Building Your Wealth Betterment vs. Wealthfront
Building Your Wealth Betterment vs. Wealthfront


Once upon a time, wealth management services specifically targeted the wealthy. Financial advisors rarely sought to sell their services to average Joes and Sallies. Times have changed, however, and there are now new automated investment tools that help regular folks like you and I manage our wealth and investments. Today we’ll explore two of the most popular financial “Robo-Advisors” and discuss how they can help you increase your net worth.


The first of these “Robo-Advisors” is called Betterment. Betterment offers a great financial model to investors who may not have much upfront capital but would like to build their wealth. You can open a Betterment account with no money starting off. Here are some of the basics of Betterment and a breakdown of its financial model.

Betterment Philosophy:

The Betterment model analyzes your risk tolerance through a short and simple questionnaire about your wealth goals. Based on your risk tolerance, the site automatically creates a portfolio that includes a mix of exchange-traded funds (ETF’s) that are designed to help you meet those targeted goals. The Betterment model is a full-management platform meaning all investment decisions are made automatically for you. Just like having a personal financial advisor, the model is a great “hands-off” approach that offers a professionally managed investment portfolio without the headache of selecting specific investments yourself.

Betterment Account Minimums and Fees:

The good news is there is NO minimum account balance to start. Betterment does, however, request that you deposit at least $100 per month into your account; otherwise, you’ll be charged a small maintenance fee of $3 a month if your account balance is less than $10,000.

Annual fees are extremely low at just 0.35% a year for balances less than $10,000 (that’s just $35 a year if your account balance is $10,000). Once your balance exceeds $10,000, the fee drops to 0.25% (e.g. just $50 on an account balance of $20,000). After your account reaches the $100,000 mark, your maintenance fees will drop to just 0.15% (e.g. $150 on a balance of $100,000). These rates are among the lowest in the industry.

Betterment Components

  • Automatic Rebalancing of Investment Portfolio
  • IRAs and taxable investment accounts
  • Automatic tax harvesting strategies for accounts over $500,000
  • Tax harvesting options for accounts over $50,000 (at an extra cost)
  • NO minimum account balance ($100 a month deposit is recommended after account opening to avoid $3 a month maintenance fee)
  • Betterment account inks to your personal checking account for easy transfers and withdrawals


The second of these platforms is called Wealthfront.  Wealthfront offers a great financial model to investors who have at least $5,000 in funds to manage. Here are some of the basics of Wealthfront and a breakdown of its financial model.

Wealthfront Philosophy:

Wealthfront is a Millennial favorite for building a solid and long-term wealth strategy at very low costs. Much like Betterment, Wealthfront uses a short and simple questionnaire to gauge your risk tolerance levels and wealth goals. The site then automatically builds an investment portfolio based on that information. The investment decisions are also automated on this platform, meaning you won’t need to worry about which stocks/bonds to choose for your portfolio. The platform does all the work for you.

Wealthfront Account Minimums and Fees:

Wealthfront requires a minimum account balance of $5,000(you cannot draw your account balance below $5,000 at any time). Wealthfront offers one of the lowest maintenance fees in the industry. In fact, the low cost of the service is virtually unmatched. The first $10,000 in your account is managed for free. Once your account exceeds $10,000, the fee is just 0.25% (with the first $10,000 remaining free of any charges). You may wonder how the company can profit off of such deep discounts.  The answer is actually quite simple: without the overhead costs of having actual human advisors doing the work, Wealthfront is able to pass those savings to its investors.

Wealthfront Components

  • IRAs and taxable investment accounts
  • Automatic tax harvesting strategies for accounts over $500,000
  • NO maintenance or annual fees on first $10,000 in account
  • Minimum account balance of $5,000 required to open an account
  • Stock rebalancing on accounts with over $500,000 invested
  • Tax-efficient investing
  • Daily tax-loss harvesting (as opposed to annual harvesting)

Which is Better for YOU- Betterment or Wealthfront?

Both Betterment and Wealthfront offer awesome and financial models to build your wealth and achieve long-term financial goals. Choosing the right service, however, depends on your risk tolerance, upfront capital, and individual goals. Betterment will be the better option if you have less than $5,000 to invest since you can open an account with no money starting off. Wealthfront, however, will be a better option if you have at least $5,000 to invest since the first $10,000 on your account are managed for free.

It’s important to check out each site and determine what features are most important to you before selecting a service.

IMPORTANT NOTE: As with all investments, there is a potential risk of losing all the money you invest in either platform. These investments are not FDIC insured and are viewed as taxable investments. It’s important to view these platforms as long-term investment and wealth growth opportunities as opposed to short-term “get rich quick” investments (i.e. these accounts are not the best for “rainy day” funds).