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Well, you’re in luck. After countless hours of customer reviews and feature analysis, we pulled together an extensive review of the best discount brokers in 2021!
Our team evaluated brokerage firms by the services and features that matter most to investors.
For instance, high-volume traders are looking for low commissions and strong mobile trading platforms on the go.
On the other hand, investors just starting out need more support. They’re looking for strong educational resources, calculators, and tools to guide them to the right investing path.
Breaking down online brokers wasn’t easy, but we did it, for you.
Lets dive right into it!
Which Discount Broker is Right For You
These days, the top-rated discount brokerage firms offer trading, investing, saving, banking, and retirement planning and if you’re not living paycheck to paycheck you should definitely set up an account.
Depending on your personal financial and investment goals, each online discount broker can serve a different purpose.
From the cheapest stock brokers with the lowest trading fees to the firms with the most powerful platforms, it’s all here.
E*TRADE Review
TD Ameritrade Review
Weathfront Review
Betterment Review
Personal Capital Review
Below are the best online discount brokers worth opening an account with today!
#1 E*Trade Review
E*TRADE is one of the most experienced online investment management companies in the business. They opened their doors back in 1982 and since then they are arguably one of the best online brokers.
E*TRADE is a US-based stockbroker and is regulated by the SEC and FINRA. They have a great track record, an in-depth banking background, and always disclose their financials to the public.
We are going to take you on a deep dive into E*TRADE.
Quick Look at E*TRADE
E*TRADE has one of the best track records in the online brokerage field. They provide a low cost, personalized platform for all of their clients.
E*TRADE wants to provide the best investment system for the lowest cost, and they do a damn good job of it.
Account minimum: $0 USD
Fees: $0 per trade (stocks)
Pros:
Very large investment selection
Super helpful and easy to use tools available
Commission-free stock, options, and ETFs
Great customer service
Cons:
Cannot open an account if you are not a U.S citizen
There is no forex available
E*Trade is best for:
Investors who trade often ($0 per trade)
Those who want to enrich their financial intelligence (great tools and educational information)
Anyone looking to plan for retirement
What is E*TRADE (Full Review)
E*TRADE is an online discount broker that offers diverse investing outlets. They offer high value to novice investors and experienced traders alike.
They have a large archive of educational resources and research tools. E*TRADE has a professional trading platform and they know how to create a personalized balanced portfolio.
It doesn’t change much for now, but we thought you should know that Morgan Stanley bought E*TRADE in February 2020. The acquisition should take time until it is complete. There are no changes as of now and E*TRADE will continue to accept new traders.
Let’s check out the services and features that E*TRADE proves:
E*TRADE makes opening an account easy. Their platform is user friendly and available to U.S citizens.
The only downside is that we noticed that it takes some time (average of 7 business days) until you get approved.
How to Open an E*TRADE Account
E*TRADE is a stockbroker that operates in the U.S. Like Wealthfront and Vanguard, E*TRADE cannot accept clients that live outside of the U.S for regulatory reasons.
Setting up an account is easy with E*TRADE, well walk you through it.
Most clients signed up online, so let’s see how it’s done.
There are five main steps to open an account with E*TRADE:
There are five main steps to open an account with E*TRADE:
Choose an account – There are four main accounts to choose from:
Brokerage account
Retirement account
Managed portfolio
Small business retirement account
Input personal information – This is a requirement to open an investment account. You need to share information such as SSN, residency, email, etc.
Create an investment plan – give your 2 cents on your trading preferences.
Create E*TRADE account number – This part’s easy, just review your application and click next.
Send funds to your account – There are four ways to send fund to your account:
Transfer money online- This service is free and takes up to 3 business days.
Wire transfer- usually takes one business day.
Transfer an account- Only available for brokerage accounts, usually takes 10 business days.
Mail a check- usually take 7 business days.
If you don’t have access to a computer, that is no problem at all. E*TRADE offers three methods to sign up and create an account:
Online- Click here or simply go online and choose the account you want.
Phone- Call 800-387-2331 (800-ETRADE-1) and speak with an E*TRADE representative.
Mail- Download their foam and send in the application to E*TRADE Securities LLC, PO Box 484 Jersey City, NJ 07303-0484
Account Types
E*TRADE is a diverse online brokerage with a handful of accounts. There is no minimum or maximum number of accounts.
