If you’re asking yourself who’s better–whether Betterment vs Wealthfront–you’re already doing better than most people.
That’s because just less than half (46%) of Americans don’t even own stocks, this according to a 2017 Gallup report. More troubling still, over two-thirds of Americans don’t even participate in–or have access to–a 401(k) plan, this according to Census Bureau researchers.
Savings account number are just as abysmal. The average American couple has just $5000 in savings. So, asking whether to go with Betterment vs Wealthfront is already a step in the right direction. We hope to help clear the air on whom provides a super service so you can get started investing and saving for your future.
The reality is this: as long as you get started, you’re going to put yourself in a better financial position than most. So good on you for asking the right questions.
What Is Wealthfront?
Wealthfront is a robo-advisor investment service with more than $10 billion of assets under management. Based in Redwood City, California, Wealthfront was started back in December 2011.
How does Wealthfront work?
The Betterment vs Wealthfront comparison starts the same way on both sides. Both companies begin by asking you questions to learn more about your goals.
You can open a cash account with Wealthfront that pays an interest rate of 2.24% and carries FDIC insurance for up to $1 million.
Here’s how Wealthfront kicks things off:
What are you looking for in a financial advisor? You can check off: creating a diversified investing portfolio, save money on taxes, want a 100% hands off investment management service, or, if you want to match (or beat) market performance. These are definitely rhetorical questions, because who doesn’t a hand-off portfolio that beats market performance!
Sign up for Wealthfront today and they’ll manage up to $5000 of your money absolutely free.
Next are more personal questions, like your income, birthday and your household status (i.e., single income, no dependents; dual income; retired, etc.) Last, is a volatility statement. It says “because the stock market is volatile, if you were to lose 10% of your balance or more, what would you do?”
It gives you an options to: buy more, sell more and others.
Once you answer these questions, it’ll give you a personalized allocation plan based on your risk tolerance level. This plan consists of a percentage ix of U.S. stocks, foreign stocks, emereging markets, real estate and other options, and will vary based on your profile. Should you agree with the recommendations, you’ll be asked which account you want to use to fund your account.
Wealthfront has a 100% free financial planning tool called Path–no obligation or required investment.
The best part is, it consider all of your accounts, even those held outside Wealthfront, so you get a clearer picture of all your financial goals.
What is the Wealthfront minimum investment?
Wealthfront minimum investment amount is $500 and if you deposit less than $5000 you won’t pay fees.
What are the Wealthfront fees?
Just 0.25% a year for balances over $5000.
Betterment vs Wealthfront: 0-1. Why? Because it’s hard to beat the value for that flat rate fee. Plus, most people don’t invest more than $5000 anyway–so a great value for new investors.
What type of accounts does Wealthfront offer?
Taxable, Joint, Roth IRA, Traditional IRA, Rollover IRA, SEP IRA, Trusts, Non-Profit, 529 (9 accounts)
Betterment vs Wealthfront: 0-2. Why? Because Wealthfront offers more accounts.
Does Wealthfront offer 401k assistance?
No, Wealthfront doesn’t offer 401k assistance.
What Is Betterment?
Betterment, like Wealthfront, is a robo-advisor investment service with $13 billion of assets under management. Based in New York City, Betterment was started in December 2008. And unlike your typical financial advisor, Betterment is a robo-advisor. The service provides recommendations based on your risk tolerance, financial goals and other information.
It’s the largest online financial advisor service, with over $13 billion dollars in assets under management.
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Like Wealthfront, Betterment offers a similar on-boarding process, compromised of several questions to determine your risk profile. Now let’s see who stacks up in the Betterment vs Wealthfront debate:
What is the Betterment minimum investment?
The Betterment minimum investment amount is zero.
Betterment vs Wealthfront: 1-2. Why? Because Wealthfront has a $500 minimum. Betterment has the lower barrier to entry, so they’re the clear winner here.
What are the Betterment fees?
Betterment offers different fees for different account types. The Betterment digital fees are 0.15-0.25% per year; and the Betterment Premium fees are 0.30-0.40%.
What type of accounts does Betterment offer?
Taxable, Joint, Roth IRA, Traditional IRA, Rollover IRA, SEP IRA, Trusts, Non-Profit, 529 (8 account types)
Does Betterment offer 401k assistance?
Yes, Betterment offers 401k assistance. Plus, they offer human assisted advice–while Wealthfront only offers automated advice.
While Wealthfront offers a wealth of automated advice, sometimes it’s nice to get that human touch. Plus, the 401k assistance is useful.
Betterment Customer Service Number
Call Betterment customer service at: (646) 600-8263 or email them at firstname.lastname@example.org. The fact that Betterment posts this number is a nice plus, too. (Wealthfront only offers phone support for account holders).
Betterment vs Wealthfront: The Winner?
So, who’s the best robo-advisor of 2019? It’s a close call, but the devil is in the details. Both offer a robust suite of features, but in the end, Wealthfront comes out on top by a small margin.
Not because Betterment is bad–far from it, in fact–but just because Wealthfront offers a few more features that Wealthfront doesn’t.
For starters, Betterment has a lower barrier to entry for new investors, with no minimum investment at all. They also have a lower fee structure in place for new investors, starting at just 0.15%. The 401k assistance and human assisted advice is another great value add.
Note though that Betterment’s asset allocation excludes commodities, while Wealthfront doesn’t support fracational shares.
Betterment vs Wealthfront: 1-4
Wealthfront is the winner!
Why? Because in the end, the high-interest cash accounts and $1 minimum, free tools like Path, and the $5000 managed free–with just a $500 minimum–just can’t be beat.