Betterment and Wealthfront are two of the larger players in the robo-advisory space, and were both pioneers. Betterment was founded in 2008, and was the first to offer automated investing. Wealthfront launched its venture-capital backed service 2009 under the cute name KaChing, intending to appeal to younger investors, but they rebranded and relaunched as Wealthfront in 2011. 

  • Account Minimum: $500
  • Fees: 0.25% annual advisory fee plus fund fees of 0.07%-0.16%
  • Best for: Younger investors
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  • Account Minimum: $0
  • Fees: 0.25% annual fee for Digital, 0.40% annual fee for Premium accounts
  • Best For: Set-it-and-forget-it investors
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On the surface, there are 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. The portfolios the platforms design are made up of low-cost exchange-traded funds (ETFs), and you are encouraged to ride out market turbulence by holding your assets no matter what. Both firms also employ tax-efficient strategies to minimize your capital gains bill. And both have plenty of calculators on their websites and mobile apps to keep you informed of your progress towards your goal.

How Wealthfront and Betterment Work

The two sites have different starting points for new clients. Betterment gives you four choices when you start the sign-up process.


The first choice guides you through opening and funding an account, and choosing an investment goal. The second starts out asking whether you are yet retired, and if not, your current age and annual income. You’ll get three portfolio recommendations right away, displayed in order from most conservative to most risky: safety net, for “life’s hiccups,” retirement savings, and general investing. 

If you choose, “See what we can do for you,” you’ll be asked why you want to invest and whether you’re already investing. The results screen displays all the benefits of investing with Betterment, which includes technology that keeps you on track, time savings, tax savings, boosted returns, one annual fee, and unlimited access to financial experts. The fourth choice walks you through your current investing strategy, and then creates a list of ways that Betterment can help you do better.


Betterment doesn’t give you a clear picture of the type of account they would create for you until you go through the process of opening an account, which includes verifying your identity. 

Wealthfront’s new client experience, optimized for mobile devices, starts out by asking whether you want to start investing, or build a financial plan. The planning module, called Path, is powered by an automated advice engine that has answers to over 10,000 financial questions. It is intended to free you from having to talk to an advisor at all.


The planning capability is free. You link your existing accounts, including your Coinbase holdings, to Wealthfront, to project your finances and your net worth over time. When you log in, Wealthfront has updated your financial data to show you your progress towards your goal.

If one of your goals is to buy a house, Wealthfront uses third-party sources such as Redfin and Zillow to estimate what that will cost. Retirement planning takes Social Security projections into account, and college tuition costs are drawn from the Department of Education. 

Once you’ve decided to invest, you’re asked a series of questions to help determine the right portfolio for your circumstances.


You choose one of these four, and are then asked what you’d want from a financial advisor. You’re asked your age and your annual taxable income. The next question asks you what you would do if the market dropped 10% in a month, and then you’re assigned a risk score. Wealthfront then displays the overview of the investment plan that is recommended for you, with the allocation among asset classes spelled out. So Wealthfront shows you a little more of what you might get before you actually sign up for an account.

The main difference between the two during the pre-account opening process is that Betterment lets you know what great things they will do for you while Wealthfront actually spells out a possible portfolio. 

Management Fees

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 such as getting married, having a child, or retiring. 

Wealthfront has a single plan, which assesses an annual advisory fee of 0.25% with a minimum of $500. Larger accounts at Wealthfront qualify for additional services. Accounts over $100,000 are eligible for a stock-level tax lost harvesting service, and those over $500,000 can opt in to the Smart Beta program, which reweights the holdings in your portfolio using Wealthfront’s proprietary system.

For both firms, there are management fees associated with the underlying ETFs, that add an additional 0.10%-0.25% to your costs. These are invisible to you, though, as they are assessed by the ETF providers.


Both firms have overall asset management features, which allow you to consolidate your assets and loans on a single screen. This is a great way to get an overview of all of your assets and liabilities, to make sure you’re not overweighted in a particular sector, asset class, or geographical area. The websites and mobile apps for both firms offer great tools for keeping up to date on your investing goals. 

You can make automatic deposits with both firms as well. On the surface, there are a lot of similarities between Betterment and Wealthfront, so here are some major differences. 

Wealthfront supports 529 college savings accounts, which Betterment does not. The fees are slightly higher for 529 accounts since there is an additional management fee on top of the Wealthfront management fee. Wealthfront says these fees range from 0.42%-0.46%. Still, this is lower than any other advisor-sold plan, according to Morningstar.   

Betterment features a Socially Responsible Investing portfolio designed to reduce your exposure to companies that do not meet certain social, environmental and governance standards. Wealthfront allows you to block certain companies from your investments if you qualify for their premium services by holding more than $100,000 in your account.

Neither firm supports custodial accounts at present, though Wealthfront said in September 2018 that they plan to offer them in the future. 

Wealthfront has an intriguing feature called Portfolio Line of Credit that is not offered by Betterment. If your account is over $100,000, you have a line of credit that you can draw on from the website or the mobile app which totals 30% of your assets. Interest rates are much lower than credit card charges and are currently 4.25%-5.5%, depending on the amount borrowed. This is essentially a margin loan, and Wealthfront keeps your risk low by restricting the amount you can borrow to 30% of your account size. 


Betterment and Wealthfront are both members of FINRA and are registered with the SEC.


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