July 30, 2019 12:00 PM PT

Betterment Fees: What You Need to Know

Read more about Betterment
This article contains references to products from our partners. We may receive compensation if you apply or shop through links in our content. You help support CreditDonkey by reading our website and using our links. (read more)

Betterment offers no minimum deposit and good returns. But are the fees worth it? Read on to learn about this robo-advisor's costs.

Betterment Robo-Advisory Fees

Betterment charges an annual advisory fee for their digital portfolio management service. Your fee is based on your account balance.

There are two service tiers:

  1. Digital Plan
    Up to $100,000 with a 0.25% annual fee. This basic service tier has no minimum balance requirement. It includes:

    • Automated portfolio management
    • Automatic rebalance
    • Tax loss harvesting
    • Fractional shares investing
    • Access to Customer Support Team

  2. Premium Plan
    Over $100,000 with a 0.40% annual fee. The premium plan is optional to those with over $100,000. You get all the benefits of the Digital plan plus:

    • Proactive account management
    • Advice on outside investments
    • Unlimited access to financial experts for guidance on life events like retirement, saving for college, etc.

How fees work: The fee is based on your account balance. Let's say you have $1,000 in your Betterment portfolio. At the 0.25% Digital service tier, your fee will be $2.50 per year.

What the Fees Cover

The annual advisory fee covers all aspects of your portfolio management. You pay no additional trading costs.

The fee includes:

  • Transfers and transactions
  • Buying and selling securities
  • Automatic rebalancing
  • Tax loss harvesting
  • Advice from CFP Professionals (for the Premium plan)
  • Other account administration
  • Retirement planning tools

Discount for High Balances

For investors with balances over $2 million, the portion above $2 million gets a 0.10% fee discount. That lowers the fees to:

PlanFees and Conditions
Digital Plan0.15% for the portion above $2 million
Premium Plan0.30% for the portion above $2 million

Expense Ratios

Betterment invests your portfolio in ETFs, which have a fee called an expense ratio. This is the operating cost of the fund, such as for management, administration, compliance, marketing, etc.

Users will pay this in addition to their annual advisory fee, which Betterment does not control or profit from. Expense ratio fees are deducted directly from the fund's assets. Keep in mind that these fees do reduce your net asset value a little.

However, the platform's recommended portfolios have, on average, expense ratios of 0.07% to 0.15%. This is considered relatively low.

If you have $1,000 invested in a fund with a 0.15% expense ratio, you will pay $1.50 per year for the operating costs.

How Fees Are Charged

The annual advisory fee is split across the year and charged quarterly (at the end of March, June, September, and December). It's based on the average daily balance each quarter.

The fee is automatically deducted from your account balance. There is no extra action on your part.

If you withdraw your entire balance before the end of a quarter, you'll only be charged the prorated fee for the days your money was with Betterment.

Betterment never charges a fee if your account balance is $0.

Advice Packages

Betterment recently added financial advice packages. You can talk one-on-one to a financial expert and get personalized guidance.

There are 2 package tiers to choose from:

  1. Getting Started Package ($199)
    You get one 45-minute call with a licensed financial expert who will help you start your Betterment account. You'll also receive a set of action items to maximize your investments.

  2. Specialized Packages ($299)
    You get one 60-minute phone call with an advisor to review your financial situation and develop an action plan. The 4 available subjects are:

    • Financial Checkup
      Review your current investment strategy.

    • College Planning
      Go over your high education plans, how much you need to save, and which education savings accounts to use for your state.

    • Marriage Planning
      Go over your goals, budgeting, debt, and merging finances.

    • Retirement Planning
      Review your current situation, accounts and holdings, employer plans, and more.

The packages have a 30-day full refund policy if you're unsatisfied with the service you received.

How Betterment Fees Compare

Here's how Betterment's fees compare against other popular robo-advisors.

Vs. Wealthfront:
Wealthfront's annual advisory fee is also 0.25%. But the minimum deposit is $500. It's not a huge amount, but newbies may still like that they can test out Betterment with no minimum requirement.

Wealthfront does not offer a higher tier service. Wealthfront's service is completely automated - there is no access to human advisors.

