Wealthfront is a member of the Securities Investor Protection Corporation (SIPC) and client accounts are protected up to a maximum of $500,000. The site actually has an article on why SIPC insurance doesn’t protect investors in the way they think it does, but the company still holds the coverage. Their trades are cleared at RBC Correspondent Services, a Canadian company that focuses on wealth management and financial advisors rather than clearing firms that serve broker/dealers with very active traders. ), Goldman Sachs Smart Beta portfolio that seeks to outperform the market, Income focused all-bond portfolio made up of BlackRock ETFs, “Flexible Portfolio” constructed from the standard portfolio’s asset classes but weighted according to user preferences. He has an MBA and has been writing about money since 2008. Wealthfront has comparable management fees of 0.25%. Wealthfront vs Betterment: Wealthfront is an online investment service who is a pioneer in robo-investing that provide investors with a wide range of investment options. In my opinion, Wealthfront's $500 minimum isn't much different for the average reader who's serious about investing. Otherwise, Wealthfront offers a more or less identical investing service to Betterment. Many of the robo-advisors also provided us with in-person demonstrations of their platforms. We publish unbiased product reviews; our opinions are our own and are not influenced by payment we receive from our advertising partners. Betterment vs. Wealthfront. Betterment vs. Wealthfront Comparison Costs and Fees. Most support questions posed on the Wealthfront Twitter account are answered relatively quickly, though we saw one that took more than a week before there was a response. In the robo-advisor space, there are few firms that can undercut these two on price while offering comparable service. Wealthfront and Betterment are well-matched in terms of features, but there are some important differences. Wealthfront has a 529 college savings plan, while Betterment doesn't. College planning gets extremely granular, with forecasts of tuition and costs at thousands of U.S. universities from the Department of Education. Additionally, Wealthfront has fund fees of between 0.07% and 0.16%. Let’s summarize some of the key differences between Betterment and Wealthfront. Betterment's customer service is available from 9 a.m. to 6 p.m. Eastern time, Monday through Friday. "What SIPC Protects." Betterment is also a similar online investment platform that offers goal based savings. After several years in business, Wealthfront now has more than $12 billion in assets under management (AUM)., based in New York, now has over $3 billion under management. These nudges can be particularly valuable for younger investors for whom retirement or buying a house is still far off and seemingly less of a financial priority. That said, the biggest difference in features is the fact that Betterment offers you a human option (for a fee) while Wealthfront is digital-only beyond basic customer service. Betterment vs. Wealthfront – Similarities. You never have a cash balance in your account; everything is immediately invested based on your risk profile. Both offer high-quality, trustworthy products managed by teams of professional investors looking to earn you the highest return on investment. Both firms have tight security on their web platforms, and offer two-factor authentication as well as biometric logins on their mobile apps. Betterment vs Wealthfront vs Acorns: Best Robo-Advisor? Betterment is the best platform for the average investor. They appeal to young and low-income investors because they offer lower fees and minimum investment requirements than hands-on advisors. Since Wealthfront has a $500 account minimum, this puts Betterment ahead of Wealthfront in our Betterment vs Wealthfront comparison. Wealthfront, on the other hand, assigns a small (5%) portion of your money to Natural Resources or Real Estate. Pandemic-led Fuel Boom Lifts India Refiner Runs to Full Tilt. You can also put some companies on a restricted list if you’d rather not invest in them. Robo advising is a relatively new service that many people thought would fail in the initial stages. Wealthfront’s retirement planning takes Social Security projections into account. We also reference original research from other reputable publishers where appropriate. Wealthfront and Betterment both deal with trades in your taxable accounts through tax-loss harvesting. Accessed Sept. 5, 2020. Both Betterment and Wealthfront have an asset management fee of 0.25%. Larger accounts at Wealthfront qualify for additional services. Learn more about how we review products and read our advertiser disclosure for how we make money. Betterment, the online investing adviser, debuted a high-yield savings account in July. 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 is where the differences between Betterment vs Wealthfront start to really show. Their digital plan comes with a 0.25% fee, and their premium plan has a higher 0.40% fee. Otherwise, Wealthfront offers a more or less identical investing service to Betterment. 