Betterment vs. Wealthfront – Robo Advisor Comparison of Performance, Returns and Fees (2018) September 4, 2018 September 1, 2018 by Louise Gaille First, let’s lay an overview of what … Betterment offers fractional share investing; Wealthfront … He contributed to InvestmentZen as an financial product analyst from 2016-2017. Betterment and Wealthfront are two of the most popular robo advisors on the market. We love the fact they have no minimum to open an account, a beautiful and user-friendly platform, and a simple yet proven investment philosophy. Fees vary between Betterment’s Digital and Premium account types. Wealthfront only uses 11 asset classes to create portfolios. These data sets are the most fair way to compare Betterment vs Wealthfront. At WealthFam, our top priority is helping readers improve their financial lives. Betterment is better for you in terms of fees because its fee drops to 0% for accounts over $2,000,000 while Wealthfront charges 0.25%. Gives you direct, real-time access to a dedicated team of financial advisors through encrypted text messaging on their mobile app. After all, robo advisors create portfolios from funds that are accessible to independent investors. Let’s dive in! Betterment vs. Wealthfront: Returns & performance Returns are impossible to predict. We cannot guarantee that this information is applicable or accurate to your personal circumstances. 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. Betterment vs. Wealthfront Comparison Costs and Fees. This estimate also reflects daily tax-loss harvesting. Betterment replaces U.S. large cap stocks and emerging market stocks asset classes with a SRI ETF alternative. Like Betterment, Wealthfront focuses on minimizing fees, lowering taxes, and managing risk for their investors. Since expected security returns depend on supply and demand, an increase in the average allocation to small and value stocks will reduce the size and value premiums. 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. Specifially, Wealthfront uses funds with expense ratios between 0.06% to 0.13% and charges no other account fees expect for an overall 0.25% management fee. Betterment: Get 1 month free of Betterment service if you invest $5,000 – $24,999. 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. Ramp Credit Card Review | Does Ramp live up to the hype? The ability to do SRI (similar to ESG investing) makes Betterment is the clear winner for socially responsible investing. To objectively compare Betterment vs Wealthfront vs Acorns, I’ve come up with three main rounds the services will … Both Betterment and Wealthfront offer a solid range of account types you would expect from industry-leading robo advisors. Cool stuff about money. 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. Both Betterment and Wealthfront operate completely online and have you complete a questionnaire when you apply for an account. The good news is both Betterment and Wealthfront do quite well with user experience. Verdict – Betterment. Verdict – Wealthfront. The question is, how does Wealthfront compare? 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.”. This compensation may affect where and how products appear on this website, including, for example, the order in which they may appear within a comparison or review. Betterment is perfect for: Lower net worth individuals and SRI investors. 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). However, Wealthfront emphasizes creating a diversified portfolio, and … Betterment’s research claims that its tax loss harvesting on average improves your return by 0.77%. Wealthfront also shares historical performance data. All content on the site is prepared by our staff or by independent contractors. $500 minimum to open an account. That said, Wealthfront provides a full whitepaper that shows how robust their methodology is in dealing with taxable events. While both platforms are grounded in low-cost index fund investing, awe prefer sticking to a simpler philosophy of stocks and bonds versus allocating capital into natural resources and specialty ETFs like dividend focused funds. For most investors, management cost is identical. The 529 college saving plan is a nice added touch for Wealthfront and thus gives it the edge in this category. Offers Portfolio Line of Credit which allows you to stay invested in the market while still meeting liquidity needs as they arise, similar to a HELOC. This enhanced version of tax-loss harvesting analyzes individual stock movements to harvest more tax losses (which can be counted against more capital gains). This strategy allows Betterment to easily diversify your portfolio, as well as greatly reduce fees. 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. Robo advisors create portfolios largely based on your personal investment goals and levels of risk tolerance. What is an ETF? Investors can select different risk scores to alter portfolio composition and view the impact it would have on returns. Both platforms have a lot in common – for instance, they both use a similar index-based ETF strategy to minimize fees and diversify portfolios. Both Wealthfront and Betterment are excellent choices if you’re looking for a robo-advisor. Wealthfront's fees are 0.25%; Betterment's fees are 0.25-0.40%. Betterment's 90% stocks portfolio returned an annual return of 9.3% for the same time period. Each of these three robo-financial advisors operates according to the Modern Portfolio Theory (MPT), wherein asset allocation is … Opinions expressed are solely those of the author and have not been reviewed or approved by any advertiser. As with Betterment, Wealthfront utilizes index-based ETFs in their portfolio composition, selecting low-cost investment funds to help keep expenses low. Betterment has no minimum initial investment compared to $500 for Wealthfront. The key with Betterment is their use of ETFs that are index-based. How Much Should I Have Saved For Retirement At My Age? Save my name, email, and website in this browser for the next time I comment. The ability to invest in fractional shares means Betterment comes out on top in terms of minimizing your cash balance. They have lower minimums, a simpler investment philosophy, and a beautiful platform that users love. There are plenty of reasons for Wealthfront to be the second most popular robo advisor on the market. For instance, Vanguard’s S&P 500 ETF (ticker: VOO) is one of the worlds largest ETFs. Verdict – Betterment. ETFs are a wonderful low-cost way to get financial diversification as your investment dollars are spread across a number of companies. 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