 Betterment
 Visit SiteLearn More
 

Betterment

Wealthfront

SPECIAL OFFER
Get up to 1 Year Managed Free - Learn More

 

Benefits and Features

Annual Fee0.25% for accounts under $100,000; 0.40% for accounts $100,000+
0.25%
Minimum Deposit
$0
$500
Phone Support
Yes
Yes
Live Chat Support
No
No
Email Support
Yes
Yes
Human Advisors
Yes
No
Robo Advisor
Assets Under Management
$14 Billion
$10+ Billion
Tax Loss Harvesting
Yes
Yes
Goal Tracker
Yes
Yes
Automatic Deposits
Yes
Yes
Online Platform
Yes
Yes
iPhone App
Yes
Yes
Android App
Yes
Yes
Single Stock Diversification
No
Yes
Fractional Shares
Yes
No
Taxable Accounts
Yes
Yes
401k Plans
Yes
No
IRA Accounts
Yes
Yes
Roth IRA Accounts
Yes
Yes
SEP IRA Accounts
Yes
Yes
Trust Accounts
Yes
Yes
529 Plans
No
Yes
 Visit SiteLearn More

Betterment: Pricing information from published website as of 04/04/2018

Wealthfront: Pricing information from published website as of 04/04/2018

Vs. Charles Schwab:
Charles Schwab Intelligent Portfolio has no annual fee. However, the opening deposit is $5,000, which may be too steep for many newbie investors.

Charles Schwab also does not offer access to human advisors.

 

Betterment

Charles Schwab Intelligent Portfolio

 

Benefits and Features

Annual Fee0.25% for accounts under $100,000; 0.40% for accounts $100,000+
None
Minimum Deposit
$0
$5,000
Phone Support
Yes
24/7
Live Chat Support
No
24/7
Email Support
Yes
Yes
Human Advisors
Yes
No
Robo Advisor
Assets Under Management
$14 Billion
$27 Billion
Tax Loss Harvesting
Yes
Available for accounts $50,000 and over
Goal Tracker
Yes
Yes
Automatic Deposits
Yes
Yes
Online Platform
Yes
Yes
iPhone App
Yes
Yes
Android App
Yes
Yes
Single Stock Diversification
No
 
Fractional Shares
Yes
No
Taxable Accounts
Yes
Yes
401k Plans
Yes
No
IRA Accounts
Yes
Yes
Roth IRA Accounts
Yes
Yes
SEP IRA Accounts
Yes
Yes
Trust Accounts
Yes
Yes
529 Plans
No
No
Annual Fee
Minimum Deposit
Human Advisors
Customer Service

Blank fields may indicate the information is not available, not applicable, or not known to CreditDonkey. Please visit the product website for details.

Betterment: Pricing information from published website as of 04/04/2018

Charles Schwab Intelligent Portfolio: Pricing information from published website as of 06/14/2018

Vs. Vanguard:
Vanguard Personal Advisor's annual fee is 0.30% and it does have a very steep $50,000 opening deposit. The 0.30% fee includes human oversight of your portfolio.

Advisors are on hand to help you make the best decisions for your goals. If you have $50,000 to invest, we think Vanguard offers one of the best services for the cost.

 

Betterment

Vanguard Personal Advisor

 

Benefits and Features

Annual Fee0.25% for accounts under $100,000; 0.40% for accounts $100,000+
0.3%
Minimum Deposit
$0
$50,000
Phone Support
Yes
Yes
Live Chat Support
No
No
Email Support
Yes
Yes
Human Advisors
Yes
Yes
Robo Advisor
Assets Under Management
$14 Billion
$100+ Billion
Tax Loss Harvesting
Yes
client-by-client basis
Goal Tracker
Yes
Yes
Automatic Deposits
Yes
Yes
Online Platform
Yes
Yes
iPhone App
Yes
Yes
Android App
Yes
Yes
Single Stock Diversification
No
No
Fractional Shares
Yes
No
Taxable Accounts
Yes
Yes
401k Plans
Yes
No
IRA Accounts
Yes
Yes
Roth IRA Accounts
Yes
Yes
SEP IRA Accounts
Yes
Yes
Trust Accounts
Yes
Yes
529 Plans
No
Yes
Annual Fee
Minimum Deposit
Human Advisors
Customer Service

Betterment: Pricing information from published website as of 04/04/2018

Vanguard Personal Advisor: Pricing information from published website as of 04/04/2018

Bottom Line

Betterment provides a good service for those who want to be completely hands-off. It's one of the best options for a robo-advisor with $0 minimum deposit.

