Betterment and Betterment are not only two of the most popular robo advisors in the industry, but they may very well be the most innovative in the field. Though they represent two of the first robo advisors, both have built out their platforms and now offer robust portfolio options and other services to their clients.

Though they each have their own nuances–and specializations–you really can’t go wrong with either platform. Each will take complete control of your portfolio, managing every aspect of it for a very low annual fee. When you sign up with either service, your only responsibility will be to fund your account on a regular basis.

But what if you’re either new to robo advisors or you’re considering a switch from another one? If you’re researching robo advisors, the information will inevitably lead to Betterment and Wealthfront. So let’s take a look at the two heavyweights in the robo advisor space and see which might be a better fit for your portfolio. Listen to the Podcast of this Article

About Betterment


Betterment is not only the original robo advisor, but its also the largest independent robo (along with Wealthfront), with $21 billion in assets under management. The company is based in New York City and began operations in 2008.

As a robo advisor, Betterment is an automated, online investment platform that handles all aspects of investment management for you. When you sign up for the service, you complete a questionnaire that will help determine your investment goals, time horizon, and investment risk tolerance. From that information, Betterment creates a portfolio of stocks and bonds to meet your investor profile.

They dont actually invest your money in individual securities, but instead through exchange-traded funds (ETFs), each representing a specific asset class. They can build an entire portfolio for you through about a dozen funds that will give you exposure to the entire global financial markets.

All this is done for a low annual management fee. Your only responsibility will be to fund that your account on a regular basis and let Betterment handle all the management details for you.

Better Business Bureau rates Betterment as A+, which is the highest rating in a range from A+ to F. The company also scores 4.8 stars out of 5 by more than 20,000 users on the App Store, and 4.5 stars out of 5 by more than 4,500 users on Google Play.

About Wealthfront

Wealthfront is, with Betterment, the largest independent robo advisor, and Betterment’s primary competitor. In fact, with over $24 billion in assets under management, its now slightly larger than Betterment. The company is based in Redwood City, California, and launched operations in 2011.

As a robo advisor, it works much the same as Betterment, creating a portfolio for you based on your answers to a questionnaire when you open your account. Wealthfront will also manage your account using a small number of ETFs spread across various asset classes. But on larger accounts, they’ll also add individual stocks to get greater benefit from tax-loss harvesting.

Like Betterment and virtually all robo advisors, Wealthfronts basic investment strategy is based on Modern Portfolio Theory (MPT), which emphasizes asset allocation over individual security selection.

Similar to Betterment, and really all robo advisors, your account will receive full investment management for a very low annual fee. Your only responsibility will be to fund your account on a regular basis.

Unfortunately, Wealthfront has a Better Business Bureau rating of F, due to unanswered complaints. However, the company gets 4.9 stars out of 5 from more than 9,000 users on the App Store, and 4.8 stars out of 5 by more than 2,700 users on Google Play.

Investment Strategies Betterment vs Wealthfront

Betterment Investment Strategy

Betterment offers two plan levels, Digital and Premium. Premium is available for minimum account balances of $100,000, while Digital is open to all account balances. Like many robo advisors, Betterment has evolved past building and managing a basic portfolio comprised of a mix of stocks and bonds.

For example, if you choose the Premium Plan, you’ll have access to live financial advisors. But there are many other services and plans to choose from.

Read More: Betterment Promotions

Basic portfolio mix

Your portfolio will be invested in as many as six stock asset classes/ETFs and eight bond asset classes/EFTs.


  • US Total Stock Market
  • US Value Stocks Large Cap
  • US Value Stocks Mid Cap
  • US Value Stocks Small Cap
  • International Developed Markets Stocks
  • International Emerging Markets Stocks


  • US High-quality Bonds
  • US Municipal Bonds
  • US Inflation-Protected Bonds
  • US High-Yield Corporate Bonds
  • US Short-term Treasury Bonds
  • US Short-term Investment-Grade Bonds
  • International Developed Markets Bonds
  • International Emerging Markets Bonds

Use of value stocks

Notice that three of the six stock asset classes involve value stocks. This is a specialization of Betterment and represents a time-honored stock market investment strategy. Value stocks are investments in companies with stock prices that are low in relation to their competitors by various standard measurements. But the companies are deemed to be fundamentally sound, and therefore likely to outperform the general market once the investment community realizes the true value of the stocks.