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. Robo-advisors manage your investments with portfolio guidance and time-saving automation. Ed is … Stock-level tax-loss harvesting is similar to a regular tax-loss harvesting strategy, but instead of investing only in broad market ETFs, Wealthfront algorithms invest directly in S&P 500 stocks. Previously available only as a manual exercise for wealthy investors, Betterment’s algorithms automatically buy and sell securities in your portfolio to capture tax losses, lowering the capital gains taxes you owe to the IRS. If one of your goals is to buy a house, Wealthfront uses third-party sources such as Redfin and Zillow to estimate what that will cost. You can also get help from financial planners at any time with a Premium account, but you’ll pay a fee of $199-$299 to consult a planner if you have a basic account. The offers that appear in this table are from partnerships from which Investopedia receives compensation. The checking account reimburses your ATM fees … In general, Betterment is the best option for investors just starting out in that you don’t need much to get started and you can get human support at a still-low fee of 0.40%. FINAL WINNER: Betterment. appeared first on SmartAsset Blog. Based on fees and tax-loss harvesting options, each is better for a specific type of investor. Once all of your financial accounts are entered, such as IRAs and 401(k)s, and any other investments you might have, like a Coinbase wallet, Wealthfront shows you a picture of your current situation and your progress towards retirement. For the purposes of this review, we're focusing on their personal investment accounts. Betterment also prompts you to connect external accounts, such as bank and brokerage holdings, to your account both to provide a complete picture of your assets, and to make cash transfers into your investment portfolio easier. Both Betterment and Wealthfront offer high yield savings accounts. Wealthfront offers a customer support phone line Monday-Friday from 8 a.m. to 5 p.m. if you need help with a forgotten password. Each goal you’ve set can be invested in a different strategy, so your longer-term goals, such as retirement, can have higher risk than a shorter-term goal, such as funding a down payment on a house. The post Betterment vs. Wealthfront: Which Is Best for You? Wealthfront is at 7.62% on its taxable portfolios, and 8.52% on its tax-advantaged portfolios. Wealthfront’s methodologies are laid out extensively, so a relatively experienced investor can have a high degree of comfort giving up the human option. Thanks to its stock-level tax harvesting strategy, investors can get an edge over Betterment in the long-term. Wealthfront offers 529 college savings plans management. 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 balance. 500,000+ users manage their money with the company that started the category—Betterment. Wealthfront, by contrast, seems like the better choice for investors who don’t feel the need for human hand-holding. Other than robo-investing, Betterment and Wealthfront offer other services as well. 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. For both firms, there are management fees associated with the underlying ETFs, which add an additional 0.10%-0.25% to your costs. For 529 plans, you can expect to pay 0.42% to 0.46% annually. Wealthfront and Betterment both follow Modern Portfolio Theory (MPT) to populate a diversified portfolio of ETFs representing different asset classes. These are invisible to you, though, as they are assessed by the ETF providers. In addition, Wealthfront requires a $500 minimum deposit to open a new account. Moreover, the service improves as your assets under management grow, with additional layers of diversification and portfolio management kicking in automatically at $100,000 and $500,000, with no increase in fees. Betterment offers checkings and savings account with an annual APY of up to 2.38%. Similarly, Betterment and Wealthfront both offer a number of services like automatic rebalancing, tax-loss harvesting, and automatic deposits. Management Fees: Wealthfront charges management fees between 0% – 0.25%. Betterment clients are not placing risky trades, and there is no margin lending offered, so it’s unlikely that there would be a need for additional SIPC coverage. For investors with more capital and a desire to work closely with an advisor, Personal Capital may be worth the higher fees. What is a Robo-advisor? Your dashboard shows all of your assets and liabilities, giving you a quick visual check-in on the likelihood of attaining your goals. You can even figure out how long you can take a sabbatical from work and travel, while still making your other goals work. Wealthfront vs. Betterment: At a Glance Wealthfront is an online financial advisor based in California’s Silicon Valley. Betterment doesn’t directly carry SIPC insurance, but trades are cleared through Apex Clearing, which has risk management tools in place. This granular control offers even more tax-loss harvesting savings than Betterment’s ETF level tax-loss harvesting management. Securities Investor Protection Corporation. Let's get the easiest comparison out of the way first. Before diving into the Betterment vs. Wealthfront debate, it’s important to learn about robo advising and … In fact, with over $24 billion in assets … Wealthfront Instead of a boxing ring, however, we have the automated investing landscape where both have towered like a colossus. Their Path planning tool helps you compare your projected retirement income against your current spending habits so you’ll be able to see whether you can maintain your lifestyle later. It can offset up to $3,000 per year of ordinary income and carries forward if you go over. When it comes to giving financial advice and customer service, it appears that Betterment has thought through a lot of the features investors need. If you have more than $100,000 in your Wealthfront investing account, you can choose a stock portfolio rather than portfolios of ETFs. At Wealthfront, to determine the portfolio you’ll invest in you’re asked a few questions about your attitude towards risk and when you might need the money. Betterment Security. Best Stock Market Apps for iPhones and iPads, Smart and Profitable Ways to Invest $10,000, The 7 Best Fractional Share Investing Brokerages of 2020, How Your Robo-Advisor Could Steer You Wrong, Investing for Retirement Through Robo-Advisors, Best Investment Apps for New and Experienced Investors, What Robo Advisors Can Do Better (and Worse) Than Financial Advisors. Betterment guarantees strong browser encryption, stores their data on servers in a secure facility, and safeguards … Before we dive into the various features and options that these apps