Fees and Deposit Limits8.2/10
Ease of Use9.0/10
Account Types and Services8.1/10
- No minimum deposit
- Great flexibility for hands-on investors (Betterment Premium)
- Full range of account varieties available
- No trade or transaction fees (Digital plan)
- $100,000 minimum deposit required for Premium plan
- Cannot work within current brokerage accounts
Is Betterment the ideal automated investing service for you? We’ll answer that question with our comprehensive Betterment review for 2018.
Betterment was one of the very first robo advisors in the world of automated investing. According to recent estimates, the company is managing more than $13.5 billion worth of assets in 2018 and have well over 200,000 clients around the globe.
We’ll show you the pros and cons of the service so you can decide if the Betterment robo advisor is worthy of your attention in 2018.
First off, we’ll start our Betterment review by analyzing the management fees and deposit limits. Back in 2016, Betterment offered the distinct benefit of not imposing any transaction, trade or rebalancing fees. This robo advisor assesses or rebalance fees according to your account balance.
But now, the same holds true with the Betterment Digital Plan.
This is the traditional hands-off Robo Advisor that will give advice on how to save for your retirement, saving for other financial needs (buying a new house or purchasing a new car), and choosing the best IRA. You get all of this with no minimum balance, and it will only cost you 0.25% each year.
This is not bad. Considering the fact that the Betterment Digital Plan includes tax loss harvesting, automatic rebalancing, tax-coordinated portfolios, and unlimited access to licensed financial experts, this service will also allow you to sync all your external accounts so you can get a clearer view of all your investments.
For 2018, Betterment is now offering a new plan: Betterment Premium.
Think of Betterment Premium as an upgraded version of the Betterment Digital plan. You get unlimited access to CFP professionals who will constantly monitor the changes in your investment account, even when you’re out sipping coconut water and soaking up the sun in Barbados.
Betterment Premium will also give you access to expert in-depth advice on all your investments outside of Betterment so you can effectively manage and grow your real estate or individual stocks.
This plan is perfect for those who own multiple assets or for those who want to be more involved while getting access to unlimited financial advice and unlimited email updates. The Betterment Premium Plan requires an initial deposit of $100,000 and has a fee of 0.40%, so it’s definitely more suited for high-net-worth investors.
Flexibility is a crucial aspect in our Robo Advisor reviews. We’ll give it to you straight: Betterment is a fully-automated investment service, but it diversified into a hands-on service by introducing Betterment Premium in 2018.
We believe this is Betterment’s way to attract more investors, specifically the big players who demand more control and flexibility in managing their accounts. Although the Premium plan comes at a price, it’s hard to fault Betterment when it comes to flexibility, but we wish that a lower account minimum is required to be a part of the elite.
However, kudos to Betterment for retaining the Digital plan. What this means is that upon signing-up and transferring your funds (and managing some early allocation decisions), the portfolio management process is taken entirely out of your hands.
Betterment takes control of reinvesting dividends and rebalancing the portfolio, so there is no need for you to do anything. Sounds perfect for newbie investors, right? It does, as long as you really prefer a hands-off approach to investing.
Ease of Use
The whole point of using a robo advisor is to make your life easier and to help you make money from your investments. With that in mind, we’re proud to say that Betterment is easy to use, and it starts with the quick and simple sign-up process. After linking your checking account (for quick contributions and withdrawals) and answering a few questions about your allocation preferences, you will receive your first portfolio advice.
The Betterment site itself also has a number of handy tools to help you understand the different types of investments. One such tool will help to allocate your funds between stocks and bonds by giving allocation advice based on your age and retirement plans.
Betterment Digital remains one of the easiest robo advisors to use. It is a fully-automated service which automatically rebalances your portfolio and reinvests dividends with minimum supervision.
With Betterment Premium, you can also talk to expert financial advisors to make sure your investments are optimized to their full potential.
Account and Investment Types and Services
It’s safe to say that an easy-to-use Robo Advisor with fair management fees is important, but if it doesn’t offer what you need in terms of accounts and investment types, then you better look elsewhere.
In terms of account types, Betterment covers a full range of potential options by providing taxable accounts, Individual Retirement Accounts (IRAs) and even the Simplified Employment Pension version of those accounts (SEP IRAs) for individuals retiring from self-employment.
When it comes to types of investments, Betterment tends to focus on a selection of low-cost stocks bonds and Exchange Traded Funds (ETFs) depending on your initial allocation.
Once the investments have been made, the Robo Advisor will handle all the portfolio rebalancing and dividend reinvestment required. It also boasts a couple of features such as tax loss harvesting for taxable accounts worth at least $50,000, and a service that will purchase fractional shares to ensure that all the cash in your portfolio is rightfully invested.
Suitability for Different Investment Budgets
Betterment Digital is a solid choice for newbie investors. The lack of a minimum deposit makes Betterment easily accessible for any budget, big or small. You don’t have to pay trade, rebalancing or any transaction fees either. If you have a larger sum to invest (over $100,000) then you can choose Betterment Premium, which we covered above. The choice is yours.
Betterment is one of the longest-established Robo Advisors online. It should come as no surprise that they are an excellent choice for newbie investors, especially if you choose the hands-off Betterment Digital plan.
The full range of account types and the comprehensive features (including automatic rebalancing and dividend reinvestment) are impressive, and added extras such as tax loss harvesting (for accounts worth more than $50,000) makes Betterment one of the best Robo Advisors around.
Overall, Betterment is a brilliant choice but the Premium plan is only suitable for investors with a higher amount to invest.