Wealthfront vs. Betterment - Best Robo-Advisors - In this video, I discuss Wealthfront and Betterment, the two leading alternatives to traditional investment advisers.
Wealthfront is an automated investment service firm that builds and manages personalized, globally-diversified investment portfolios. It provides data-driven, actionable recommendations to improve net-of-fee, after-tax, risk-adjusted returns. With an annual advisory fee of 0.25%, users can monitor their real-time investment performance, review recent transactions, receive financial advice, and manage their deposits.
Betterment is a smart automated investing service that provides optimized investment returns for individual, IRA, ROTH IRA, and rollover 401(k) accounts. Its technology enables users to manage their investments in a customized, diversified portfolio. Betterment charges a management fee of 0.25% and 0.40% for premium services. The company’s mobile app enables users to access, view, share, and review their portfolio’s activities as well as deposit and withdraw money from anywhere, anytime.
1. Investment strategy: Both firms use low-cost, index ETFs to build portfolios. Smart beta and socially responsible investing available. Also, Betterment offers income-focused portfolios.
2. Fees: Wealthfront, 0.25%, Betterment 0.25% or 0.40%
3. Financial planning: Wealthfront, software-based. Betterment, access to financial planners for accounts with minimums of $100k.
4. Differences: Wealthfront, 529 plan and portfolio line of credit. Betterment, trust account and access to financial advisors.
5. Minimum deposit: Wealthfront, $500 (first $10k managed for free). Betterment, $0.
6. Tax-loss harvesting: Both companies offer tax-minimization strategies.
Conclusion: Both investment firms are excellent. Choose Wealthfront for a slightly more sophisticated investment strategy. Choose Betterment for financial advice and one-on-one support.
Other robo-advisers I recommend: Vanguard Personal Advisor, Schwab Intelligent Portfolios, and Personal Capital (for accounts over $5M)
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