Betterment vs. Wealthfront: Which Is Best For You?

Just about anybody can invest now, thanks to robo-advisors like Betterment and Wealthfront.

Robo-advisors use artificial intelligence to build and rebalance investment portfolios, charging low fees, so you don’t have to hire a human financial advisor.

New robo-advisors launch every year — both from start-ups and from investing powerhouses like Schwab and Fidelity. Still, Betterment and Wealthfront lead the pack.

What are the differences between these two robo-advisors? Which one should you choose? Or how about going with another robo?

Betterment vs Wealthfront: What Are They?

Betterment and Wealthfront help ordinary people invest their money more easily and at a low cost.

In the past, professional wealth managers or financial advisors built investment portfolios manually. Hiring a pro will still get you the best financial planning — which will be tailored to your life and your future plans.

But the decisions required to build and manage an investment portfolio can be reduced to a series of patterns — and computer algorithms excel with finding and applying patterns. That’s exactly how robo-advisors work.

The artificial intelligence built into robo-advisors can identify patterns in the market, consider the patterns required to meet your investment goals, and make sound decisions.

You shouldn’t expect a robo to get creative, but you can expect it to apply modern portfolio theory and to limit your capital gains taxes with tax-loss harvesting. This may be all you need for a segment of your investment portfolio.

Betterment & Wealthfront Use AI

At their cores, Wealthfront and Betterment work the same way. They both use AI for investing your money, automatic rebalancing of your portfolio, and limiting your tax exposure with tax-loss harvesting.

Both platforms reinvest your dividends automatically. Both invest your money in exchange-traded funds (ETFs) instead of individual stocks and bonds so you can spread your portfolio across a broad stretch of individual securities.

Both platforms can integrate, but not manage, your outside accounts so you can see the bigger picture of your financial life.

And, both platforms let you change asset allocations seamlessly on the app.

Betterment vs Wealthfront: At a Glance

Feature Betterment Wealthfront
Minimum Initial Investment $0 $500
Annual Fees 0.25% – 0.40% 0.25%
Promotions Up to One Year Free First $5,000 Managed Free
Automatic Rebalancing ✔️ ✔️
Tax-Loss Harvesting ✔️ ✔️
Human Advisors ✔️ ✖️

Betterment vs Wealthfront: Features

With so many similarities, it’s the key differences that will help determine which service to use, beginning with account minimums and the annual fee structure.

Betterment’s Standout Features

Betterment has no minimum deposit required to open an account, and the platform is slightly more user-friendly, so it’s ideal for new investors who don’t want to commit to investing a lot of their money.

And, Betterment’s management fee increases once you pass $100,000 in investments, so this platform normally attracts more beginners than Wealthfront. (We’ll compare fees more thoroughly below.)

Here are some unique Betterment features:

  • Bonds: Betterment’s portfolios make it easy to mix in U.S. government and corporate bonds, a lower-risk investment option.
  • Fractional shares: When you buy fractional shares you won’t have to wait until you have enough to buy a full share of an ETF. This also means you can keep more of your cash actively invested.
  • Smart Deposits: Betterment can analyze your bank account, anticipate the patterns of your monthly expenses, and move ‘unneeded’ money from your savings account into your investment account. This is optional, of course.
  • Two-Way Sweep: Smart deposits work both ways. Betterment could return money to your bank account if your balance dips too low.
  • Cash Reserve: Betterment’s high-yield savings account which currently pays 0.4% APY. Money in this cash account is available to invest at any time. In fact, Betterment will nudge you to invest the money.
  • Tax Strategies: You can opt for a tax-coordinated portfolio, which will put your most tax-efficient assets in taxable accounts and tax-inefficient assets in an Individual Retirement Account (IRA). This strategy helps lower capital gains taxes.
  • Certified Financial Planners: With the premium plan ($100,000 in assets or more) you’d have unlimited access to financial advice from a CFP.
  • CFP Appointments: Betterment Premium gives you unlimited access to a Certified Financial Planner. But with Betterment Digital you could buy an appointment with a CFP for a specific purpose — if you’d like to set new goals or want an assessment of your retirement planning, for example.
  • Socially Responsible Investing (SRI): You could choose investment strategies that put your money into companies that protect natural resources, for example.
  • Target Income Setting: You could set specific financial goals such as a certain amount of income. Betterment would choose specific Blackrock ETFs to make your goal more likely to happen — within your pre-set level of risk tolerance.