At E*TRADE you have full control to invest the way you would like to with the accounts that you wish.
This is an account for small business owners (self-employed)
Education savings
Saving for college
Custodial account
An account set up by an adult for a minor
Personalized investment accounts
Accounts set up for trading/investing
Fees & Commissions
E*TRADE allows investors to buy and sell securities at a very low cost. They offer free stock and ETF trading.
Before we break down E*TRADE, let’s look over the basic fees and commissions brokers charge:
Management fees-
These are basically trading fees and consist of conversion fees, financial rates, and commissions
Non-trading fees-
These are costs that don’t have to do with trading. Fees that are connected to depositing money, withdrawing money, and inactivity.
Compared to the market and competition, E*TRADE has low fees. We based our analysis on the fees explained above.
Let’s break them down!
Management Fees
These fees revolve around “trading”. The fees and commissions that are directly related to the act of investing.
E*TRADE
Stocks
Bonds
ETFs
Options
Mutual Funds
$0 (Exchange-listed U.S stocks)
U.S treasury bonds – $0
Corporate bonds- $1
$0 (online)
Contract fee
$0.65 (0-29 trades a QTR)
$0.50 (30+ trades a QTR)
$19.99
Stocks & ETFs
Buying stocks and ETFs have zero commissions! If you’re an investor who focuses in on those securities, it can’t get any better than that!
Bonds
If you’re interested in buying treasury bonds there is zero commission. Corporate bonds cost $1 per bond- minimum $10- maximum $250.
Options
E*Trade charged a volume baes free in connection to options trading. The base fees are $0.65 per contact. 30 or more contracts per quarter, the fees drop to $0.50 per contact.
Mutual Funds
E*TRADE’s mutual funds cost $19.99 per trade. While that is a good amount of money, it is fairly low compared to competitor brokers.
Investors interested in trading on margin or shorting should know that the USD margin rate E*TRADE offers is just about 9.8% (base rate + tiered mark up).
That is basically the rate at which you need to pay E*TRADE for “borrowing” money or stocks. In other words, the margin rate is interest.
Non-Trading Fees
E*TRADE doesn’t have non-trading fees!
Setting up an account is free
There is no inactivity fee
No deposit fee (might be charged by your bank, not E*TRADE)
No withdrawal fees ( if you use ACH transfer)
Asset Classes
E*TRADE has a large variety of investments to choose from. In spite of the fact that they have a large investment selection, they don’t have it all.
E*TRADE
Stocks-Short & Long
✔
Options/Complex Options
✔
ETF
✔
Futures/Commodities
✔
Mutual Funds
9,000+
Bonds
✔
Cryptocurrency
✔
Forex
????
Roth IRA
✔
International Exchange
????
OTC, OTCBB Penny Stocks
✔
Fractional Shares
✔
Whatever investments you’re interested in, E*TRADE has several portfolios and investing plans to choose from. You can get financial advisory from E*TRADEs experts or you can go for a more hands-off approach with E*TRADE’s Robo-advisory service.
As you can see, there are many investment vehicles to choose from. If you are interested in forex, try TD Ameritrade, E*TRADE wouldn’t be the best option.
Trading Platforms
Good trading platforms are what “makes or breaks” online brokerages. At the end of the day, you are here because you are interested in investing and the trading platform is your portal.
E*TRADE has optimized their trading platforms and made easy to use tools for investors. They have trading platforms for the web (your computer) and for your mobile device.
E*TRADE has two trading platforms that are specialized for different investors in mind.
Let’s take a look!
E*Trade
Power E*TRADE
Mobile app
✔
✔
Web trading
✔
✔
Tradable securities
Stocks
Bonds
ETFs
Options
Mutual funds
Stocks
ETFs
Complex Options
Futures
Best for
Anyone looking for simple investing
Traders looking for more in-depth investing tools
The E*TRADE platform is the default trading platform. Investors new to E*TRADE are recommended to start out with that platform.
If you are a more aggressive trader and you want to maximize E*TRADEs resources, Power E*TRADE could be great for you.
Mobile Trading Platform
We tested out both apps on a mobile device. They are both available for iOS and Android.
E*Trade app
The E*TRADE app is an easy to use app that allows investors to take control on the go.
