Robo-advisors continue to disrupt traditional investment services models and have driven competition across the space. While competition helps investors, the sheer number of robo-advisor options can make it confusing to determine which offering best suits you. Betterment and E*TRADE's Core Portfolios present two intriguing choices that have distinct features but share a common mission in making portfolio management simpler, smarter, and more accessible to everyone.
E*TRADE began in 1982 as a discount broker before growing into a top trading platform, eventually expanding into digital investment management by launching Core Portfolios. Morgan Stanley’s 2020 acquisition of E*TRADE further bolstered its position in the industry. Betterment arrived on the scene more recently, creating its robo-advisor service in 2010. An early challenger to conventional portfolio management, Betterment continues to think ahead as illustrated by the acquisition of crypto manager Makara in 2022. In this article, we’ll explore each offering in detail so you can determine which digital investment manager best fits your situation.
- Account Minimum: $0
- Fees: 0.25% (annual) for digital plan, 0.40% (annual) for the premium plan
- Betterment is our best robo-advisor for beginners and best for cash management
- Premium service level offers financial advisor guidance for a variety of planning topics
- Powerful digital tools and calculators are available to plan for multiple goals
- Financial account syncing lets you holistically analyze your finances in detail
- Easy, intuitive signup process and site navigation lets you effortlessly manage money
- Account Minimum: $500
- Fee: 0.30%
- E*TRADE Core Portfolios is our best for mobile in the robo-advisor category
- Geared towards investors looking for a straightforward way to invest their cash
- Linking of external accounts to the platform isn’t supported
- Narrow range of portfolio options means Core Portfolios is more ideal for new investors than advanced traders
- Existing users of E*TRADE’s classic platform will find Core Portfolios a seamless transition
Betterment has a smooth, simple onboarding process with a clear emphasis on a friendly user experience. To get started you’ll share your goals, investment experience, and other personal information to help the system identify a portfolio best geared toward your profile. Accounts can have different investment allocations based on separate goals, ensuring each portfolio accommodates your preferences. Like many robo-advisors, the investment strategy generally follows a passive approach based on modern portfolio theory (MPT) and invests in the market through exchange-traded funds (ETFs) that combine to make up different risk levels (crypto allocations are made separately). If you’re looking for further guidance, human advisors can be accessed through separately purchased packages or at the premier tier once $100,000 is deposited.
Creating a Core Portfolios account at E*TRADE is similarly straightforward and intuitive. Before you invest, E*TRADEe offers a risk tolerance questionnaire to help assess your investment profile, factor in deposit estimates, and generate potential portfolio allocations. When you’re ready to get started, the Core Portfolios strategy requires at least a $500 initial deposit. In terms of investment approach, E*Trade’s Core Portfolios also follows a classic, passive strategy based on modern portfolio theory. Your money will be invested in ETFs exclusively. Investment advisors are accessible to prospective and current users without an additional fee, although this service is more geared towards getting you setup on the platform.
The onboarding process at both digital investment advisors is relatively quick, easy, and entirely digital, but we give a slight nod to Betterment here since there is no investment minimum compared to E*TRADE Core Portfolios’ $500 minimum.
Goal planning is one of the key features of a strong digital investment advisor, and Betterment stands out here thanks to a broad and powerful range of tools, calculators, and goal planning options. The goals you can choose from include general investing, retirement, major purchase, safety net, and education. If you fall behind on your goals, you’ll be prompted to adjust your strategy so you can get back on track. Betterment also allows you to link external financial accounts to the platform so you can get a better sense of your overall picture. Pairing these features with the available digital financial planning tools gives you a realistic, insightful assessment on the likelihood of reaching your financial destination.
E*TRADE’s Core Portfolios platform doesn’t focus on goal planning tools and features. This is intentional, as the experience is geared towards a streamlined portfolio management approach without unnecessarily complicating your dashboard with separate goals. As a result, you’ll use a single bucket of money to fund all of your financial objectives. Reporting progress on your goal is easy to follow, but you won’t receive tailored prompts to help improve your situation. Linking other E*TRADE accounts to the Core Portfolios site can give you a bit more insight, but other financial accounts can’t be synced. E*TRADE does provide you with extensive research and education resources to help supplement the planning experience, with some tools and calculators embedded in these sections. However, these features aren’t located within the Core Portfolios planning experience, limiting their usefulness.
When it comes to goal planning, Betterment has the clear edge over E*TRADE due to its far more comprehensive range of tools and taking external financial holdings into account.
E*TRADE and Betterment both offer the most commonly used investment account types, with a couple of differences. Betterment supports trust accounts and a high interest savings option. While E*TRADE doesn’t offer these accounts, support is provided for Uniform Gifts to Minors Act (UGMA) and Uniform Transfer to Minors Act (UTMA) accounts that Betterment doesn’t offer.
