Betterment vs. Wealthfront: Which One Should You Trust With Your Money?

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Does investing in the stock market intimidate you? Do you wish someone could just make the entire process of investing easier?

Trust me, I’ve been there. I avoided the stock market entirely for a few years because I was so overwhelmed with the entire process.

Trying to learn financial terminology felt like I was trying to learn hieroglyphics. I just didn’t understand it. I knew I wanted to save money for retirement but I didn’t want to make a mistake and lose a bunch of money.

Sound familiar?

At that time, new platforms were just getting started known as robo-advisors. I wish I would’ve started with them earlier as they make it much easier for beginners to invest in the stock market.

Instead, I poured into financial podcasts, books, blogs, and anything else to understand how to get started investing. Now that I have the background, I can say that robo advisors will make it so much easier to get started.

Two of the most common and popular robo advisors are Betterment and Wealthfront. They both provide options for investors to make it simple and easy to invest.

Here’s everything you need to know in the betterment vs. wealthfront debate.

Betterment vs Wealthfront | The Robo-Advisor Matchup

Robo advising is a relatively new service that many people thought would fail in the initial stages. Before diving into the Betterment vs. Wealthfront debate, it’s important to learn about robo advising and how both of these great companies got started.

As I mentioned, investing is made unnecessarily hard in my opinion. It’s the reason so many people never start investing or have enough money in retirement. They are scared of the financial jargon, complexity, and losing money.

Ultimately, both companies were both created to help the everyday investor simplify the entire process.

What are Robo-Advisors?

Robo-advisors are online investing platforms that act as a financial advisor to help get you higher returns on your money. They are great options for beginner investors who just want someone to do it for them. Plus, since robo-advisors aren’t human (obviously), they keep costs lower and follow an algorithm to invest your money.

Two of the most popular advisors in this field are Wealthfront and Betterment in a growing industry. Both are great options but they have certain perks and benefits depending on your financial situation which I’ll cover.

Why Use Robo-Advising?

The main reasons to use services like Wealthfront and Betterment is because both are good for long-term, passive investors. My main goal with investing is to keep it simple, pay low fees, and minimize the amount of time I need to spend on them. If you’re busy with a family, career, and other adulting obligations, I’m sure you can agree.

Both of these companies will help you maximize your returns without making you have to understand the ins and outs of the stock market. Robo advising will help you get the most for your money with the least amount of effort.

The History of Wealthfront

Wealthfront is relatively new and was launched in 2011 by Andy Rachleff and Dan Carroll. Prior to beginning Wealthfront, Rachleff taught tech entrepreneurship courses at the Stanford Graduate School of Business. He also worked as the vice chairman at the University of Pennsylvania.

Both of his prior careers made him realize two things:

  1. He constantly found himself being asked questions about investing from students and entrepreneurs. While he wanted to help, he couldn’t as most entrepreneurs and students had too low of balances.
  2. He also realized the best-managed firms in the world were using outdated tools that weren’t matching technological updates with apps.

Like any good entrepreneur, he saw a problem in the marketplace and then created the solution with his company.

His partner, Dan Carroll was a former trader. One day, when helping his parents assess the damage from the 2008 stock market collapse he felt they misled with previous advice from their advisor.

So in 2008, the two founded “KaChing!” This company was created to mimic the portfolios of seasoned stock professionals using smaller amounts of money. In 2011, the company underwent some changes and officially became Wealthfront.

The History of Betterment

Betterment was founded in 2008 by Jon Stein and Eli Broverman. Most people associate Betterment as the actual first robo advising platform. While in college, Stein was studying economics and decided to apply his knowledge to his own financial portfolio.

It was then he realized that economics assumes that people are rational when investing, which he realized is rarely the case. Especially when it comes to managing money (I can 100% agree here). He then teamed up with Broverman, who was a securities attorney at the time, to create the first robo advising platform.

Betterment is different than Wealthfront as they focus on giving fiduciary advice. Their fiduciaries have no funds of their own and sole job is to help you manage your investments. This is one of several differences that I’ll cover in the Betterment vs. Wealthfront debate.

Comparing Betterment vs. Wealthfront

Now that you understand the history of these two great platforms, let’s compare the major differences so you can make the best choice for your investments.

Minimum Deposit

Betterment has no minimum deposit, whereas Wealthfront has a $500 minimum. In the world of investing, $500 is still a great option! In the past, Wealthfront used to be $5,000 but decreased to help more investors.

Either option is a good one here.