You can effortlessly make trades, get live quotes, and manage your portfolio all from your mobile device.
Power E*TRADE app
The Power E*TRADE app has slightly more power than the traditional E*TRADE app.
You can trade complex options, futures, and stocks all on the go. There is also a large selection of charts, technical studies, and news available.
Web Trading Platform
E*TRADE has two great web trading platforms available. Both platforms are available to clients with no minimum balance.
E*Trade
The E*TRADE web trading platform gives you a full 360-degree view of your account. You can view the market, make trades, create watch lists, and more!
the E*TRADE web trading platform offers plenty of free tools and resources at your fingertips.
Power E*TRADE app
Power E*TRADE is a platform that harnesses all of E*TRADE’s abilities into one platform.
E*TRADE acquired OptionsHouse a couple of years back and improved their platform. They transformed it into Power E*TRADE. This platform has so many technical studies, drawing tools, and trade tickets. You can do it all with Power E*TRADE.
Education & Research
E*TRADE has a learning and research center that offers investment/financial-related articles, trading content, educational videos, and great research tools.
E*TRADE Education
E*TRADE has super helpful learning materials for their clients. Their educational materials are broad and cover many investing topics.
Their educational information is available in four main ways:
Educational articles
Webinars
Educational videos
Tutorial videos
The educational information is helpful to beginner investors and experienced traders alike. One of the coolest things about the learning center is that it is free!
E*TRADE Research
When it comes down to research tools, E*TRADE really shines! E*TRADE has strategy building, analysis, and trading tools available on both E*TRADE and Power E*TRADE platforms.
We are going to go over a few of the research tools that E*TRADE provides. It’s important to remember that the basic E*TRADE platform has great research tools available, but Power E*TRADE has more complex research analysis tools.
Trading tools
E*TRADE has tools to help recommend securities worth investing in. These recommendations come from third party analysis ( TipRanks, MorningStar, MarketEdge, etc).
E*TRADE also provides lists called All-star funds. For the most part, they are made up of commission-free ETFs and mutual funds.
Tools and Calculators
E*TRADE has numerous calculators and tools to help you get a better grip on your financial situation.
Some of their top calculators are:
Taxable equivalent calculator
Marginal tax calculator
Loan repayment calculator
Retirement calculator
Charts
E*TRADE has plenty of charts available. If you’re really into dissecting charts, Power E*TRADE is probably the best platform for you.
They have a wide array of technical indicators and drawing features. While you’re analyzing charts there are live streams quotes on the web and mobile app.
News
Both platforms have easy to read reliable news at your disposal. Bloomberg TV, MarketWatch, BusinessWire, GlobeNewswire, and more are streaming live.
These sources are available on both the app and the web trading platform.
Financial Data
If you’re on the fence about purchasing a stock, E*TRADE has loads of financial data available. You can dig deep into a company’s financial statements right from their platform.
This information is located under the fundamentals menu.
Customer Service
When you lose your password or have trouble filling an order, customer service becomes super important.
Luckily getting ahold of E*TRADE is easy. E*TRADE provides three ways of getting a hold of them:
Live Chat– On the home page there is a live chat button.
Email– Log into your account and send them an email. We got a response the following day.
Phone– Call 800-387-2331, they have great phone support.
Overall E*TRADE has really great customer service. They are fast, reliable, and offer quality 24/7 support.
Safety
As an investor safety is one of the most, if not the most important thing. After doing a thorough background check, we can say that E*TRADE has high levels of security.
All investors at E*TRADE are covered by the SIPC and the FDIC. The SIPC is an organization that protects investors up to $500,000 in securities if there was a mistake from the broker.
The FDIC, on the other hand, is a governmental body that backs up funds placed in banks and savings accounts. The standard insurance is $250,000 per depositor.
Is E*TRADE For You
E*trade provides a complete package for investors with intuitive tools and specialized support. There is no doubt that E*TRADE is one of the better discount brokers to consider.
They have an easy to use platform with tons of free resources. When it comes down to value for money, E*TRADE takes the win!
Whether your new to investing or you’re a seasoned trader, E*TRADE has the tools you need to help reach your financial goals.
#2 TD Ameritrade Review
TD Ameritrade is a top online broker with the history to prove it!
Established in 1975, TD Ameritrade has been giving the essential tools that clients need to take control of their financial lives.
