Updated October 24, 2023

Betterment vs Wealthfront

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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.

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About Betterment and Wealthfront

About Betterment
Jon Stein first started building Betterment in 2008 with the mission to make investing easier for everyone. He wanted a service that automatically handled your money, and found that the only way to get it was to make it himself.

Betterment was launched in 2010 and since then has become the largest independent robo-advisor. It has expanded to also include personalized financial advisory services.

About Wealthfront
Wealthfront was first founded by Andy Rachleff and Dan Carroll in 2008 as kaChing, a site that allowed smaller investors to follow strategies of investing geniuses. It was revamped a year later as Wealthfront with a more serious name and more serious professional managers.

Today, Wealthfront is a fully automated robo-advisor. Its services also include free financial planning tools and lending.

Quick Takeaway: Which is better: Wealthfront or Betterment?
  • Both are good for beginners.

  • Betterment is better for investors who need access to financial experts for personalized advice.

  • Wealthfront is better for investors with over $100k who can make use of more advanced tax-efficient strategies.

  • Betterment has more portfolio options, while Wealthfront provides more diversified asset classes.

Read on to learn which is right for you.

Key Similarities

Both Betterment and Wealthfront first ask you a series of questions to understand your goals and risk tolerance. Then they automatically select investments and manage your portfolio for you based on your goals.

Both offer these features:

  • 0.25% annual fee for the basic service

  • Globally diversified portfolio of ETFs using the Modern Portfolio Theory

  • Automatic rebalancing when your asset allocation drifts

  • Tax loss harvesting for all clients at all balances

  • Linking of external accounts to get an overall financial picture

  • Retirement goal tracker that tells you if you're on track

  • Automatic deposits

  • A risk-free savings account with competitive APY

  • SIPC protection for up to $500,000 per account

Betterment also offers a SmartDeposit feature. This feature automatically withdraws money from your bank account when it exceeds a certain balance. This way, you won't have uninvested cash just sitting around. You can set parameters so you maintain total control.

Key Differences

Here's a quick look at where Betterment and Wealthfront differ.

Betterment Offers

  • No minimum opening deposit

  • A premium service for 0.40% annual fee that gives you access to human advisors

  • Fractional shares—you can buy just one part of an ETF

  • More portfolio options, including a socially responsible investing portfolio, low-risk portfolio of mutual funds, Goldman Sachs Smart Beta portfolio, and more

  • Financial advice packages for one-on-one advice from experts

Wealthfront Offers:

  • $500 minimum opening deposit

  • 529 College Savings Plan

  • Assets in real estate and natural resources

  • Advanced financial toolkit for retirement, homebuying, college, travel, and more

  • Automatic lending against your portfolio at a low interest rate (for accounts $100k+)

  • Advanced strategies such as stock level tax loss harvesting and risk parity (for accounts $100k+) and Smart Beta (for accounts $500k+)

Quick Summary: In short, Betterment has human advisors available, while all Wealthfront services are automated only. On the other hand, Wealthfront has better free financial planning tools and more advanced strategies for high-balance investors, as well as a lending service.

Detailed Comparisons Breakdown

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Now let's take a more detailed look at how the two compare.

Cost—Winner: Depends

Both Betterment and Wealthfront offer their basic service at a 0.25% annual fee. But if your total Betterment balance is below $20,000 or you don't have a recurring deposit of at least $250 per month, Betterment will charge you $4 per month rather than a 0.25% annual fee.

Betterment also offers an optional Premium service to those with $100,000 or more at a 0.40% annual fee. The Premium service gives you unlimited access to financial experts. The cost is more, but being able to get personalized professional advice may be worth it.

Betterment gives a discount for high-balance investors. For clients with over $2 million, the portion above $2 million gets a 0.10% fee discount. So the Basic service will cost only 0.15% and the Premium 0.30%.

Besides the annual fee, you'll also have to pay for the expense ratios within each fund. Wealthfront selects low fund fees with expense ratios between 0.07% and 0.16%. Betterment's average expense ratio range is 0.07% - 0.15%.

