If you want to start investing or would prefer a hands-off approach to investment management, using a robo-advisor could be a good option for you. There are more than 200 robo-advisors in the U.S. so the question is, which one should you use? To help you narrow the list down, check out this article which looks explicitly at WiseBanyan vs Betterment and includes reviews for each.
In this article:
How WiseBanyan works
Unlike many robo-advisors, WiseBanyan offers an automated investment management service with no asset management fees and no account minimum. Anyone can get started investing as long as he or she has $1 to open an account.
The way WiseBanyan makes money is by charging for add-on products, such as “WiseHarvesting” their tax-loss harvesting strategy. The fee for this service, for example, is 0.25% of taxable assets and its capped at $20 per month.
WiseBanyan aims to make investing accessible to everyone, not just the rich. Its service attracts beginner investors, who may not have much money to invest and who would benefit from a diversified, managed portfolio without fees.
WiseBanyan’s investing strategy focuses on Modern Portfolio Theory (MPT). Its portfolios are made up of ETFs with an average expense ratio of 0.12%.
What people are saying about WiseBanyan
Some Google Play reviews focus on returns; for example, one user mentioned that WiseBanyan has a good passive income strategy and they received a good return with a 7% risk tolerance. Another reviewer claimed he’d seen a return of 20.6% in one year, with an aggressive stock option stance.
WiseBanyan’s easy to use interface is mentioned across several different reviews on Google Play, and the fact that it has no asset management fees appears to be a bonus!
Some users have experienced problems and mix-ups regarding the add-on fees from WiseBanyan, e.g. its Fast Money package which offers quick deposits, scheduled deposits, and overdraft protection.
It’s important to note that WiseBanyan (like all robo-advisors) isn’t FDIC insured. With that said, WiseBanyan is a member of the Financial Industry Regulatory Authority (FINRA) and offers SIPC protection. In the unlikely event that WiseBanyan goes out of business, SIPC will cover losses of up to $500K with a limit of $250K for cash losses.
How Betterment works
Betterment, like WiseBanyan, has no minimum balance requirement. It charges a relatively inexpensive annual management fee of 0.25% for its Digital plan (the same fee as Wealthfront) and 0.40% for its Premium plan.
The Digital plan offers personalized (automated) financial advice, low-cost diversified portfolios, automatic rebalancing, tax-loss harvesting, the ability to link all your accounts in one place and customer support.
Betterment’s Premium plan is only available to those with assets worth $100K or more. It includes all the benefits of the Digital plan and access to a group of CFP professionals for advanced financial planning and advice on investments outside of Betterment.
Betterment claims that their long-term investing approach can help users earn 2.66% more returns per year, compared with typical investors.
What people are saying about Betterment
Many reviews rated the app highly, with some mentioning quality portfolios and its low-cost fee structure. One user stated that Betterment is a solid place to park your investments and IRAs and that the customer service is amazing; they’d always received a response within 24 hours.
A user who gave the app a 3-star rating in the App Store referred to the app’s functionality as not being as advanced as Vanguard, saying that it doesn’t have enough in-depth tables and reports. With that said, this person highly recommended Betterment’s investing strategy which gave them an automated ETF solution with broad exposure.
Over on Google Play, there were similar reviews about the app not showing enough information or charts.
Reddit has both Betterment and WiseBanyan communities that are worth checking out to find out more information about each platform. Users are posting comments, questions, and feedback about these apps on Reddit all the time.
In the WiseBanyan subreddit, the top comment currently is about a new savings goal feature that WiseBanyan has added to help users save for a home. In the Betterment subreddit, a referral thread is at the top of the list, which is where new users can sign up with Betterment and get 90 days of service for free.
It’s a good idea to spend quite a bit of time researching robo-advisors to determine the best one for your needs. Some may only offer a limited selection of account types while others may provide a broader choice of funds. The fees that each platform charges and whether or not you’ll get access to human advice may also be a crucial factor for some.
*The details presented in this article are correct at the time of publishing.