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Comparing which is better - Betterment vs. Wealthfront

Betterment vs. Wealthfront: Which one should you choose?

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Updated: January 30, 2024

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A new robo advisor seems to be popping up every few months — some more popular than others. Currently, two of the most popular services are Betterment and Wealthfront. In this Betterment vs Wealthfront comparison, I will break down which service is the winner when it comes to some key features.

Paid non-client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Learn more about this relationship.

Key takeaways

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
  • Wealthfront allows you to customize your portfolio at the ETF level; Betterment doesn’t
  • Wealthfront offers direct indexing; Betterment doesn’t
  • Betterment offers fractional share investing; Wealthfront doesn't
  • Betterment's Premium level offers human assistance; Wealthfront's advice is totally automated

Betterment seems to win in several aspects: minimum deposits, fees, human assistance, and fractional shares. Keep on reading for further information.

How do Wealthfront and Betterment compare?

Highlights Betterment Wealthfront
Rating 4.5/5 4.5/5
Minimum to open account $10 $500
401(k) assistance
Two-factor auth.
Advice options Automated, human assisted Automated
Socially responsible investing
Learn more Sign up Sign up
Review Betterment review Wealthfront review

About both services

About Betterment

Betterment was founded by Jon Stein and Eli Broverman in 2008. Many consider this the robo advisor that started it all.

The basic idea behind Betterment is to create a portfolio from your risk tolerance and then put you into an asset allocation of exchange-traded funds (ETFs) that matches that tolerance.

Betterment focuses on giving fiduciary advice. Because 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.

The investment process is based on Modern Portfolio Theory (MPT), which holds that individual security selection is not nearly as important as proper asset allocation.

About Wealthfront

Wealthfront's story stretches back for more than a decade. In 2008, Andy Rachleff and Dan Carroll founded KaChing!, which was intended to mimic the portfolios of stock professionals but with your money. In 2011, they renamed their product Wealthfront and began molding it into a service that aims to be an all-in-one financial solution for its users.

Today, Wealthfront focuses on three fully automated services: free financial planning, investment management, and lending.

Wealthfront's chief investment officer is Burton Malkiel. He is best known for his classic financial book A Random Walk Down Wall Street. Malkiel's passive investing strategy is the basis for Wealthfront's investment approach.

When 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 adjusting the weights of asset classes and adding and removing ETFs based on your beliefs and values. Your portfolio can vary based upon if you open a taxable or tax-deferred account.

How are they the same?

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 waives fees for 90 days for every referral and one free year for every three referrals, up to five referrals.
  • Cash accounts: Both Wealthfront and Betterment offer cash management accounts. With Betterment, your savings account is FDIC insured up to $1 million and you can earn interest on your account. With Wealthfront, your savingvs account is FDIC insured up to $5 million and offers the ability to get paid two days early with direct deposit and makes it super easy to pay friends and family. You can also set up bill pay and automatic savings. Both companies offer debit cards. 

How are they different?

Let's take a look at the areas where Betterment and Wealthfront differ.

  • Minimum deposit: Betterment has no minimum requirement, while Wealthfront requires an account minimum of $500 to invest.
  • Annual fees: Betterment: 0.25%-0.40%; Wealthfront: 0.25%.
  • 529 accounts: At this time, only Wealthfront supports 529 college savings accounts.
  • Fractional shares: Only Betterment offers fractional share investing.
  • Human assistance: One of the biggest advantages of Betterment's Premium level membership is access to professional human assistance, however you have to pay more for this service. Currently, Wealthfront offers free financial planning through the app.

Minimum deposit comparison

Let's get the easiest comparison out of the way first. Betterment has no minimum deposit, whereas Wealthfront's minimum deposit is a $500 minimum.

In my opinion, Wealthfront's $500 minimum isn't much different for the average reader who's serious about investing. So while Betterment is technically the winner, this shouldn't be a factor when picking which robo-advisor to use.

Winner: Betterment, with no minimum deposit.

