Betterment was one of the first digital advisors on the scene in 2008, offering Americans a simple, low- cost way to invest for life goals such as retirement. Today, Betterment is a leader that represents great all-around value and is our #1 rated robo-advisor in 2017.

By / February 21st, 2017 / Updated: November 1st, 2017

  • 529 plans are not supported
  • Mobile app is basic and lacks details of the website
  • Too easy to change asset allocation

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Betterment is considered a robo-advisor, which is an online advisory firm that uses a team of investment managers and a computer model to manage your investments. Betterment is completely automated – meaning everything you do is set up using just your computer or smart phone. No humans are involved, but you can call a customer service rep with questions.

The goal is to help you get better results than you would on your own, but at a lower cost than you would incur through a traditional advisor.  

In just eight years, Betterment has quickly risen to the largest independent online advice firm, with more than 210,000 client accounts and $7.3 billion in clients’ assets. Only Charles Schwab Intelligent Portfolios has more total assets under management (AUM). Betterment’s target customers are not just millennials, but include clients of all ages.

Investment Approach

Betterment relies on Vanguard for its index ETFs. Founded in 1975, Vanguard is the lowest cost provider of ETFs and mutual funds in the world. The whole point of index funds is to generate returns that are similar to the market at a much lower cost.

The funds Betterment offers through Vanguard are meant to bring you a diverse portfolio at low cost. For instance, Vanguard’s U.S. Total Stock Market ETF portfolio is 95% less costly than similar mutual funds. And, within that portfolio you would have the choice of owning a host of giant companies’ stock that everyone has heard of, including Apple, Microsoft, Exxon, Amazon, Johnson & Johnson, Facebook and AT&T.

Betterment’s investing philosophy comes from Nobel prize winners Eugene Fama and Robert Shiller. The company uses Fama’s approach to selecting investments and creating portfolios. Over the years, Fama realized that beating the market is not sound advice. He believes the best way to invest is to choose products that simply mirror market performance, such as index funds.

Shiller focused on the behavior patterns of average investors, specifically during market downturns. He noticed a tendency among investors to dive out of the market during downturns, when, technically, stocks are usually discounted relative to historical averages. He proposes that selling stocks is a poor decision that can create more problems for investors. Betterment uses its index funds to create consistent returns for investors and does not let investors make rash decisions, which is the firm’s attempt to “minimize the influence of emotion via automation.”

Also, taking emotions out of play, you can decide what your savings goal will be at Betterment, and your asset allocation will change according to your goals. For instance, if you’re planning to retire in 30 years, Betterment will probably recommend a more aggressive portfolio. But if you’re saving for a new house or a big trip, then Betterment will probably recommend a less risky portfolio because you may want to tap into resources.

While most robo-advisors allow you to adjust your portfolio allocation, Betterment makes it too simple.

Speaking of portfolio recommendations, one quirky aspect of the program is investors can still change their asset allocation easily at any time. For example, I am comfortable with a portfolio heavy on stocks – 85% – but when I tried to make a reversal to 15%, it was simple to do so. While most robo-advisors allow you to adjust your portfolio allocation, Betterment makes it too simple. This is concerning because humans are emotional by nature and changing your allocation during a market downturn, for example, could have significant ramifications long term.

Allocations aside, Betterment also has a unique philosophy toward trading throughout the day. It doesn’t trade in the first half-hour of the day, when the markets can be turbulent. The firm aims to shield investors from bumpy rides in the market. For instance, in June 2016, when Great Britain voted to leave the European Union – better known as Brexit – Betterment did not trade until about noon ET. The firm did not notify retail investors, but took a break from trading as protection against increased volatility. Betterment is the only online advisor to have taken this proactive measure. Betterment took flak for making this decision but the firm maintains this is part of its ongoing philosophy.


Betterment is one of the cheapest digital advice firms on the market, requiring no minimum deposit and charging a flat advisory fee of 0.25% per year. The fee is pro-rated across the year and charged at the end of each calendar quarter, which is once every three months.

For example, with $10,000, the fee would be $25 per year ($5000 * .0025), which is less than most couples would pay for a meal out. Would you like to invest $100,000? Then your fee will be just $250 per year ($100,000 x .0025) or about the cost of an average round-trip plane ticket.

View All FeesBettermentWealthfrontTD Ameritrade Essential PortfoliosFidelity GoSchwab Intelligent Portfolios
Total AUM$9.1 Billion$7.4 Billion$900 MillionNA$19.4 billion
Minimum Deposit$0.00$500.00$5,000.00$5,000.00$5,000.00
Annual Fee - $5,0000.25%0.0%0.30%0.35%0.00%
Annual Fee - $25,0000.25%0.15%0.30%0.35%0.00%
Annual Fee - $50,0000.25%0.20%0.30%0.35%0.00%
Annual Fee - $100,0000.25%0.23%0.30%0.35%0.00%
Annual Fee - $1,000,0000.25%0.25%0.30%0.35%0.00%
Cost 4.5 Stars 4.5 Stars 4 Stars 4 Stars 5 Stars

Fund companies also charge an expense ratio fee, and this applies to all robo firms. Your average expense fee for a Betterment portfolio is 0.13%. These expense ratios are some of the lowest in the industry, and even for a saver with $10,000 paying $25 a year, the added .13% fee of $13 a year makes the total annual fee just $38.

