Throughout most of modern history, if you needed investment guidance, you had to hire a financial advisor. There are certainly benefits to having the advice of a seasoned professional, but there's one big drawback -- an investment advisor can be expensive.
Now there's an alternative option: robo-advisors.
As with any investment method, you should learn a few things about robo-advisors before you start investing your money. In this guide, we'll share our picks for the best robo-advisors and take you through the most important things you should know about investing with a robo-advisor.
Ratings Methodology
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
Betterment offers a a wide array of investment services and account types, along with essential cash management features such as a high-yield cash account. Best yet, Betterment is now offering up to one year managed free.
Fees:
$0 per trade, management fee 0.25%
Account Minimum:
$10
Open Account for Betterment
On Secure Website.
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
With a low fee structure, this to-the-point platform is a great option for investors with at least $3,000 to start.
Fees:
0.20% all-in fee
Account Minimum:
$3,000
Open Account for Vanguard Digital Advisor®
On Vanguard Digital Advisor®'s Secure Website.
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
With no management fee or account minimum, anyone can get started with SoFi Automated Investing.
Fees:
$0 per trade, expense ratio 0.03%-0.08%
Account Minimum:
$1
Open Account for SoFi Automated Investing
On Secure Website.
Rating image, 4.0 out of 5 stars.
4.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
With great access to customer service, low-cost investments, and automatic rebalancing, E*TRADE Core Portfolios is a great option for anyone with at least $500 to start investing.
Fees:
$0 per trade, management fee 0.30%, expense ratio 0.06%-0.12%
Account Minimum:
$500
Open Account for E*TRADE Core Portfolios
On E*TRADE Core Portfolios Secure Website.
Rating image, 4.0 out of 5 stars.
4.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
With competitive pricing, low minimums, and features such as automatic rebalancing, Ally Invest Managed Portfolios is a great choice for anyone without a lot of cash to spend.
Fees:
$0 per trade, management fee 0.30%, expense ratio 0.05%-0.20%
Account Minimum:
$100
Open Account for Ally Invest Robo Portfolios
On Secure Website.
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
Acorns takes a unique spin on the robo-advisor model by rounding up your purchases to invest that change into an automated investing strategy. Importantly, its costs are low, and it's a solid fit for people wanting to manage their investments and banking under one roof.
Fees:
$1-$5 monthly
Account Minimum:
$0
Open Account for Acorns
On Acorns' Secure Website.
Rating image, 4.0 out of 5 stars.
4.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
With a competitive management fee and no account minimum, this is a great broker for a variety of people. Their ability to factor in woman oriented financial issues is a unique plus!
Fees:
0.25% management fee
Account Minimum:
$0
Open Account for Ellevest
On Secure Website.
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
TD Ameritrade Essential Portfolios has a great portfolio selection and in-person help, but its high account minimum might be too steep for some investors.
Fees:
$0 per trade, management fee 0.30%, expense ratio 0.06%-0.07%
Account Minimum:
$5,000
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
If you have a large account balance or are in a high tax bracket, Wealthfront could be great for you as tax-loss harvesting can result in significant savings.
Fees:
$0 per trade, management fee 0.25%, expense ratio 0.05%-0.29%
Account Minimum:
$500
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
With perks like automatic rebalancing and tax-loss harvesting, this robo-advisor could be a great choice if you're looking to invest at least $5,000.
Fees:
$0 per trade, $0 mgmt fee, 0.03% to 0.60% expense ratio
Account Minimum:
$5,000
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
Fidelity Go provides a simple, easy-to-understand pricing structure with access to financial planning tools and educational resources.
Fees:
Free to 0.35% per year
Account Minimum:
$10
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
The standout perks include a modern app, capable robo-advisor, and banking in one. The inclusion of no management fee sweetens the pot.
Fees:
$0 commissions and no management fee. 0.06%–0.20% fund expense ratio
Account Minimum:
$100
What is a robo-advisor?