Fees comparison

Below is a table to show the differences in annual fees. Note: This table assumes you are opening a basic-level, tax-deferred account (e.g., an IRA). There are additional services that have not been figured into the table (see below).

Deposit amount
Betterment fees
Wealthfront fees

For an extra 40 basis points, you can also receive the services of a financial advisor from Betterment. You can make unlimited calls to receive advice tailored to your portfolio. This is a great deal.

Wealthfront recently introduced a Risk Parity fund for investors with taxable accounts of more than $100,000. The fund's strategy allows users to experience the level of risk protection once available only to institutions and high-net-worth individuals. However, it does bear a cost that could bring your overall Wealthfront fees to as much as around 0.20% (we think it could be well worth it).

Both robo advisors have tax-loss harvesting services. Read the next section for more details.

Tie: Betterment and Wealthfront are practically equal when it comes to fees.

Tax-efficient investing: Who's better?

This feature assumes you have a taxable account. If you are looking for an IRA account, this feature doesn't apply to you.

  • Both make heavy use of tax-efficient investing, in part by performing tax-loss harvesting daily, rather than just at the end of the year.
  • Wealthfront and Betterment both use index funds, which provide a natural tax advantage. Since turnover in the funds is very low, your exposure to capital gains — particularly short-term gains — is minimal. They also use dividends to rebalance your portfolio, which minimizes the need to sell off positions that may result in capital gains.
  • Wealthfront does offer bonus features not available with Betterment.Clients who have at least $100,000 invested in a taxable account are eligible for PassivePlus, which includes Stock Level Tax-Loss Harvesting, along with Smart Beta and Risk Parity.Also, every year, Wealthfront publishes the results of its tax-loss harvesting. This is unique among robo advisors and they recently found that their Tax-Loss Harvesting service can cover their fee for over 96% of their clients.
  • Clients who have at least $100,000 invested in a taxable account are eligible for PassivePlus, which includes Stock Level Tax-Loss Harvesting, along with Smart Beta and Risk Parity.
  • Also, every year, Wealthfront publishes the results of its tax-loss harvesting. This is unique among robo advisors and they recently found that their Tax-Loss Harvesting service can cover their fee for over 96% of their clients.
  • Betterment's tax-loss harvesting has options specific to it as well. These are available to all taxable accounts with no minimum deposit. Recently, Betterment introduced the Tax-Coordinated Portfolio service. This allocates your investments to maximize tax efficiency among your tax-deferred and taxable accounts held with the robo advisor.

A muni bond ETF is available at Betterment to maximize tax efficiency further. Betterment also offers state-specific municipal bonds.

Winner: Wealthfront

Portfolio comparison

When you first sign up with Betterment or Wealthfront, the robo advisor asks you a series of questions about your investment needs and then sets your risk tolerance based on your answers. Both also offer a slide bar that allows you to have some control over the allocation in your portfolio.

Betterment's portfolio

Betterment invests your money in a combination of various ETFs, including stock funds and bond funds. Depending upon your ratio of stocks to bonds, taxable vs. tax-deferred, some of the ETFs listed below may not be in your portfolio.

The percentages of the ETF allocation are no longer fixed, either. Depending upon your allocation of stocks to bonds, Betterment adjusts the allocation of each individual ETF to meet the efficient frontier. In other words, Betterment has optimized the portfolio to give you the best performance possible.

(Note that besides this portfolio, Betterment also offers three types of socially responsible portfolios, a BlackRock-branded portfolio, and a Goldman Sachs-branded portfolio.)


