Betterment vs Wealthfront -
Which Is Better In 2024?
The short answer is Betterment is the only choice if you have less than $500 since Wealthfront requires a $500 minimum deposit that Betterment does not. In addition, it's definitely the superior choice for accounts over $2,000,000 since their fee drops to 0% at that value. Wealthfront is better if you have less than $10,000 to invest since they don't charge fees for accounts lower than that value (increased to $15,000 if you apply via a referral).Both Betterment and Wealthfront have very similar investing strategies based on modern portfolio theory, but there are minor differences in their feature sets as well as their fee structure. You should select the service that meets your needs and minimizes your fees based on your initial deposit amount.
Enter your anticipated initial deposit amount to determine which is better for you!
My initial deposit is:
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Betterment is the only choice for you due to the fact that Wealthfront requires $500 minimum.
Wealthfront is better for you in terms of fees, since they don't charge for accounts less than $10,000 while Betterment charges 0.25%.
It's a tie! 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.
But Betterment has more advanced functionality such as direct real-time contact with financial advisors via encrypted text messaging, spousal tax loss harvesting, and tax coordinated portfolios.
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%.
Advantages of Betterment
- For a limited time, get up to 1 year of free investment management depending on your initial deposit amount.
- Gives you direct, real-time access to a dedicated team of financial advisors through encrypted text messaging on their mobile app.
- Has the ability to let you specify and track multiple personal savings goals simultaneously. This way you can set aside money for retirement, a new house, and a wedding ceremony through different goal funds and track their progress independently.
- Offers a strong personalization feature called "RetireGuide" that customizes a dynamic investment plan based on your unique situation by asking you questions about your financial scenario and using those (20+) pieces of information to generate a diversified portfolio based on your unique needs.
- SmartDeposit strategically takes extra cash you might accrue in your account and puts it to work for you, capped at a certain amount to make sure you still have more than enough to pay your bills. 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.
Advantages of Wealthfront
- Your first $10k is fee-free. You're incentivized to invite friends and family with $5000 in free management for each referral on top of the $10k.
- 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.
- Supports direct indexing for accounts over $100k which reduces fees & increases tax loss harvesting.
- Supports 529 college savings plans which is useful for parents preparing for their children's education.
- Offers Path, an online financial planning tool that connects to your existing accounts and analyzes your spending and provides visualizations of "what if" scenarios for your financial future. Now includes College Planning, which models your tuition costs based on data from each university and helps you save for higher education.
- 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.
Features of Both Wealthfront and Betterment
Robo Advisor | Betterment | Wealthfront | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Minimum Deposit | $0 | $500 | ||||||||||||
| Annual Fee |
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| Year Founded | 2010 | 2011 | ||||||||||||
| Assets Under Management | $16.4 Billion | $20 Billion | ||||||||||||
| Direct Indexing | Wealthfront enables direct indexing, an enhanced form of tax-loss harvesting for accounts with a minimum of $100,000. | |||||||||||||
| Tax Loss Harvesting | ||||||||||||||
| Fractional Shares | ||||||||||||||
| Human Advisors | Betterment provides a free human advisor for accounts over $100,000 | |||||||||||||
| Single Stock Diversification | Wealthfront calls this their "Selling Plan" which allows any shareholder with a concentrated position to sell their shares over time and diversify their holdings. | |||||||||||||
| Taxable Accounts | ||||||||||||||
| 401k Plans | ||||||||||||||
| IRA Accounts | Wealthfront's "Tailored Transfer" feature migrates your investments tax-efficiently over time. | |||||||||||||
| Roth IRA Accounts | Wealthfront's "Tailored Transfer" feature migrates your investments tax-efficiently over time. | |||||||||||||
| SEP IRA Accounts | ||||||||||||||
| Trust Accounts | ||||||||||||||
| 529 Plan Accounts | ||||||||||||||
| Sign Up | Check out Betterment | Check out Wealthfront |
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