"Robo-advisor" refers to any investment platform that automates key components of investment planning that were traditionally handled by a human advisor. It can help you assess your risk tolerance, determine your investment time horizon and goals, and allocate and rebalance your portfolio to maximize return potential without too much risk.
Some investment apps use only robo-advisors, especially those geared toward micro-investing. Major online stock brokers tend to offer robo-advisors for free or low fees and provide access to human advisors for premium account holders.
Features and costs among robo-advisors vary significantly.
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How does a robo-advisor work?
The exact procedures and features depend on the specific robo-advisor, but generally speaking, here are the basic steps you can take to get started:
- Fill out an account application and provide the required personal details. You'll likely be asked to provide your Social Security number and you may need to sign tax forms.
- Answer some basic questions to help the robo-advisor determine how to best invest your money. These typically have to do with your age, when you want to retire, investment goals, and risk tolerance.
- Transfer your initial deposit into your account and/or set up a recurring deposit. Once the money is in your account, the robo-advisor will do the rest.
How much does a robo-advisor cost?
Costs vary among robo-advisors depending on their features and the types of investors they want to attract. Robo-advisors are known for having lower fees than their human counterparts, but it's still important to know how much you'll pay to use a robo-advisor.
There are two primary types of fees for most robo-advisors:
- Management fee: This fee gives you access to the robo-advisor's features and services. Management fees are expressed as a percentage of your managed assets on an annual basis, so a 0.25% management fee means that you'll pay $2.50 per year for every $1,000 invested. Not all robo-advisors charge a management fee. Those that do typically range from 0% to 0.35%.
- Investment expenses: The funds a robo-advisor invests your money into -- the same ones a human advisor would invest in -- often come with their own fees, called the "expense ratio." Like management fees, expense ratios are expressed as an annualized percentage of assets under management. Expense ratios can vary dramatically -- fees on exchange-traded funds used by top robo-advisors have expense ratios ranging from 0.03% to 0.90%, although the vast majority are on the lower end of this spectrum.
It's important to consider the combination of these fee types, often collectively referred to as the "all-in" cost of a robo-advisor. All-in costs typically range from 0.03% to 0.50%, but even at the higher end, this compares favorably to hiring a human financial advisor, which might cost 1% to 3% in management fees.
Why are investment fees such a big deal?
The fees discussed above may sound small, but don't underestimate the difference they make over the long run. The same way your money grows through compounding interest, that growth can be held back by compounding fees.
To illustrate this, let's say that you have $5,000 to invest and that you plan to add another $5,000 every year for the next 30 years. We'll say your portfolio achieves annual returns of 8% on average. Here's how you'd fare with these all-in fees:
| VALUE AFTER | 0.25% ALL-IN FEE | 0.50% ALL-IN FEE | 1.00% ALL-IN FEE |
|---|---|---|---|
| 10 Years | $71,579 | $70,735 | $69,082 |
| 20 Years | $222,571 | $216,523 | $204,978 |
| 30 Years | $541,085 | $516,997 | $472,304 |
Data source: Author's calculations.
Short-term, the difference a fee makes is quite small. But over the long run, those seemingly small differences in fees make a big difference to your bottom line.
After 30 years, your hypothetical investment would have earned nearly $69,000 more by using a low-cost robo-advisor with a 0.25% all-in fee rather than a typical human financial planner with a 1% management fee.
Top features of the best robo-advisors
Some key features are available through almost any robo-advisor, while other interesting perks aren't quite as common. Here are the main features you should pay attention to as you search for the best robo-advisor for your financial goals.
Low fees
Robo-advisors are generally far cheaper than their human counterparts, but they aren't all equally cheap. There's quite a bit of variation in management fees and expense ratios.
A quick look at our best robo-advisor picks shows management fees ranging from 0% to 0.35%. Many offer tiered pricing, so you can opt into a no-frills version or a premium product, depending on what you want to pay and which features you need.