Wealthfront’s Standout Features

Wealthfront has an account minimum deposit of $500, so it’s best-suited to committed investors. You can open a Betterment account with any amount of money.

Wealthfront’s annual management fee takes a smaller percentage of your account balance if you have a larger account with $100,000 or more invested. So right out of the box Wealthfront works better for higher value investors. (See the full price comparison below.)

Here are some other unique Wealthfront features:

  • REITs: Unlike with Betterment, you could choose real estate investment trusts and commodities, which diversify your portfolio by giving you exposure to alternative asset classes.
  • Wealthfront Path: This package of financial planning tools gives you advice to help reach specific money goals like retirement and can project your future net worth given certain scenarios. It’s not a human advisor, but it still helps you put your short-term and long-term finances into perspective.
  • PassivePlus: This suite of portfolio-enhancing features gives you stock level tax-loss harvesting and a tax-optimization service. (The suite also includes Risk Parity and Smart Beta processing for larger accounts.)
  • High-Yield Savings: Wealthfront has an FDIC-insured savings option that pays 0.35% APY — more than most national banks.
  • College Savings Accounts: Betterment specializes in college savings plans including tax-advantaged 529 accounts.
  • Portfolio Line of Credit: You could borrow against your account balance if you had at least $25,000 invested with no credit check.
  • Wealthfront Risk Parity Fund: Accounts with $100,000 or more can put up to 20% of their portfolio into this mutual fund which can increase gains without too much of an impact on expense ratios.
  • Smart Beta: This platform for accounts with $500,000 or more taps into Wealthfront’s most intelligent algos.

Betterment vs Wealthfront: Fees

When you compare prices for robo-advisors, look at the management fee and the expense ratio of the ETFs your money buys.

  • Management fees: The robo itself charges the management fee which is measured as a percentage of your account balance charged annually. On a $10,000 account that charges a 0.25% advisory fee, you’d pay $25 a year — not a bad deal!
  • Expense ratios: The ETFs themselves charge these fees to your robo-advisor, and the robo passes them along to you. These fees are harder to predict, but they average around 0.13% of your portfolio a year.

Both Betterment and Wealthfront have low ETF fees, but their management fees have some variation depending on your plan.

Betterment Fees

Betterment charges advisory fees of either 0.25% or 0.40% of your assets, depending on the type of account you create.

If you opt for Betterment Digital package (with only digital consultations included), your fee will be 0.25% of your assets, with no minimum balance required.

However, if you choose the Betterment Plus package (with access to in-depth advice from real Certified Financial Planners), you’ll need a balance of $100,000 or more and will pay an annual fee of 0.40%.

You could get up to one year – depending on the size of your portfolio – free with our special offer. This makes Betterment the cheaper option, at least for the first year.

Wealthfront Fees

Wealthfront’s fees are 0.25% of your balance, regardless of your account type. Thanks to a current promotion, you’ll get the first $5,000 managed for free.

After you stop benefitting from Betterment’s initial promotion, Wealthfront has lower fees, especially after your balance grows beyond $100,000.

Betterment vs Wealthfront: Signing Up

Both services are straightforward to start using.

Signing-up For Betterment

Betterment will set up a baseline account for you (the personal taxable account), and you’ll then be able to create different account types.

You can create various accounts for different investment goals. You’ll be able to move money into your account by either linking a bank account to make cash deposits or transferring investments from your previous account with a different firm.

Signing-up For Wealthfront

Wealthfront will first prompt you to fill out a questionnaire. This helps build your recommended portfolio and gives you a risk tolerance score; Wealthfront then invites you to open an account if you’re happy with the plan assigned.

Depending on your goals, options for different account types will appear.

Betterment vs Wealthfront: Security

Betterment and Wealthfront both take pride in their security and offer two-factor verification.

Betterment Security

Betterment guarantees strong browser encryption, stores their data on servers in a secure facility, and safeguards accounts from unauthorized activity to avoid fraud.

Betterment has SIPC insurance which protects your account up to $500,000. SIPC insurance does not prevent your account from declining in value because of market movement; it does prevent you from losing your account’s value if the brokerage firm — in this case Betterment — goes under.

Wealthfront Security

To keep your money safe, Wealthfront refrains from proprietary trading and makes trades only on behalf of clients.

They also have SIPC insurance to protect securities of a value of up to $500,000.

Betterment vs. Wealthfront: Mobile App

Both companies are suitable for smartphone users and have an app you can download.

