Choosing the right brokerage matters if you want to build the right portfolio to meet your financial goals. Betterment, Wealthfront and Vanguard are three possibilities you might consider when deciding where to invest. Betterment and Wealthfront are firmly established in the robo-advisor space while Vanguard is one of the most trusted names in the mutual fund market. Comparing each option can help you to decide which one might be right for you.
If you’re looking for a hands-on approach to investing, a financial advisor can help you create a financial plan for your needs and goals.
Overview of Betterment vs. Wealthfront vs. Vanguard
Betterment is a digital investment and cash management service that was founded in 2008. As an independent financial advisor, Betterment offers a range of accounts and services, including investment accounts, IRAs, 401(k)s, checking accounts and trusts. As of 2022, the platform had over $33 billion in assets under management and more than 730,000 customers.
Like Betterment, Wealthfront is a robo-advisor offering an automated approach to investing. The company was also founded in 2008 and is headquartered in Palo Alto, California. Wealthfront offers investment accounts and cash accounts to more than 480,000 clients. Assets under management totaled $27 billion and counting, as of September 2022.
Founded by John Bogle in 1975, Vanguard is one of the most recognizable names in investing. The company is notable for being a leader in the index fund space and for charging some of the lowest expense ratios around. Investors can choose from DIY portfolio management, digital advisory services, personal advisor services and wealth management all under one roof.
Betterment vs. Wealthfront vs. Vanguard: Fees
Cost is an important consideration when choosing where to invest. The lower the fees, the more of your investment gains you get to keep.
Betterment has a simplified pricing structure, which is typical of robo-advisors. The digital investing account has an annual advisor fee of 0.25% with a $0 minimum balance requirement. Investors who choose the premium investing account pay an annual fee of 0.40%, which is still well below the 1% annual fee many financial advisors charges. There is a $100,000 minimum balance requirement to open a premium account.
Wealthfront also charges an annual advisory fee of 0.25%. There are no account opening fees, withdrawal fees, trading fees or commission fees. Wealthfront doesn’t charge maintenance fees for its cash management account either. There’s a $500 minimum deposit requirement to open an investing account.
At Vanguard, the fees you’ll pay depend on which investing service you choose. The annual management fee for Digital Advisor services is just 0.15%. The fee doubles to 0.30% for Personal Advisor services, though you’re still paying less than what you would for a premium account with Betterment. There are no commissions or trading fees when you trade Vanguard funds, ETFs and stocks. Vanguard funds have expense ratios that are 82% less than the industry average.
Betterment vs. Wealthfront vs. Vanguard: Services and Features
Betterment is first and foremost a robo-advisor service, but you’re not limited to opening an investment account. You can also set up an IRA, trust, checking account or cash reserve account here for simplified money management in one place. Automated investing is at the core of what Betterment does and there are several portfolio options to choose from, including socially responsible investing. Cryptocurrency investments are also on-deck, though those offerings are not available yet.
Wealthfront allows you to invest for different goals on autopilot through individual accounts, joint accounts and trust accounts. You can also open a traditional, Roth or SEP IRA to plan for retirement and a 529 college savings plan here. The Wealthfront Cash Account is designed to be a no-fee replacement for traditional checking accounts. One unique feature is that you can get tax-loss harvesting built-in, which is a plus for tax-conscious investors.
Vanguard allows you to set your own investment course with individual accounts or IRAs. If you’d like to take advantage of robo-advisory services, you can set up a Digital Advisor account. And Personal Advisor services make it easier to invest with the help of a fiduciary advisor. Concierge wealth management services are also available for high and ultra-high-net-worth investors.
If you need help with your Betterment account, you can access the online virtual assistant tool 24/7. Phone support is also available Monday through Friday. If you need to talk to an advisor, you can use concierge services for guidance on transferring accounts to Betterment. One-on-one packages are also available if you need more in-depth planning, with pricing starting at $299.
Wealthfront offers phone and email technical support during regular business hours. You won’t have access to a financial advisor, however, which could be a drawback if you need a little more help with investing. Vanguard is available by phone and if you enroll in Personal Advisor services, access to financial advisors is included.
Betterment vs. Wealthfront vs. Vanguard: Online and Mobile Experience
Betterment, Wealthfront and Vanguard make it easy to invest and build wealth online or through a mobile app. All three have websites that are well-organized and easy to navigate. And if you can’t find an immediate answer to your question, they each have an online resource center or help center where you can find additional information.
Betterment has an article library that includes guides to investing basics, which could be helpful for a beginning investor. Wealthfront does something similar with a dedicated investing blog, while Vanguard has an investor education section that includes both evergreen articles and up-to-date news updates.
In terms of how each brokerage’s app measures up, Betterment’s app has a 4.5-star rating in the Google Play store and a 4.7-star rating in the App Store. Wealthfront scores a slightly higher rating, at 4.6 stars in the Google Play store and 4.8 stars in the App Store. Vanguard’s app, meanwhile, doesn’t fare as well in the Google Play store, with just a 2-star rating. However, it scored a 4.7-star rating in the App Store.
Who Should Use Betterment, Wealthfront and Vanguard?
Betterment may be a good option for beginning investors who want guided portfolios without advisory fees. It could also be a good fit for someone who’s interested in socially responsible and ESG investing. While crypto portfolios aren’t available yet, those could appeal to someone who’s interested in a simplified approach to cryptocurrency investments. The option to talk to a human advisor is a nice bonus, though again, you’ll pay a fee for that.
Wealthfront could be an excellent choice for investors who are interested in robo-advisory services with tax-loss harvesting as an added feature. The advisory fee is low, and you don’t need a lot of money to get started investing. The one downside may be the lack of access to human financial advisors but that isn’t uncommon with robo-advisor platforms.
Vanguard could be suited to investors who want the option to talk to a human advisor or direct their own investment decisions. Perhaps the biggest selling point with Vanguard costs is that their advisory fees are lower than both Betterment and Wealthfront. And some investors may simply feel more comfortable working with a brokerage that has a long track record and history.
Bottom Line
When comparing Betterment, Wealthfront and Vanguard, it’s important to consider your investment needs and goals. Each platform is designed with a different kind of investor in mind and what works for someone else might not work for you. Taking a look at the unique features and services offered and the fees you might pay can help you to decide which platform might be the best choice.
Tips for Investing
- Finding a financial advisor doesn’t have to be complicated. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you decide to invest on your own, using the right tools can help you to make better investment decisions. For example, you can use an online investment calculator to plan your goals and shape your investing strategy.
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