The 0.25% annual advisory fee for the basic plan is low and competitive with other robo-advisors.

The 0.40% annual fee for the Premium Plan is also not a bad deal for the ability to talk to financial experts.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

More from CreditDonkey:


Betterment Review


Betterment vs Wealthfront


How to Invest Money

More Articles in Money Tips


October
16
2019

IRA vs 401k

Putting money aside each month can help you reach your retirement goals. But is an IRA or a 401(k) the better choice? Keep reading to learn the difference between these two long-term saving plans.

    The Best Way to Invest $100

    $100 may not seem like much, but you can make it grow into more. Here are 10 clever ways to turn that $100 into a better future.

    Passive Income: Practical Ideas to Build Wealth

    The best passive income ideas help you build real wealth and achieve financial freedom. Here are 25+ opportunities and examples for beginners.

    Best Robo Advisor

    Is robo investing a good idea? You need to compare the app's performance and cost. Find out how the best robo advisors can help retirees and beginners.

    Best High Yield Savings Accounts

    Make your money work harder for you in a high-yield savings account. Here are the top savings accounts to grow your money.

    Best Investment Apps

    Investment apps let beginners (even college students) manage stocks and ETFs from your phone. Find out how Acorns, Stash, Robinhood and more compare.

    Best Roth IRA Providers for Beginners

    Opening a Roth IRA is one of the best money moves you can make. But where should you open an account? Here are our top recommended Roth IRA providers.

    10 Smart Ways to Invest $1,000

    $1000 can become a lot more with investing. Here are 10+ smarter ways to spend that extra grand than on a shopping splurge.

    Best Short Term Investment Options

    The best short term investment options provide good returns with low risk. Here are the top 10 strategies for your short term goals.

    How to Invest and Make Your Money Work for You

    So, you want to invest some of your money, but you have no idea how to start? No problem. This handy 10-step guide is loaded with useful resources to help you get started.

    How to Start Investing

    Thinking about investing but unsure where to start? Read this beginner's guide for 7 smart steps to help you grow your money.

    Best Discount Broker

    The best online broker offers low fees, great customer service, and smart research tools. Find the best discount brokerage to consider.

    Best Ways to Invest $10,000

    Have $10,000 to invest? Here are 14 smart investments ideas that will turn that $10k into even bigger money.

    How to Invest in Stocks with Little Money

    Think you don't have enough money to invest? You can start with as little as $5. Read our top ways to invest a little money and start earning now.

    Residual Income

    Make money and get paid even after the upfront work is done. Learn how residual (or passive) income works. Here are 10 good investment ideas to build it.

    How Much Money Should I Have Saved by 30? A Realistic Look

    Are you on track financially at 30? Learn how much you should have saved towards retirement goals. Not there? Don't worry, there's time to catch up.

    Best Investment Apps for Beginners

    Looking to start investing? You can begin with as little as $5. Check out these cheap (or free) apps for new investors.

    How to Invest $100k

    Investing large sums of money in a savings account or standard CD? That mistake may be costing you. Learn better ways to invest $100K and increase your profits in our guide.

    Beginner's Guide to Robo Advisors

    Robo advisors promise to automatically manage your portfolio. But can they really make you money with low fees? Read on for the pros and cons of the best apps.

    Betterment vs Wealthfront

    Betterment and Wealthfront are two of the oldest and most popular robo-advisors. Is there a difference? Which is better for you? Read on to find out.

    23 Traits of Successful Investors

    Adopt the habits of successful investors and you too could call yourself one after a while. We have 23 to get you started.
More Articles in Investing








About CreditDonkey®
CreditDonkey is a stock broker comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the card offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.