Betterment App

Betterment also allows customers to manage your goals and investments from the app.

Wealthfront App

Wealthfront strongly encourages customers to use their app from the start; before opening an account, they’ll prompt you to explore the information on your phone to understand your investment goals better.

Betterment vs Wealthfront: Customer Support

A major difference between the two companies is the type of advisors you’ll have access to.

Betterment Customer Support

Betterment gives you the option to talk to human advisors if you’re willing to pay extra, either through their premium package if you have a $100,000 investment with them or through a one-off package.

They also have a customer support team available seven days a week and support via phone, email, or messaging.

Wealthfront Customer Support

With Wealthfront, all advisors are digital. That means consultation is easier and cheaper to access, but some may prefer to speak to a real person.

Betterment vs Wealthfront: Asset Classes

Betterment Asset Classes

Betterment divides its asset classes into 15 categories:

  • 8 stock-based ETFs with small-cap, large-cap, U.S., mid-cap, foreign, emerging market offerings, all from Vanguard, and two socially responsible classes from iShares.
  • 7 bond-based ETFs with U.S., municipal, corporate, foreign, and emerging market classes available.

Wealthfront Asset Classes

Wealthfront uses 11 asset classes:

  • 4 stock-based ETFs from Vanguard (U.S. stocks and foreign stocks)
  • 5 bond-based ETFs from Vanguard, Schwab, and iShares (government, corporate, municipal and emerging markets)
  • 2 alternatives (Vanguard REITs and a natural resources ETF).

Wealthfront Pros and Cons


  • A Wealthfront account offers a wider variety of accounts including SEP-IRA for small businesses and a 529 college savings plan account.
  • Wealthfront charges lower fees for higher wealth investors.
  • The platform’s high-dividend yield ETFs make it better suited for dividend-paying stocks.
  • More tax-efficient investment strategies.


  • Higher minimum assets required to invest.
  • No human advisors.
  • Doesn’t stress socially responsible investing.

Betterment Pros and Cons


  • No minimum deposit required to invest.
  • Betterment requires no starting balance to open an account.
  • Betterment allows you to choose socially responsible investing (SRI) strategies.
  • Betterment is better for portfolio rebalancing and retirement planning
  • The option of charitable giving assistance (allows clients to gift appreciated shares to charity) can also help reduce capital gains taxes.
  • Betterment Plus ($100,000 account or higher) offerse the option to talk with human advisors (CFPs).


  • More limited variety of accounts: just taxable accounts, SEP, Traditional and Roth IRA accounts, 401(k)s, and rollover IRAs.
  • Less tax-efficient for higher account balances.
  • Less suited for dividend-paying stocks.


Although Betterment and Wealthfront are both great robo-advisory platforms suitable for most people, there are a few other alternatives for those with more specific needs.

Personal Capital

Personal Capital offers a wide range of investment options, which is perfect for those who want a portfolio mix. Betterment and Wealthfront both have limitations since the former excludes real estate, and the latter excludes government bonds.

Ally Invest

Ally Invest is a good option for retirement or loyalty customers who want to have their managed account, trading account, and bank account all in the same place. Betterment and Wealthfront were designed for those who wish to have built-in portfolio management but Ally Invest allows for self-directed trading too.


Ellevest specializes in social responsibility investments that align with your values. It’s also marketed toward women since females statistically earn lower over their lifetime and live for longer, which impacts how they invest.

However, men can use Ellevest too.

Can I Have Both Betterment and Wealthfront?

It might sound tempting to open an account with both platforms so you can test them out and see which one works the best for you.

Technically there’s no rule against doing this. But in reality, it doesn’t make much sense, and you might find yourself running into difficulties.

Consider tax-loss harvesting, for example. An algorithm in one platform may buy a particular index fund for tax reasons. The other platform’s algorithm may detect the same pattern and take the same action. But you won’t be able to make the same gains twice.

It’s harder for advisors — human advisors or artificial intelligence — to give reliable advice when they lack a holistic perspective on your portfolio. So choose just one platform.

Wealthfront vs Betterment: Which Is Best For You?

Betterment and Wealthfront are both great investment platforms. They make investing far too easy and cheap for you to not get involved.

The platform you choose comes down to your investment needs and personal preferences. The size of your portfolio, your experience investing, and the types of portfolio you want are all important factors to consider when choosing between the two sites.

Generally, Betterment is a better option for new and low-asset investors, whereas Wealthfront is best-suited to those who have larger assets and more experience.

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