  • US Sector: Vanguard US Total Stock Market(VTI)
  • Large Cap Sector: Vanguard US Large-Cap Value(VTV)
  • Mid Cap Sector: Vanguard US Mid-Cap Value(VOE)
  • Small Cap Sector: Vanguard US Small-Cap Value(VBR)
  • Foreign Sector: Vanguard FTSE Developed Market(VEA)
  • Emerging Market Sector: Vanguard FTSE Emerging Markets(VWO)


  • US Bonds Sector: iShares Core U.S. Aggregate Bond(AGG)
  • Muni Sector: iShares National AMT-Free Muni Bond(MUB)
  • Corporate Sector: Xtrackers USD High Yield Corporate Bond (HYLB)
  • Emerging Market Sector: iShares J.P. Morgan USD Emerging Markets Bond(EMB)
  • Foreign Sector: Vanguard Total International Bond(BNDX)
  • US Short-term Treasury Sector: iShares Short-Term Treasury Bond(SHV)
  • US Short-term Sector: JPMorgan Ultra-Short Income(JPST)
Get started with Betterment portfolios

Wealthfront portfolio

Wealthfront uses eleven possible asset classes for portfolio construction. The funds in your particular account vary depending on the type of investment account and answers to their questionnaire. For those interested, Wealthfront has details about their investment methodology.

A unique feature of Wealthfront is the ability to customize your portfolio and add or delete ETFs to your portfolio. In other words, you can create a portfolio of ETFs that you think fit your investing style, based on ETFs that are vetted by Wealthfront's team of experts.


  • U.S. Sector: Vanguard US Total Stock Market(VTI)) Schwab U.S. Broad Market (SCHB)) iShares Core S&P Total (ITOT))
  • Dividend Sector: Vanguard Dividend Appreciation(VIG)) iShares Dow Jones Select Dividend Index(DVY)) Schwab Dow Jones (SCHD))
  • Foreign Sector: Vanguard FTSE Developed Market(VEA)) iShares Core MSCI Total (IXUS)) Schwab International Equity(SCHF))
  • Emerging Market Sector: Vanguard FTSE Emerging Market(VWO)) iShares Core MSCI Emerging Markets(IEMG)) Schwab Emerging Markets Equity(SCHE))


  • US Gov't Sector: Vanguard US Total Bond Market(BND)) iShares Core U.S. Aggregate Bond(AGG)) Vanguard Intermediate-term Bond (BIV))
  • US TIPS Sector: Schwab US TIPS(SCHP)) iShares Barclarys TIPS Bond(TIP)) SPDR Barclays TIPS(IPE))
  • Muni Sector: iShares National AMT-Free Muni Bond(MUB)) Vanguard S&P National AMT-Free Muni(VTEB)) State Street Barclays Capital Muni(TFI))
  • Corporate Sector: iShares Corporate Bond(LQD)) Vanguard Intermediate-Term Corporate Bond(VCIT)) SPDR Portfolio Intermediate Term Corporate Bond(SPIB))
  • Emerging Market Sector: iShares JPMorgan Emerging Markets Bond(EMB)) Powershares DB EM USD Liquid Balanced(PCY)) Market Sectors Emerging Markets Local Currency Bond(EMLC))


  • Real Estate Sector: Vanguard REIT(VNQ)) iShares Dow Jones U.S. Real Estate(IYR)) Schwab U.S. REIT(SCHH))
  • Socially Responsible: US ESG (ESGU)), Dev ex US ESG (ESGD)), iShares ESG Aware MSCI EM (ESGE)), Clean Energy  (ICLN)), Green Bonds (EAGG))
Get started with Wealthfront portfolios

At first glance, its list of funds looks very similar to Betterment's, but Wealthfront also offers real estate funds, while Betterment does not. If you're looking for complete diversification, the Wealthfront portfolio is slightly stronger.

On the flip side, in addition to its core portfolio, Betterment also offers these products:

  • BlackRock Target Income Portfolio: This portfolio was designed for those in retirement or investors wanting a portfolio with low risk. This portfolio is a diversified 100% bond basket.
  • Goldman Sachs Smart Beta Portfolio: This smart beta portfolio was designed to target higher returns by taking on additional systematic risk.
  • Socially Responsible Investing Portfolio: Your core Betterment portfolio can be tweaked to represent a slant toward socially responsible investing. We will get into more details about this portfolio later on.

