Betterment vs. Fidelity Go: Who They're Best For
On the surface, Betterment and Fidelity Go share many similarities. Both firms ask you a few questions when you first sign up to determine how many years you’ll be contributing to your account and your attitude towards risk. Both robo-advisors have very low minimums for opening an account, with Fidelity Go requiring $10 and Betterment requiring zero. The portfolios designed by both robo-advisors are made up of low-cost funds and follow Modern Portfolio Theory (MPT) principles for diversity and risk, and you are encouraged to ride out market turbulence by holding your assets no matter what. However, there are some key differences between Betterment and Fidelity Go that will help you choose the best fit for your money.
- Account Minimum: $0
- Fees: 0.25% (annual) for digital plan, 0.40% (annual) for the premium plan
- Perfect for people looking for simplicity and ease of use
- Great for those who want an analysis of all their investment accounts in one place
- Aimed towards those looking to set and plan for financial goals such as purchasing a home or retirement
- Premium plan is great for people who would like access to a real financial advisor
- Account Minimum: $10
- Fee: 0.35%
- Ideal for those looking to invest with a well-known financial institution at a low price
- Aimed towards people who value transparent costing and a low minimum deposit
- Designed to help young and emerging investors overcome hesitations around investing, giving them access to all the educational content and calculators on the Fidelity brokerage site
Betterment has very easy-to-follow steps for setting goals, and each one can be monitored separately. You can set up a variety of goals with different target dates, and the portfolios will vary considerably. Your asset allocation is displayed in a ring with equities in shades of green and fixed income in shades of blue. If you’re falling behind on meeting a goal you’ve set, you’re encouraged to put more aside.
You can only track a single goal per account using Fidelity Go, but you can open multiple accounts if you want to dedicate funds to separate goals. Once the account has been funded and invested, you can choose a dollar amount you're trying to reach along with your target date. Fidelity then estimates the likelihood of reaching your dollar goal by your target date, based on your initial deposit and planned monthly additions. If it looks like you may not reach your goal, Fidelity offers some suggestions of things you can do that could improve your likelihood of success. If you have other Fidelity accounts, you can see how they are all doing on a single screen. Selecting the Fidelity Go account from the list brings up an asset allocation graph and a performance summary.
Both Fidelity Go and Betterment offer retirement accounts.
Betterment prompts you to connect external accounts, such as bank and brokerage holdings, to your account to provide a clearer picture of your overall retirement savings.
Fidelity Go doesn’t offer this level of account syncing, but you’ll be shown the likelihood of reaching your retirement goal in IRA accounts. While both platforms do a good job of keeping you on track, Betterment has the advantage of knowing more about your overall finances than Fidelity Go does - provided you do sync up your accounts.
Fidelity Go and Betterment both offer the most commonly used accounts, taxable and retirement, but Betterment offers a wider range overall. This is a key difference if, for example, you intend to use a simplified employee pension (SEP) IRA. However, average investors will find the account options they expect at either robo-advisor.
Betterment account types:
- Individual taxable accounts
- Joint taxable accounts
- Traditional IRA accounts
- Roth IRA accounts
- SEP IRA accounts (for the self-employed and small businesses)
- Rollover IRA
- Trust accounts
- High-interest savings accounts
- Checking account (starting in September 2019)
Fidelity account types:
- Individual taxable accounts
- Joint taxable accounts
- Traditional IRA accounts
- Roth IRA accounts
- Rollover IRA
Features and Accessibility
Betterment has a wider range of features than Fidelity Go, as the latter is more narrowly focused on investment rather than all your finances. Betterment’s savings and checking accounts are signs that the robo-advisor is moving towards a complete, digital-only solution to manage all aspects of your financial life.
- Free financial planning tools: The prospective client can get a free and comprehensive analysis of all their current investments prior to funding an account.
- Portfolio and goal flexibility: A mature platform provides coaching and other goal planning resources, while the account interface supports impressive portfolio flexibility.
- Premium plan: The client can speak with a financial advisor at any time for free on the premium plan, which charges a 0.40% management fee rather than the standard 0.25% fee.
- Savings and checking: Betterment launched a savings account paying 2.69% interest in July 2019, and their checking accounts will roll out starting in Sept. 2019.
- Cash sweep: Any cash in the account is swept into a money market fund that is currently paying over 2%.
- Fidelity consolidation: If you hold multiple accounts at Fidelity, including brokerage, you can see all of your in-house holdings on one screen.
- Education resources: Once you have an account funded with Fidelity Go, all of the videos, articles, and classes published by the firm are available.
When it comes to fees, the comparison between Betterment and Fidelity Go requires a bit of digging.
Betterment has two plans available: a Digital plan, which assesses an annual fee of 0.25% with a $0 minimum balance, and a Premium plan, with a 0.40% annual fee and a $100,000 minimum balance. The Digital plan includes personalized advice, automatic rebalancing, and tax-saving strategies, while the Premium plan also offers advice on assets held outside Betterment, and guidance on life events like getting married, having a child, or retiring.