The fees at Betterment are much cheaper than those of a financial advisor managing a traditional portfolio. The latter’s charge hovers around 1% a year, depending on your assets. For instance, according to Advisory HQ, an online media site, investors with $100,000 to invest will pay an average of 1.12% or $1,120 per year.

Customer Service

Betterment is one of few companies in which the CEO jumps in and answers client phone calls from time to time. That’s what CEO Jon Stein does during “customer week,” in which he participates just like all Betterment employees and answers calls. He also takes additional phone calls throughout the year and regularly replies to emails from customers. Investors shouldn’t expect to get on the phone with Stein, but the fact the CEO fields phone calls occasionally shows that customer service is paramount in the Betterment culture. The company employs 30 customer-service staffers in its New York headquarters.

Stein didn’t answer any of my phone calls, but each person who did was friendly and helpful.

Stein didn’t answer any of my phone calls, but each person who did was friendly and helpful. I asked multiple questions and they were answered. For example, during one phone call, a customer service representative named Marshay answered the call. Within seconds, she delved into a number of my inquiries. Seconds after I hung up, I had an email from Betterment with an opportunity to review Marshay. The email even included a picture of her, and I could click on a button that initiated a recommendation she be awarded a gift certificate for doing a good job.

I’ve never received that type of email before and thought Betterment went the extra mile to reward its staffers for excellent customer service. When I spoke with Katie on another day, I received a similar email showing a picture of Katie and her cat – which was just cool.

The email service is also spot on and I received return emails from Betterment in less than an hour. The on-line chat is inconsistent and appears to be more effective during business hours. It is not available outside of business hours. When I used the online chat during traditional business hours, someone responded within five minutes and answered multiple questions.


When it comes to client tools, RetireGuide is Betterment’s advanced retirement calculator and featured product. After entering general information about yourself including income, age, location, savings to date, etc. RetireGuide will project what you need to retire and tell if you if you are on track. To improve accuracy and provide a clearer financial outlook, you can sync data from third party firms such as Charles Schwab or Fidelity (more on syncing below).

Compared to its robo competitors, RetireGuide is great because of its clean user interface and overall design. Without question, Betterment put a lot of resources and thought into building RetireGuide.

As far as linking third party accounts go, any third party portfolio linked with Betterment can be independently analyzed for potential fee savings and portfolio recommendations. Naturally to do this you have to enter your username and password into Betterment’s system.

Being picky about account security myself, I asked Betterment customer service about account security. This is what they had to say: “Syncing a financial account creates a secure, read-only connection with your firm through our data partner, Quovo. Betterment does not store your log-in information and will never share your synced data.”

Beyond RetireGuide and analyzing outside portfolios, Betterment shines with its easy-to-use website.

Beyond RetireGuide and analyzing outside portfolios, Betterment shines with its easy-to-use website. Education is woven throughout the experience, and pages such as the client dashboard and portfolio holdings are cleanly laid out.

The icing on the cake was when I discovered how painless it was to transfer money into my account. Betterment even offers a service it dubs SmartDeposit, which allows Betterment to periodically withdrawal money from your linked bank account when it reaches a pre-determined threshold.

All in all, Betterment has created a website experience and tools investors can understand, while offering clients a deeper dive for learning more, if interested.

Other Notes

Betterment also offers tax loss harvesting as part of its program. This is a practice whereby Betterment may sell a security that has experienced a loss to help reduce your losses. Only three robo-advisors, Betterment, Wealthfront, and Schwab Intelligent Portfolios, offer tax loss harvesting.

In late January, 2017, Betterment launched Betterment Plus ($100,000 minimum) and Premium ($100,000 minimum) plans, connecting current clients with pre-screened Certified Financial Planner (CFP) professionals that only provide financial advice (no insurance sales, for example) and follow a fiduciary standard. Put simply, these plans add human advice options for clients that seek it.

Final Thoughts

While Betterment’s platform works very well for all investor types, those who aren’t comfortable with trading and simply want to get started saving will find it especially appealing. You don’t need to understand complicated investment terms to be a successful saver with Betterment. Additionally, there is no minimum investment, which makes it easy to dip your toes into the service before you’re ready to invest large sums.

Overall, Betterment is a winner because the client tools are easy to use and the customer service is top notch. Betterment offers a Nobel Prize-winning, diversified approach to the markets at far lower prices than those charged by traditional advisors and is our No. 1 rated robo-advisor in 2017.


To find the best robo-advisors we assessed, rated, and ranked eight different firms. Instead of relying on website information and marketing materials as most editorials do, we opened and funded an account with each robo-advisor to acquire a true client experience.

Reink Media Group (RMG) remains committed to providing transparent and unbiased reviews of various financial services and segments, including Robo-Investment Advisors (“RIA’s”). Although exempt from registration as an investment advisor under the Investment Advisors Act of 1940, 15 U.S.C. §80b-1, et seq, RMG works tirelessly to ensure compliance with all applicable Security and Exchange Commission rules and regulations for entities which perform reviews and/or receive payments for advertising and solicitation. Please be advised that for purposes to this Review, RMG utilized a live account with actual funding which was later closed once the Review’s test period was complete.


View all Betterment Fees & Features
Blain Reinkensmeyer

Reviewed by Blain heads research at and has been involved in the markets since placing his first stock trade back in 2001. He developed's annual review format seven years ago, a format broker executives consider the most thorough in the industry. Blain currently maintains funded accounts with more than a dozen different US-regulated online brokers and has executed thousands of trades throughout his career. He enjoys sharing his experiences through his personal blog,

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