What makes TD Ameritrade so unique is that they provide the services needed for beginner and advanced traders.
Our team spent countless hours peeling back the layers of TD Ameritrade. That way you can see if they’re the right online discount brokerage for you.
Let’s take a zoomed-out view on TD Ameritrade
Quick Look at TD Ameritrade
TD Ameritrade offers low-cost trades, great trading platforms, helpful tools, and much more to their clients.
They have just about everything you need as an investor.
Account minimum: $0 USD
Fees: $0 per trade (stocks)
Pros:
Very large investment selection
Super helpful and easy to use tools available
Commission-free stock and ETFs
Great customer service
Cons:
Could be tricky for total beginners
Broker assisted trades can be costly
TD Ameritrade is best for:
High volume traders
Investors interested in high-quality learning tools
Beginner traders
Who is TD Ameritrade (Full Review)
With over 45 years in the industry, TD Ameritrade is one of the largest U.S stockbrokers.
Their reputation is highly glorified and they are regulated by the top governmental agencies.
TD Ameritrade is a mix of a few other “daughter companies”. Some of their previous subsidiaries are TD Waterhouse which they acquired from TD Bank Financial Group and Scottrade.
TD Ameritrade took control of the acquired companies and improved their operations and services in all areas.
Through a few mergers and acquisitions, TD Ameritrade evolved into the elite online broker that they are today.
Today TD Ameritrade is a nationally known broker. They pride themselves on delivering quality investing services to beginner and seasoned investors.
Now that we had a small background check, let’s check out the services and features that TD Ameritrade proves their investors:
TD Ameritrade
Account minimum
$0
Stock trading cost
$0
Option trading cost
$0.65 per contract
Commission-free ETFs
✔
Mutual funds
$49.99 per trade
Broker assisted trades
$25.00
Inactivity fee
none
Investment products
Stocks
Options
Futures
Bonds
ETFs
Mutual Funds
Forex
Crypto trading
IPOs
Education & Research
✔
Mobile apps
✔
Web trading platforms
✔
Customer support
24/7 phone line
24/7 online chat
Email
Accounts
Opening an account with TD Ameritrade is fast and easy!
TD Ameritrade is a full-service online broker and they offer just about any investment/retirement account that you can think of.
There is no minimum balance required when opening an account with TD Ameritrade. Just sign up and begin planning for your financial future!
How to Open Account with TD Ameritrade
Similar to E*TRADE, TD Ameritrade is an online discount brokerage firm
Opening an account can be intimidating, but it doesn’t have to be.
Below are step-by-step instructions to guide you through the signing up process.
Setting up an account with TD Ameritrade will only take a few minutes. Before you get started make sure you have the following two pieces of information ready.
Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
Name and address
Alright, let’s go over the steps to open an account with these guys!
Begin application– Head over to the TD Ameritrade application.
Choose an account– There are five main accounts to choose from:
Standard account
Retirement account
Education account
Specialty (Business) account
Managed portfolios
Personal information– This is the section where you will input your personal details, SSN/ITIN, address, email, etc.
Investment plan– You will be asked a few questions about your general situation.
Agree to terms– Review the imputed information and scan over the TD Ameritrade terms.
Set up login– Choose your username and password for your TD Ameritrade account.
And you’re all set!
TD Ameritrade Account Types
Once your account is set up and funds are sent, you’re ready to invest.
TD Ameritrade has just about any account that you can think of!
TD Ameritrade doesn’t have a minimum balance so you can get started immediately.
Here are a few of their accounts:
Account
Explanation
Individual account
A standard brokerage account for a single owner
Joint account
This is called Joint Tenants with Rights of Survivorship (JTWROS). This is an account with two or more owners
Retirement account
TD Ameritrade offers a variety of retirement accounts:
Traditional IRA
Roth IRA
Rollover IRA
SEP IRA
Solo 401(k)
Simple IRA
Pension or Profit plan
Education savings
They offer great accounts to help you plan for college and save.
529 Plans
Coverdell Education Savings Account
Custodial Uniform Gift to Minors/Uniform Transfer to Minors Act
Specialty account
Specialty accounts are for your business. They include trusts, limited partnerships, small businesses and accounts for investment clubs.