Annual Fees

Keeping fees low used to be difficult before robo advisors, especially if you used a financial advisor or mutual funds. But fees are so important to understand when it comes to investing in the stock market. Best-selling author and life Tony Robbins, breaks down why it’s so important to keep your fees low in his best-seller, Money: Master The Game.

“But what the majority of Americans don’t realize is that an increase in 1% in fees will cost you 10 years in retirement income!”

Keeping fees low is crucial to having more money in your future. Luckily, both Wealthfront and Betterment do a great job of keeping costs low for investors.

Below is a table to show the differences in annual fees for investing in both platforms using a tax-deferred (i.e. IRA) account.

Deposit Amounts Betterment Fees Wealthfront Fees
$0–$499 0.25%/yr. N/A
$500-$1.99M 0.25%/yr. 0.25%/yr.
$2M+ 0.15%/yr. 0.25%/yr.

Tax Efficient Investing

Both Wealthfront and Betterment offer great features to help minimize taxes as well. Of course, this assumes that you are using a taxable account. They do this with “tax loss harvesting.”

To simplify, tax loss harvesting is a rebalancing of your portfolio. They do this on a daily basis, not annually, which is what typically happens.

Another way they minimize your taxes is by only using index funds. Not only are these the lowest fees but they provide a natural tax advantage. Additionally, both platforms also use dividends to rebalance your portfolio. This means you’ll sell fewer positions which will result in fewer capital gains taxes as well.

For the more seasoned investor, Wealthfront wins in this category. If you have at least $100,000 invested in a taxable account, you are eligible for Passive Plus. This is a feature with advanced features that can add higher returns to your portfolio.


As I mentioned in the previous section, both platforms invest your money into low-cost index funds (ETFs). Betterment invests your money in a combination of 13 different ETFs. This includes six stock funds and seven bond funds.

The percentages of the ETF allocation are no longer fixed, either. Depending upon your allocation, Betterment adjusts the allocation of each individual ETF to meet your goals.

Betterment Portfolio Options

Stock Funds

Sector ETF Ticker
US Vanguard US Total Stock Market VTI
Large Cap Vanguard US Large-Cap Value VTV
Mid Cap Vanguard US Mid-Cap Value VOE
Small Cap Vanguard US Small-Cap Value VBR
Foreign Vanguard FTSE Developed Market VEA
Emerging Market Vanguard FTSE Emerging Markets VWO
Socially Responsible iShares MSCI KLD 400 Social DSI
Socially Responsible iShares MSCI KLD 400 Social KLD

Bond Funds

Sector ETF Ticker
US TIPS Vanguard Short-Term Inflation Protected VTIP
Muni iShares National AMT-Free Muni Bond MUB
Corporate iShares Corporate Bond LQD
Emerging Market Vanguard Emerging Markets Govt. Bond VWOB
Foreign Vanguard Total International Bond BNDX
US Short-Term iShares Short-Term Treasury Bond SHV
US Total Vanguard US Total Bond Market BND

In addition to its main portfolio, Betterment also offers four additional options as well:

  1. Goldman Sachs Smart Beta Portfolio — This portfolio is geared for higher returns but higher risk as well.
  2. BlackRock Target Income Portfolio — This portfolio is the opposite of the Goldman Sachs portfolio. It was designed for investors who want low risk and all investments are put into bond funds only. No stock funds here!
  3. Socially Responsible Investing Portfolio — This portfolio is a spinoff of the main Betterment portfolio and geared toward more socially responsible investing.
  4. Flexible Portfolio — You can now opt to have control over your asset allocation within the main portfolio. While you will still get recommendations from Betterment, it’s nice to have the ability choose. This option requires the most work and is great if you’re a more hands-on, savvy investor.

Wealthfront Portfolio Options

Wealthfront is similar to Betterment but uses a total of eleven funds to build your portfolio. Here is an overview of the simplified but more diversified Wealthfront portfolio.

Stock Funds

Sector ETF Ticker
US Vanguard US Total Stock Market VTI
Dividend Vanguard Dividend Appreciation VIG
Foreign Vanguard FTSE Developed Market VEA
Emerging Market Vanguard FTSE Emerging Markets VWO

Bond Funds

Sector ETF Ticker
US Gov’t Vanguard US Total Bond Market BND
Muni iShares National AMT-Free Muni Bond MUB
Corporate iShares Corporate Bond LQD
Emerging Market iShares JPMorgan Emerging Markets Bond EMB

Alternative Investing Choices

Sector ETF Ticker
Real Estate Vanguard REIT VNQ
Natural Resources Energy Select Sector SPDR XLE

One of the biggest advantages of Wealthfront is the “alternatives” category. With Betterment, you only have the option to choose stock and bond funds. But with Wealthfront you can also invest in a REIT (which is a real estate fund) and natural resources fund. This makes Wealthfront a more complete portfolio in my opinion.

