Betterment vs. Wealthfront: Which is Best for You?
Are you in search of the best Robo-adviser available or simply trying to compare Betterment vs Wealthfront to discover which is best for you? Get all these updates in this post. Read down to get the help you need!
What is a Robo-Advisor?
Robo-advisors are digital pnike fit trainingshandschuhe damen صور دراجات نارية للبيع små stoler ergonomisk mus med ledning como espantar perros Mexico pumpkin dress pale blue waterfall cardigan adidas yezzy boost ps3 joystick charger id armband official nfl shop små stoler textilní páska from athletes to fashion forward consumers how adidas boost is winning over fans costume carnevale cucciolo sette nanilatforms that provide automated, algorithm-driven financial planning services with little to no human supervision.
They are software products that can help you manage your investments without the need to consult a financial advisor or self-manage your portfolio.
Robo-advisors are often very inexpensive and require very low opening balances. Therefore, nearly everybody can benefit from a Robo-advisor if they choose.
A typical robo-advisor collects information from clients about their financial situation and future goals through an online survey and then uses the data to offer advice and automatically invest client assets.
You should note that; the robo-advisor industry was pioneered by Betterment and Wealthfront. And while the companies started out with very similar models, they’ve slowly made changes to differentiate themselves.
Overview of Betterment and Wealthfront
Generally, Betterment focuses on giving fiduciary advice. Since it’s an independent advisor with no funds of its own to push, Betterment gives you peace of mind that it’s helping you do what’s best for your portfolio.
Their investment process is based on Modern Portfolio Theory (MPT), which holds that individual security selection is not nearly as important as proper asset allocation.
On the other hand, Wealthfront focuses on three fully automated services: free financial planning, investment management, and lending.
Wealthfront’s chief investment officer is Mr Burton Malkiel who is best known for his classic financial book A Random Walk Down Wall Street. Malkiel’s passive investing strategy is the foundation for Wealthfront’s investment approach.
The moment you sign up for Wealthfront, the app asks you a series of questions and determines your asset allocation based on your answers.
Your money is invested in a globally diversified portfolio of ETFs, which you can customize by modifying the weights of asset classes and adding and removing ETFs based on your beliefs and values.
However, your portfolio can vary based on if you open a taxable or tax-deferred account.
Benefits of Using a Robo Advisor
There are a few key advantages to outsourcing portfolio management to software:
- You can avoid investing mistakes. Investors make emotional decisions at market highs and market lows and based on gut feelings. Software doesn’t make these kinds of mistakes.
- You can automate the process. Once you open your account, the robo-advisor software takes care of the investment process. You don’t have to worry whether you should make changes to your portfolio or invest more or less in a given market sector. Also you don’t even have to log in to the account and place trades.
- You can invest a smaller amount at a lower cost. Advisory firms generally require a higher amount to initially invest and impose fees that are often higher than those charged by robo advisors. Also you don’t have to worry that a broker is making a recommendation that isn’t in your best interest.
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Betterment vs Wealthfront Comparison
| BETTERMENT | WEALTHFRONT | |
| Minimum Deposit | $0 | $500 |
| Annual Fees | Digital – 0.25%/year; Premium – 0.40%/year | 0.25%/yr. |
| Tax Loss Harvesting | Yes | Yes |
| Portfolio Rebalancing | True | True |
| 401(k) Assistance | Yes | No |
| Best For: |
|
|
| Promotions | Up To 1 Year Free | $5k Managed for Free |
Betterment vs Wealthfront Similarities
Both firms offer a lot of features. First, let’s discuss the similarities between both companies.
| Investment Account Types | Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, taxable, joint and trust investment accounts. |
| Automatic Rebalancing | Rebalance your portfolio if out of alignment with the desired allocation. |
| Tax-Loss Harvesting | No minimum deposit for this service. |
| Socially Responsible Investing | Both services allow you to align your beliefs and values with your investments via Socially Responsible Investing (SRI), although how each firm implements SRI is slightly different. |
| SIPC Insured | SIPC protects against the loss of cash and securities — such as stocks and bonds — held by a customer at a financially troubled SIPC-member brokerage firm. The limit of SIPC protection is $500,000, which includes $250,000 for cash. |
| Referral Program | You share a link with your friends, and you get credit. With Wealthfront, you get an additional $5,000 managed for free. Betterment offers one free month for every referral and one free year for every three referrals. Both have no limit to how much you can accrue. |
Which is Better? Betterment vs Wealthfront
Let’s take a look at the areas where Betterment and Wealthfront differ.
- Wealthfront requires a minimum of $500 to invest; Betterment doesn’t
- Wealthfront’s fees are 0.25%; Betterment’s fees are 0.25-0.40%
- Wealthfront supports 529 college savings accounts; Betterment doesn’t
- Betterment offers fractional share investing; Wealthfront doesn’t
- Betterment’s Premium level offers human assistance; Wealthfront’s advice is totally automated
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The Bottom Line
The basic offerings at Betterment and Wealthfront are similar and fit the standard robo-advisor mold. Both include; automatic portfolio rebalancing, tax-loss harvesting, and portfolios of low-cost exchange-traded funds.
I hope this article has helped you with all you needed to know about Betterment vs Wealthfront, including which is best for you. Kindly share this link and subscribe to this page.