Managed accounts
TD Ameritrade offers managed portfolios to help you reach your investment goals. There are
Essential Portfolios
Selective Portfolios
Personalized Portfolios
Each portfolio is designed for you.
Fees & Commissions
Over a lifetime of investing you can end up paying hundreds of thousands of dollars in fees and commissions.
TD Ameritrade is an online broker firm that charges very little to buy and sell securities.
Before we look at TD Ameritrade, let’s understand the basic fees and commissions that most brokers charge.
Fees and commissions are broken down into two main categories: Management fees and Non-trading fees.
Management fees- Management fees are made up of the conversions, financial rates, and commissions of your securities. These are costs to manage your financial assets.
Non- trading fees-Non Trading fees and the more general fees that don’t have to do trading itself. They are directly tied to inactivity in the account, depositing money and withdrawing money.
TD Ameritrade has fairly low fees compared to the other online broker.
Let’s look at the specific management fees and non-trading fees that TD Ameritrade charges.
Management Fees
Management fees are directly related to the trading of financial assets. Think of these fees as the outcome of investing.
TD Ameritrade
Stocks
ETFs
Options
Futures
Mutual Funds
Broker Assisted Trade
$0 (Online)
$0 (Online)
Contract fee
$0.65
$2.25 Per contract
$49.99
$25.00
Stocks
When it comes down to buying or selling, TD Ameritrade knows how to get it done. TD Ameritrade uses advanced routing technology to evaluate execution quality. This gives the investor the best price.
For an added note, $0 commissions apply to the U.S stock market.
ETFs
Exchange-traded funds (ETFs) are commission-free with TD Ameritrade! If you’re having trouble you can use their interactive voice response phone system, but that costs $5.00 per trade.
TD Ameritrade use advanced routing technology for buying and selling ETFs as well, providing you with the best price.
Options
Options cost $0.65 per contract with TD Ameritrade. If you’re interested in trades over the counter (OTC) there is a commission of $6.95 per trade.
TD Ameritrade offers interactive voice response guidance which costs an additional $5.00 per trade. They also have broker assisted option trades which cost an additional $25.00 per trade.
Futures
Futures and options on futures cost $2.25 per contract (plus possible exchange and regulatory fees).
The National Futures Association (NFA), a regulatory organization, currently charges $0.02 per contract. That is an added cost to be aware of.
Mutual Funds
TD Ameritrade charges $49.99 for a no-load mutual fund. Basically the cost for a mutual fund is a flat $49.99. No front end, back end, or level sales charge.
Broker Assisted Trades
Trading can get confusing, TD Ameritrade gets that. That is why they provide broker-assisted trades.
Broker-assisted trades as available for pretty much every asset that you can trade on the TD Ameritrade platform. A broker-assisted trade costs $25.00 plus the fee of the security that you are trading.
Now that we have a good understanding of the management fees that tie along with TD Ameritrade, let’s see their non- trading fees.
Non-Trading Fees
TD Ameritrade doesn’t have non-trading fees!
There is no inactivity fee
Setting up an account is completely free
No deposit fee (know that you might be charged by your bank, TD Ameritrade isn’t related)
Electronic statement is FREE
No withdrawal fees (if you use ACH transfer)
TD Ameritrade is a very open and transparent brokerage firm. When looking at fees and commissions, TD Ameritrade offers quality service at a very low price.
Asset Classes
TD Ameritrade is an online broker that provides a wide range of investment vehicles.
Whether you’re new to investing or you’ve been investing for years, chances are that TD Ameritrade offers the investment that you’re looking for.
More choices mean more potential opportunities
Trading Platforms
TD Ameritrade understands the importance of high-performing trading platforms.
TD Ameritrade offers trading platforms for the online web (desktop/laptop) and for your mobile device.
Let’s cut to the chase and check them out!
TD Ameritrade
thinkorswim
Mobile app
✔
✔
Online web trading
✔
✔
Customizable
????
✔
Tradable securities
Stocks
ETFs
Options
Mutual funds
Stocks
ETFs
Complex Options
Futures
Forex
Best for
Investors interested in the general aspects of investing
Investors looking for more in-depth tools/more frequent traders
The TD Ameritrade platform is the default trading platform. If you are new to investing, we recommend that you start with the default platform.
On the other hand, if you’re interested in more frequent trading, TD Ameritrade’s thinkorswim is for you.