Minimum deposit requirements
A deposit requirement could be a major limiting factor if you're just getting started or have limited funds available to invest.
Most robo-advisors come with far lower minimum deposit requirements than traditional brokerages, but the requirements vary a lot. Some let you open an account with as little as $1, and some require a minimum opening deposit of $500 or more.
Generally, the minimum deposit requirement aligns with the investment goals the app is designed to help you achieve.
If you just want to play in the stock market to see what it's all about, a micro investment app can help you get started for $5. If you want to seriously stash away money to diversify your retirement savings, a more advanced robo-advisor with a $500 minimum is more likely to offer the features you need.
Automatic rebalancing
When you set up an investment portfolio through a robo-advisor, your initial investment allocations will be aligned with your risk tolerance and investment goals. For a simplified example, your robo-advisor might determine that your ideal allocation is 70% invested in stocks and 30% in bonds.
Over time, those stocks and bonds shift in value, so your allocation shifts, too. A strong year for the stock market could push your portfolio to 80% stocks -- which puts it at a higher risk in case of a down year.
Automatic rebalancing solves this problem by periodically reviewing your portfolio and moving money into different types of investments to maintain your target balance between risk and reward.
Automatic rebalancing is a fairly standard feature among robo-advisors, but the frequency varies among platforms.
Tax-loss harvesting
Some robo-advisors incorporate strategies to reduce your tax bill into their portfolios, and the most important to know about is tax-loss harvesting.
Here's the short version of how tax-loss harvesting works with a robo-advisor: Let's say that your robo-advisor constructed your portfolio using five investment funds. We'll also say that over the next few months, four of the funds perform very well, and one declines in value. In the course of rebalancing, your robo-advisor will likely sell some of the high-performing funds.
This can create a taxable capital gain. Some robo-advisors actively combat this by strategically selling investments that have declined in value. That offsets your capital gains (because they sell at a loss), and they can re-invest the remaining capital.
Tax-loss harvesting is most important if you invest large amounts or you're already in a high tax bracket. It's only a concern if you're investing in a taxable account, not tax-advantaged accounts like retirement plans.
Access to human financial advisors
By definition, the purpose of a robo-advisor is to take the human element mostly out of the equation. And most of what a human investment advisor can do can be automated rather easily. Plus, robo-advisors remove the hassle of finding a financial advisor.
However, there are some instances where it can be valuable to have access to a human financial advisor. For example, if you're planning to buy a home in a few years or you want to start saving for college, a financial advisor can point you in the right direction.
Some robo-advisors eschew human advisors altogether, but some give you access with a premium membership or for a set fee per consultation.
Customer support
All robo-advisors offer some type of account support, though the level varies a lot. You might only be able to chat with customer service through messages in the app, on their website, or through email. Some hold customer service hours with agents available via phone. Look into those details before choosing an advisor if one-on-one support is important to you.
Unique features that appeal to you
It's not practical to list every possible feature a robo-advisor could offer or that might matter to you in particular. But it's worth noting that some of our favorite robo-advisors offer features that go beyond the standard list we've discussed. To name a few:
- Robo-advisors offered by major brokerage firms or banks often integrate with other accounts at the company. This can allow you to view your balances in one place and facilitate easy transfers between accounts.
- Some robo-advisors offer discounts on other products and services from the same company, such as lower interest rates on loans.
- If you want to invest through a combination of a robo-advisor and self-directed investing, there are several robo-advisors that allow you to do both through the same platform.
- Some robo-advisors offer unique services, like career or financial counseling, income planning for retirees, and in-person customer events. Features like these aren't likely to appeal to everyone but can be valuable to some people.