have, let’s breakdown the basics first. Betterment requires no minimum balance and charges a 0.25% annual fee, or about $25 per year for every $10,000 invested, for a regular digital account. Accessed Sept. 5, 2020. As previously mentioned, Wealthfront has some additional account types that Betterment currently doesn’t support. If you’re falling behind on meeting a goal you’ve set, you’re encouraged to put more aside. Betterment vs Wealthfront. We collected over 300 data points that weighed into our scoring system. So although Betterment may be the go-to if you are cash-strapped when you are starting out, Wealthfront is ultimately the superior service in the long run. Over time, tax-loss harvesting can add up to big savings. A Brief Overview of Betterment and Wealthfront. Fees at Wealthfront are comparable to Betterment. Your asset allocation is displayed in a ring with equities in shades of green and fixed income in shades of blue. Thanks to its no-minimum opening balance, low fees, and simple investment setup, Betterment is the best option for new investors looking to make money in the markets with minimal personal involvement. There’s no account minimum, no minimum deposit, and you can get up to one year managed free. You can get started with no minimum deposit, and Betterment invests 100% of your dollars automatically. However, Wealthfront offers a product that gives you even better tax results than you can get with Betterment’s tax-loss harvesting: stock-level tax-loss harvesting (formerly known as direct indexing). Betterment and Wealthfront both take pride in their security and offer two-factor verification. That said, Wealthfront provides a full whitepaper that shows how robust their methodology is in dealing with taxable events. Betterment allocates your money exclusively across stocks and bonds. Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking robo-advisor platforms for investors at all levels. If you have a portfolio of $100,000 or more, Wealthfront is the strongest offering by far. Every robo-advisor we reviewed was asked to fill out a 50-point survey about their platform that we used in our evaluation. Because they have similar offerings, it can be tough to decide which is right for you unless you take a look at some of their differentiating features. Betterment and Wealthfront offer various services and products, including financial planning and savings accounts. If you're looking to save for college, a Wealthfront account might be where … Both platforms help investors to craft diversified portfolios and use automated investment strategies to meet their goals. While Betterment’s premium account has a $100,000 minimum, the standard option has no account minimums at all. Still, if your account has more than $500,000 in it, or if you hold more than $250,000 in cash in your Betterment Cash Reserve account, you might consider moving the excess to a firm with additional insurance. Investopedia requires writers to use primary sources to support their work. The comparison between the two biggest robo-advisors is like the clash of heavyweights inside a boxing ring with investors sitting in the front row. Another difference is in the fees. Betterment and Wealthfront are two of the most popular robo advisors on the market. While Betterment and Wealthfront invest in similar index funds, a few minor differences are worth pointing out. Here is what you need to know about how Betterment and Wealthfront manage your money. Accounts over $100,000 are eligible for a stock-level tax-loss harvesting service, and those over $500,000 can opt into the Smart Beta program, which re-weights the holdings in your portfolio using Wealthfront’s proprietary system. Our 2019 reviews are the result of six months of evaluating all aspects of 32 robo-advisor platforms, including the user experience, goal setting capabilities, portfolio contents, costs and fees, security, mobile experience, and customer service. Betterment vs Wealthfront | The Robo-Advisor Matchup. Wealthfront and Betterment were very close across our rankings. Betterment’s explanation, and potentially the service, is more basic. Wealthfront’s goal planning is the best of all the services we reviewed this year, with very specific ways to forecast your financial needs. Wealthfront has a single plan, which assesses an annual advisory fee of 0.25% with a minimum of $500. TRENDING. Betterment vs Wealthfront: Other Features. Betterment states on their website that the digital plan is suitable for most investors. 1. Neither firm offers online chat for customer support. Features & Tools. Because Betterment builds in tax-loss harvesting, any investor can take advantage of opportunities formerly reserved for the wealthiest investors. Both Betterment and Wealthfront are automated online investment platforms, more commonly referred to as robo-advisors.Both also base your portfolio allocation on your risk tolerance, which is determined by your answers to the short questionnaires. Betterment vs. Wealthfront Investment performance conclusion Based on the numbers above, Betterment has an average annual investment return of just under 8.8%. However, you only gain access to stock-level tax-loss harvesting when your taxable investment balance reaches $100,000. The methodologies are likely very similar, swapping in comparable assets for a loss to offset gains elsewhere. One of the features many investors get most excited about with Betterment is tax-loss harvesting. Betterment vs. Wealthfront: Minimum Deposit. Betterment and Wealthfront are very similar in that they are more passive, hands-off, and provide “leave your money with us and we’ll take care of the rest” investing solutions. Betterment and Wealthfront are better for financial planning while Acorns is best for forgetful or lazy investors. Betterment has very easy-to-follow steps for setting a goal, and each one can be monitored separately. 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