Mobile Trading Platform
TD Ameritrade created two mobile trading platforms for two different investors.
These guys realized that investors are at different levels and have different financial goals. With that in mind, they tailor-made two investing apps: TD Ameritrade Mobile app and thinkorswim Mobile app
TD Ameritrade Mobile app– The TD Ameritrade mobile app is the default investing platform.
Easy to navigate
Real-time market information
News and research on the platform
Live quotes and price alerts
thinkorswim Mobile app– The thinkorswim app is a robust and powerful trading app. As a trader, you will have everything you need- and more.
Useful educational videos on the go
Numerous technical indicators
Modernized trading platform
Online Web Trading Platform
TD Ameritrade offers online web trading platforms that are suitable for many different investors. They have tools for any investor at any level.
TD Ameritrade has two online web trading platforms: TD Ameritrade Web Platform and thinkorswim Web
TD Ameritrade Web Platform- The TD Ameritrade Web Platform offers the gadgets needed for any level investor.
The ability to manage, buy and sell investments
An intuitive platform with a clean design
Access to research, educational resources, and investment planning tools
thinkorswim Web- The thinkorswim Web platform is “the” online web trading platform for investors looking for a professional level trading platform.
Great educational tools and resources like thinkManual and platform tutorial videos
Fully customizable platform
Top-level tools to perform market analysis
TD Ameritrade Education & Research
TD Ameritrade offers great educational and research materials for their investors.
In a nutshell, they provide investment/financial news, trading content, educational “know-how” videos, and top of the line research tools.
Education
TD Ameritrade has helpful learning materials available for all of their clients no matter the platform.
TD Ameritrade has very extensive educational information covering topics from finance to current news.
TD Ameritrade offers their educational information in the following ways:
Educational articles
Educational/instructional videos
Online webinars
Tutorial videos
The educational information is available and useful for all level investors. The elite platform, thinkorswim has a bit more advanced educational material.
Research
We tested the trading and research tools that TD Ameritrade has to offer on both the TD Ameritrade Platform and the thinkorswim platform.
They have great research tools including financial data, charts, trading tools, news, and more!
Financial Data
Investing 101 is becoming familiar with a company and their financials. TD Ameritrade has countless financial performance and rating indicators available. That way you can get a better feel of the company you’re interested in investing.
If that’s not enough for you they also have financial statements 5 years back until the present day.
Charts
The charts in the thinkorswim platform are some of the most comprehensive on the market.
The TD Ameritrade Platform and the thinkorswim platform have plenty of editable charts. Their charts allow you to analyze financial information, aiding to a smart and educated decision.
Trading tools
TD Ameritrade has excellent trading tools on their platform. There is also a fair share of distinctive trading ideas.
These tools and ideas are “outsourced” from external parties. A few of the many parties are The Street Ratings, Vickers, and Market Edge.
News
The TD Ameritrade Platform and the thinkorswim platform have updated news whenever you need it. MarketWatch and CNBC are some of the news channel providers.
News is available on the mobile trading platform and the online web trading platform.
TD Ameritrade Customer Service
Customer service is a very important aspect of an online broker. We tested out the main ways of getting a hold of them.
Live Chat– Available at the home page of their site.
Email– We sent them an email and they replied the following business day.
Messaging Them– TD Ameritrade has a presence on Facebook messenger, Twitter and via SMS (Text them at TXTTDA)
Phone– If you’re looking to open an account, call 800-454-9272.
We were very satisfied with the customer service and available outlets that TD Ameritrade offers.
Safety
TD Ameritrade is regulated by top governmental organizations.
A few of the regulators are:
SEC- Securities and Exchange commission
CFTC- Commodity Futures Trading Commission
FINRA- Financial Industry Regulatory Authority
MAS- Monetary Authority of Singapore
SFC- Hong Kong Securities and Futures Commission
With All of That Regulation is TD Ameritrade Safe?
TD Ameritrade offers in-depth account protection to their clients in relation to personal data and financial assets.
TD Ameritrade investors are financially covered by the SIPC and the FDIC.
SIPC insurance protects the assets in your brokerage account. In the event that something goes wrong from the broker’s side, SIPC protects investors up to $500,000.
