Betterment Review

Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice, and in 2017 he received the SABEW Best in Business Award.

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Robo-advisors give investors access to some of the perks of hiring a financial advisor, but for a fraction of the cost. Simply put, these services consider your risk tolerance and investment goals to automatically invest your money in a portfolio custom-tailored for you.

Betterment was one of the first brokerages to automate the investment process in this manner. In this review, we'll take a closer look at how the company's robo-investing service works, its pros and cons, and how to tell if Betterment is the best robo-advisor for you.

Ratings Methodology
Why Apply

Betterment offers a lot of different services and account types, along with high-yield savings and checking accounts. And you don't need to have a ton of money to get started.


$0 per trade, management fee 0.25%

Account Minimum:


Top perks

Low management fee: Betterment’s basic Digital service charges a 0.25% management fee, which is among the lowest in the industry, especially considering the other features of the platform. For a slightly higher fee of 0.40%, Betterment also offers a Premium plan that gives customers unlimited access to financial advisors by phone.

Automatic rebalancing: When your portfolio's asset allocation no longer fits your target risk profile, Betterment will automatically rebalance your investments. This has become a standard feature at most robo-advisors but is still worth mentioning.

Tax-loss harvesting: Betterment is one of the few robo-advisors that don’t require a minimum balance to provide clients with automatic tax-loss harvesting. In a nutshell, when one of your underlying investment funds declines in value, Betterment may choose to sell it at a loss and reinvest in a similar fund in order to lock in the potential tax savings that come with investment losses.

Fractional shares: Betterment allows its customers to buy fractional shares of their underlying investment funds. This is a common feature among robo-advisors with no minimum balance, as it allows investors to put their entire deposit to work for them, instead of leaving some of their investment funds in cash.

No minimum balance: Unlike many of its competitors, Betterment doesn't require a minimum account balance. However, you'll need to deposit at least $10 to get started. In contrast, many competitors have minimums of $500 or more.

Integrated cash management: Betterment also offers savings and checking accounts that allow investors to keep all of their finances in the same place.

What could be improved

Human advisor availability: Betterment offers unlimited access to Certified Financial Planners® only to its Premium members. However, Premium accounts are available only to clients with at least $100,000 in invested assets. Unlike some of its competitors, Betterment doesn’t grant lower-balance customers access to a human advisor unless they pay for a financial advice package with a price tag of $199 or more.

Account types: Betterment offers standard brokerage accounts (individual and joint), as well as traditional and Roth IRAs, SEP IRAs, rollover IRAs, and trust accounts. It doesn't offer custodial accounts, Coverdells, 529 savings plans, or SIMPLE IRAs, to name just a few of the most common.

How Betterment works

Like most robo-advisors, Betterment starts the investment process by asking clients a series of questions about your age, investment goals, and other topics that help Betterment to assess your risk tolerance. Based on your answers, Betterment will automatically build a personalized investment portfolio, which you can choose to modify if you want to.

Also, depending on your investment goals, Betterment can tell you how much you'll need to deposit initially as well as on a continuing basis.

Services offered

In addition to the standard portfolio allocation service offered by every robo-advisor, Betterment offers some services that help it to stand out from the competition.

For example, instead of rebalancing client accounts once per year or quarter to maintain the desired asset allocation, Betterment rebalances whenever necessary. And Betterment is one of the only robo-advisors that provides an automatic tax-loss harvesting feature to all accounts, regardless of balance.

Betterment also offers a Premium version of its robo-advisor service, which is available only to clients with at least $100,000 in their accounts and comes with a higher 0.40% management fee. However, the Premium plan has unlimited access to human CFP® professionals to provide financial advice on life events, retirement, and even investments held outside Betterment.

Pricing and fees

There are two main types of fees involved with investing through a robo-advisor. First, most robo-advisors charge an account management fee, which is a percentage of invested assets expressed on an annualized basis. Betterment charges a 0.25% management fee for its basic service, which it calls Betterment Digital, or 0.40% for its Premium offering. This translates to $25 or $40, respectively, for every $10,000 in your account.

In addition, the individual investment funds Betterment selects for your portfolio all have their own investment fees, known as expense ratios. Like the management fee, these are also annualized percentages of invested assets. The combination of your management fees and the expense ratios of your investment funds are collectively referred to as the "all-in" cost of a particular robo-advisor.

It's worth mentioning that most of Betterment's preferred ETFs are toward the lower end of the investment fund fee range. This is certainly a competitive cost structure in the robo-advisory industry, especially when you consider Betterment's list of account features.

Service/Item Betterment Cost
Account management fee 0.25%-0.40%
Investment fund fees 0.03%-0.25%
All-in fees 0.28%-0.65%
Other account charges None

Customer service and support

There are two types of support that clients of a robo-advisor could need: investment advice from a human being and help with technical issues. So let's take a look at how Betterment stacks up.

When it comes to access to a human financial advisor, Betterment provides unlimited access -- if you have a Premium membership. This means that you must have at least $100,000 in your account and pay the higher 0.40% management fee. To be clear, this is certainly cheaper than hiring a financial advisor on your own, but it's important to realize that clients on the Digital membership plan don't get any access to financial advice from a human being unless they pay for one of the separate advice packages, which cost $199-$299.

Customer support for account-related issues is available by phone and email from 9 a.m.-6 p.m. EST on weekdays, which is pretty good but not the most convenient in the business. In fact, several competing robo-advisors offer 24/7 customer support.

Alternatives to consider

There's no one perfect robo-advisor for everyone, and there are alternatives that could be better for certain investors.

To name one example, if you have more than $5,000 to invest, you might want to look into Schwab Essential Portfolios. There is a higher account minimum, but Schwab charges no management fee for its robo-advisor service -- the only cost is the fees charged by the underlying investment funds. Schwab also offers 24/7 customer service, which can be a nice benefit if you need help outside regular business hours.

Feature Betterment Schwab Intelligent Portfolios
Advisory Fees 0.25%-0.40% 0%
Automatic Rebalancing Yes Yes
Tax-Loss Harvesting Yes, with no minimum Yes, with $50,000 or more in assets
Access to Financial Advisors Yes, with premium membership Yes, with premium membership
Account Minimum $10 $5,000

Better yet, check out our list of the best robo-advisors so you can compare all of our favorites to see which is the best fit for you.

Betterment is right for you if:

  • You don't have a ton of money to get started.
  • You want to open a standard brokerage account, traditional or Roth IRA, SEP IRA, or trust.
  • You want a high-yield savings account and a checking account that can integrate with your investment account.
  • You're concerned with the tax implications of your investments
  • You aren't worried about access to human financial advisors, or are willing to pay a little more for the privilege.

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