Betterment account types:
- Individual taxable
- Joint taxable
- Traditional individual retirement accounts (IRA)
- Roth IRA
- Simplified employee pension (SEP) IRA (for the self-employed and small businesses)
- Rollover IRA
- High-interest savings
E*TRADE Core Portfolios account types:
- Individual taxable
- Joint taxable
- Traditional IRA
- Roth IRA
- SEP IRA
- Rollover IRA
- Custodial accounts (UGMA & UTMA)
Transferring funds into and out of Betterment can be done seamlessly and without a fee by linking your bank to the platform. You can also transfer other investment accounts to the platform with relative ease. Once your money is on Betterment’s platform, you can utilize cash management services, automate your portfolio management, or invest in crypto thanks to the 2022 acquisition of Makara. While these are all helpful tools to manage your money, lending services and margin accounts are not offered by Betterment.
E*TRADE’s Core Portfolios lets you set up regularly scheduled deposits that are easy to adjust as your financial situation changes. Other financial transactions such as withdrawals, transfers, or moving money to other E*Trade accounts are simple to set up. While financial tools such as margin, stock trading, and options aren’t available through Core Portfolios, you can access these features in other areas of E*TRADE’s product ecosystem.
Betterment won our Best for Cash Management award for robo-advisors with a strong lineup that includes a checking account, debit card, and high-yield savings account. Combined with portfolio management, crypto, and financial planning options, Betterment provides a well-rounded offering if you’re looking to consolidate your finances under one umbrella.
E*TRADE’s Core Portfolios has limited cash management options in comparison. Cash in the portfolio is swept into a money market account so you can potentially earn a little higher than a traditional bank savings account. The minimum cash balance in your portfolio is 1%. Once your portfolio exceeds 6% of cash, the assets will be rebalanced. While other cash management features such as checking or bill pay isn’t available through Core Portfolios, you can access these options in other areas of E*TRADE’s site.
Betterment uses ETFs exclusively (with a crypto opt-in) to build portfolios. These allocations are divided up into several subcategories that include:
- Core Portfolio with basic diversification and weightings
- Goldman Sachs Smart Beta portfolio attempting market outperformance
- Socially Responsible allocations that score highly for social and environmental factors
- Flexible Portfolios that feature general asset classes weighted by investor preferences
- Income-focused portfolio built with BlackRock ETFs
The portfolio makeup of E*TRADE Core Portfolios includes a variety of ETFs that can be combined to make up a variety of risk levels. While the investment strategy closely follows modern portfolio theory across the board, you have the ability to include socially conscious, income focused, or smart beta ETFs as part of your investment allocation. These allocations are all highly diversified internationally and domestically across equity and fixed income. E*TRADE doesn’t offer tax-loss harvesting as part of the portfolio management approach, but municipal bond ETFs can be used to ensure you continue to be tax-optimized.
|Socially Responsible or ESG Options||Yes||Yes|
Betterment offers a Flexible Portfolio feature which gives you more say over how investments are allocated in your account. All Betterment portfolios let you adjust risk levels, but the Flexible Portfolio lets you go further by being able to choose amounts to allocate towards specific asset classes. Advanced investors will find this an especially intriguing option to fine tune the portfolio.
E*TRADE offers the ability to customize your allocation as part of the available portfolio tooling. However, this is limited to risk level adjustments and portfolio preference opt-ins such as socially responsible, smart beta, and income focused ETFs. While these features help align the portfolio to your liking, the level of customization is less than what Betterment offers.
Automatic rebalancing is one of the fundamental portfolio management strategies that both Betterment and E*TRADE Core Portfolios offer, albeit with slightly different approaches. Betterment rebalances your portfolio when the allocation drifts more than 3% from the initial weighting. If you link external accounts, you’ll receive recommendations based on your entire financial picture.
E*TRADE will rebalance your allocation automatically on a semi-annual basis or when the portfolio drifts more than 10% from the initial weighting. A rebalance is also triggered if cash exceeds more than 6% of your holdings. E*TRADE also keeps you informed on market movements that could impact your portfolio allocations.
Ensuring your taxable accounts are tax optimized is an important aspect of portfolio management. Betterment automatically applies tax-loss harvesting for all users that have taxable accounts. E*TRADE doesn’t offer tax-loss harvesting but does provide tax-advantaged holdings (i.e. municipal bond ETFs) to reduce your tax burden over time.
|Key Portfolio Management Features|
|Automatic Rebalancing||Daily monitoring, rebalanced when portfolio drifts more than 3% from target allocation||Semi-annually, or when cash in portfolio exceeds 6%|
|Reporting Features||Net worth, goal progress, investment performance, tax, statements||General online monitoring, tax, statements|
|Tax-Loss Harvesting||Yes - Setup to keep users invested and avoid wash sales||No tax-loss harvesting, but fixed-income ETFs include municipal bonds to reduce taxable income|
|External Account Syncing/Consolidation||Yes - Users can link external retirement, brokerage, and bank accounts. Only Betterment holdings receive portfolio adjustments||No – E*TRADE offers this for classic platform, but Core Portfolios does not offer this feature|
E*TRADE and Betterment prioritize your financial security to ensure your assets are safeguarded. Standard Securities Investor Protection Corporation (SIPC) coverage is in place on both platforms for missing funds, which covers up to $500K total value or $250K cash in your account. E*TRADE has excess SIPC coverage through London Insurance up to an aggregated limit of $600,000,000. Both platforms also protect your data through encryption, two-factor authentication, and account monitoring.
