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Written by Jason Dolan on March 15, 2021
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Betterment vs Wealthfront vs Acorns 2021: Best Platform?

Many investors are looking for someone to manage their investments for them. Unfortunately, this usually comes with high management fees and high minimum account balances. These factors make professional management out of the reach of many investors.

Active money management is often time consuming and expensive for a full service financial advisor. Enter robo-advisors, the computer automated portfolio management that comes at a fraction of the cost of human-led management. 

Robo-advising and online investment advice appeal to both the hands-off investor as well as people wanting to take a more proactive approach. One of the key advantages of these automated approaches is the lower fees. Since the portfolios are controlled by algorithms and not people, the savings are passed along to the individual investor.

They also have significantly lower minimum account balances in most cases. In this article, we are going to compare 3 popular robo-advisors: Betterment, Wealthfront, and Acorns.

Betterment vs Wealthfront vs Acorns: The Basics

Betterment is a powerhouse for the average investor offering robo-advising, a high-yield savings account, and goal oriented investing. Betterment has two platforms, Betterment Digital and Betterment Premium. The premium model has a minimum balance of $100,000 comes with a fee of 0.40% of total assets that they manage. Digital comes at a lower fee of 0.25% and no account minimum but does not come with access to a human advisor.  

Wealthfront offers additional features, unavailable to Acorns or Betterment, including the ability to take a loan against your assets. Wealthfront also offers a more focused approach to tax-loss harvesting. All of this is available at a fee of 0.25%. In addition, Wealthfront also offers a high yield savings account for investors who want their cash to grow.

Acorns is best for investors who haven't quite mastered the art of investing consistently. Acorns rounds up your purchases and allows you to invest for $1 to $5 per month. From there, users can choose from a variety of pre-built portfolios to help their money grow.

Summary

  • Betterment and Wealthfront support tax-loss harvesting while Acorns does not. 
  • Betterment has a $0 minimum to get started.
  • Acorns has a $5 minimum to get started and Wealthfront is $500.
  • All three support automatic rebalancing.
  • Acorns uses spare change to invest without having to make deposits.
  • Betterment has access to real financial advisors if you use the Betterment Premium service. 
  • Acorns charges $1-$5 per month while the other two are percentage-based fees based on assets under management.
  • None of these three offer individual stocks, just portfolios containing ETFs. 
  • Wealthfront offers the option to borrow against your investment account.
  • Wealthfront offers 529 college savings plans management.
  • Betterment and Wealthfront are better for financial planning while Acorns is best for forgetful or lazy investors. 
  • Both Betterment and Wealthfront have an asset management fee of 0.25%. 
  • Both Betterment and Wealthfront offer high yield savings accounts.

Which robo-advisor is the best for you?

Answer a few quick questions and we'll recommend the best advisor for you, based on our objective analysis.

