Betterment versus Wealthfront brokerage firm comparison: IRA, fees, commissions, benefits, pros and cons. Which investing service to choose?

Betterment vs Wealthfront: Fees

Betterment and Wealthfront are the two data-driven behemoths that corner most of the market share when it comes to robo-investment and retirement.

Both services are priced quite modestly in comparison to a traditional brokerage. Both charge a flat 0.25% fee, with slightly different perks and bonuses, from sign up to high-value accounts. Betterment ceases charging fees at all once an account hits $2,000,000.


Minimum Deposits, Differences, and Referrals

Betterment has no minimum deposit. It also offers fractional shares. Two features Wealthfront does not have. On the other hand, the minimum deposit for Wealthfront is only $500, which should not be too much for anyone serious about their retirement planning. Wealthfront’s portfolio also offers Real Estate and Natural Resources, for increased diversification, instead of only holding Stocks and Bonds.

Betterment and Wealthfront offer referral programs. For each new client referred, Betterment will give out a month of free management. Wealthfront offers a referral bonus of an additional $5,000 managed for free.

While both platforms are a fine place for new investors to dive into the world of retirement funds, Wealthfront does tend to offer the more up-front benefits. People without savings accounts aren’t liable to drop $2,000,000 on an investment (or even get there through compound interest at any point soon). As the saying goes, you have to spend money to make money, but by using Wealthfront, a person with a very slim bank account doesn’t have to shell out anything in excess of their deposit in order to reap some real benefits.


Wealthfront vs Betterment


User Experience

The interface on both the website and the mobile app are clean and easy to use.  When opening an account, Wealthfront and Betterment ask some simple questions to assess risk tolerance. They uses factors like age, expected date of retirement, how comfortable someone is with the possibility of losing principal, and whether or not they’d stay the course during market fluctuations. Based upon that, they suggest an investment portfolio.

Making the initial deposit with Wealthfront and Betterment is very simple. They allow for a transfer via ACH from most major banks, or a wire transfer. They also have the option to roll-over other retirement accounts—from past workplaces or otherwise. The process usually takes between 3-5 business days, from setting up the deposit, to having the funds actually invested. Both firms also do a good job of encouraging users to set up automatic, recurring contributions. The logic being that saving is much easier when little thought is involved.


Betterment vs Wealthfront


Additional Services

Wealthfront recently rolled out a new feature called Path, which gives more actual advice about retirement planning. It allows the user to run simulations based upon current net worth, monthly contributions, and how much an individual is likely to need when they retire.

Path encourages users to link up all their accounts for a definitive financial picture. It’s much easier to go forward with savings if there is a plan in place. Path can be a great step in that direction.

Wealthfront offers numerous resources for beginner investors looking to jumpstart their education. After signing up, users will receive weekly onboarding emails that explain important reasons to invest for the long-term and avoid bad habits like market timing or day trading. There’s also a blog kept up to date, and the opportunity for users to ask questions they may have.


Competitors

M1 Finance offers many more options for investing than either Betterment or Wealthfront. The company also charges $0 in commissions!


Wealthfront vs Betterment - Final Thoughts

The two robo advisors are pretty similar and have the same pricing. Because Betterment offers $0 minimum to open an account and 6 months of free service, it is a better option to try robo advising service risk free.



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