Betterment vs. Wealthfront: Which Is Best for You? (2024)

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Wealthfront and Betterment are two well-established companies that have been integral in the formation, and ongoing development, of the robo-advisor industry. Both companies are among the winners in our list of the best robo-advisors of 2023, with Wealthfront winning best overall, best for goal planning, best for portfolio construction, and best for portfolio management, while Betterment is best for beginners and best for cash management.

On the surface, Betterment and Wealthfront look similar, but there are some key differences. Betterment is a good option for beginner investors, as they can start investing with a $0 account minimum. The company gives investors access to customer service and human financial advisors for an additional fee but also offers a premium version that includes unlimited access to human advisors. Wealthfront, by contrast, requires a $500 minimum investment and offers a fully digital financial planner without any human touch, making it a better choice for investors looking for a hands-off approach.

Account Setup

Betterment

Betterment's account setup is smooth—just input your name, email, and password, and then complete basic profile information, including your name, address, and Social Security number. After creating an account, you can complete the brief goals, timeline, and risk questionnaire. The platform provides investment portfolios comprised of diverse U.S. and international stock and bond ETFs and recommends an allocation based on your responses to the initial quiz.

While Betterment does recommend a portfolio based on answers to questions during account setup, investors are still able to adjust their investment portfolio’s specific asset class weights for further customization.

There’s a $10 minimum deposit required to fund the account, so you can get started investing with small dollar amounts. You can also view portfolio options before funding, which is a plus. Investing plan clients can purchase low-fee financial planning packages, while Premium users with $100,000 or more have unlimited access to certified financial planners at no additional cost. Phone customer service representatives are available to help with questions.

Wealthfront

At Wealthfront, you can create an account, take the initial questionnaire, and view potential portfolios by inputting your name, email address, phone number, and password. Wealthfront will recommend a core portfolio, informed by your responses to the initial quiz, without requiring potential users to input a Social Security number. The recommendation will be comprised of diverse U.S. and international stock and bond ETFs, as well as a real estate investment trust (REIT) fund. You can also view other investment portfolio options before funding your account.

Wealthfront requires a $500 minimum investment and only offers a digital financial planner—no human advisors. That said, customer service representatives all have a minimum of Series 7 investment licenses. Customers can customize premade portfolios from a choice of 239 investments, 17 asset classes, and 2 cryptocurrency trusts. All account holders, even those who haven’t funded their account, can use Wealthfront’s free and comprehensive goal-planning tools.

Account Setup Verdict: Wealthfront

While both Betterment and Wealthfront have smooth account setup processes, Wealthfront has the edge in this category because you can get a deeper preview of the platform and your suggested portfolio without providing your Social Security number. Additionally, anyone can use Wealthfront’s comprehensive goal-planning tools without investing.

Account Types

Betterment

• Individual taxable
• Joint taxable
• Traditional IRA
• Roth IRA
• 401(k) rollover IRA
• SEP IRA
• Trust
• 529 college savings plan (only available through an employer)
• Cash reserve and checking

Wealthfront

• Individual taxable
• Joint taxable
• Traditional IRA
• Roth IRA
• 401(k) rollover IRA
• SEP IRA
• Trust
• 529 college saving plan
• High-interest cash

Account Types Verdict: Tie

Both Betterment and Wealthfront offer the typical account types, including cash management, but neither offers custodial accounts. 1 Wealthfront previously had an edge with its 529 college savings account, however, Betterment recently added this feature. The main difference is that Betterment's 529 plan is only available through an employer via Betterment at Work, whereas Wealthfront's is a regular account offering.

Account Services

Cash Management

Betterment offers two account types for fee-free cash management: checking and Cash Reserve accounts. The Cash Reserve account is a high-yield cash account, currently offering 5.00% APY and an introductory rate of up to 5.5% APY for new customers for the first three months. The checking account includes a Visa cashback debit card and ATM fee reimbursem*nt in the U.S. and internationally. There are no overdraft fees or minimum balance requirements. The company also offers automatic sweeps into an FDIC-insured bank sweep account.