Also, depending on if your account is taxable or tax-deferred the funds and asset allocation might change slightly. Ultimately, both offer great, low-cost index funds.

Retirement Planning

One of the best parts about robo-advisors is their ability to help you plan for retirement.

Both of these platforms sync with your external accounts to give retirement planning advice for financial life. Based on separate review sites, both platforms are very consistent in the retirement planning methodology.


One benefit of Wealthfront is that they offer Path. This service helps you plan for big retirement goals like a home purchase, college tuition, and retiring. This is built into the service and doesn’t require any extra fees.


Betterment has a few more options for retirement planning than Wealthfront but at a cost. It charges 0.40% per year for its Plus plan and 0.50% per year for its Premium plan. Premium is similar to the Plus offering, but instead of only one annual phone call, Premium offers unlimited communications with advisors.

If you’re younger or have a simpler portfolio, either platform will work great at helping you plan for retirement. If you’re older or have a more complex portfolio, I’d probably recommend Betterment. They have an edge on Wealthfront as they have human advisors. But, like using a typical financial advisor, it is more expensive.

Customer Support and Resources

One thing I love about both services is that they provide live customer support. This can help give you peace of mind when it comes to making sure you’re investing your money wisely.

Both companies also have helpful resource centers online which include in-depth blogs to help better understand your financial goals.


Betterment wins in the battle for the best hours. Here are there customer support hours:

  • Monday-Thursday: 9:00 a.m.—8:00 p.m. ET
  • Friday: 9:00 a.m. – 6:00 p.m. ET
  • Saturday and Sunday: 11:00 p.m. – 6:00 p.m. ET (support is provided via chat only)
  • Email support available 24/7

Their blog has a ton of helpful articles, podcasts relating to money, and even offer personalized calculators to help you plan your retirement.


Wealthfront has slightly less availability when it comes to customer service. Here are the customer support hours for Wealthfront:

  • Monday through Friday: 11 a.m. – 8 p.m. ET
  • Email support available 24/7

One of the biggest downsides of Wealthfront’s customer service is not having personal support on weekends. Betterment’s chat option is still better than no support and available on weekends.

Like Betterment, Wealthfront has a helpful resource library including a great section about careers. It discusses how certain career choices can significantly affect your long-term wealth.

Betterment allows all customers to chat with 12 financial advisers through its mobile app and receive responses within one business day. And if you enroll in the Premium account, you also get unlimited access to CFP professionals.

Wealthfront’s service lives purely online and in its app, with no human advisers to speak with.


So who are the wizards behind these two magical software’s? Even though these platforms are robo advisors, there is a ton of behind the scenes work to create these helpful platforms.


Betterment doesn’t hold back when it comes to making sure your money is in the right hands. They hire Certified Financial Planners (CFP), behavioral finance specialists, and macroeconomic researchers to design the software.

All members of the committee also hold undergraduate, master’s, and Ph.D. degrees. Their main areas of specialties are decision science, mathematics, operations research engineering, and computer science.


Wealthfront is very similar in this category. Their research team members also include individuals with undergraduate, master’s, and PhD degrees in the same areas of expertise.

Plus, their Chief Investment Officer, Burt Malkiel, is a Senior Economist at Princeton University. He is commonly known as one of the first people who brought passive investing to the masses.

There isn’t a winner here but it’s great to know that both platforms use incredibly smart people to help grow your money.

Referral Program

Both services also have referral programs to gives you incentive to bring in family and friends. The more people you refer to these great services, the more you are rewarded!

Betterment is offering a special deal for new individual accounts. It will waive management fees based on the total amount you deposit within 45 days of opening an account, so you can get up to one year managed totally free!

With Betterment’s referral program, you will get 30 days managed free for every friend who funds and that friend also gets three months free. Additionally, when your first three friends fund, you also get an extra free year.

With Wealthfront’s referral program, you and your friend get $5,000 managed free when the friend funds an account, so in total you’ll get your first $15,000 managed free.

