TD Ameritrade versus Betterment brokerage firm comparison: IRA, fees, commissions, benefits, pros and cons. Which broker to choose?

Overview of Betterment and TD Ameritrade

Betterment and TD Ameritrade offer different investment services at different prices. While they emphasize trading and investing with different styles, there is overlap in certain areas. This survey will compare the two brokers in different categories and try to verify what their strengths and weaknesses are.

Education and Research

Betterment doesn’t specialize in the trading of individual assets. In fact, this is not even possible at the investment firm. As such, there are no educational or research materials available on individual investments. The Betterment website does, however, provide portfolio analysis tools that look at specific target allocations in a portfolio. The same tool presents very brief information on specific ETF’s held in a managed account, including their percent weights in the account.

Transitioning to TD Ameritrade, we do find resources on individual securities. The broker’s equity profile pages supply enormous information, including free third-party reports. A very good educational portion of the site provides articles and videos on many investment topics. During our examination, we found the company’s investment screeners easy to use. Like Betterment, TD Ameritrade’s website also has a portfolio analysis tool.

TD Ameritrade is definitely the victor here.

Range of Investments

Betterment customers invest in robo portfolios composed of low-cost ETF’s. Both debt and equity funds are used. Unfortunately, the brokerage firm does not provide any other assets.

Investors at TD Ameritrade get ETF’s (including individual ETF’s that can’t be traded at Betterment) plus stocks, bonds, mutual funds, closed-end funds, options, annuities, forex, and futures contracts.

Betterment fails again.

Promotions

TD Ameritrade: Trade free for 60 days + get up to $600.

Betterment: none right now.


Managed Accounts and Financial Advice

Although TD Ameritrade offers self-directed accounts, the brokerage house also provides several managed account options, some of which include one-on-one traditional financial advice. The company has a robo package called Essential Portfolios. It costs just 30 basis points each year and carries a $5,000 minimum starting point. Traditional packages come with in-person human advice and range from 0.60% to 0.90% with a $25,000 minimum commitment. Some packages offer bonds, stocks, and mutual funds as investment options.

Betterment is primarily a robo advisor. The cost of its digital service is 0.25% with a $0 minimum balance. A premium package comes with unlimited access to human advisors, although the broker’s software program is still responsible for making trading decisions. The cost of this second program is 40 basis points with a very steep $100,000 commitment.

Overall, we like TD Ameritrade better here.

Trading Technology

Betterment’s trading service is constantly on autopilot, and as such, there’s not much to do with a Betterment account. As a result, the broker’s website doesn’t have a lot of trading tools on it. It is simple to navigate, but there is no trading platform. To invest with the broker, you simply choose a model portfolio, make a deposit, and monitor your account with basic analysis tools.


Betterment vs Fidelity


With TD Ameritrade, it’s a very different story. During our exploration, we found a website capable of placing trades for many different asset classes. A trade bar resides at the bottom of the screen. It can submit trades for equities and derivatives. The broker’s fixed-income trade tool is browser-based, but we found it to be user-friendly and simple to operate. Same goes for mutual fund trades.


TD Ameritrade


While the Betterment site offers no charting at all, TD Ameritrade delivers graphing software capable of technical analysis and comparisons. Company events can be overlaid, a chart can be detached and expanded the width of the computer monitor, and there are multiple graph styles available.

Once again, TD Ameritrade emerges as the better choice.

Mobile Apps

Betterment offers a mobile app that functions on iOS and Android. It is rather simple and doesn’t provide many notable features. It does provide the same portfolio analysis tools available on the website. We were disappointed not to find a mobile check deposit function.

TD Ameritrade customers get to use three apps, one of which is compatible with Windows 10. Many features absent on Betterment’s lone app can be found on at least one of TD Ameritrade’s: live streaming of financial news, charting, check deposit, bill pay, and options trading are all available.


TD Ameritrade vs Betterment


TD Ameritrade takes another victory.

Other Tools

During our investigation, we were not able to find any other software tools for Betterment customers. TD Ameritrade, by comparison, offers a really nice skill for Amazon Echo and Echo Show devices. The program has the ability to place trades by voice command, a really unique feature.

TD Ameritrade also offers a smartwatch platform for both Apple and Android devices. Another highlight in this category is the broker’s free desktop software that is able to place trades for futures and currencies.

Clearly, TD Ameritrade is the winner here.

DRIP Service

Betterment doesn’t offer a traditional Dividend Reinvestment Program. Instead, it takes dividends from ETF’s that pay them and then uses the cash to invest in a portfolio’s underperforming funds. So for example, the broker’s digital advisor could take a dividend from an outperforming emerging markets fund and buy more shares of an underperforming small-cap fund.

TD Ameritrade’s robo service uses a similar system without the traditional DRIP. The broker’s self-directed accounts can sign up online for a DRIP, and the service is free of charge.

We’ll choose TD Ameritrade again.

Our Recommendations

The first recommendation we need to make is for robo accounts. Small investors and budget-conscious shoppers should select Betterment for a small quarterly savings and no minimum deposit requirement.

Traditional advisory services seem more enticing at TD Ameritrade due to the broker’s larger selection of assets and actual human management.

For reasons mentioned above, we suggest TD Ameritrade over its rival for the trading of individual securities, currencies, and futures.

For retirement savers, we propose TD Ameritrade for its larger selection of IRA’s plus a good variety of target-date mutual funds.

Promotions

TD Ameritrade: Trade free for 60 days + get up to $600.

Betterment: none right now.


TD Ameritrade vs Betterment - Final Thoughts

Except for a 0.05% difference in a robo fee, Betterment is a consistent underperformer compared to TD Ameritrade, who clearly is a much better value when other services are considered.


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