Choosing the right brokerage matters if you want to build the right portfolio to meet your financial goals. Betterment, Wealthfront and Vanguard are three possibilities you might consider when deciding where to invest. Betterment and Wealthfront are firmly established in the robo-advisor space while Vanguard is one of the most trusted names in the mutual fund market. Comparing each option can help you to decide which one might be right for you. Alternatively, if you’re looking for a professional to manage your entire portfolio then you can work with a financial advisor to set up the right asset allocation for your goals.
Overview of Betterment vs. Wealthfront vs. Vanguard
Betterment is a digital investment and cash management service that was founded in 2008. As an independent financial advisor, Betterment offers a range of accounts and services, including investment accounts, IRAs, 401(k)s, checking accounts and trusts. As of 2022, the platform had over $33 billion in assets under management and more than 730,000 customers.
Like Betterment, Wealthfront is a robo-advisor offering an automated approach to investing. The company was also founded in 2008 and is headquartered in Palo Alto, California. Wealthfront offers investment accounts and cash accounts to more than 480,000 clients. Assets under management totaled $27 billion and counting, as of September 2022.
Founded by John Bogle in 1975, Vanguard is one of the most recognizable names in investing. The company is notable for being a leader in the index fund space and for charging some of the lowest expense ratios around. Investors can choose from DIY portfolio management, digital advisory services, personal advisor services and wealth management all under one roof.
Betterment vs. Wealthfront vs. Vanguard: Fees
Cost is an important consideration when choosing where to invest. The lower the fees, the more of your investment gains you get to keep.
Betterment has a simplified pricing structure, which is typical of robo-advisors. The digital investing account has an annual advisor fee of 0.25% with a $0 minimum balance requirement. Investors who choose the premium investing account pay an annual fee of 0.40%, which is still well below the 1% annual fee many financial advisors charges. There is a $100,000 minimum balance requirement to open a premium account.
Wealthfront also charges an annual advisory fee of 0.25%. There are no account opening fees, withdrawal fees, trading fees or commission fees. Wealthfront doesn’t charge maintenance fees for its cash management account either. There’s a $500 minimum deposit requirement to open an investing account.
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