Looking for more hands-on financial advice? Check out this article from Lake Road Advisors to learn what you can expect from financial advisor fees.

Minimum Deposit—Winner: Betterment

Betterment has no minimum deposit to get started. This is great for beginners without a lot to invest or even those unsure about using the service.

Wealthfront has a minimum deposit of $500. This is still a very low amount compared to other robo-advisors. It's not such a big deal, but you still have to be fairly sure to commit the cash.

Account Types—Winner: Depends

Both Betterment and Wealthfront support the following accounts:

  • Individual taxable accounts
  • Joint taxable accounts with rights of survivorship
  • Traditional IRA
  • Roth IRA
  • 401(k) rollovers
  • Trust accounts

And here is what each offers that the other doesn't:

  • Betterment offers Inherited IRA
  • Betterment offers 401(k) for business owners.
  • Wealthfront offers 529 College Savings Plan.

Neither robo-advisor offers custodial accounts, solo 401(k), HSAs, or self-directed accounts.

Asset Classes—Winner: Wealthfront

Betterment invests your funds in up to 13 different asset classes. Betterment's asset classes include:

  • U.S. Total Market
  • U.S. Large Cap
  • U.S. Mid Cap
  • U.S. Small Cap
  • International Developed Market Stocks
  • International Emerging Market Stocks
  • U.S. Short-Term Treasury Bonds
  • U.S. Short-Term Investment-Grade Bonds
  • U.S. Inflation Protected Bonds
  • U.S. Municipal Bonds
  • U.S. High Quality Bonds
  • International Developed Market Bonds
  • International Emerging Market Bonds

Wealthfront's asset classes include:

  • U.S. Stocks
  • Foreign Developed Market Stocks
  • Foreign Emerging Market Stocks
  • U.S. Dividend Growth Stocks
  • U.S. Government Bonds
  • U.S. Corporate Bonds
  • Emerging Market Bonds
  • U.S. Municipal Bonds
  • Treasury Inflation-Protected Securities (TIPS)
  • Real Estate
  • Natural Resources

Wealthfront offers a more well-rounded diversified portfolio as it also invests in real estate and natural resources. It also focuses more on dividend paying stocks, so you may like it better if you're looking for more passive income.

Portfolio Options—Winner: Betterment

Betterment offers a range of portfolio options, including:

Betterment Core Portfolio
Personalized to your goals and made up of globally diversified stock ETFs and bond ETFs.

BlackRock Target Income Portfolio
Only invests in bond ETFs for lower risk and more income.

Goldman Sachs Smart Beta Portfolio
Aims to provide better returns by investing in companies screened for value, high quality, strong momentum, and low volatility.

Flexible Portfolio
Allows you to modify your individual asset class weights to your preferences.

Tax Coordinated Portfolio
Aims to increase your after-tax returns by allocating your assets between taxable accounts and IRAs.

Socially Responsible Investing (SRI) Portfolio
Contains more stock from socially and environmentally conscious companies.

Wealthfront does not offer as many portfolio options for different goals. You only get the core portfolio of diversified ETFs.

Those with $100k+ will get some more features, such as the ability to delete certain companies you don't wish to invest in (as close as Wealthfront gets to SRI).

Financial Tools—Winner: Wealthfront

Both allow you to link external accounts so you can get an overall picture of your current finances. But Wealthfront has more advanced financial planning tools.

Wealthfront's financial planning tools (called Path) are available for free whether you use the robo-advisor service or not. Some things it can calculate include:

  • How your spending or saving patterns would affect your retirement income

  • What happens if you retire at different ages

  • How big financial decisions would impact retirement

  • How much house you can afford and explore homes within your budget

  • Estimated cost of college and how much financial aid is likely

  • The impact of taking time off work to travel

Read more about What Path can do.

In comparison, Betterment only offers simple tracking of retirement goals. It estimates your portfolio balance over the years and your retirement income. If you're off track, it tells you how much you should save each year to get back on track.

