complete a questionnaire when you apply for an account. Here's Why You Need To Have Multiple Streams Of Income, How To Live Your Dream Life Through Mini-Retirement, How A Million Dollars Bought Me Happiness, specify and track multiple personal savings goals, strong personalization feature called "RetireGuide", incentivized to invite friends and family. Ramp Credit Card Review | Does Ramp live up to the hype? Betterment offers a great platform for beginner investors, Personal Capital caters to higher net worth individuals, Wealthfront is the do it yourself platform. Specifically, Betterment selects “low-cost, highly liquid, index-tracking ETFs to ensure clients gain the desired asset exposure at the lowest total cost of ownership.”. Further their websites don’t make it easy to see historical performance at certain risk levels or asset allocations over time. These platforms were designed to be user friendly and not be intimidating for new investors. In summary, not worth it if you have the time and financial acumen a. 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