Summary of Betterment and Wealthfront


Thanks to no minimum opening balance, simple investment setup, and a history of leading the market for robo-advising, Betterment is the best option for new investors looking to make money in the markets with virtually no personal involvement beyond funding your account and an initial risk profile.

Because tax loss harvesting is built in, any investor at Betterment can take advantage of opportunities formerly reserved for the wealthiest investors even with a small starting nest egg. Wealthfront does offer investors free management on portfolios below $10,000, which gives them a leg up over Betterment on that front; but no minimum to open made Betterment the winner.

Here are some of my favorite perks of Betterment:

  • No minimum deposit
  • Fractional shares, meaning you don’t have hardly any cash in your portfolio.
  • Three additional portfolio strategies. This is great as it gives options to have more or less risk based on your current retirement plan.
  • Flexible portfolios. This is a new feature that lets you become more hands-on (if you want)
  • External account analysis. This feature allows Betterment to examine your entire financial picture including all external accounts. It also gives you estimate on how it would look if your entire portfolio was within Betterment.
  • Financial advice packages. This new feature gives you tailored advice based on specific life events. This could include buying a home, paying for a child’s education and retirement options. This is great as it’s a service you typically get from a 1-on-1 relationship with a financial advisor.


I think that Wealthfront is the best robo-advisor if your portfolio is over $500. Thanks to its direct indexing tax strategy, investors can get an edge over Betterment in the long-term.

Fees are nearly the same between the two companies for portfolios from $10,000 to $2 million. Over $2 million, Betterment is cheaper again

Remember, for any investor with more than $500 that you contribute to a new account, Wealthfront is free up to $10,000.

Here are some of the other amazing features with Wealthfront:

  • REIT and Natural Resources ETF (unlike Betterment). This can let you take advantage of more than just stock and bond funds.
  • 529 College Savings Plans. It’s never too early to start planning for your children’s future education costs!
  • PATH. This feature helps you find the right path to align with your biggest life goals. They also now offer “college planning with path” as well.
  • Portfolio line of credit. If you have over $100,000 you can take a line of credit out against the investment you have within Wealthfront.

Are There Other Robo-Advisors?

As you can tell, there are tons of perks when it comes to using Betterment and Wealthfront. So are there any other robo advising platforms out there?

Yes, the robo-advisor industry is continuing to see growth as people want to invest without the hassle of learning about the stock market. But in my opinion, Wealthfront and Betterment are the two best options available.

Just in case, here are the other most common robo advisors:

1. Personal Capital

As you know, Money Peach is a big fan of Personal Capital! They offer free personal finance management tools that are great for any investor and offers investment management for a fee.

They offer great free tools that I think everyone should take advantage of immediately. You can track your net worth, keep a budget, and all sorts of other features. If you have over $100,000 you can also use their robo advising services as well.

2. WiseBanyan

WiseBanyan offers no-fee robo-advising with no account minimum like Betterment. They have similar features like tax loss harvesting and others from Wealthfront and Betterment. If you are a brand-new investor with a small portfolio WiseBanyan is another good option.

3. Wealthsimple

Wealthsimple is another option with no minimum balance requirement, but they do have management fees for your account. They charge 0.4 percent to 0.5 percent in management fees, which makes them higher than others on this list of robo-advisors.

Tax loss harvesting is included with Wealthsimple Black but only if you have over $100,000 in your portfolio. Wealthsimple also offers socially responsible portfolio options.

4. Schwab Intelligent Portfolios

If you already have any accounts open with Charles Schwab, you may be interested in Schwab’s robo-advising product. One of the big perks is that they have no fees. The minimum account balance is $5,000 to get started with Schwab.

5. Acorns

Acorns is great for students and people who can only invest a small amount of money. You invest your spare change from monthly expenses. While it won’t be enough to retire on, it’s a good way to get started investing even if you don’t have much capital yet.

So Which Robo-Advisor Should You Choose?

Both Wealthfront and Betterment are great choices for your investment needs. They both offer diversified portfolios (with low-cost ETFs), automatic rebalancing and low fees.

Like I mentioned, one of the biggest downfalls of mutual funds is the high fees. Luckily, these robo advisors keep costs low and can help you save big for your retirement.

Betterment and Wealthfront both appeared to be risky when they first entered the market nearly a decade ago. But in the years since, robo-advising makes it easy for people to get started investing.

Honestly, you can’t go wrong with either if you’re just starting out. If you have been waiting to invest because you don’t know what stocks to pick, robo-advisors are perfect for you. Get started sooner rather than later to take advantage of compound interest and have more money for your retirement.



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