Types of robo-advisors
There aren't any official "types" of robo advisors, but the idea of each kind is generally the same -- a robo-advisor will take your investment capital and create a portfolio that is appropriate for your age, goals, and risk tolerance. That said, I would divide robo-advisors into three general categories:
- Traditional brokers: These are brokers that offer traditional investment capabilities, like the ability to buy stocks and mutual funds, but also offer robo-advisor products for customers who want to automate. Schwab, TD Ameritrade, and Fidelity are examples in this category.
- Pure robo-advisors: These are companies that were created for the primary purpose of automating the investing process. Betterment and Wealthfront are examples.
- Fintech companies: Fintech is short for financial technology. These are tech-focused companies that offer a range of financial products, including robo-advisory services. SoFi is a good example of this.
Is a robo-advisor right for you?
Robo-advisors are most appropriate for investors who fit into one or more of the following groups:
- Newer investors: Investing for beginners can seem intimidating. If you don't have a ton of money to invest or you don't have the level of knowledge to be comfortable making your own investment decisions, a robo-advisor can help you get started with a custom-designed portfolio and minimal capital.
- Hands-off investors: Many people who know the basics simply don't want to spend their time researching and managing investments. Robo-advisors can allow you to put your investments on auto-pilot, and at a cheaper cost than hiring an advisor.
- Tax concerns: If you're investing a large amount of money or you have a high income, the tax optimization strategies offered by some robo-advisors can easily justify the management fees all by themselves.
- You don't like fees: As we've seen, lower investment fees can make a big difference over time. If you're concerned with paying too much for investment advice, a robo-advisor could be the solution for you.
How should you choose a robo-advisor?
The short answer is that you should choose the robo-advisor that has features that are the best fit for you. There's no such thing as a financial account that is a perfect fit for everyone (and if there is, we haven't found it).
Here are few things to look for:
- Make sure the account type you want is offered by a robo-advisor.
- If you want features like access to human financial advisors, limit your search to robo-advisors that offer them.
- Check for discounts or perks -- many robo-advisors offer these to their customers.
A good place to start is with our best robo-advisor picks. You can also check out a few of our reviews and see which looks like the best fit for you.
| Broker/Advisor | Best For | Commissions | Next Steps | |
|---|---|---|---|---|
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Beginners |
Commission:
$0 per trade, management fee 0.25% |
|
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Low fees and low account minimums |
Commission:
0.20% all-in fee |
|
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Financial advice |
Commission:
$0 per trade, expense ratio 0.03%-0.08% |
|
Rating image, 4.0 out of 5 stars.
|
Rating image, 4.0 out of 5 stars.
|
Best For:
Socially responsible investing |
Commission:
$0 per trade, management fee 0.30%, expense ratio 0.06%-0.12% |
|
Rating image, 4.0 out of 5 stars.
|
Rating image, 4.0 out of 5 stars.
|
Best For:
Conservative investors |
Commission:
$0 per trade, management fee 0.30%, expense ratio 0.05%-0.20% |
|
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Rounding up your purchases to invest |
Commission:
$1-$5 monthly |
|
Rating image, 4.0 out of 5 stars.
|
Rating image, 4.0 out of 5 stars.
|
Best For:
Women |
Commission:
0.25% management fee |
|
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Lowering taxes |
Commission:
$0 per trade, management fee 0.30%, expense ratio 0.06%-0.07% |
|
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Lowering taxes |
Commission:
$0 per trade, management fee 0.25%, expense ratio 0.05%-0.29% |
|
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Larger accounts |
Commission:
$0 per trade, $0 mgmt fee, 0.03% to 0.60% expense ratio |
|
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Minimum balance |
Commission:
Free to 0.35% per year |
|
Rating image, 4.5 out of 5 stars.
|
Rating image, 4.5 out of 5 stars.
|
Best For:
Investing and banking in one |
Commission:
$0 commissions and no management fee. 0.06%–0.20% fund expense ratio |
FAQs
-
Robo-advisors automate certain components of the investment planning process. A robo-advisor can assess your risk tolerance, determine your investment time horizon and goals, and allocate your investment portfolio to maximize return potential without too much risk.
