Which robo-advisor is right for you?

Personal Finance Insider writes articles about products, strategies and techniques to help you make informed decisions with money. We may receive a small commission from our partners (such as American Express), but our reports and recommendations are always independent and objective.

• Betterment is an automated application that provides investment, retirement, checking and cash reserve accounts.
• Wealthfront provides automated investment, retirement, college savings, crypto and cash accounts.
• Betterment is best for low fees and consultant visits, but Wealthfront is more suitable for those looking for encryption, credit lines, and other products.
• Please refer to the Insider guide to learn about the best online brokers for all types of investors.

Betterment vs. Wealthfront: The biggest difference

Betterment and Wealthfront are the first two investment platforms to provide automated investment advice. Designed to simplify the investment process, Robot Advisor Use software and computer algorithms to manage your finances and investment portfolios. These platforms provide another option for investors who may not want to consult financial companies or use active/day trading brokers.

Both also provide a series of wealth accumulation solutions, including investment accounts, retirement accounts, saving account, And more.you can Passive investment exist ETF Collaborate with robo-advisors through web platforms and mobile applications.

However, the pricing structure, investment portfolio, and account functions provided by the two advisors are slightly different. Read on to learn how Betterment and Wealthfront compare.

The functions and costs of Betterment and Wealthfront are different. Read on to find out which automation application is best for you.

Is Betterment right for you?

Betterment is an independent Automation consultant Manage more than 29 billion U.S. dollars in assets. It provides automated personal and joint taxable accounts, trust accounts and retirement accounts, as well as checking and cash reserve accounts.

Betterment offers two investment account options: digital plan and premium plan. Digital accounts are the cheapest, with an annual fee of 0.25%. This account invests your funds in stock ETFs and bond ETFs, and provides services such as tax loss collection, automatic rebalancing, Fractional shares, Goal-based planning, socially responsible investment and human consultant visits.

Tax loss harvest allows you to write off or claim investment losses on your tax return, thereby reducing the amount of tax you owe. Betterment uses the tax loss harvest to sell any losses and reinvest them in securities that are consistent with your current portfolio.

Digital plans can be set up for free, but a one-time consultant consultation requires at least $299. However, with the advanced plan, you can have unlimited access to financial professionals.

The minimum fee for a premium account is $100,000-you will incur an annual fee of 0.40%-but you will have access to all the features of the digital plan and more.Specifically, you will have unlimited access to Certified Financial Planner And in-depth investment advice.

In addition, Betterment provides multiple retirement accounts (traditional IRA, Roth Individual Retirement Account, SEP IRA and Roth IRA conversion), 401 (k) seconds Serving enterprises and providing investment platforms for consultants.

If you are looking for investment and retirement strategies based on specific goals, Betterment may be a good choice. The platform provides five types of taxable targets: Retirement savings, Retirement income, safety net, major purchases and general investment. You can also adjust these goals at any time.

this

Robot Advisor
If you are looking for a good choice Investment application Have access to human advisors.However, if you are looking for other professional accounts, for example, Betterment may not be appropriate College Savings Plan.

Is Wealthfront right for you?

Wealthfront has more than 20 billion US dollars in customer assets, providing investment accounts, retirement accounts, portfolio credit lines, 529 College Savings PlanAnd cash management accounts.

Wealthfront’s investment account provides tax loss collection, financial planning tools, and a series of Index fund invest. And, if the balance is large (you need at least $100,000 to get the stock-level tax loss and risk parity), you can take advantage of its PassivePlus portfolio features, such as stock-level tax loss harvest, risk parity, and Smart Beta strategy (this feature The minimum amount is 500,000 USD).

According to its website, Wealthfront’s stock-level tax loss collection aims to reap more losses and reduce your tax bill by searching for changes in individual stocks in the US stock index. Risk parity is an asset allocation strategy designed to increase your risk-adjusted returns.

On the other hand, Smart Beta can increase your return by using a portfolio diversification And other specific strategies for selecting securities.

As of July 2021, Wealthfront also has the first automated investment application that provides a managed diversified portfolio, with the option of making crypto investments. It provides two types of crypto trusts: Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE). You can choose to allocate these asset portfolios to 10% of your investment portfolio. Learn more about Wealthfront encryption products here.

As for account types, Wealthfront supports individual, joint and trust investment accounts. The minimum deposit requirement for advisors is $500, and the investment account includes a 0.25% consulting fee and a fund fee ranging from 0.06% to 0.13%.

Its automation features also apply to retirement accounts-including Traditional IRA, Roth Individual Retirement Account, SEP IRA, with 401(k) Roll-and education savings plan.

A notable feature of Wealthfront is that it provides portfolio credit lines. This allows you to borrow up to 30% of the investment account at your disposal, thereby obtaining fast cash. You can decide at any time to repay the borrowed money with interest. Wealthfront’s current interest rate is between 2.40% and 3.65%.

Unlike Betterment, Wealthfront also offers a 529 College Savings plan, which allows you to set aside funds for your child’s education. The account-which can be opened in any state-costs up to 0.46%. And you can withdraw money without paying federal taxes.

In addition to the college savings plan, Wealthfront also offers a free cash account with an annual interest rate of 0.10%.

Wealthfront is slightly more expensive than Betterment, but if you are interested in using products such as education savings plans, credit portfolio lines, and high-yield cash accounts, this robo-advisor may be a good choice.

Betterment vs. Wealthfront: Which is right for you?

Both Betterment and Wealthfront are required to charge a 0.25% management fee for their standard investment accounts. These two investment platforms also provide tax relief and wealth accumulation tools.

In addition, each robo-advisor provides individual and joint investment accounts, trust accounts, IRAs, and high-yield cash accounts; one of the biggest differences between the two is that Wealthfront provides cryptocurrency exposure, 529 college savings plans, and portfolio credit lines .

Unlike Betterment, Wealthfront requires a minimum account balance of $500 for its investment account. In addition to the 0.25% management fee, you must also pay 0.06% to 0.13% of investment fund fees. Wealthfront does not provide access to financial planners like Betterment.

Betterment and Wealthfront only operate online. Both consultants provide competitive customer support and help centers, but if you prefer lower fees, stronger goal-centric investment strategies, and human advisor access, Betterment may be more appropriate.

Wealthfront may be a better choice for those who want additional features and products (such as crypto investments, credit lines, college savings plans, high-yield cash accounts, and stock-level tax strategies).