More importantly, the ETFs within the Betterment portfolios have management fees ranging from 0.07%-0.15%. This is important as Fidelity Go’s management fee is 0.35% of assets under management but the portfolios hold proprietary Fidelity no-fee mutual funds, so there are no additional fees. So the total account fees on a Fidelity Go account are just 0.35% while the total account fees on a Betterment account range from 0.33%-0.40% when you include the ETF fees on the Digital offering. Although Fidelity Go has a higher headline fee, the two are essentially even in this regard.
Neither Betterment nor Fidelity Go requires a minimum deposit to open an account. Fidelity Go notes that it takes $10 to get started investing, so the cash sits in a short-term investment with no advisory fee charged until that threshold is met. The threshold appears to be identical with Betterment according to the ADV 2A, but it is not stated explicitly in any of the marketing materials.
- Betterment's minimum deposit is $0
- Fidelity Go's minimum deposit is $0
Betterment offers five portfolio types based upon classic Modern Portfolio Theory (MPT) principles and/or specific investment themes:
- Standard portfolio of globally diversified stock and bond ETFs.
- Socially responsible portfolio comprised of holdings that score well on environmental and social impact. Note: investments may not meet standard requirements for this theme.
- Goldman Sachs Smart Beta portfolio that seeks to outperform the market.
- Income-focused all-bond portfolio made up of BlackRock ETFs.
- "Flexible Portfolio" constructed from the standard portfolio’s asset classes but weighted according to user preferences.
Betterment accounts are rebalanced dynamically when they deviate from their intended goal allocations. Portfolios get more conservative as the target date approaches, with the goal of locking in gains and avoiding major losses.
Fidelity Go's portfolios are invested in proprietary no-fee funds managed by Fidelity itself. In our robo-advisor ranking, this proprietary approach hurt Fidelity Go compared to other platforms even though the funds themselves have performed well. Approximately 0.5% of the portfolio is held in cash. Portfolio rebalancing is done semi-annually, but it will also occur when cash in the account hits an internal limit (around 1%) or the portfolio drifts significantly from the target allocation.
Betterment offers tax-loss harvesting to all taxable accounts. Fidelity Go does not have tax-loss harvesting as it only offers its proprietary ETFs, setting a practical limit on how many substitutions can be done for tax purposes.
Both Betterment and Fidelity have solid security features around their web platforms and mobile apps, including two-factor authentication and biometric logins.
Betterment doesn’t directly carry Securities Investor Protection Corporation (SIPC) insurance, but trades are cleared through Apex Clearing, which has risk management tools in place. Fidelity has a Customer Protection Guarantee, which reimburses you for losses from unauthorized activity in your accounts. Fidelity also participates in asset protection programs such as FDIC and SIPC to insure against losses should the firm have an unexpected financial catastrophe. Overall, both Betterment and Fidelity have sufficient controls in place to protect your data and your money.
Betterment has online chat built into the mobile apps and the website for help whenever you need it. Customer service is available 9 a.m. to 6 p.m. Eastern time, Monday-Friday, and 11 a.m. to 6 p.m. Eastern time on Saturday and Sunday. You can get help from financial planners at any time with a Premium account, but you’ll pay a fee of $199-299 to consult a planner if you have a basic account.
Fidelity Go is a digital-only offering, so almost all support is online. You can use the chat function 24/7 and the automated chatbot succinctly answered all the basic questions. The FAQs are somewhat brief, so if you have a question that requires more assistance to answer, you may end up in a long phone queue. Once an agent picks up the line, however, we found that our questions were answered in depth by a knowledgeable representative.
Betterment is ranked higher than Fidelity Go in our 2019 rankings. However, as with everything to do with Fidelity Go, there is some nuance to that statement. Betterment has superior goal planning and tracking services thanks to its intake of your external accounts, but one of the bigger gaps between Betterment and Fidelity Go in our rankings is actually the portfolio contents. We give robo-advisors a higher rating if they allow funds from outside providers, and this is usually the right call. The challenge with applying that to Fidelity Go is that the funds for its managed portfolios have actually performed quite well and have the historical data to prove it. That said, the penalty for proprietary funds is somewhat offset by the no-fee funds underlying the portfolio, giving Fidelity Go one of the lowest integrated fee structures. This keeps Fidelity Go competitive with Betterment’s lower management fee, which includes underlying ETF management fees that investors might overlook in favor of the headline number.
Overall, Betterment and Fidelity are both very strong choices for a robo-advisor. In fact, the competition is too close to call without knowing your exact needs. If you are particularly looking for goal planning and tracking, then Betterment is the better choice as it is one of the best in this area. If you are mostly looking for the automated management and are primarily concerned with performance, however, Fidelity Go actually comes out ahead once the goal planning difference and proprietary fund penalty is removed. While it is a bit unsatisfying to be unable to pick a clear winner, it is a good sign for the robo-advisory space when there are multiple platforms offering a high level of portfolio management at a very low cost.
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