Wealthfront offers a high-interest cash account with no minimum balance and $0 fees, currently paying 5.0% APY. Investors have access to a debit card and can get cash from over 19,000 ATMs nationwide fee-free. Additionally, Wealthfront offers up to $8 million in FDIC insurance through partner banks.

Account Services Verdict: Tie

Overall, Wealthfront and Betterment are evenly matched in terms of cash management, but for different reasons. Betterment has two choices for your cash management and ATM fee reimbursem*nts and offers a slightly higher interest rate for new customers. Wealthfront has a large ATM network along with the ability to pay bills with its cash account while investors will enjoy paying $0 in fees.

Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities. For Cash Reserve (“CR”), Betterment LLC only receives compensation from program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.

Checking accounts and the Betterment Visa Debit Card provided and issued by nbkc bank, Member FDIC. Checking made available through Betterment Financial LLC. Neither Betterment Financial LLC, nor any of their affiliates, is a bank. Betterment Financial LLC reimburses ATM fees and the Visa 1% foreign transaction fee worldwide, everywhere Visa is accepted.

Goal Planning

Betterment

At Betterment, clients can set up multiple goals and enable distinct asset allocations in line with the goal type and time horizon. Betterment gives investors the option to set potential timelines for the following goal types:

• Major Purchase
• Education
• Retirement
• Retirement Income
• General Investing
• Emergency Fund

Additionally, investors can set goals within their cash and crypto accounts as well. Based on the expected time horizon–except for the Emergency Fund, which doesn’t have a predictable timeline–Betterment will recommend an asset allocation specific to your goal.

Wealthfront

Wealthfront's goal planning is integrated with its excellent Path digital financial planning tool. This goal planning tool is completely free, and you don’t even have to invest with Wealthfront to access it; however, you do need to enter your personal information. The company also offers the ability to link your accounts in order to get a comprehensive picture of your current financial situation and run scenarios on future financial goals to see how one goal will affect another and the tradeoffs that may need to take place.

Goal Planning Verdict: Wealthfront

While both platforms excel with goal-planning tools, reporting, and scenario analysis, Wealthfront takes this category due to its more comprehensive analysis of all your synced data to determine your current financial health. Investors will also appreciate the Path feature and find it to be an incredible tool.

Portfolio Construction

Both Betterment and Wealthfront employ modern portfolio theory (MPT) principles, yet each digital investment advisor modifies the low-fee, diversified ETFs in its core portfolios to suit specific investment research theories. They each offer core portfolios, sustainable ESG options, and additional customization options through flexible portfolios.

Betterment

Betterment’s portfolios are constructed of ETFs comprised of the following asset classes:

Equities

• U.S. equities
• International developed market equities
• Emerging market equities

Bonds

• U.S. short-term treasury bonds
• U.S. inflation-protected bonds
• U.S. investment-grade bonds
• U.S. municipal bonds
• International developed market bonds
• Emerging market bonds

While Betterment does implement the general principle of modern portfolio theory, there are some asset classes that the company has chosen to exclude: commodities, natural resources, and REITs. However, Betterment does provide investors with exposure to additional asset classes, including commodities, high yield bonds, and REITs, with Flexible Portfolios.

Wealthfront

Wealthfront has created two sets of portfolio allocations–one for taxable accounts, and one for retirement accounts. Each type of allocation contains 20 portfolios with differing levels of portfolio volatility. Assets that comprise these portfolios fall under three broad categories: stocks, bonds, and inflation assets.

Asset classes include ETFs from the following categories:

• U.S. stocks
• Foreign developed market stocks
• Emerging market stocks
• Dividend growth stocks
• U.S. bonds
• U.S. corporate bonds
• Emerging market bonds
• Municipal bonds
• Treasury inflation-protected securities (TIPS)
• Real estate
• Commodities

Available Assets