So-Fi Automated Investing

Read Full Review

Open Account

Management Fees $0

Account Minimum $0

Best For: low account balances, beginner investors

M1 Finance

Read Full Review

Open Account

Fees: $0

Account Minimum: $100/$500

Best For: beginner investors, pre-built portfolios

So-Fi Automated Investing

Read Full Review

Open Account

Management Fees $0

Account Minimum $0

Best For: low account balances, beginner investors

M1 Finance

Read Full Review

Open Account

Fees: $0

Account Minimum: $100/$500

Best For: beginner investors, pre-built portfolios

So-Fi Automated Investing

Read Full Review

Open Account

Management Fees $0

Account Minimum $0

Best For: low account balances, beginner investors

M1 Finance

Read Full Review

Open Account

Fees: $0

Account Minimum: $100/$500

Best For: beginner investors, pre-built portfolios

So-Fi Automated Investing

Read Full Review

Open Account

Management Fees $0

Account Minimum $0

Best For: low account balances, beginner investors

M1 Finance

Read Full Review

Open Account

Fees: $0

Account Minimum: $100/$500

Best For: beginner investors, pre-built portfolios

Personal Capital

Read Full Review

Open Account

Fees: 0.49% to 0.89%

Account Minimum: $100,000

Best For: Access to human advisors, larger account balances

Betterment

Read Full Review

Open Account

Fees: 0.25% to 0.40%

Account Minimum: $0

Best For: Full investment automation, access to human advisors

Personal Capital

Read Full Review

Open Account

Fees: 0.49% to 0.89%

Account Minimum: $100,000

Best For: Access to human advisors, larger account balances

Betterment

Read Full Review

Open Account

Fees: 0.25% to 0.40%

Account Minimum: $0

Best For: Full investment automation, access to human advisors

Personal Capital

Read Full Review

Open Account

Fees: 0.49% to 0.89%

Account Minimum: $100,000

Best For: Access to human advisors, larger account balances

Betterment

Read Full Review

Open Account

Fees: 0.25% to 0.40%

Account Minimum: $0

Best For: Full investment automation, access to human advisors

What Is Betterment?

Out of our three comparison options, today Betterment is the largest with over $22 billion dollars in assets under management.

Betterment has been building on the idea of being a truly automated system with a variety of different features in order to support many types of investors. This platform puts a strong emphasis on saving you money and offering features that make managing your finances easier.

Betterment also has a beginner-friendly atmosphere. They offer goal-oriented investing and milestones to keep your on track with your predetermined savings goals.

Betterment review

You can read our full review of Betterment here!

Betterment Features

Access To Human Advisors: With the Betterment Premium option, you get access to a human advisor who will give you individual financial advice. To access Betterment Premium you must have a minimum account balance of $100,000. 

If you do not have $100,000 in your account, you can purchase an individualized financial advice package from Betterment. Each of these advice packages comes in the form of a phone call with a Certified Financial Planner® to help evaluate your current and future financial situation. 

There are multiple different packages running as low as $299 dollars for the Getting Started package. There are also financial planning packages for college savings, retirement, marriage planning and more.

Bank Account Management: Betterment does offer a savings account with a higher APY than traditional banks called Betterment Cash Reserve. You do not have to have a minimum balance with Betterment in order to take advantage of this feature. 

There are two features that act as automated account managers as well.

Smart Deposit

The first is Smart Deposit. You link a bank account with Betterment and their automated system will monitor it for you. You’ll give them a set amount of money that you want to keep in your checking account and anything in excess of this amount is transferred to Betterment.

You can designate where you want this money to go to your Betterment account as well.

Two-Way Sweep

Two-Way Sweep is just like Smart Deposit. It monitors your checking account in the same way and looks for money that is over the threshold that you have designated. When it sees the money that isn’t allocated for anything else, it transfers that money over to your Betterment savings account. This will ensure most of your money is sitting in your higher yield account. 

It also works the other way too, hence the name. If your checking account goes below the amount that you wish to have in it, it will transfer money back from the savings account.

Betterment Fees

There are two levels of the Betterment platform.

Digital: There is no minimum balance and will charge a fee of 0.25% of your assets to manage.

Premium: You must have an account minimum of $100,000 and it will cost you 0.40% of your total assets that they manage.

Betterment Premium gives you access to a human financial advisor who can answer a variety of your financial questions. 

What Is Acorns?

Acorns offers several unique tools on its investment platform. Their platform features full automation to invest your spare change through transactions, making it appealing to less involved investors.

Their system has been focused on young adults to help them invest. This money is often small enough to not hurt someone on a tight budget. 

Acorns is a cross between a robo advisor and a savings tool. The combination of these two services is what makes Acorns such a popular platform, with over $15 billion dollars in assets under management.

Acorns saving and investing platform

You can read our full review of Acorns here!

Acorn Features

Round-Ups: The Acorns Round-Up feature makes the process of depositing money to your investment account a total afterthought. Start by linking an account to Acorns. It could be a bank account, debit card, credit card or even all three. Then go about your life as you normally would. When you make purchases with the account linked to Acorns, the platform will round up your purchases to the nearest dollar and invest the difference. 

To make it a little easier let’s use an example:

  1. You spent $19.30 on gas with your linked credit card.
  2. Acorns rounds that up to $20.00. Therefore, sending $0.70 to your Acorns account to be invested.

