Betterment review: Personalized ETF portfolios and human advisor access

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Overall rating

Is Betterment right for you?

Betterment is an automated investing platform that offers robo-advice and personalized, self-managing investment portfolios. It best suits hands-off investors who want to make use of individual or joint accounts, IRAs, trust accounts, and cash reserve or checking accounts.

The platform additionally offers a vast range of portfolio options while solely utilizing ETFs in its portfolio allocations. The Betterment mobile app is available on both iOS and Android devices.

Betterment vs. Wealthfront

Min. Investment $0 or $100,000, depending on the account	Min. Investment $500
Fees 0.25%/year or 0.40%/year	Fees 0.25% (0.06% to 0.13% for fund fees)
Investment choices ETFs	Investment choices ETFs, index funds, and crypto trusts
Betterment	Wealthfront Investing

Betterment and Wealthfront are two of the oldest platforms in the robo-advisor space. Both offer automated portfolio management, with access to perks like cash accounts, tax-loss harvesting, socially responsible investing, and more.

Betterment offers financial advisor guidance, but Wealthfront doesn't (although it does allow its users to contact specialists with questions). Betterment also has a lower account minimum requirement than Wealthfront. You don't need anything to get started with the Betterment digital plan. Wealthfront, however, has a $500 minimum.

Wealthfront is a better option for users who want access to a wider range of investment choices. Plus, it's great for those who'd like to automate custodial accounts like 529 plans.

Betterment vs. Vanguard

Min. Investment $0 or $100,000, depending on the account	Min. Investment $0 ($3,000 for Vanguard Digital Advisor; $50,000 for Vanguard Personal Advisor Services)
Fees 0.25%/year or 0.40%/year	Fees 0% (0.20% to 0.30% for professionally managed portfolios)
Investment choices ETFs	Investment choices Stocks, ETFs, options, bonds, mutual funds, and CDs
Betterment	Vanguard

Betterment and Vanguard both have automated investing, but Vanguard is the stronger choice for all types of investors. With Vanguard, you get access to both self-directed accounts and automated accounts. But you'll be limited to automated investing at Betterment, so it's not a great choice for those who want to trade on their on. 

When it comes to robo-advice, though, you'd pay less with Vanguard's basic automated account, Vanguard Digital Advisor, than you would at Betterment. The Betterment digital plan has a 0.25% fee, but Vanguard Digital Advisor only charges 0.20%. 

Ways to invest with Betterment

Automated portfolio management

Betterment uses computer algorithms to build and manage personalized portfolios. The platform also offers an FDIC-insured checking account, a cash reserve account (this has an APY of 1.60%), IRAs, and a 401(k). Plus, its pricing plans are simple to follow. It offers two options:

• Betterment digital: This plan doesn't have any account minimum requirements, but it holds a 0.25% annual fee. It includes features like tax-loss harvesting, asset location, portfolio rebalancing, and dividend reinvesting. Plus, to maintain a healthy level of risk, Betterment automatically adjusts your portfolio allocation as you get closer to meeting your goals. This level also offers a range of portfolio options, but it doesn't include complimentary advisor access.
• Betterment premium: You'll need at least $100,000 for the premium account, but you'll get access to all of the features the digital plan offers in addition to unlimited one-on-one CFP guidance. Its CFPs also offer advice on other investments you hold outside of Betterment.

You can additionally invest toward specific goals at Betterment. It currently offers six: retirement (saving), retirement (income), safety net, major purchase, general investing, and cash goals.

Portfolio types

Betterment offers several portfolio options. The first, its Core portfolio, focuses on long-term investing by allocating your money across a global selection of stock and bond ETFs. Its Innovative technology portfolio targets companies with a lot of potential for growth. These include semiconductors, blockchain businesses, clean energy companies, and more.

Its three socially responsible portfolios — Broad Impact, Climate Impact, and Social Impact — are ideal for those who want to make a positive difference with their investments. Finally, its Goldman Sachs Smart Beta portfolio aims for companies that will outperform the market, and its BlackRock Target Income portfolio works to protect your assets against loss by investing primarily in bond ETFs.

Investment types

As for Betterment's investment types, it mainly offers stock ETFs and bond ETFs.  Many automated platforms offer ETFs, so its investment selection aligns with most competitors. However, some automated platforms offer alternatives. For instance, Wealthfront has ETFs, index funds, and crypto trusts. Fidelity automated accounts — Fidelity Go and Fidelity Personalized Planning & Advice — both offer Fidelity Flex mutual funds (these funds don't have expense ratios), 

Betterment: Is it trustworthy?

The Better Business Bureau gives Betterment a B rating. Ratings range from A+ to F and reflect the bureau's opinion of how well a company interacts with its clients. The BBB says Betterment's rating also stems from the fact that it received 98 complaints against it.

In addition, bureau ratings don't guarantee a company will be reliable or perform well. But they take into account a number of other factors, including type of business, time in business, customer complaint history, licensing and government actions, and advertising issues.

The company has closed 41 complaints in the last 12 months, and it doesn't have any unresolved complaints at this time, according to its BBB profile.

Betterment — Frequently Asked Questions (FAQ)

How much do you need to open a Betterment account?

Betterment most basic account, the digital plan, has a $0 account minimum, but you'll need at least $100,000 to get started with its premium account. One of the things the premium account offers that the digital plan doesn't is unlimited one-on-one CFP guidance.

Is Betterment worth the fee?

Many robo-advisors  — like Wealthfront and SigFig — also have a 0.25% fee option, but you can also find other automated platforms that don't have advisory fees (e.g., SoFi Automated Investing and Ally Invest Managed Portfolios).

The answer to this question largely depends on what you're looking for in an investment platform. If you're looking for access to low fees, human advisors, goal-focused strategies, and features like tax-loss harvesting, then Betterment may be a good choice for you.

How trustworthy is Betterment?

Betterment is a legitimate platform that has been in business since 2011. In addition to its B rating with the Better Business Bureau, the robo-advisor is also registered with the US Securities and Exchange Commission (SEC), and it's a member of the Financial Industry Regulatory Authority (FINRA) and Securities Investor Protection Corporation (SIPC).