Betterment vs Wealthfront – Which Firm Is Perfect For You?

Robo-advisors, like many other investments, can serve as the backbone for your life when you step into retirement. Although there are various options available today, it can sometimes become a tad difficult to make sense out of all the brouhaha. On top of that, some people may be uncomfortable to rely on automated algorithms, no matter how accurate they are. However, you cannot ignore the fact that these advisors not only save your precious time, but they also require low maintenance. With busy careers, investments take a back seat, and before you know it, it’s probably too late.

With several firms jumping into the fray, it can again become tough to choose one particular service. Therefore, this article will help you understand the differences between two top firms – Betterment and Wealthfront – so that you can make an educated choice.

Betterment vs Wealthfront – A Swift Comparison

Betterment Wealthfront
Fees 3 Tier System

Builder Tier – 0.35% of balance

Better Tier – 0.25% of balance

Best Tier – 0.15% of balance

Flat fee of 0.25% of balance
Automated Portfolio Rebalancing Yes Yes
Customization of portfolios Yes Yes
Referrals Refer one person and get 30 days free management. Refer three people and get one year’s worth free management Get $5000 additional free management for every person you refer
Automated Deposits Yes Yes
Minimum Initial Investment None $500
Tax-loss Harvesting Yes Yes


Betterment is a platform that offers financial advice online. They create a portfolio based on the risk you choose to take and then place you in a mix of ETFs that match your interests. Based out of New York, they have a staggering sum of $3 billion under their management. Once you are on the platform, you do not get to choose the funds you want, but like other investment portfolios, you will be placed amidst limited ETFs. The only difference between you and the others will be the allocation.

With super-fast technology and tools, their software offers various options and completes several tasks for you. A human broker can do the same too, but not without charging you an arm and a leg. Of course, this doesn’t mean that Betterment (or other Robo-advisor platforms for that matter) is free, but the difference between these firms and human advisors is definitely noticeable. Fees at Betterment typically vary from 0.15% to 0.35% with three tiers – the builder, better and best tier. Additionally, you do not need a minimum balance to start off with this firm.

Wealthfront, based in Silicon Valley, has much experience with numerous years in the business. They come close to Betterment, especially with $2.6 billion under their belt. Wealthfront also works like Betterment when it comes to determining your risk tolerance. This firm will also place you in a portfolio that contains ETFs. Both Betterment and Wealthfront use the MPT (Modern Portfolio Theory) system to manage your investment. One key difference here is that Wealthfront doesn’t hold portfolios, but instead, they just manage it.

The predominant difference between both the firms is that Wealthfront has no tier system. The fee structure is simple where you pay a flat fee of 0.25%, no matter how much money you invest. To top that, they also manage your first $10,000 for free! However, unlike Betterment, investors need a minimum of $500 to start off at Wealthfront.


Betterment vs Wealthfront – Fee Structures and Other Features

When talking about Robo-advisors, you have to take the fee structure into account since that’s the biggest edge when compared to human advisors. In a nutshell, you need something that doesn’t take up a lot of time but also charges the lowest in terms of fees.

While Betterment will allow you to open an account even if you’re short of money, Wealthfront will require you to have $500 at least, as mentioned above. However, Wealthfront has a distinct advantage where your first $10,000 will be managed free. This could work well for people who don’t plan to invest too much. This structure can also help beginners save money as they continue investing money. Wealthfront’s fees at a flat 0.25% are lower than Betterment’s 0.35% (Builder Tier).

On the other hand, if you have long-term goals, Betterment might be the right choice for you since the fees drop to 0.25% (Better Tier) once you invest $10,000, and then drops down to a mere 0.15% (Best Tier) after you reach a cap of $100,000, thereby making it the lowest fees charged in the entire industry. The 0.10% difference might seem trivial, but it will make a difference when you’re dealing with substantial amounts of money.

As you can see, you can choose either of the two companies, depending on your personal requirements. The good news is that you can lower the fees further at both the firms if you are willing to work a bit. In other words, if you convince your family or friends to invest in either Betterment or Wealthfront, you get a sweeter deal.

At Betterment, they manage your account for free for 30 days if you manage to get one referral. However, if you refer 3 people, you get an entire year’s management for free! Similarly, you can refer other investors at Wealthfront and receive $5000 worth free management. If you calculate this right, you can invest $100,000 and lower the fees to 0.15% at Wealthfront by referring 6 investors and still get your first $10,000 managed at no cost!

What the Users Say

As always, customer reviews can always help you make up your mind. New investors are interested in investing something, even if it’s just $100 since and it definitely feels better to invest it, rather than waiting to amass a chunk. In this regard, Betterment has a distinct advantage since many customers are glad that they aren’t turned down ever. Additionally, many users who have the ability to invest more than $100,000 are happy to pay the lowest fees charged by anyone in the industry, thereby making Betterment a favorite among many.


So, when it comes to Betterment vs Wealthfront, which firm is the best? Which company among these two can help you make money with low fees and less interference from your side? Well, the groundwork is laid out in front of you and it’s up to you to decide. Both the firms are almost the same, thanks to their low fee structures and other features. At the end of the day, it is safe to say that it is better to invest in either Wealthfront or Betterment, when compared to traditional financial advisors, but what you invest in will depend on what features are important for you.

If you like our Betterment vs Wealthfront article, please do leave us comments.Also do check our full review of both these services.