In this way, Betterment makes an attempt to outperform the general market, such as the S&P 500 or even some broader indices.

Smart Beta

This is another investment strategy Betterment uses with the potential to outperform the general market. This specific portfolio is managed by Goldman Sachs. Smart Beta is a form of active portfolio management, which seeks high-quality companies with low volatility, strong momentum, and good value.

Since its a higher risk/high reward type of investing, it requires a minimum portfolio of $100,000.

Socially responsible investing (SRI)

This is an investment option increasingly being offered by robo advisors. However, with Betterment only a portion of your portfolio will be invested in SRI. They replace the ETFs in the International Emerging Market Stocks and US Value Stocks Large Cap with ETFs that specialize in socially responsible investing in those sectors.

Learn More: The Pros and Cons of Socially Responsible Investing

Flexible Portfolios

If you want more control over your investment portfolio, you can choose this option. It allows you to adjust the individual asset class weights in your portfolio allocation. Its also designed for more advanced investors and gives you an opportunity to increase allocations in asset classes you believe are likely to outperform the market.

BlackRock Target Income

For investors looking for income and safety of principal, Betterment offers this portfolio, which consists of 100% of bonds. There is some risk of principal in this portfolio but it’s designed to be minimal. You can even choose the level of risk and return you want. It won’t provide the type of long-term gains you’ll get from a stock portfolio, but it will offer the kind of steady income that will work especially well for retirees.

Tax-loss Harvesting

Tax-loss harvesting is a year-end strategy in which asset classes with losses are sold (and later replaced with comparable ones) to offset gains in winning asset classes. The strategy helps to defer taxable capital gains on growing asset classes.

Betterment makes this strategy available on all account balances. However, it’s only offered on taxable accounts since it’s completely unnecessary for tax-sheltered retirement plans.

Betterment Everyday Cash Reserve

If you’re looking to add a cash option to your investment portfolio, you can do it through Betterment Cash Reserve. The account is eligible for FDIC insurance up to $1 million. The minimum deposit is $10, and offers unlimited transfers, both in and out of your account.

Betterment Checking

The Betterment Checking account gives you the flexibility to manage your money in a way that best fits your financial goals. You’ll get this account with a debit card and you can use it to pay in person or online. You’ll also get FDIC insurance on your money.

The Betterment Checking account is an innovative way to manage your money. It’s faster, more secure, and requires zero minimum balance requirements. You can now deposit checks using their streamlined mobile app. Just take a picture and deposit checks will be there for you on the other side.

Wealthfront Investment Strategy

Unlike Betterment, Wealthfront has a single plan for all investors, with an annual management fee of 0.25% on all account balances. And like Betterment, Wealthfront has expanded its investment options menu in many different directions.

Basic Portfolio Mix

Wealthfront uses 11 asset classes in the construction of its portfolios, including four stock funds, five bond funds, plus real estate and natural resources.

The allocation looks like this:


  • US Stocks
  • Foreign Stocks
  • Emerging Market Stocks
  • Dividend Stocks


  • Treasury Inflation-Protected Securities (TIPS)
  • Municipal Bonds (on taxable investment accounts only)
  • Corporate Bonds
  • U.S. Government Bonds
  • Emerging Market Bonds


  • Real Estate
  • Natural Resources

Use of Alternative Investments

Wealthfront includes real estate and natural resources in its portfolio composition. The real estate sector invests in companies that provide exposure to commercial property, apartment complexes, and retail space. Natural resources are held in ETFs representing that sector.

The combination of the two offers a stronger diversification away from a portfolio comprised entirely of stocks and bonds, largely because they offer protection in an inflationary environment. It’s possible for these sectors to perform well when the general financial markets are not.

