July 30, 2019 12:00 PM PT

Betterment Fees: What You Need to Know

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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

Wealthfront

 

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 ($100k minimum)
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
Mobile 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
Annual Fee
Minimum Deposit
Human Advisors
Customer Service
Investment Types

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 ($100k minimum)
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
Mobile App
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 ($100k minimum)
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
Mobile App
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

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

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

Bottom Line

How much does Betterment charge in fees? Betterment's annual fee is 0.25% for the basic service. Accounts over $100k have the option to upgrade to the Premium plan, which costs 0.40% per year and includes access to financial advisors. Accounts over $2M get a 0.10% discount for the portion over $2M.

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.

Note: This website 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. You do not have to use our links, but you help support CreditDonkey if you do.

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