The Best Betterment Alternatives for Hands-Free Investing
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Trading in stocks, bonds, and other equities is considered to be one of the best long-term investment strategies. However, for many people, the prospect of dealing with a traditional brokerage and making investment decisions can be daunting.
Fortunately, With the rapid development of fintech, several online or app-based investing platforms aim to simplify investing. Betterment is one of the most well-regarded platforms, so here we’ll delve into this platform in more detail, and we’ll also cover Betterment alternatives in case you’re looking for options.
The Betterment Basics
Betterment has been operating since 2008 and has become known by many as the best robo advisor. In fact, it was the first automated online investment platform. While in the intervening years, many companies have launched a robo advisor, Betterment continues to remain on the cutting edge.
Betterment is the largest independent robo advisor platform, with over $16 billion in assets managed by the platform. There are several Betterment account options, including traditional IRAs, Roth IRAs, and SEP IRAs, in addition to taxable individual and joint brokerage accounts.
This is a great choice for those who want to invest towards a big goal, such as a college fund, retirement, or a down payment on a home. The platform algorithms match your specific goals and risk tolerance to diversified portfolios of low costs mutual funds and ETFs.
Betterment has two tiers; Betterment Digital and Betterment Premium. Betterment Digital is the basic level and has a 0.25% annual management fee. Betterment Premium is only available to those who have a balance of $100,000 or more. It has a higher annual fee of 0.40%, but this also provides unlimited free consultations with the Betterment financial advisor team.
If you’re a Betterment Digital customer, you can request a 45-minute coaching session with a financial pro, but this will cost you $199. This service is available free of charge for Betterment Premium customers.
Pros and Cons of Betterment
While Betterment is a solid platform, there are both benefits and potential drawbacks. These include:
- Fractional Shares: Betterment does allow every penny of your portfolio to be put to use, as it facilitates the trading of fractional shares.
- Auto Rebalancing: If your investments go beyond 3% off their target ratios, Betterment will automatically adjust your portfolio to return to the target asset allocation. This is an excellent feature that makes it a hands-free platform.
- Addresses Taxes: Betterment consistently monitors asset allocations to minimize your potential tax burden.
- Withdrawal Delays: Some customers have complained about withdrawal delays from their accounts.
- No Direct Indexing: There are no opportunities for direct indexing (owning the stocks directly instead of through an ETF or mutual fund) with this platform.
Betterment is an excellent platform, but if you’re not completely convinced, some solid alternatives may be more appealing to you. Some great examples include the following:
1. M1 Finance
M1 Finance is different from Betterment as it’s considered a “Finance Super App.” Rather than just focusing on your investments, M1 aims to be a one-stop financial shop, helping its customers in investing, spending, and borrowing.
Investing through M1 Finance is based on pre-built portfolios or “pies” that align with specific strategies. There are over expert-created 80 pies, each with a theme, such as passive investing, socially conscious, or hedge fund mimicking.
It’s also possible to create your own custom pies choosing from individual lists of stocks, REITs, ETFs, and ESGs.
Like Betterment, M1 has an auto-rebalancing tool, and you can click to rebalance anytime. It also automatically reinvests your dividends.
While M1 Finance isn’t technically a robo advisor, it allows you to automate your investing with the same benefits of passive investing.
Like Betterment, there are two M1 account tiers. The Basic plan is free (and will meet the needs of most users). But if you upgrade to M1 Plus, you’ll get more perks for a $125 annual subscription cost.
M1 Finance makes it easy to manage your investments. Choose from a wide variety of professionally-created "pies" (portfolio allocations) or create your own. Contribute to your account and M1 Finance automatically invests based on your selections.
- Free alternative to robo advisors
- Automated investing
- Easily view and manage your portfolio
- Ideal for long-term investors
- Commission-free trades
This is essentially a line of credit. If you have at least $10,000 invested, you could qualify to borrow up to 35% of the value of your portfolio. M1 uses your portfolio as collateral, securing the debt, which means you can qualify for a low rate. However, M1 Plus customers access a preferential rate.