Smart Beta

The Smart Beta option attempts to outperform the general financial markets. The strategy deemphasizes market capitalization in the creation of a portfolio. For example, rather than using the capitalization allocations of certain companies within the S&P 500, the strategy might increase some allocations and decrease others. It’s more of an active investment strategy and requires a minimum investment portfolio of $500,000.

Wealthfront Risk Parity

This is another investment strategy for investors with larger accounts and a greater appetite for risk. Its been shown to provide higher long-term returns, but it may use leverage to increase those returns.

Stock-level Tax-loss Harvesting

Tax-loss harvesting is available on all taxable investment accounts. But Stock-level Tax-loss Harvesting is available to larger accounts to provide more aggressive tax deferral.

This is a fairly complex investment strategy, but it involves the use of individual stocks to take greater advantage of tax-loss harvesting. The use of individual stocks will make it easier to buy and sell securities to minimize capital gains taxes. Depending on the specific plan, the required minimum investment ranges between $100,000 and $500,000.

Wealthfront Path

This is a software-based financial advisory, providing you with financial planning tools. They can help you plan for retirement or saving for the down payment on a house or a college education for one or more of your children. The apps run what-if scenarios, that can make projections based on various savings levels for each of your specific goals.

Though it doesn’t offer live financial advice, the service is free to use.

Wealthfront Cash

You can open an interest-bearing cash account with Wealthfront Cash Account with just $1. There’s no market risk, no fees, unlimited free transfers, and your account is FDIC insured for up to $5 million.

And now, Wealthfront Cash allows you to get your paycheck up to two days early when you set up a direct deposit. They’ve also implemented the ability for you to invest directly into the market within minutes, straight from your Wealthfront Cash account. That means you can get paid early and immediately invest – giving you about extra days of investing each year.

Read more: Wealthfront Cash Account review

Wealthfront Portfolio Line of Credit

Much like a home equity line of credit, the Wealthfront Portfolio Line of Credit is secured by your investment account. You can borrow up to 30% of the value of your account for any purpose. There’s no prequalification since the line of credit is completely secured by your investment account.

The line of credit is automatic if you have a non-retirement account balance of at least $25,000. You can request funds against the line on your smartphone and receive them in as little as one business day.

Current interest rates paid on the line range between 2.45% and 3.70% APR, depending on the size of your account.

Retirement Planning Betterment vs. Wealthfront

One of the most common uses of robo advisors is the management of retirement accounts. Both Betterment and Wealthfront can manage all types of IRA accounts, similar to the way they do with taxable accounts. But each also offers some level of retirement planning.

Read More: Best Robo Advisors Find out which one matches your investment needs.

Betterment Retirement Planning

Betterment is strong in this category because in addition to their regular portfolios, they also offer income-specific investment options, like their BlackRock Target Income and Everyday Cash Reserve. The Target Income option in particular focuses on maximizing interest income, which is exactly what most people are looking for in retirement.

One of the advantages Betterment offers is that you can connect your 401(k) with your investment account. Betterment cant manage the 401(k) (unless chosen to do so by your employer through their 401(k) management plan), but they can coordinate your Betterment retirement account(s) with the activity in your employer plan.

And of course, if you have at least $100,000 in your Betterment account, you can enroll in the Premium plan and have access to live financial advisors.

But Betterment also offers its Retirement Savings Calculator to help you know if you’re on track for your retirement. By answering just four questions, they’ll be able to determine if your current retirement plan will provide the income you’ll need in retirement, taking your projected Social Security income into consideration. If it isn’t, it’ll let you know how much more you need to invest on a regular basis.

Wealthfront Retirement Planning

You can take advantage of Wealthfront Path to help you with retirement planning. You’ll start by linking your financial accounts so the program can get a better understanding of your finances. Recommendations to help you reach your goals are made based on the amount of regular contributions you’re making and the income you will need in retirement.

Path will analyze your spending patterns, your average annual savings rate, the interest you’re earning on those savings, as well as your investment and retirement contributions. It will also analyze the fees you’re paying on your investment and retirement accounts. Loan accounts are analyzed as well.

