Betterment has plenty going for it, including access to fractional shares, automated portfolio rebalancing and diversification across 10 asset classes. But depending on your investment goals, the grass may be greener with one of these five Betterment alternatives.
More automated investing features than Betterment.
This platform's flat-rate robo-advisor rounds up debit purchases to invest the difference on your behalf. Acorns sets itself apart from Betterment — and many other robo-advisors — with a round-up feature and flat-rate pricing. Most automated investment platforms charge a percentage-based management fee, but Acorns opts for flat-rate monthly pricing that's at its most competitive for portfolios of $5,000 or more. To use this platform's robo-advisor, you must link a debit card to your account. Acorns then rounds up any purchases you make and invests the difference.
Greater control over your portfolio than Betterment.
M1 Finance is ideal for investors seeking more autonomy over their investments. The platform essentially acts as a happy medium between fully automated investing and self-directed trades. M1 Finance invites investors to pick out their own investment slices that it later combines into investment “pies.” Your investment pie is your portfolio, which M1 then monitors and rebalances on your behalf. The service is free to use and various accounts are available, including traditional and Roth IRAs. But it lacks Betterment’s tax-loss harvesting feature, and new investors may not feel comfortable picking their own investments.
M1 Finance, LLC does not charge commission, trading, or management fees for self-directed brokerage accounts. You may still be charged other fees such as M1’s platform fee, regulatory fees, account closure fees, or ADR fees. For a complete list of fees M1 may charge visit M1 Fee Schedule. M1 is not a bank. M1 Spend is a wholly-owned operating subsidiary of M1 Holdings Inc.. M1 High –Yield Savings Accounts are furnished by B2 Bank, NA, Member FDIC. Obtaining stated APY (annual percentage yield) with the M1 High-Yield Savings Account does not require a minimum account balance. Stated APY is accrued on account balance. APY is solely determined by M1 Spend LLC and its partner banks, and will include account fees that will reduce earnings. Rates are subject to change without notice. M1 High-Yield Savings Account is a separate offering from, and not linked to, the M1 High-Yield Cash Account offered by M1 Finance, LLC. M1 is not a bank.
Better for families saving for their children's education than Betterment.
With similar management fees and asset classes, Wealthfront's major edge over Betterment is its college savings account. Wealthfront has plenty in common with Betterment, including a 0.25% annual management fee, a spread of over 10 asset classes and tax-loss harvesting options. In fact, the platforms share so much in common that there's really only one reason to opt for Wealthfront over Betterment: the ability to open a 529 college savings account. If you're interested in saving for higher education expenses, Wealthfront is your best bet. But be prepared for a $500 minimum deposit and lack of access to fractional shares.
Better than Betterment for access to financial planners.
While it lacks tax-loss harvesting, SoFi stands out by providing complimentary access to financial planners — a feature Betterment reserves for its Premium tier. We also like SoFi for its automatic portfolio rebalancing and its robo-advisor service for a 0.25% annual fee. While SoFi hasn't been around quite as long as Betterment, its free access to human advisors gives it a unique edge in the market.
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
Automated investing is offered through SoFi Wealth LLC, an SEC-registered investment adviser.
Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
0.25% fee is based on your account value. The wrap program fee may cost more or less than purchasing brokerage, custodial, and recordkeeping services separately.
Blooom can help you grow your retirement savings, but its fixed annual fee pricing structure means it's only cost-effective for larger portfolios. Blooom offers automated investment portfolios designed for investors with employer-sponsored accounts, like 401(k)s and 401(a)s. Fees are assessed on an annual basis, and plans start at $45 per year. The fixed cost of entry means that for Blooom's service to be cheaper than Betterment's, you'll need a portfolio of at least $20,000. Still, for those seeking guidance with an employer-sponsored account, Blooom offers portfolio analysis, automatic portfolio rebalancing and — with the higher tiers of service — access to financial advisors.
Annual fee
$45 per year
Annual advisory fee
$45 per year
Pros and cons of Betterment
Consider the following benefits and drawbacks of investing with Betterment.
Pros
Tax-loss harvesting. Asset allocation is consistently monitored to minimize potential taxes.
Fractional shares. The availability of fractional shares ensures every penny in your portfolio is put to practical use.
Automated rebalancing. If your investments stray further than 3% off their target ratios, your portfolio is automatically adjusted.
Cons
No direct indexing. Betterment investors don’t have access to direct indexing opportunities.
Withdrawal delays. Some investors complain of account withdrawal delays.
How to transfer your brokerage account
Interested in switching brokers? The process will depend on the type of account you have and the platform you plan to move to. Betterment doesn’t charge any account transfer fees, and most brokers don’t charge anything for account setup. Here’s what to expect of the process.
Inform your new broker of the transfer and provide them with your Betterment account number.
Complete the transfer paperwork from your new broker. For accounts under $250,000, your signature must be notarized or medallion signature guaranteed. For accounts over $250,000, your signature must be medallion signature guaranteed.
Mail your transfer paperwork, including a copy of the first page of your most recent Betterment statement, to Betterment Transfers, PO Box 207691, Dallas TX 75320-769.
Full shares from individual accounts will be transferred directly to your new institution. For IRA to IRA transfers, Betterment will send a check to your new brokerage.
Compare robo-advisors today
Review your options by comparing minimum deposits, asset types and annual fees, or select the Go to site button to learn more about a particular service.
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Shannon Terrell is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in personal finance. Her writing and analysis on investing and banking has been featured in Bloomberg, Global News, Yahoo Finance, GoBankingRates and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga. See full bio
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