Cash held in your TD Ameritrade account is insured by FDIC. They protect and backup your funds up to $250,000 per depositor.
Wealthfront was one of the first investment management companies to start with Robo-advisors. Today they are one of the best in the industry!
Quick Look at Wealthfront
Wealthfront is an investment management giant that offers affordable diversification investment portfolios with top of the line planning tools.
What separates Wealthfront from the rest is their Robo-advisory services. The overall goal behind Wealthfront is to offer the best financial advisory services to those who might not have previously been able to afford them.
Account Minimum: $500 USD
Fees: 0.25% management fee for most accounts
Pros:
Great financial planning that helps the investor see the whole picture
Profile line of credit available
Unbelievable planning tools available for investors (even if you have multiple goals)
Cons:
There isn’t an online chat
Larger accounts might be exposed to more expensive mutual funds
Wealthfront is best for:
Investors who want a “hands-off” approach
A load of free financial tools
Investors who want to take advantage of tax-loss harvesting
What Wealthfront is all About (Full Review)
Wealthfront is one of many investment firms in the Robo- advisory market.
In the past decade, Robo-advisors have become a growing trend within the brokerage industry. They started as a way to help novice investors or those who lack time to invest.
Robo-advisors provide access to a virtual financial advisor without the bloated fees their physical counterparts can carry. Wealthfront has played a major part in revolutionizing this niche.
With Wealthfront, you do not actively trade individual stocks, mutual funds, options, etc. Like Betterment, you invest in a basket of Exchange Traded Funds (ETFs) created for you based on your circumstances.
Let’s look at the services and features that Wealthfront provides:
Wealthfront Overview
Account minimum
$500
Management fee
0.25% annually for most accounts – no trading commissions or fees for withdrawals.
Accounts
Individual & joint non-retirement
Roth, traditional, SEP & rollover IRAs
Trusts
529 college savings plans
401(k) rollovers
Cash account
Tax strategy/planning
Tax harvesting in taxable accounts
Smart-beta- clients who have a balance of $500,000 or more
TurboTax customers can effortlessly import tax-loss harvesting information from Wealthfront
Portfolio rebalancing
Free for all accounts
Helpful tools
Free financial planning tools
A line of credit available if needed
Can link external accounts
Customer support
Phone assistance
Monday-Friday 10 AM- 8 PM eastern
Email
wealthfront.com/contact-us
It’s time to move on to a more in-depth understanding of Wealthfront, let’s dive in!
Wealthfront Signup & Portfolio Management
Once you input your personal details, the Wealthfront Path financial advisor will ask you some questions. These questions are for you, to better understand how you stand as an investor.
Some of the questions include:
Choosing main investment goals: college saving, general savings or retirement
Your objectives: Maximum gains, minimum losses, both
If your portfolio lost 5% of its value, what would you do? Sell, buy, stay static
At the end of the process, Wealthfront will create an investment portfolio. The portfolio is customized to you for you based on your risk tolerance, goals and investing style.
Wealthfront keeps an eye on your goals and monitors portfolios closely. If an investor changes their risk tolerance Wealthfront’s algorithm will change as well. They will align your risk with the asset allocation in your portfolio.
Wealthfront has a goal to minimize the amount of taxes you pay. They have one of the best tax-loss harvesting programs in the industry. This service is available for taxable accounts and the bottom line is to save money on taxes.
If you have a large investing account of $100,000 or $500,000, Wealthfront adds additional technology to help your investments perform.
Wealthfront has a service called Smart Beta (formerly known as Advanced Indexing) which helps increase returns by intelligently weighing securities in your portfolio.
Commissions & Fees
Wealthfront pricing is very competitive, similar to other top investment companies like Betterment.
Fees can be very damaging to an investment portfolio. Wealthfront is well aware of that and boasts as one of the lowest fee structures in the industry.
In general, there are two main costs that you should be aware of when signing up with an investment firm that uses Robo-advisory.
Management fees-
A fee to the brokers, in our case Wealthfront for their investment platform and service.
Investment fees-
These fees are for the purchased securities and go to the investment funds themselves (not Wealthfront).