The information is assembled, and future projections are made. You’ll be given advice on any needed increases in savings for retirement contributions, as well as asset allocations. And perhaps best of all, since all your financial accounts are linked to the service, it will provide continuous updates on your progress toward your retirement goals.

Betterment Pros & Cons

  • No minimum initial investment or account balance requirement.

  • Reduced fee structure on larger account balances.

  • Use of value stocks seeks to outperform the general market.

  • Unlimited access to certified financial planners on account balances over $100,000.

  • Comprehensive retirement planning package.

  • Limited investment diversification, excluding alternative asset classes, like real estate and natural resources.

  • The annual management fee rises from 0.25% to 0.40% if you select the Premium plan.

  • The reduced fee structure on large account balances doesn’t kick in until you reach a minimum of $2 million.

Wealthfront Pros & Cons

  • Your account includes alternative investments, like real estate and natural resources. This offers greater diversification than a portfolio invested only in stocks and bonds.

  • The minimum initial investment is just $500. That’s not zero, but it’s an amount most small investors can comfortably start with.

  • Flat-rate fee of 0.25% on all account balances.

  • Larger accounts get the benefit of more efficient tax-loss harvesting strategies through Wealthfront Risk Parity.

  • The Wealthfront Portfolio Line of Credit lets you borrow up to 30% of the value of your non-retirement accounts at very low interest and with no credit check.

  • There’s no reduced management fee for larger account balances.

  • The retirement planning tool (Path) is an automated system and does not provide advice from live financial advisors.

  • Poor rating from the Better Business Bureau.

Bottom Line

We’ve covered a lot of territory and details in this side-by-side comparison of Betterment vs Wealthfront. The summary table below should help you to be able to compare the various services each offers with a quick glance.

Category Betterment Wealthfront
Minimum initial investment Digital: $0
Premium: $100,000
Promotions Up To 1 Year Free First $5,000 Managed Free
Management fees Digital: 0.25% up to $2 million, then 0.15% above Premium: 0.40% to $2 million, then 0.30% 0.25%
Available accounts Individual and joint taxable accounts; traditional, Roth, rollover and SEP IRAs; trusts and nonprofit accounts Individual and joint taxable accounts; traditional, Roth, rollover and SEP IRAs; trusts and 529 accounts
Rebalancing Yes Yes
Dividend reinvestment Yes Yes
Tax-loss harvesting – on taxable accounts only Yes Yes
Socially-responsible investing Yes Available through Smart Beta ($500,000 minimum) and Stock-level Tax-Loss Harvesting ($100,000 minimum)
Smart Beta investing Yes Yes, minimum $500,000
Interest bearing cash account Yes Yes
Line of credit No Yes
Financial advice Yes, on Premium Plan only Automated only
Mobile app Yes Yes
Customer service Phone and email, Monday through Friday, 9:00 am to 6:00 pm Eastern time Phone and email, Monday through Friday, 10:00 am to 8:00 pm Eastern time

You’ve probably already guessed were not declaring a winner between these two popular roboadvisors. Both are first rate and you can’t go wrong with either. More than anything, your decision will likely come down to specific details–what features and benefits one offers that better suits your own personal preferences and investment style.

But one advantage that’s undeniable with both Betterment and Wealthfront is that not only is each a first-rate service, but they provide enough investment options and related services that they can accommodate your growing financial capabilities and needs well into the future.

For example, while you may start out with a basic managed portfolio, you’ll eventually want to get into higher risk/higher reward options as your wealth grows. As well, you’ll like the flexibility of having high-interest cash investment options, as well as low-cost or free financial or retirement advice.

We like both these services and are certain you can’t go wrong with whichever one you choose.


  • Kevin Mercadante

    Since 2009, Kevin Mercadante has been sharing his journey from a mortgage loan officer emerging from the Financial Meltdown as a contract/self-employed slash worker accountant/blogger/freelance blog writer. He offers career strategies, from dealing with under-employment to transitioning into self-employment, and provides Alt-retirement strategies for the vast majority who won't retire to the beach as millionaires. Kevin holds a Bachelor’s degree in Finance, and worked in accounting and the mortgage industry before becoming a writer.