Human Advisors—Winner: Betterment

Wealthfront services are completely software-driven. It doesn't have any human advisors to offer personalized advice.

Betterment's Premium service (available to those with $100k+) comes with unlimited access to real financial experts who can provide guidance on life events and investments outside of Betterment.

Betterment also offers Advice Packages to all investors for an extra fee. You can get one-on-one professional guidance on major life events, such as college, marriage, or retirement planning. The advisor will go over your situation and provide a personalized action plan.

Tax Strategy—Winner: Wealthfront

Both offer tax loss harvesting to all clients with taxable accounts. But Wealthfront offers more advanced strategies for higher net-worth investors.

Wealthfront offers Stock-Level Tax Loss Harvesting to those with $100k+ (explained more below). For accounts $500k+, Wealthfront offers Smart Beta, which further minimizes the impact of taxes by weighing stocks in your portfolio more intelligently.

Even though Betterment offers tax loss harvesting to all clients, you may not be eligible for it if your income is below a certain level.

Services for Investors $100k+—Winner: Depends

Both Betterment and Wealthfront offer value-added services for high balance investors with $100,000 or more.

Wealthfront offers features to increase performance and returns. Once you have reached $100k, you get these for free:

Stock level tax loss harvesting
This advanced program purchases individual stocks from the S&P 500, not just ETFs. This allows for more tax reducing opportunities at the stock level.

Risk parity
This advanced strategy weighs risk among the different asset classes. This can provide a better return for a portfolio with the same risk level.

Portfolio line of credit
This unique service allows you to borrow from your portfolio. You can borrow up to 30% of your portfolio value at a low interest rate. It's automatic and there is no credit check.

Ability to restrict companies
You can set which companies you do not wish to invest in. This allows you to build your own socially responsible portfolio.

On the other hand, Betterment offers unlimited access to financial experts if you choose to upgrade to the Premium service for a higher annual fee. They can provide guidance on any financial matters, even for accounts outside of Betterment.

This is extra cost, but being able to get personalized advice could be worth it if you have complex portfolios or complicated financial situation.

The better one for you depends on which you'd rather have: the potential for higher returns or ability to talk to financial experts.

Cash Account—Winner: Tie

Both Betterment and Wealthfront offer a savings account. Betterment's is called Cash Reserve, and Wealthfront's is called Cash Account.

Both accounts act like a savings account and provide a guaranteed APY. You can save for short-term goals and make unlimited transfers and withdrawals. Both provide up to $1 million of FDIC insurance.

Both offer competitive APYs higher than most banks.

Pros & Cons of Betterment


  • $0 minimum investment
  • Option to get advice from real human financial advisors
  • Several different portfolio options
  • Fractional shares
  • Socially Responsible Investing Portfolio
  • SmartDeposit
  • 401(k) for business owners
  • Discount for large balances over $2M


  • Less advanced financial tools
  • No 529 College Savings Plan
  • Less diversified asset classes

Pros & Cons of Wealthfront


  • Free advanced financial tools
  • More diversified portfolio including real estate and natural resources
  • Stock level tax loss harvesting (for accounts $100k+)
  • Risk parity (for accounts $100k+)
  • Ability to borrow against your portfolio (for accounts $100k+)
  • Free savings account with higher APY


  • No human advisors
  • No fractional shares
  • No Socially Responsible Portfolio
  • $500 minimum investment

Final Verdict: Which is Better?

It's a close call between the two. It ultimately depends on your needs.

Betterment may be better if:

  • You are new or unsure and don't want to commit $500.

  • You want access to human advisors. Those with more complex portfolios or financial situation may really appreciate this feature.

  • You want to invest in different portfolios, like SRI, BlackRock, or Goldman Sachs Smart Beta.

Wealthfront may be better if:

  • You have over $100k and can take advantage of extra features, such as stock level tax loss harvesting, risk parity, ability to delete companies, and portfolio line of credit.

  • You want a more diversified portfolio including real estate and natural resources.

For beginners with just a little to invest, either will make a great choice.


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