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Two of the biggest robo-advisors are Betterment and Wealthfront.  At first glance they may appear to be virtually identical. Both create diversified portfolios with similar low cost ETFs. Both rebalance your portfolio, reinvest your dividends, and offer tax loss harvesting. Both have slick, easy-to-use websites.

But there are some significant differences between Wealthfront and Betterment upon closer inspection. A podcast listener named Dan touched on this in a recent email:

“Are you going to do a podcast on what made you choose Wealthfront for your taxable account (other than to keep multiple sponsors happy!)? I assume it’s for the Wealthfront 500 and tax-loss harvesting benefits it offers, but Betterment counters that this is only done on a portion of the account, and not worth the added cost. Is this the future of indexing or a gimmick? Still very interested in this topic (robo-advisors) which you brought to my attention.

Many thanks,

(Betterment was at one time a sponsor of the Dough Roller Money Podcast. As of today, neither Betterment nor Wealthfront are sponsors, but both offer affiliate programs that I participate in.)

So, let’s address Dan’s question about Betterment versus Wealthfront, starting with the basics.

Best ForNew investors with low
starting balances
Higher net-worth investors
PromotionsUp To 1 Year FreeFirst $5,000 Managed Free
Minimum Deposit$0$500
Pricing and Fees0.25%-0.40%0.25%
Tax Loss HarvestingYesYes


Listen to the Podcast of this Article

1. Account Types

Wealthfront offers the following account types:

Betterment options are more limited:

  • Taxable accounts (personal, joint, revocable trusts, irrevocable trusts)
  • Traditional IRA accounts (including 401(k) rollovers)
  • Roth IRA accounts
  • SEP IRA accounts
  • 401(k)

Related: Wealthfront Review

2. Cost

Which one is cheaper depends on your account balance.  In addition to the costs of the ETFs, each service charges a management fee.

Wealthfront: Charges a flat rate of .25% of assets under management, though the first $5,000 is free (For DR readers!).

Betterment: Betterment’s fee structure falls into two categories: Digital and Premium.

The fees are as follows:

  • Digital – 0.25% (no minimum required)
  • Plus – 0.40%; minimum 100,000 and access to their CFP professionals.  Also includes in-depth advice on non Betterment investments.
  • Up to ONE YEAR managed free – Betterment is currently offering a limited time promo where if you deposit $15,000 – $99,999 you get one month free.  If you deposit $100,000 – $249,999 you get six months free and if you deposit $250,000 or more, you get a full year free.

Related: How Half a Percent Can Ruin Your Retirement

With the limited time promo, Betterment turns out to be the current cheaper option (for year one).  The more you deposit, the more you’ll save in fees even if you take advantage of the Plus platform.  Wealthfront turns out to be the cheaper option in the long run once the bonus opportunity fades beyond year 1.

3. Asset Allocation

Both use solid asset allocation plans. They each allocate your money into different exchange traded funds (ETFs). Personally, I think both platforms have reasonable asset allocation plans.

But there are also some differences:

  1. Betterment favors value funds – companies that are undervalued according to certain measures, like P/E ratio.
  2. Wealthfront has real estate investment trusts (REITs), Betterment does not.
  3. Wealthfront has commodities, Betterment does not.
  4. Wealthfront tilts toward dividend paying stocks – they have a high dividend yield ETF, while Betterment doesn’t.

On balance, I prefer Wealthfront, but it’s a close call. You may see if differently based on your own investment preferences.

Learn More About Asset Allocation

4. Website and Features

Both are easy to use and to understand. It’s also easy to change asset allocations. But I think Betterment is the better of the two.

However, when it comes to features, Wealthfront stands out with it’s advice engine–Path. Path is designed to give you advice for any financial situation with just a few clicks and without having to make any calls. This feature can even project your future net worth allowing you to run a few scenarios on how to best save and invest your money. This is a valuable financial planning tool that gives Wealthfront the win for unique features designed to keep you on the right track–or more appropriately–path. It’s free for anyone to use — you don’t even need to open an investment account first.

Read More: Betterment Promotions

5. Tax Loss Harvesting

With both Betterment and Wealthfront there are no minimums for tax loss harvesting.

Tax loss harvesting doesn’t eliminate your tax liability, it defers it. That has value, because the more money you can keep in your account, the more you can earn on that balance.

For that reason, there’s no doubt that tax loss harvesting has value, and increases your return.