This is quite a unique feature that’s not offered by most online brokerages. This allows you to use M1 Finance for your everyday spending. In simple terms, it’s a checking account with a debit card.
You can use your account for everyday banking, including money transfers and direct debits, with no minimum balance requirements. As an M1 Plus customer, you can also earn interest on your cash balance and earn 1% cash back on your debit card purchases.
This is a relatively new feature on the platform. It’s a credit card that allows you to earn rewards on your purchases. However, unlike most reward credit cards on the market, this card not only gives 1.5% on your purchases, but if you own stock of a participating company, you can earn up to 10% cashback.
M1 has a list of 70+ companies, including Walmart, Amazon, and Home Depot, but there are three reward levels. Depending on the specific company, you can earn 2.5%, 5%, or 10% on your purchases. You can auto-reinvest your rewards in stocks to help boost your portfolio. The card has a $95 annual fee, but the fee is waived if you’re an M1 Plus member.
On the surface, Wealthfront is quite similar to Betterment. Like Betterment, it’s a robo advisor that charges 0.25% in management fees. However, Wealthfront has a minimum investment requirement of $500, and certain options require at least $100,000.
Wealthfront has various account types, including traditional and Roth IRA, taxable brokerage accounts, and education savings accounts. There’s also an FDIC-insured checking account and a portfolio line of credit. However, if you want to access a line of credit, you need to have a minimum investment balance of $25,000, and you can borrow a maximum of 30% of your portfolio value.
Wealthfront also has a “set it and forget it” feature. This is a self-driving money product that pays your bills, funds your savings goals, and maintains your investment account contributions according to your long-term financial plans.
3. Ally Invest
Ally Invest is a part of Ally Bank, offering several specialized tools to help investors build their portfolios. There are various investments, including stocks, ETFs, mutual funds, options, and fixed-income products like CDs and bonds. Ally Invest also has a separate and dedicated platform for foreign exchange trades with access to 50 plus currency pairs. However, unlike Betterment, Ally does not offer fractional shares.
Unlike most other commission-free trading platforms, Ally Invest also offers a robo advisory option. There is a $100 minimum investment to use the robo advisor, and there are no fees to use the service. However, 30% of your portfolio will be held as a cash reserve in an Ally Bank account, which may not be ideal for all investors.
This feature-rich investment platform is an excellent choice for Ally Bank customers. From the main home screen, you can see all your Ally Bank accounts, Ally loans, and managed accounts. From there, you can click the link to launch Ally Invest Live.
On Ally Invest, the menus feel intuitive and easy to navigate. You can also customize your screen with several options. However, there are some differences between the mobile app and the web-based platform. While the main features and functions are all present on the web-based platform, the charting and some other features aren’t as effective on the app.
Another downside of Ally Invest is its fee structure, which is more complex than to Betterment. While there is no flat commission fee on your investments, the fees you’ll encounter include:
- Options: $0.50 per contract and a $0.50 fee for closing low-value positions.
- Mutual Funds: There is a $9.95 no-load mutual fund trade fee.
- Wire Transfers: There is a $30 fee for domestic outgoing wire transfers.
- Live Broker Assist Trades: $20, but this could be waived.
4. SoFi Automated Investing
SoFi, or “social finance,” began as a student loan refinancing company, but it has expanded its product line to include personal loans, checking accounts, savings, and investments.
SoFi Invest is a great investing platform if you’re an existing SoFi Money customer or want to have all your money under one roof, making it easy to move funds between your accounts.
As a legit Betterment alternative, SoFi Automated Investing provides digital advisor services with no SoFi management fees.
The process starts with goal planning, so SoFi can learn about your personal situation and your expectations. Based on your goals and your level of risk tolerance, it will create a portfolio for you. And your portfolio will be automatically rebalanced quarterly.
SoFi Automated Investing is also beginner-friendly, as you can get started with as little as $1.
