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Betterment: Overall Rating
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Is Betterment Right for You?
The platform additionally offers a vast range of portfolio options, including cryptocurrencies and socially responsible investing. But you’ll want to look elsewhere if you’re in search of less expensive ongoing financial advisor guidance.
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Betterment vs. Wealthfront
Betterment and Wealthfront are two of the oldest platforms in the robo-advisor space. Both offer automated portfolio management, with access to perks like cash accounts, tax-loss harvesting, socially responsible investing, and more.
Betterment offers financial advisor guidance, but Wealthfront doesn’t (although it does allow its users to contact specialists with questions). Betterment also has a lower account minimum requirement than Wealthfront. You don’t need anything to get started with the Betterment digital plan. Wealthfront, however, has a $500 minimum.
Wealthfront is a better option for users who want access to a wider range of investment choices. Plus, it’s great for those who’d like to automate custodial accounts like 529 plans. Wealthfront also offers DIY investing for stocks — you’ll just need to open a separate stock investment account, which only requires $1 to get started.
Betterment vs. Vanguard
$10 or $100,000, depending on the account
$0 ($3,000 for Vanguard Digital Advisor; $50,000 for Vanguard Personal Advisor Services)
0% (0.20% to 0.30% for professionally managed portfolios)
ETFs and cryptocurrencies
Stocks, ETFs, options, bonds, mutual funds, and CDs
Betterment and Vanguard both have automated investing, but Vanguard is the stronger choice for more types of investors. With Vanguard, you get access to both self-directed accounts and automated accounts. But you’ll be limited to automated investing at Betterment, so it’s not a great choice for those who want to trade on their on.
When it comes to robo-advice, you’d pay less with Vanguard’s basic automated account, Vanguard Digital Advisor, than you would at Betterment. The Betterment digital plan has a 0.25% fee, but Vanguard Digital Advisor only charges 0.20%.
Ways to Invest With Betterment
Automated portfolio management
Betterment uses computer algorithms to build and manage personalized portfolios. The platform also offers an FDIC-insured checking account, a cash reserve account, IRAs, and a 401(k). Plus, its pricing plans are simple to follow. It offers two options:
- Betterment digital: This plan doesn’t have any account minimum requirements, but it holds a 0.25% annual fee. It includes features like tax-loss harvesting, asset location, portfolio rebalancing, and dividend reinvesting. Plus, to maintain a healthy level of risk, Betterment automatically adjusts your portfolio allocation as you get closer to meeting your goals. This level also offers a range of portfolio options, but it doesn’t include complimentary advisor access.
- Betterment premium: You’ll need at least $100,000 for the premium account, but you’ll get access to all of the features the digital plan offers in addition to unlimited one-on-one CFP guidance. Its CFPs also offer advice on other investments you hold outside of Betterment.
You can additionally invest toward specific goals at Betterment. It currently offers six: retirement (saving), retirement (income), safety net, major purchase, general investing, and cash goals.
The platform gives you access to four different crypto portfolios:
- Universe: This portfolio aims to give you exposure to a diversified range of crypto assets. Bitcoin, ethereum, and bitcoin cash make up most of its holdings, but it also contains dogecoin and 21 other investments.
- Sustainable: The sustainable portfolio is best for those looking to make a postive impact with their investing. It focuses on cryptocurrencies that aim to reduce carbon emissions, and Betterment specifically targets investments that use less energy to validate blockchain transactions. Ethereum, solana, and chainlink are among its holdings.
- Metaverse: With this option, you’ll be investing in cryptocurrencies that work to advance digital commerce and virtual experiences. Its allocation consists of roughly 30% bitcoin. Another 14% of the portfolio contains ethereum, and 7.85% is allocated toward axie infinity. The remainder of the portfolio is allocated across 20 different assets.
- Decentralized Finance: This portfolio focuses on cryptocurrencies that conduct transactions and services without the assistance of banks and other centralized institutions. It’s primarily made up of bitcoin, and the portfolio contains 23 cryptocurrencies in total.
You can invest in both a crypto portfolio and a regular ETF portfolio if you want, but you’ll have to account for both advisory fees. And when it comes to security, Betterment implements two-factor authentication. Plus, it takes several other measures to keep your accounts safe. These include identity verification, transaction review, automatic logout, account ownership verification, system outage protection, and more.
Overall, Betterment offers an impressive crypto selection. While it gives you access to complete portfolios with assets like bitcoin, ethereum, litecoin, and more, Wealthfront only lets you allocate up to 10% of your portfolio in its crypto trusts.
Betterment offers several portfolio options. The first, its Core portfolio, focuses on long-term investing by allocating your money across a global selection of stock and bond ETFs. Its Innovative technology portfolio targets companies with a lot of potential for growth. These include semiconductors, blockchain businesses, clean energy companies, and more.
Its three socially responsible portfolios — Broad Impact, Climate Impact, and Social Impact — are ideal for those who want to make a positive difference with their investments. Finally, its Goldman Sachs Smart Beta portfolio aims for companies that will outperform the market, and its BlackRock Target Income portfolio works to protect your assets against loss by investing primarily in bond ETFs.
As for Betterment’s investment types, it mainly offers stock ETFs, bond ETFs, and cryptocurrencies. Many automated platforms offer ETFs, so its investment selection aligns with most competitors. However, some automated platforms offer alternatives. For instance, Wealthfront has ETFs, index funds, and crypto trusts. Fidelity automated accounts — Fidelity Go and Fidelity Personalized Planning & Advice — both offer Fidelity Flex mutual funds (these funds don’t have expense ratios).
Betterment: Is it Trustworthy?
The Better Business Bureau gives Betterment a C- rating. Ratings range from A+ to F and reflect the bureau’s opinion of how well a company interacts with its clients. The BBB says Betterment’s rating stems from the fact that it has received a high number of complaints, including three that are unresolved.
Bureau ratings don’t guarantee a company will be reliable or perform well. But they take into account a number of other factors, including type of business, time in business, customer complaint history, licensing and government actions, and advertising issues.
The company doesn’t have any recent public controversies.
Betterment — Frequently Asked Questions (FAQ)
How much do you need to open a Betterment account?
Betterment’s most basic account, the digital plan, has a $0 account minimum, but you’ll need at least $100,000 to get started with its premium account. One of the things the premium account offers that the digital plan doesn’t is unlimited one-on-one CFP guidance.
Is Betterment worth the fee?
The answer to this question largely depends on what you’re looking for in an investment platform. If you’re looking for access to low fees, cryptocurrencies, human advisors, goal-focused strategies, and features like tax-loss harvesting, then Betterment may be a good choice for you.
Many robo-advisors — like Wealthfront and SigFig — also have a 0.25% fee option, but you can also find other automated platforms that don’t have advisory fees (e.g., SoFi Automated Investing and Ally Invest Managed Portfolios).
How trustworthy is Betterment?
Betterment is a legitimate platform that has been in business since 2011. The robo-advisor is registered with the US Securities and Exchange Commission (SEC), and it’s a member of the Financial Industry Regulatory Authority (FINRA) and Securities Investor Protection Corporation (SIPC). It has a C- rating from the BBB due to a high number of customer complaints, but it doesn’t have any recent scandals.