- The Good
- No account minimum
- Great for beginners
- Retirement planning advice with RetireGuide
- The Bad
- No direct indexing to reduce tax exposure
Betterment has some of the best options when it comes to diversifying your portfolio, as well as an array of pricing options that let’s you feel more in control, even if your investments are automated. In addition to the above, Betterment can display your 401(k) plans, but it cannot create an overall asset allocation plan with your 401(k) plans in mind, thus only managing accounts you have at Betterment.
- Annual Fee
- 0.25% to 0.50% of invement
Betterment offers three levels of investment, each with its own fee. 1. Betterment Digital: annual management fee of 0.25%, with no minimum account balance; 2. Betterment Plus: annual management fee of 0.40%, with minimum account balance of $100,000; 3. Betterment Premium: annual management fee of 0.50%, with minimum account balance of $100,000.
- Individual and joint nonretirement accounts
- Roth, traditional, SEP and rollover IRAs
Betterment offers goal-based investing for beginners and experienced investors. Multiple goals are tailor-made for each beneficiary, automated cash transfers for beneficiaries are conducted on a custom schedule, and different trust accounts are managed with a single login.
The ETFs that Betterment uses represent up to 12 asset classes, depending on risk tolerance and set goals. Betterment works to adjust the distribution of every individual ETF to meet your goals. Depending upon your allocation of stocks to bonds, it categorizes stocks and funds in the aforementioned manner. The stocks range from small-cap to large-cap and include foreign and emerging markets. The bonds include muni, corporate, and U.S. short-term bonds, all carefully picked. Betterment bases its investment philosophy on the modern portfolio theory, which highlights the benefits of diversification.
- Custom asset allocation
- RetireGuide calculator
- Tax-coordinated portfolio
- Two-factor authentication
- App passwords
- High-security measures
- Prompt customer service
- Referral program
Besides those listed above, Betterment also offers features according to the plan you choose. The Betterment Digital plan includes portfolio rebalancing, tax-loss harvesting and RetireGuide. The Betterment Plus plan includes these features, as well as an annual call with a financial expert. The Betterment Premium plan offers the same, plus unlimited calls with financial experts.
- Minimum Deposit
The minimum deposit for Betterment Digital is $0, while Betterment Plus and Premium have a minimum account balance of $100,000. Wealthfront, however, has a minimum deposit of $500.
Betterment: User Reviews
One question you may be asking yourself right now is, “How does Betterment work for my financial betterment?”
That depends largely on who you are. If you are someone who cannot keep up with the dynamism of share markets or does not understand them, Betterment is for you. Not only does it invest per your asset preference — or take the lead if you have none — for lucrative dividends, it takes into account your tax-loss harvesting.
If you are someone who keeps up with the investment market, then the opinion of an expert financial adviser can reaffirm an instinct that you may have, especially since Betterment currently manages more than $7 billion in assets for more than 250,000 clients.
Another factor that raises the bar for Betterment is its security. Increased data security for all your accounts is provided by a 256-bit SSL encryption and SIPC insurance coverage, where everything in your account is protected up to $500,000 in the case of fraud or mismanagement.
It’s also easy to reach Betterment. It offers caller support from Monday to Friday, 9 a.m.–8 p.m. EST. On Saturday and Sunday, you can reach Betterment from 11 a.m.–6 p.m. EST. It also has email support, and live chat is provided 24/7, so customers never face problems alone.
How Does Betterment Work?
Signing up for Betterment is free, easy and only takes about five minutes. You have to respond to a couple of short questions regarding your investment needs. Once you have made the choices, and your personal checking account has been linked up, you can transfer money to and from your Betterment account whenever you want.
Once money is in the account, Betterment automatically purchases exchange-traded funds (ETFs). The purchases are made based on the way you’ve defined your asset allocations. Your investments are liquid, and selling the investments is extremely easy. Betterment performs the sell trades for all its customers. Dividends earned are automatically reinvested for the customers. Any portfolio that is off by more than 5% is automatically rebalanced.
Once you have an account with Betterment, you should familiarize yourself with its unique features to fully reap the rewards.
What Makes Betterment Stand Out?
Betterment’s team of human financial experts ready and willing to aid clients makes it a formidable entity among robo-advisers. Their accolades and their expertise garnered as alumni of Harvard University, Columbia University and the London School of Economics make this investment committee a trustworthy body to handle your hard-earned money.
To further emphasize how Betterment goes the extra mile to look after its clients, look at who the ideal clients for the service are: hands-off and retirement investors, users with perpetually low balances, people who want automatic rebalancing, and those who like goal-based tools.
Students, who typically have low bank balances, could opt for this service, thereby inculcating the investment culture early on. Even those who have retired get the most comprehensive guide to a good portfolio investment. From comparing current levels of savings to the desired levels of spending during retirement, important questions can be answered. Irrespective of age or income, Betterment has something unique to offer everyone.
Common Reviews of Betterment
According to the Consumer Affairs website, Betterment scored a 3 out of 5 stars. Clients seemed happy with the customer service and the website’s ease of use, but didn’t seem to like the fees charged by Betterment.
One customer wrote, “The customer service was great. Any time I called having a question with anything, the workers were always very friendly and helpful with answering my questions. The customization options are great. I like that they offer many and that I was able to choose which one was the closest to matching me and what I could afford at the time. I don’t really like the additional fees. I have been fined a few times for things and I just think the fees are expensive and I do not agree with them. I would say the ease of use is great. I have not had any major issues with visiting the website or speaking to someone by phone. Overall I am very pleased.”
Another customer said, “I didn’t use customer service much but it is very much evident that they are extremely customer focused by being completely user friendly and easy to contact. The customization options are great. They seemed to have thought of everything when it comes to what a custom experience should be like. I was able to move things around to fit my personal needs. I am not a fan of additional fees but the additional fees that are offered are satisfactory and make sense. In a perfect world everything would be free but that isn’t so logical. The ease of use is very good. Navigating the services it offers and other areas within are very much self explanatory, which I admire since I favor being able to figure things out on my own.”
As for the negative reviews, people tended to complain when they lost money. One customer said, “Looking at what the Betterment claims as the robo-investing in a diversified portfolio. Can anyone explain as to how the value of a diversified portfolio is going down when the market has gone significantly up! How can one expect it to do it better in the long term. On the contrary, Charles Schwab’s Intelligent Portfolio seems to reflect the market. I would advise investors to keep a close watch on their portfolio.”
Can I Get Deals on Betterment’s Website?
Yes, you can. There is a promotional deal with up to six months of free management with a minimum deposit, in addition to a very generous referral program. For investors with a lower income, the pricing structure is incentive enough to opt for this robo-adviser.