Titan is not the typical robo advisor as it’s not designed to help you build a diversified portfolio. In fact, Titan specializes in selecting specific stocks, which makes it an active management strategy platform. However, like a robo advisor, it provides a passive way to invest.
This is a higher-risk approach, but also potentially higher rewards as Titan aims to outperform the S&P 500.
Titan has a minimum account requirement of $100, and there’s a 1% annual fee if your balance is $10,000 plus.
They offer four different funds or “strategies.” You can invest in any of them or create a portfolio with multiple strategies. In fact, when you create an account, Titan will recommend a specific allocation based on your personal situation and goals.
The 4 Titan strategies are:
- Flagship – U.S. large-cap stocks
- Opportunities – Smaller, under-the-radar U.S. companies
- Offshore – Internation stocks
- Crypto – Actively managed portfolio of crypto assets
While Betterment may be limited in areas outside of auto investing, Titan is limited in a different way. There are no tax strategies, banking services, or access to financial advisors that are standard with Betterment and some other Betterment alternatives.
As the name suggests, Wealthsimple aims to make socially responsible investment decisions simple. It’s a unique robo advisor platform with a socially responsible index that diverts funds into a mix of six ETFs. There’s a focus on companies that invest in technology to forward the development of underserved populations, develop clean technology, or employ diverse hiring practices.
There’s even a “halal investing” feature that allows its users to create an asset mixture of companies that are Shariah compliant, screened by a third-party council of experts in the faith. Companies that deal in gambling, alcohol, or other haram products are excluded.
Wealthsimple has no minimum investments, and new customers will receive a 15-minute call with a human advisor free of charge to ensure the services will get them working towards their goals.
While Wealthsimple’s fees are higher than Betterment’s at 0.50%, if you’re socially conscious or religious, you may be prepared to pay extra for peace of mind.
Ellevest was founded by Sallie Krawcheck, a Wall Street veteran, and the platform bills itself as a woman-centric investment firm. The management fees of Ellevest are comparable to Betterment, with 0.25% for basic account holders. The platform supports IRAs, 401k rollovers, and taxable accounts.
However, unlike Betterment, an investor can hold an emergency cash fund with Ellevest without management fees for this cash balance. Ellevest also has an impressive choice of ETF profiles, with the option to divide your assets between 20 plus fund classes. Like Betterment, the platform automatically rebalances accounts to keep you on track and limit risk.
While Ellevest being a female-centric platform, may appear to be a marketing gimmick, it does impact its investing strategies. For example, salary curves and the wage gap that separates male and female investors are considered when creating a portfolio. There are also automatic plans for female investors’ longer retirement periods since women tend to have longer lifespans than men.
If you upgrade to Ellevest Premium, you can access one-on-one career planning consultations. This may help you to close the wage gap, negotiate your salary and move ahead in your career. Although you don’t need to be a woman to use this platform, it’s a great Betterment alternative for female investors who want more specialized guidance.
(Update: Blooom is no longer operating) Blooom advertises itself as a “robo advisor for your 401k”. The platform is built around a retirement account fee analyzer, developed to help everyday investors spot hidden fees that could compromise their investment returns.
There are no account minimums, but you’ll need to choose one of three paid plans. The DIY plan is the most basic at $45 per year, which includes a self-directed portfolio optimization tool. The Standard plan ($120 per year) and the Unlimited plan ($250 per year) operate as robo advisors with access to human advisors if required.
If you have only one 401k, the DIY or Standard plans may be sufficient. But if you have multiple employer accounts or want flexibility for the future, you’ll need the top-tier plan. This also provides priority live chat access to the in-house Blooom advisors.
Acorns pairs an FDIC-insured checking account with a newbie-friendly online taxable brokerage account. Depending on your plan, there’s also a tax-advantaged retirement account and custodial investment accounts available.
Acorns is one of the original micro-investment platforms. Essentially, it turns your spare change from everyday purchases into an investment fund. So, when you make debit card purchases from your checking account, the amount billed to your account is rounded up, and the difference goes into your investing account.
