Robo-advisors are becoming increasingly popular as a simple and relatively low-cost way to manage investments. Betterment is one of the leading robo-advisors in the industry, but you might be wondering what makes it different from other platforms. Find out more in this Betterment app review below.
In this article:
Betterment is an online, automated investment management service. It works like many other robo-advisors in that its technology recommends a portfolio based on user risk preferences and investing goals. It then automates the investing process.
According to Betterment’s website, it aims to help you to become a smarter, better investor across your finances, as opposed to other robo-advisors which only help you identify what your portfolio should look like.
You can open several different account types with Betterment, including individual or joint investment accounts and traditional, SEP or Roth IRAs.
Betterment is popular with beginner investors who may not have masses of money to invest, as it has no account minimum for its Digital plan. This option offers access to a portfolio of low-cost, globally diversified stock ETFs and bond ETFs with automatic rebalancing and tax-loss harvesting.
Betterment’s Premium plan requires a minimum balance of $100,000. If you go for this option, you’ll have all the benefits of the Digital plan, but with access to Betterment’s team of CFPs for guidance on life events, plus advice on investments outside of Betterment.
Unlike some other robo-advisors, Betterment offers an element of human advice. You can contact Betterment’s support team by phone or email seven days a week.
How much does Betterment cost?
Betterment’s Digital plan costs 0.25% annually for assets under management, while its Premium service has an annual fee of 0.40% of assets managed.
What are people saying about Betterment?
Betterment scores (4.4 / 5) on Google Play and (3.7 / 5) in the App Store. Overall, Betterment’s investment management service seems to be good, although the app’s functionality itself could be better according to some users.
For example, a reviewer at the App Store highly rated Betterment as a company along with its automated ETF solution. However, this person reported the app to be “generally frustrating” with not enough reporting elements.
Over at Google Play, one user said that he liked the app, but a recent update made it so that he can’t view the percentage growth in each of his individual accounts.
Another user similarly reviewed the app, saying that he liked the app and had been using it for a few years, but in recent weeks he’d not been able to change the automatic investment date and amount properly.
With $13.5 billion in assets under management, it’s fair to say that Betterment is legit. Like all robo-advisors, Betterment isn’t FDIC insured, however, each account type is SIPC protected up to $500,000. You can add to your funds and transfer or withdraw them at any time.
WiseBanyan bills itself as the world’s first free financial advisor. Rather than charging for assets under management, this platform instead makes money by charging for add-on services. An example of one of these services is “WiseHarvesting” which is WiseBanyan’s tax-loss harvesting strategy. Tax-loss harvesting is included as standard with Betterment’s Digital and Premium plans.
There are quite a few similarities between WiseBanyan and Betterment. For starters, the investment strategies for each platform are both built on Modern Portfolio Theory (MPT). Like Betterment, WiseBanyan has no account minimum, making it easy for beginner investors to get started.
Both WiseBanyan and Betterment offer the ability to transfer outside investments such as old employer-sponsored 401Ks or 403Bs across to its service. Each platform favors a goal-based approach to help users plan ahead financially.
WiseBanyan and Betterment both suit beginner investors, those who have low balances and those who are looking for free management. Betterment also attracts retirement investors and hands-off investors too.
Before deciding whether Betterment is for you, take some time to research similar apps, such as Wealthfront (which also charges 0.25% annually) or a digital wealth manager like Personal Capital. Each offers different services and depending on where you’re at in your investment journey, you might find that an alternative solution is better for your requirements.
*The facts and figures presented above are correct at the time of publishing.