They say there’s no such thing as a free lunch. There is also no such thing as free financial advice, at least, not advice that’s worth taking. Betterment has become one of the largest robo-advisors by offering investment advice in exchange for low and highly transparent fees. WiseBanyan, a relative newcomer to the robo-advisor game, hopes to make free financial advise a reality by being the first fee-free financial advisor. But is it really free? And is saving a few bucks in investment fees worth it? Here’s how the two stack up.
- Review of: Betterment vs WiseBanyan
- Reviewed by: Janet Berry-Johnson, CPA (Forbes.com Contributor)
Published on: Novemeber 10
Last modified: Novemeber 10
- Betterment Promotional Offer? Betterment Provides Non-pay 2 Months
- Be sure to check out our Betterment Review for more information
Neither Betterment nor WiseBanyan charge transaction fees for buying or selling securities.
Betterment charges customers transparent commissions in exchange for advice that helps them achieve goals such as saving for retirement or building an emergency fund. Accounts with balances of $0 – $10,000 are charged 0.35% with a minimum of $100 per month auto deposit or $3 per month without auto deposit. The larger your account balance, the lower your commissions. Between $10,000 and $100,000, the commission is 0.25%, and for balances greater than $100,000 the commission is 0.15%.
WiseBanyan does not charge any custodial fees but earns money from a la carté products and services designed to provide personalized value to their clients. Customers can opt into paid services as they wish. For example, a customer can opt for customized portfolio management solutions for an annual fee of 0.50% – 1.0%. Or clients can opt into WiseHarvesting (WiseBanyan’s term for tax loss harvesting) for 0.25% of taxable assets, charged monthly and capped at $20 per month.
It’s important to note, however, that customers of both Betterment and WiseBanyan will pay ETF expense ratios, the built-in cost of the ETFs that would have to be paid anyway, even by DIY investors.
Both Betterment and WiseBanyan offer portfolios that are composed solely of low-cost ETFs. Asset classes include U.S. Stocks, foreign stocks, emerging markets, TIPS, short-term treasuries, and corporate, municipal, emerging market and foreign bonds.
Both Betterment and Wisebanyan also allow their customers to purchase fractional shares, down to 1/1,000,000 of a share, putting every dollar to work instead of allowing some cash to sit idle in your portfolio. Most discount brokers and online portfolio managers require you to own whole shares.
You can open a Betterment account with a $0 opening balance. Betterment will never charge a minimum account fee, other than the $3 per month fee for not having a $100 per month auto deposit.
WiseBanyan requires a $1 minimum deposit to start, but there is no minimum balance to maintain your account once opened.
Account options & features
Betterment offers individual and joint taxable accounts, trusts and Traditional and Roth IRAs, SEP IRAs and Rollover IRAs. WiseBanyan offers personal investment accounts, Roth and Traditional IRAs and SEP IRAs. They do not currently offer joint accounts, trust accounts or custodial accounts.
Rolled into Betterment’s low fee structure are several premium features. Those include automatic portfolio rebalancing, tax-loss harvesting and goal-based investing. Investors can also sync outside accounts, allowing them to see their total net worth on one dashboard. Betterment then uses that information to offer advice for saving money on fees and losing money on idle cash. Betterment also offers Smart Deposits, allowing Betterment to invest your extra cash automatically.
WiseBanyan provides goal-based investing referred to as “milestones.” Those milestones can be a Rainy Day Fund, Retirement, Build Wealth, or Custom. WiseBanyan provides automatic portfolio rebalancing every time you make a deposit, withdrawal, or earn dividends, but tax-loss harvesting is a premium feature.
Both Betterment and WiseBanyan have apps for both iOS and Android, allowing you to access and manage your account with Touch ID or a secure PIN. You can also access your account with either company via the web from anywhere you have internet access.
Protection and security
Betterment and WiseBanyan are both members of the Financial Industry Regulatory Authority (FINRA), and the Securities Investor Protection Corporation (SIPC). Securities of their customers are protected up to $500,000 (including $250,000 for claims for cash). If something
happened to either Betterment or WiseBanyan, securities are protected up to those limits. Of course, the SIPC does not protect against losses due to regular swings in the market.
Both companies also promise security of your personal data using fully-encrypted, state of the art technology.
Neither Betterment nor WiseBanyan currently offer accounts to investors residing out of the United States. Customers must have a permanent U.S. address and a U.S. Social Security number to open an account.
Betterment integrates with TurboTax, TaxAct, and H&R Block tax preparation software, allowing customers to automatically import income and capital gain/loss information for tax return preparation.
WiseBanyan currently integrates only with TurboTax.
Betterment provides customer support Monday through Friday from 9 am to 8 pm, Eastern and Saturday and Sunday from 11 am to 6 pm. You can also send support emails or live chat via the website.
Customer Support is a little difficult to locate on WiseBanyan’s website, but they can be reached via phone at (646) 593-8359 or via email at email@example.com.
The bottom line
With zero transaction fees, both Betterment and WiseBanyan offer significant savings for frequent traders.
For beginning investors looking for no-frills investing, WiseBanyan’s fee-free advice may be just the ticket. Investors looking for a little more customized advice and tax loss harvesting without having to opt into a la carté services, will find Betterment’s all-inclusive low fees a better option. Also anyone looking for joint and trust accounts will have more options from Betterment.