Betterment Fees vs. Wealthfront Fees

0

Thanks to robo-advisors, investors don’t have to have large portfolios or hire a financial advisor to receive the best returns possible. Technology allows them to charge a fraction of what traditional managers charge, yet still provide personalized advice and portfolio management previously reserved only for the wealthy. Yet even robo advisors come at a cost and the fees vary by platform. Here’s a comparison of the fees charged by Betterment vs. Wealthfront.

Betterment

Betterment never charges trade fees for buying or selling securities or depositing or withdrawing from your account.

Management fees are based on account balance. Account balances of $1 to $9,999 pay a fee of 0.35%, as long as the investor implements a $100 per month automatic deposit. Without the automatic deposit, Betterment charges a $3 per month.

Accounts with a balance of $10K to $99,000 are charged a 0.25% fee. Accounts with balances of $100K and up are charged 0.15%. No recurring deposit is required for account balances of $10K and up.

Betterment has no account minimums and investors are never charged a low-balance fee, other than the $3 per month fee for having an account balance under $10K without the $100 per month automatic deposit.

Wealthfront

Like Betterment, Wealthfront never charges fees for buying or selling securities or transaction fees for deposits or withdrawals.

Where Wealthfront excels is with account balances under $10K, as those are managed for free. For account balances above $10K, Wealthfront charges a 0.25% annual advisor fee. However, if you invite friends and family to open an account, for each one that signs up, Wealthfront will waive fees on an additional $5,000 of assets.

Wealthfront does require a minimum balance of $500 to open an account.

The bottom line

Both Betterment and Wealthfront offer portfolios of low-cost ETFs, which have fees embedded in their costs. It’s important to understand that no matter which robo-advisor you choose, ETFs have their own inherent fees.

Another advantage enjoyed by clients of both Wealthfront and Betterment is that fees are charged per client, not per account. So if you have a $50,000 taxable account plus a $60,000 IRA with Betterment, you will fall into the 0.15% tier.

Because Wealthfront waives management fees on the first $10,000 of assets, they may be a better option for investors starting out without any existing assets to roll in. For investors who can move assets to get their account balance over $100,000, Betterment offers a lower annual advisor fee.

LEAVE A REPLY

Please enter your comment!
Please enter your name here