Like many other aspects of society, investing has undergone many changes over the past couple of decades with the continued growth of technological capabilities. One of the advancements that came along with this was automated investing platforms.
Tons of these platforms remove you from having to do with traditional brokerages, and two of the best are Wealthfront and Betterment.
These platforms are looked at as robo-advisors and give investors a set-it-and-forget-it-like approach to investing their money. They utilize survey risk factors to create customized portfolios for the individual.
But even though these are two of the most popular choices between them may be difficult. That is why we’re going to take a look at each of them in a head-to-head comparison to help you with your decision-making process.
What is the Difference?
Both of these platforms utilize robo-advisors to help build custom portfolios. But even though they have the same basic structure, they differ in many places. Here are a few of the biggest differences between the two:
- With Wealthfront, you’re going to need a minimum account balance of $500. On the other hand, Betterment has no minimum requirement whatsoever.
- They also differ in their annual fees. Wealthfront is an across-the-board .25% annual account fee. Betterment, however, has a different scale and starts at .25% and can go all the way up to 40%.
- Wealthfront gives you access to 529 college savings accounts.
- When it comes to fractional shares, the only one of these two that offers this option is Betterment.
- Though Betterment primarily uses a robo-advisor structure, at the highest level of membership, you have access to professional financial assistance with actual human beings.
Which One is More Popular?
Each of these options is very popular. But, of course, it depends on what you’re looking for and the features that each of them brings. For those that are looking for a set-it-and-forget-it, each of them has wonderful features to allow you to do that.
For those looking for minimal fees and the ability, once they have started to accrue some financial security, to have advice given to them by actual financial experts, then Betterment is going to be a more popular choice.
Either way, you can’t go wrong. Each of them, as we said, offers features and investment opportunities that will help you create a more well-rounded and diverse portfolio.
Pros & Cons: Wealthfront vs. Betterment
When it comes to determining where to put your hard-earned money, understanding the advantages and disadvantages of financial services is key.
Both of these options are robo-advice financial investment platforms, but each of them comes with its own pros and cons. Here is our look at the pros and cons of both Wealthfront as well as Betterment:
- ETF expense ratios are low
- tax loss harvesting feature
- access to automatic rebalancing
- Not able to purchase fractional shares
- wide range of portfolio choices and personalization
- the account minimum and fees are low
- ability to purchase fractional shares
- Unable to directly index
Price Range: Wealthfront vs. Betterment
When looking at the price and fees that come with each of these, it’s pretty straightforward.
We have already discussed some of it, but we want to go over it again because, as we said, investing your hard earned money and knowing the cost that it’s gonna require is key to ensuring your financial budget is on track.
For Betterment, annual fees of anywhere from .25% to 40%. This is one area where if you’re worried about fees, Wealthfront may stick out because it only has a straightforward .25% annual fee.
That being said, there is no minimum when it comes to Betterment and to really dive deep into the price range is important to know.
Wealthfront requires a minimum of $500 in the account, which could be too rich for your blood. Either way, the costs are relatively low when it comes to these two platforms, but it is a factor in your overall decision-making process.
The Verdict: Wealthfront vs. Betterment
When it all boils down, the simple answer is that both platforms are stable going back and forth robo-advisor financial investment platforms.
However, if you are first starting, Betterment may be a better option for you because of the lack of a minimum deposit. Plus, there are other bonuses that come with new accounts.
On the other hand, the front comes with tax loss harvesting, which could help save a ton of time when it comes to tax season. Either way, both give you a wealth of versatility and options that could benefit your overall portfolio.
Final Thoughts on Wealthfront Vs. Betterment
We hope that by going through all of the information for both Wealthfront and Betterment, we’ve helped make your decision process in which financial platform to utilize for your investment a little bit easier.
But, in the end, the decision is yours and should be determined solely by your preferences and needs.