Betterment investors will find a user-friendly experience throughout the site with financial tools, reporting, and calculators intuitive and easy to use. Performance metrics, account details, and dashboard functionality are readily accessible and simple to navigate as well. If you connect outside accounts to Betterment, you’ll find it relatively effortless to monitor your finances.
The E*TRADE Core Portfolios desktop experience is also relatively simple to maneuver. The tabs, reports, and tools on the pages are spaced out to give an uncluttered feel to the site. Educational resources and research material is also easy to find. Although account linking is limited to other E*TRADE holdings, you can quickly get a sense of how you are doing financially if you hold more than one account with the brokerage.
Betterment scored highly for their mobile experience, ranking 4.8 for the iOS version and 4.6 for Android. The mobile app has all the features and functionality that you would expect to see on the desktop experience, which is welcome news to users who prefer to access their portfolio from the app.
E*TRADE’s mobile experience is outstanding, winning our best in category for robo-advisors. The mobile app is sleek and exceptionally easy to navigate, especially during the mobile account opening process. Reporting and performance metrics are also very clearly understood. Users of other E*TRADE platforms will find that the Core Portfolios experience is a seamless transition.
Betterment’s customer service team is available by phone and email from 9am to 6pm EST, Monday through Friday. If you’re part of the Premium Investing service, you’ll have unlimited access to financial planners. Investors who purchase advice packages can also engage with advisors based on the package offered. The FAQ and site resources are sufficient for most general inquiries as well.
E*TRADE’s phone lines are available 24/7. You can talk to a financial advisor on the phone, or walk into a physical location for help. Keep in mind that this advice is generally more limited to ensuring you are set up on the platform correctly. The online FAQs are somewhat limited, although most general inquiries can be answered online.
|Phone contact available||Yes - M-F 9am - 6pm EST||Yes - 24/7|
|Pre-funding phone consultation with certified advisor||No||No|
|Online chat available||Yes - Chatbot only||No|
|Website FAQ section||Yes - General FAQs||Yes - General FAQs|
Fees are an important starting point when exploring a relationship with a financial institution so you can be sure that you’re getting the value, products, and support needed to drive your desired financial outcomes.
Betterment provides two separate experiences with different fee structures. The Digital Investing plan includes digital advice, tax-loss harvesting, automatic rebalancing, and the full suite of accounts and portfolios for a 0.25% annual fee. The Premium Investing plan is priced at 0.40% annually and includes the Digital Investing plan features plus unlimited communication with a Certified Financial Planner™. Additional costs not included in either plan fee are ongoing ETF management fees, averaging from 0.09% annually.
E*TRADE Core Portfolios has an annual fee of 0.30% of assets under management. This fee is assessed quarterly based on the average daily balance and is deducted from your cash in the account. The portfolios hold between 1% and 6% in cash so that assets don’t have to be unnecessarily liquidated to pay fees. There are no additional trading fees associated with your account, but there are ongoing expenses for the ETFs that makeup your portfolio ranging from 0.05% to 0.12%.
|Management fees for $5,000 account||$12.50 - Digital||$15|
|Management fees for $25,000 account||$62.50 - Digital||$75|
|Management fees for $100,000 account||$400 - Premium||$300|
|Expense ratios||0.09% Average||Range from 0.05% to 0.12%|
Betterment and E*TRADE Core Portfolios both provide strong portfolio management options to help manage your money in a more cost effective way than traditional solutions. Deciding between the two offerings depends on your goals, investment background, customization preferences, and desire for additional financial guidance. Existing E*TRADE users looking to simplify and automate their portfolio strategy will find a seamless transition when utilizing the Core Portfolios platform. The ability to link other E*TRADE accounts and an excellent mobile experience are other nice features to keep in mind as well.
Even so, Betterment clearly stands out for tremendous goal setting, holistic financial planning, cash management, and portfolio customization functionality. The option to link a wide range of external financial accounts and invest in crypto further enhances the money management tools at your disposal. While the premium tier costs slightly more than E*TRADE’s Core Portfolios, overall, Betterment provides a much more robust platform on your journey towards improving your financial standing.
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Betterment. "Crypto is coming."
Betterment. "Using Investment Goals at Betterment."
Betterment. "What accounts can I open with Betterment?"
E*Trade. "How much cash is in my account?"
Betterment. "What you get when you invest with us."
E*Trade. "Why is Core Portfolios made up of ETFs?"
Betterment. "Take on More Control with Flexible Portfolios."
E*Trade. "What is portfolio rebalancing?"