Wealthfront does offer a unique tax loss harvesting feature called Stock-Level Tax-Loss Harvesting.  For those with at least $100,000 in a taxable account, Wealthfront will buy shares in an index like the the S&P 500, rather than invest in an index ETF. Wealthfront will even include on your statement the amount saved through tax-loss harvesting.

By doing so, they can generate additional tax losses on a company by company basis.

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

6. Account Minimums

Wealthfront has a minimum of $500 (down from $5,000) to open an account. Betterment currently has no account minimum required, and you are not charged a fee for an account that has a $0 balance.

7. Cash Accounts

Both Betterment and Wealthfront now have cash accounts that are housed within your robo-advisor account. This adds a ton of value. You can use this as a savings account, keep money stashed there for investing later, or any other purpose–it’s, in effect, a savings account.

Wealthfront Cash currently has a 0.35% APY and has no fees whatsoever. You’re FDIC insured up to $1 million, you get unlimited, free transfers, and there’s only a $1 minimum to open up an account. Also – Wealthfront JUST introduced a checking feature as part of their cash accounts. With the new feature, you’ll be able to pay bills, use a debit card, and direct deposit your paycheck right into your Wealthfront cash account.

Additionally, you can get your paycheck up to two days earlier, get cash from over 19,000 ATMs, deposit checks, make purchases with Apple Pay and Google Pay, as well as pay friends using Cash App, Venmo, or Paypal.  Read more: Wealthfront Cash Account full review

Betterment Cash Reserve currently has a 0.40% APY and all of the same perks (no fees, FDIC insurance, etc.) that Wealthfront Cash has. But Betterment does not have direct deposit or a debit card, nor have they announced plans to add those features. Instead, they’ve directed customers to their new checking account, which has mobile check deposit capability but doesn’t have an APY. So, we currently prefer Wealthfront Cash.


Author Bio

Total Articles: 1118
Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Article comments

Mjand says:

Do you have an opinion on Betterment’s self custody vs. Wealthfront’s use of a third party (apex)? Is there an appreciable difference in safety?


Chuck says:

Hey Rob,
Have you taken a look at SigFig yet? Wondering what your thoughts are. I like the option of leaving account with TD Ameritrade while having it robo managed.


Rob Berger says:

Chuck, I have looked at SigFig. As you’ve noted, you leave your money with (or move it to) TD Ameritrade. That’s very different than either Betterment or WealthFront. SigFig is really similar to FutureAdvisors. It seems to me to be another reasonable option.

Sam says:

can you please do a comparison on Charles Schwab intelligent portfolio? it is Schwab’s free robo advisor. thanks.

Jeremy G. says:

Wealthfront just announced today that everyone with a taxable account, not just those with $100,000 or more, will receive their tax-loss harvesting benefits. People with $100,000 or more will now have access to the Wealthfront 100, which is a separate offering as well.

JT says:

This was a great article, thank you for writing it. I opted to go with Wealthfront for my own situation. The referral program is a nice feature.

Brandon says:

I believe this article deserves and update. Betterment has changed its pricing policies and it seems for a vast majority of people it will cost .25% unless you are a multimillionaire. This may be ok so long as their tax harvesting highly pays for itself. I have my reservations about that but Mr Money Moustache has a lot of faith in them and is still depositing 1k a month on top of his 500k already invested with them. He was planning on moving over a full million but decided against it. Now I don’t really worry about tax loss harvesting since almost all but 9k of my investments are in 401k’s or IRA’s but I am almost at the point where I am maxing both. My home should be paid off in about 5 years when I reach 36. At that point I’ll need to find a good vehicle for that extra money each month and sadly it will need to be in a taxable account. The positive side is it will work on replacing my income should I want to retire early. I was thinking betterment might be the way to go but the 10% additional fee for the next 30 years has me leery since the previous .15% was already on top of the etf expenses. If we can get mutual funds and etfs around .5-.15% with vanguard, adding that .25% for some fancy tax loss harvesting algorithm makes me wonder how close the platform is getting to trying to be an active passive fund management firm. (Contradictory in my eyes)

Sean says:

Another option for you to look at would be WiseBanyan. Similar robo-advisor but no additional fees other than the etf fees.

John Antolak says:

The article says that Betterment’s new fee structure gets more expensive as your balance gets higher. However, that is only if you opt for the Plus or Premium packages. There is no requirement to do so. Therefore, the difference in fee for WealthFront is the waiver on the first $10K.

Bipin says:

I have both Betterment and Wealthfront account . The ROI of wealthfront is far better than Betterment .