Acorns is best known as a micro-savings app that helps the beginner to intermediate investors save over time. It is best for those on a tight budget or for investors who are just starting out. 

Found Money: Another great feature Acorns offers is Found Money. When you shop with one of their 350+ partner companies, extra money is put into your Investment account. Similar to credit card rewards for shopping at certain retailers. It is a free extension to take advantage of the expenditures you were already expecting.

The amount that goes into your account can vary depending on the partner and how much you spend. This makes it difficult to pin down an exact dollar amount of savings. Take a look at this resource to get more details. 

Acorns Fees

Acorns has three different tiers of their system. This ranges from $1 to $5 per month. 

For $1 a month you get access to Acorns Lite which features the Round Ups technology.

At $3 per month, you will also get Acorns Later and Acorns Spend which gives you the opportunity to open a retirement account and a checking account.

The final tier is $5 per month and allows the whole family to get involved with Acorns Early (investment account for kids).

What Is Wealthfront?

The system used at Wealthfront offers a lot of benefits in a wide variety of different areas. Their ideology is more focused on appealing to a broad type of investors instead of aiming for a specialized approach.

They also have some really big names in the investing industry under their belt too. Namely, Burton Malkiel who is their Chief Investment Officer and widely known  as the author behind “A Random Walk Down Wall Street."

With such a wide approach and investing royalty behind them, it’s no surprise that Wealthfront has reached over $21 billion dollars in total assets under management.

Wealthfront Features

Portfolio Line of Credit: Wealthfront offers the ability to borrow money against your account with the portfolio line of credit. This is not a feature unique to Wealthfront as other platforms offer similar features. But out of the three we are covering today, Wealthfront is the only platform that offers borrowing against your investment account. 

Once you reach $25,000 in your brokerage account, you will have the opportunity to take out a loan of up to 30% of your total amount. The interest rate varies based on the federal funds rate. 

They say that the interest rate changes based on the Federal Funds Rate but you can read more about their tiered interest system here as it is a bit beyond the scope of this comparison.

Passive Plus

This is Wealthfront’s tax-optimization system. In addition to the tax-loss harvesting, you will find with other robo advisors out there you also get access to stock level tax-loss harvesting. You must have between $100,000 and $500,000 dollars in your account to make use of this but it offers a bit more bang for your buck when it comes to reducing your taxes.

Wealthfront claims tax-optimization can add 2.03% to your investment performance.

Wealthfront Fees

There is a fee of 0.25% of your managed assets to use the Wealthfront platform.

They do not charge a trade commission or any fees for withdrawing, minimums or transfers.

Wealthfront review

Betterment vs Wealthfront vs Acorns: Final Thoughts

Choosing between these three platforms is a lot easier if you know your purpose for investing. 

Acorns is hands down the best approach if you don’t have a lot of starting capital and do not want to think about the investing process. They offer many features to make it as easy as possible to add money to your investments over time.

But Acorns does not have nearly as robust of a system as Betterment and Wealthfront. Both Betterment and Wealthfront are best for more intermediate to advanced investors who have more questions about their finances or have more to invest. 

Choosing between Betterment and Wealthfront is a lot harder and is going to depend on what you want your investing experience to look like. They are both top-notch robo advisor services and carry similar features.

Wealthfront might be a good pick if you want to be able to leverage your investment account to borrow money. They are the only option of the three to offer it.

They also really stand out when it comes to tax optimization with Passive Plus and if you have an account with more than $100,000 in it this might be the way to go. That in conjunction with their 529 college savings plan could swing some investors in their direction.

If you want something that has more guidance and planning, Betterment might be a good choice for you. They are the only one of these platforms to offer human financial planners to give you personalized financial advice.

Betterment also seems to have the best platform for actually planning out your financial future with a heavy emphasis on goal-based investing. And their automation is superb with the addition of Two Way Sweep and Smart Deposit making it great for hands-off investors.

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betterment vs wealthfront vs acorns
Article written by Jason Dolan
Jason has worked for over 7 years in sales and marketing, along with a background in web development. During his free time, Jason enjoys learning and educating others about investing and personal finance.

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