Also, based on whether the account is taxable or tax-deferred, the asset allocation and fund selection will be slightly different with either firm. Both Betterment and Wealthfront offer government-issued Treasury Inflation-Protected Securities (TIPS), which match inflation. Betterment purposely omits investments in real estate and commodities.

While I cannot predict the future of which asset allocation will do better, I can state which portfolio is more diversified. Based on Wealthfront's real estate, and TIPS options, I believe Wealthfront is a slightly better-designed portfolio.

Winner: Wealthfront

Retirement planning comparison

Retirement is a primary function of both robo advisor services. The question is: Which robo advisor is better for retirement planning and has more flexibility?

  • Sync to external accounts: Both have the ability to sync up external accounts and give retirement planning advice for all your accounts. From our testing, both services appear to be similar in functionality. In my testing, Betterment did have an issue syncing with an account I use that has two-factor authentication. However, I was able to get the issue resolved by contacting technical support.
  • Integration: Wealthfront offers retirement planning as part of its free service. Wealthfront's free financial planning offers answers to more than 10,000 financial questions personalized for your situation. You can use this feature on whether or not you sign up for Wealthfront's paid services.
  • Human advice: However, if you want a human touch, Betterment still shines by offering human, financial advisors for an additional fee.
  • Fees: Betterment charges 0.40%/year for its Plus plan and 0.50%/year for its Premium plan. Premium is similar to the Plus offering, but instead of only one annual phone call, Premium offers unlimited communications. Both services from Betterment can help with your accounts outside Betterment, such as your employer's 401(k) plan.

For younger individuals who don't have a complex portfolio, either service could suffice for retirement planning. Betterment does have a slight edge with human advisors, although this does come at a cost. Betterment might make sense for older individuals who have a more complex portfolio and want the hand-holding option.

Winner: Betterment

Socially responsible portfolio comparison

Besides its standard SRI portfolio, Betterment offers two portfolios focused on either environmental or social issues.  All of its socially responsibly focused portfolios choose ETFs based on the specific environmental, social, and governance criteria. Also, the Climate portfolio focuses on mitigating climate change by focusing on companies that reduce their carbon footprint, among other things. The Social Impact portfolio expands the Broad Impact portfolio by also including stocks of companies focused on diversity in the U.S.

Wealthfront offers the ability to add SRI ETFs to your portfolio to customize your portfolio based on what you believe in. They also offer the option to restrict investing in certain companies if you qualify for Stock-level Tax-Loss Harvesting or Smart Beta.

Winner: Betterment is clearly the winner here, as they offer SRI focused portfolios.

Privacy and security comparison

Let me state what I know about both robo advisors: They are secure in the way their services are set up. So I am in no way suggesting either service is insecure. What I am discussing is which service has more protections in place.

Recently, a financial account that I have with another institution was compromised, so I understand the importance of two-factor authentication. A password is something you know; that's the first-factor authentication. The second is typically something you have, which, in most cases, is your smartphone. This makes it harder for a hacker to gain access to your account. While they may know your password, it is unlikely they will have access to your phone.

  • Betterment recently introduced two-factor authentication, and Wealthfront also offers it as well.
  • Both have the option to set up two-factor authentication via SMS text to your phone or an authenticator app installed on your smartphone.

Lastly, Betterment has the option of creating a read-only secondary password when syncing to online services like Empower. Should your password ever get compromised, the attacker would have only read-only access to your account.

Tie: Betterment and Wealthfront are both good choices with security

So, which is better: Betterment or Wealthfront?

Based on our in-depth reviews of the two robo advisors and the comparisons we've made, we tend to favor Betterment over Wealthfront, but you can't go wrong with either service.

We give Betterment the winning edge because it grants the option of unlimited contact with a human advisor for an extra fee.

However, Wealthfront is a solid choice if you'd prefer to have everything delivered straight to your smartphone.

Moneywise receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. Moneywise is not a Wealthfront Advisers client, and this is a paid endorsement. More information is available via our links to Wealthfront Advisers.

Larry Ludwig Freelance Contributor

Larry Ludwig is a freelance contributor for Moneywise.


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