-
Yes, most robo-advisors charge a small management fee as a percentage of client assets expressed on an annual basis. And all robo-advisors expose investors to fees charged by the underlying investment funds they use.
-
As with any investment product, investments offered through a robo-advisor can lose value. However, if you aren't an experienced investor, using a robo-advisor is likely a safer move than trying to choose a portfolio of stock and bond investments on your own. Money you invest with a robo-advisor should be SIPC-insured, like any other investment.
-
"Online brokerage" is a broad term that refers to any financial firm that facilitates the purchase of investment vehicles like stocks, bonds, ETFs and mutual funds. "Robo-advisor" refers to a specific type of online brokerage account that chooses and maintains an investment portfolio automatically on behalf of clients.
-
The minimum amount of money required to get started varies, but many robo advisors don't have any minimums at all. You can literally get started investing with $1 in some cases.
-
Many are designed to match or beat the market, but it's not a sure thing. For example, most robo-advisors offer a selection of passive investment funds that are designed to match the performance of certain benchmark indices over time (say, the S&P 500). And some offer actively managed fund options that have the goal of beating the market, but there's no guarantee they'll actually do so.
About the Author
Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice for The Ascent and its parent company The Motley Fool, with more than 4,500 published articles and a 2017 SABEW Best in Business award. Matt writes a weekly investment column ("Ask a Fool") that is syndicated in USA Today, and his work has been regularly featured on CNBC, Fox Business, MSN Money, and many other major outlets. He’s a graduate of the University of South Carolina and Nova Southeastern University, and holds a graduate certificate in financial planning from Florida State University.
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Betterment disclaimers
†Betterment Cash Reserve ("Cash Reserve") is offered by Betterment LLC. Clients of Betterment LLC participate in Cash Reserve through their brokerage account held at Betterment Securities. Neither Betterment LLC nor any of its affiliates is a bank. Through Cash Reserve, clients' funds are deposited into one or more banks ("Program Banks") where the funds earn a variable interest rate and are eligible for FDIC insurance. Cash Reserve provides Betterment clients with the opportunity to earn interest on cash intended to purchase securities through Betterment LLC and Betterment Securities. Cash Reserve should not be viewed as a long-term investment option.
Funds held in your brokerage accounts are not FDIC‐insured but are protected by SIPC. Funds in transit to or from Program Banks are generally not FDIC‐insured but are protected by SIPC, except when those funds are held in a sweep account following a deposit or prior to a withdrawal, at which time funds are eligible for FDIC insurance but are not protected by SIPC. See Betterment Client Agreements for further details. Funds deposited into Cash Reserve are eligible for up to $1,000,000.00 (or $2,000,000.00 for joint accounts) of FDIC insurance once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity—e.g., individual or joint—at up to four Program Banks). Even if there are more than four Program Banks, clients will not necessarily have deposits allocated in a manner that will provide FDIC insurance above $1,000,000.00 (or $2,000,000.00 for joint accounts). The FDIC calculates the insurance limits based on all accounts held in the same insurable capacity at a bank, not just cash in Cash Reserve. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through Cash Reserve may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Cash Reserve, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see the full terms and conditions and Betterment LLC's Form ADV Part II.
**The annual percentage yield ("APY") on the deposit balances in Betterment Cash Reserve ("Cash Reserve") is 1.60% and represents the weighted average of the APY on deposit balances at the banks participating in Cash Reserve (the "Program Banks") and is current as of August 01, 2022. This APY is variable and subject to change daily. Deposit balances are not allocated equally among the participating Program Banks. A minimum deposit of $10 is required, but there is no minimum balance required to be maintained. The APY available to a customer may be lower if that customer designates a bank or banks as ineligible to receive deposits. APY applies only to Cash Reserve and does not apply to checking accounts held through Betterment Checking. Cash Reserve and Betterment Checking are separate offerings and are not linked accounts.
For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.
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