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IN-DEPTH ANALYSIS

Betterment Review

Julija A. Image
ByJulija A.
March 07, 2022
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When it comes to robo-advisors, Betterment is one of the best-known and highly rated options available. But what exactly does it offer? How does its pricing structure compare to other advisors, and, most importantly, is Betterment really worth it?

In this Betterment review, we’ll take a look at the company's history, services, and pricing. We’ll also discuss its features, including retirement planning, IRAs and 401(k)s, automated investing options, and more. By the end of the article, you should be able to decide whether Betterment is the right solution for you.

Account management fee:
0% - 0,40%

No minimum deposit

Visit Site

Fortunly Rating

Fortunly's Rating: Our editorial team determines the rating based on a set of evaluation criteria developed for each product and service category.

Account minimum:
$0 to open an account
Deposit minimum:
$0
Account management fee:
0% - 0,40%
Pricing plans:
N/A
Investment account ratios:
N/A
BBB Rating:
B
Withdrawal time:
4-5 business days
pros thumb up Strengths
  • No minimum deposit
  • Low advisory fees
  • Multiple portfolio options
  • Great variety of tax management features
  • User-friendly platform
  • Excellent customer support
pros thumb up Weaknesses
  • Premium plan requires $100,000 minimum balance
  • No demo accounts
  • Only available in the US

Overview

Betterment is a robo-advisor for automated investing services and financial planning. It was founded in 2010, has more than $33 billion in assets under management (AUM), and over 700,000 in its customer database. Its mission is to help people manage investments, save for their future, and maintain financial independence.

In addition to traditional investment accounts, there are other Betterment banking services worth considering: It offers checking accounts, retirement savings accounts, and cash management products. It has robust features, including tax-loss harvesting, goal-based investing, automated rebalancing, as well as financial advisor counseling. Its services are available to all US citizens and permanent residents.

With Betterment, all their investments would be ensured and protected by SIPC, covering up to $500,000 of missing assets, including a maximum of $250,000 for cash claims.

Who Is Betterment for?

A Betterment investment account is an excellent choice for anyone looking for low-cost automated investing options. The company’s variety of services is suited to beginners and experienced investors alike. It's also great for individuals who want to take a more hands-off approach to their investments.

If you are looking to make a home down payment, or need advice on investing in a college fund or a retirement plan, Betterment's algorithms will find the best option based on your risk tolerance and long-term goals.

Those who review Betterment will see it offers several features specifically for retirement planning. Its prime features in this category are automatic rollovers and tax-loss harvesting, to help you save money on taxes, as well as guidance on what to do when you retire.

​​How Does Betterment Work? 

Betterment's sign-up process is simple: First, provide basic information, including your age, income, investment goals, and Social Security number. Betterment will recommend a portfolio of stocks and bonds that aligns with your goals and risk tolerance. You can invest in Betterment's recommendation or create your own portfolio.

As our Betterment robo-advisor review will show, the company has a variety of portfolios to choose from, including socially responsible investing (SRI), dividend growth, and high-yield tax-loss harvesting.

To fund your Betterment account, you need to link your external bank account to the platform and set up deposits, which can be either one-time or recurring.

After you've opened an account and invested your money, Betterment takes care of the rest. It will monitor your investments, rebalance them, and adjust them based on market changes. A slew of Betterment’s features will make investing more convenient, and you can access most of them through Betterment’s mobile app.

It allows you to check your account balance and portfolio performance, make deposits, change your settings, and manage your investments on the go. You can also use the app to find financial advice and learn more about Betterment’s key assets. 

Pricing, Discounts, and Fees

Betterment is one of the most affordable robo-advisors on the market. If you are interested in Betterment’s investing, you can review three plans: Checking, digital investing, and premium investing. All of these plans beat the average fees charged by most human advisors available on the market.

The checking plan comes with no fee and doesn't have any minimum balance requirements. It includes unlimited ATM withdrawals, a Mastercard debit card, cashback rewards, and the ability to pay bills online.

And if you are looking to open an investment account, you can choose between digital and premium investing. With the former, you can get Betterment's investment advice for as low as 0.25% per year with no minimum balance. The plan's name comes from the fact you would receive their advice online.

This plan includes:

  • Betterment socially responsible investing options
  • Low-cost investing portfolios
  • Advanced tax-saving strategies (e.g., asset location and tax-loss harvesting)
  • Automatic features (e.g., portfolio rebalancing, dividend reinvestment)
  • Account choices
  • Checking and cash reserve accounts with no additional fees

However, if you wish to get advice from Betterment's team of licensed financial experts, you should choose the Premium investing plan for 0.40% of your earnings per year. Unlike the previous two, this plan requires a minimum balance of $100,000.

The financial professionals whose advice you would get with Betterment premium would review your inquiries and contact you via email or phone. This plan includes all the features of the digital plan, plus:

  • Unlimited calls and emails with Betterment specialists
  • In-depth advice on investments held outside of Betterment

If your balance exceeds $2 million, the fee with the Betterment digital plan will be 0.15% per year instead of 0.25%, while the Betterment premium plan will charge 0.30% on the portion of your balance that goes above the $2 million. These fees cover all transactions, transfers, trades, rebalancing, and the advice you would be getting from Betterment.

If you don’t have a minimum balance of $100,000 but still wish to have professionals from Betterment review your financials and provide in-depth advice, you can purchase one of the flat-fee advice packages. These packages go from $299 to $399, and each package includes a personalized plan of action, tailored call with a financial expert, and educational content.

