Robo-advisors have changed the investing landscape for untold millions. Where investing was once a niche activity reserved for the select few, the “appification” of the internet, which has seen web pages and web sites replaced by programs that run on mobile operating systems, has brought the world’s markets into the living-rooms of the proletariat: both figuratively, and literally.
Betterment and Wealthfront are two of the oldest robo-advisors around, and two of the most popular. At Modest Money, we put stock in longevity: it usually means something – namely, a pedigree made of customer satisfaction. Betterment was founded in 2008 by Jon Stein, and their goal was clear and simple: make investing easy. In fact, they were famously criticized by well-known startup investor Chris Sacca, who said “this starts to feel a little like a toy”. And that’s exactly Betterment’s charm. Indeed, investing with Betterment is a bit like putting your portfolio on autopilot.
Wealthfront had a similar ethos in mind when launching their product: co-founder Andy Rachleff saw a need to democratize access to sophisticated investing products. And he knew that software, specifically the mobile variety, could be the vehicle which brought investing to the masses. Thus, Wealthfront was born. Pivoting into wealth management right around the time Betterment launched, Wealthfront has been a stalwart in the field for a while.
So, Betterment and Wealthfront are both robo-advisors aiming to make the investing process easier. They both sport storied histories, and are trusted by consumers. In a nutshell, they both look like pretty similar, right?
This article will break down the similarities and differences between the two, making it easier to determine which one is the better fit for you.
Betterment vs. Wealthfront is no easy call. Let’s get down to the nitty-gritty.
Betterment is an industry leader, and for good reason. The platform facilitates low-cost, easy investing, and charges just 0.25% in management fees and has automated tax-loss harvesting. It really is a one-stop solution to investing, and a great way for beginner investors to get started.
“The financial industry wasn’t designed to be fair” – yeah, that much is evident. Just look at the distribution of wealth around the world – in the United States, the top 5% hold 65.1% of all resources. The game is rigged, but robo-advisors are slowly adjusting things by giving the people access to the pie.
Betterment vs. Wealthfront, the battle of OGs – this is a tough one to call. Both Betterment and Wealthfront pack a wealth of features and amenities that we have come to expect from modern robo-advisors. In fact, they are both archetypical examples; they make investing easy and pain-free, and should appeal to novice investors of all stripes.
Betterment is great because it has zero minimum investments, and a very clear and easy-to-navigate graphic interface.
Wealthfront, on the other hand, could appeal more to higher-net-worth investors. This is because investors with at least $100,000 gain access to the Risk Parity portfolio, and stock-level tax-loss harvesting.
In a nutshell, if you are completely new to the stock game, we advise you choose Betterment. If you have some experience and capital, but are still looking for a relatively automated experience, Wealthfront is a great platform.
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