For example, if you pay for a $9.45 purchase, $10 will be billed to your account, and $0.55 cents is diverted into your investment portfolio. While this may seem inconsequential, these small “acorns” can grow into a decent investment fund.
Acorns provide robo advisor services for the money you invest. You’ll be able to select an approach that works well for your goals and risk tolerance, and Acorns will handle everything related to investing.
In addition to the roundups, you can manually contribute to your account anytime.
There’s no free Acorns plan, so you’ll need to pay at least $3 per month. However, even at a basic level, you can access semi-custom portfolios. You can also boost your investment fund, as you can earn up to 10% back on your purchases when you spend with selected merchants.
Stash has a user base of almost four million people who each pay a $1 (or more) monthly maintenance fee. While the investment options are not particularly extensive, the interface is simple.
You can also access a Stash Coach, which can help to guide you towards understanding investments and strategies. This uses an algorithm to guide you towards better-balanced investments to minimize risk while maximizing returns.
Each move you implement may earn you Stash system points. These don’t have a monetary value but can add an element of excitement to implementing long-term investing strategies.
From the main website and app, you can access Stash Learn, which is packed with educational and informative articles. This creates a unique perspective on helping to teach newbies about market volatility, financial products, and more. You don’t have to be a Stash member to access this resource.
There are three tiers of Stash management accounts. Beginner is $1 per month, Growth is $3 per month, and Stash Plus is $9 per month. Each tier has access to a personal investment account and educational resources. However, higher-level tiers come with more included options.
This differs from Betterment, where you pay a percentage of your investment fund. So, if you’re a newbie with limited funds, this fixed-rate fee structure may deplete your returns quickly. Additionally, there are fees for debit accounts and retirement investment accounts.
This platform is growing, with new features rolling out periodically. In fact, Stash appears to be pushing to add services to mirror other popular brokerages. For example, there are plans for a round-up feature as you have with Acorns.
This is a great platform for newbies to grow their knowledge and learn the investment fundamentals while you increase your gains.
Final Thoughts on Betterment Alternatives
Betterment is a solid, reputable platform with some great features. However, there are some excellent Betterment alternatives if the platform does not meet your specific needs.
Which option is best for you will depend on your investing style, requirements, and preferences.
Best All in One: M1 Finance
If you want to keep your everyday finances and investments on one platform, M1 Finance is an excellent choice. You can earn cash back on debit card transactions and free stocks with minimal fees.
Best for Education Resources: Stash
While the fee structure may not be advantageous for those with a small investment fund, the educational tools and resources on Stash are hard to beat. You can even access Stash Learn without being a Stash member.
Best for Foreign Exchange: Ally Invest
Ally Invest offers access to trading in over 50 currency pairs. This makes it a great choice if you want to prioritize foreign exchange within your portfolio.
Best for Modest Investors: Acorns
If you’re new to investing and can’t seem to save up a decent fund, Acorns could provide the solution. Since your debit card transactions are rounded up in small amounts, you’re not likely to notice that you’re building up your investment fund.
Best for Socially Conscious Investors: Wealthsimple
If your priority is investing in socially conscious companies, Wealthsimple makes it easier. You can even select companies that adhere to religious principles.
Best for Female Investors: Ellevest
Planning for retirement varies depending on whether you’re a man or a woman, and Ellevest considers the differences to help female investors. With strategies that account for a longer retirement period and the wage gap, Ellevest is a great choice for female investors.
Since each platform has particular specialties, it’s worth considering what you’re looking for and need in an investment platform. Many platforms have minimal fees and no investment minimums, so you can always try more than one platform to get a feel for them and decide which represents the best fit for you.
Stocks & alternative investments, plus social community
Up to $300 in free stock
Advanced tools for active traders
Up to 15 free stocks
Invest in stocks, ETFs, options, and crypto
Up to 12 free stocks
Passively invest in real estate with as little as $10