Betterment Retirement Planning

When it comes to retirement planning, Betterment is one of the best robo-advisors on the market. Its tools can help you determine how much you should be saving based on your retirement goals. Your financial plan will be tailored based on factors such as your retirement age, zip code, and Social Security payments.

Once you opt-in for Betterment retirement, you can review different tools that will help you make a savings plan. You can calculate how much to save, connect external accounts to get a clearer picture of your finances, learn to prioritize your accounts, and make adjustments to your savings plan along the way.

Betterment also has an IRA account option, which can help you earn more money for retirement or even retire early. It also offers 401(k) plans for companies who wish to help employees prepare for retirement. They get to review, design, manage, and adjust their employees’ retirement through these plans.

Betterment vs. Wealthfront

Now that we know how Betterment works, let's see how it compares to Wealthfront, one of its major competitors. Wealthfront is another popular robo-advisor that has a lot in common with Betterment. They are both low-cost, have a wide range of investment options, offer retirement planning, and support different accounts.

The main difference between the two seems to be their trading platform and fee structure: Wealthfront has lower fees, but a $500 minimum investment requirement. On the other hand, Betterment has no minimum requirement but charges slightly higher costs.

Another thing differentiating these two providers is that Wealthfront also offers 529 plans for college expenses, while Betterment doesn't. Also, Betterment offers ​a checking account, which Wealthfront doesn't.

Betterment vs. Vanguard

Next, we have Vanguard; this is not purely a robo-advisor. Instead, Vanguard offers both human advisors and robo-advisors, which gives it a more comprehensive range of services. It also has much higher account minimums ($3,000), which is one of its main cons.

Vanguard’s primary disadvantage, however is that its fees are much higher than either Betterment or Wealthfront’s, going as high as 0.70%. It also doesn't offer retirement planning or 529 Plans. It does, however, have a much wider range of investment options, such as mutual funds and ETFs.

Betterment App Review

We already mentioned how Betterment has a mobile app for iOS and Android devices, which allows users to track their investment portfolio on the go.

The app has many outstanding features and is quite popular among Betterment clients, with over 8,000 reviews on Google Play and an average rating of four stars. It’s also user-friendly: You can review your Betterment account balance and goals, make deposits and withdrawals, change your investment settings, and more. You can also use it to connect with Betterment’s customer support if you have any questions or assistance.

How does Betterment compare to other robo-advisors?

Betterment Logo
Betterment
Management Fee:

0% - 0,40%

Portfolio Rebalancing:

Available in two plans

Open Account
Vanguard Logo
Vanguard
Management Fee:

0.15%

Portfolio Rebalancing:

Automatic

Open Account
M1 Finance Logo
M1 Finance
Management Fee:

0%

Portfolio Rebalancing:

Automatic

Open Account

Betterment Customer Support

Finally, we'll take a look at Betterment's customer service. Betterment offers a wide range of support options, great for those who need help with their finances.

Its support channels include:

  • Phone support is open Monday through Friday, from 9 a.m. to 6 p.m. (ET)
  • Email support 24/7
  • Live chat support with a virtual assistant, also 24/7

The support team at Betterment will review your inquiry and get back to you as soon as possible. Betterment also has a very informative FAQ section where you might find the answers to your questions yourself.

Final Thoughts

So there you have it - a comprehensive analysis of Betterment, one of the leading robo-advisors on the market. We looked at what it is, how it works, who it's for, and how it compares to its major competitors.

If you are interested in opening a Betterment checking account, review the website to find out more about keeping your funds safe and secure. Besides this, you can also learn about Betterment’s socially responsible investing, Betterment retirement accounts, and Betterment IRA rollover.

Overall, we think that Betterment is an excellent option for those looking for a low-cost, easy-to-use robo-advisor with a wide range of excellent features. It's perfect for those who want to save for retirement, students looking to save for college, and all others who wish to invest in their future.

It's also a great option for those who want to trade stocks and bonds but don't have the time or knowledge required. We hope our Betterment review for 2022 has helped you understand how this platform can help you save money and reach your financial goals.

FAQ

Is Betterment a bank?

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Betterment is not a bank. It is a financial service provider that helps customers sort out their investments and make most of their money through guided investing, retirement planning, and cash management. All they have to do is pay the Betterment management fee, and the provider will take care of everything for them, from managing their investments to filing taxes and tracking the performance of their Betterment portfolio in a single account.

Can foreigners open Betterment?

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Unfortunately, Betterment currently operates in the United States only. You need to be a US citizen and permanent resident and have a Social Security number (SSN) to open an account with Betterment.

Does Betterment have a credit card?

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Betterment does not have a credit card. It does, however, offer a Betterment Visa debit card that rewards customers with cash back at thousands of popular brands, such as Adidas, Walmart, and Dunkin'. It comes with no overdraft fees and automatically reimburses all ATM and foreign fees. You can use this card to make purchases or pay your bills in-store, online, and on the go.

How long does it take to withdraw money from Betterment?

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It usually takes four to five business days for Betterment to process your withdrawal request. Once you submit the request, Betterment will review the shares in your account, sell them, and send the funds to your linked bank account. There are no trading or withdrawal fees, and if you decide to close the account, there will be no assessed penalties. When it comes to withdrawing funds from a 401(k) account, the procedure is a bit different. These savings aren't eligible for withdrawal unless the account holder leaves employment, turns 59 and a half, becomes disabled, or passes away.