Account minimum
$500
Management fee
0.25%
Investment fee
Between 0.06%-0.13%
Total fee
Between 0.31%-0.38%
Wealthfront Investment Options
Wealthfront has hundreds of thousands of securities available for investors. For the most part, Wealthfront focuses on low-cost ETFs that cover the following asset classes:
Stocks
U.S stocks
Emerging market stocks
Dividend stocks
Foreign stocks
Bonds
U.S government bonds
Municipal bonds
Corporate bonds
Treasury inflation-protected securities
Emerging market bonds
Alternatives
Real estate
Natural resources
We must note that there may be a slight difference if your account is tax-deferred like an IRA. for the most part, the portfolio Wealthfront creates is based on the above ETFs listed
Goal Setting Tools
Wealthfront has some of the best tools available to their investors!
On your dashboard, your goals are always right there to keep you updated and show your progression towards your goal.
Wealthfront has numerous tools to help you reach your goals. For example, if you’re interested in opening up a college savings account, Wealthfront can help you reach an attainable goal. They have a college saving estimator that projects the cost of room board and tuition.
They use third party data to gather the most accurate information on the web to accurately guide investors to their goals.
Features
The nice thing about Wealthfront is that they offer so much more than your average online brokerage. Below are a few of the many features you can your to leverage your portfolio and get to your goals faster
Wealthfront Cash Account: A high-interest cash account
2.07% APY (no fees)
Unlimited transfers (FDIC deposit insurance up to $1 million)
Tailored Transfers: Exclusive to Wealthfront investors
If you are moving from a previous broker you can transfer assets into a diverse portfolio overtime inset of selling
This can help lower taxes
External Account Support: Organize all of your accounts
This is service that helps you keep your accounts organized and under on roof
Helps you see the full picture
529 College Savings: An account specifically designed to save for college
There are great tax advantages
You can use this account for tuition, room, board, etc
Portfolio Line of Credit: Once you have $25,000 in your individual, trust, or joint account you have access to credit with Wealthfront
4.5%-6% interest
Can borrow up top 30% of your account
Free Financial Planning: Use Wealthfront’s app to plan, just download it
You can plan your child’s college education costs with the app
If you’re interested in buying a home, you can get estimates on mortgages to better understand the market
Time off: A planning service that helps users evaluate possible time they can take off from work
They offer a calculator that is connected to your financial data
The calculator can tell you how much you can take off from work while keeping your financial goals intact
Retirement savings: Plan for your retirement
Wealthfront can help you plan for your retirement while looking at all of your accounts
Giving you a full realistic view
PassvePlus: Wealthfront’s investment strategy set
Established to maximize client investments and minimize tax using tax-loss harvesting
Beta Smart is a service that helps clients weigh stocks in portfolio more intelligently (for investors with $500,000 and up)
Customer Service & Educational Tools
Wealthfront offers a large variety of services on their web desktop panel. A few of the following are: “My Wealthfront,” “Getting Started,” and “Learning Center.” These services are available on the online help center whenever you need them.
Wealthfront also has an overwhelmingly large amount of informational videos on investing. If you need assistance, simply call Wealthfront’s support line.
Wealthfront doesn’t have an online chat, but they have a customer support team. They are open Monday through Friday, 7 AM-5 PM Pacific time. They also have a twitter presence and most support questions are posted over there.
Security
Wealthfront is an investment management company that knows how to take proper security measures. They go above and beyond to protect investors from hackers and foreign dangers
Wealthfront is a member of the Securities Investor Protection Corporation (SIPC). Being a member of the SIPC, clients are protected up to $500,000. They also ensure separate cash accounts by the FDIC up to $1 million per account.
In addition to that, Wealthfron takes personal security seriously. They are equipped with a 2-step authorization and security questions at login for added protection.
What Separates Wealthfront From Other Discount Brokerages
There is much to like about Wealthfront. Many of their positive features have been pointed out already, but just in case you missed them, here they are:
Fees: Wealthfront is hard to beat when it comes to fees. When you look at Wealthfront vs. Betterment in terms of fees, both are low in price, though Wealthfront has a slight edge due to the flat structure.
Tax-loss harvesting: This has been covered at length, but Wealthfront uses tax-loss harvesting to effectively and efficiently grow your portfolio.
Personalized service: Much like Betterment, Wealthfront is set up to help you reach your specific goals. For those lacking access to a true physical financial advisor, this is a huge benefit.
Dividend Reinvestment: Unlike Motif Investing, Wealthfront offers dividend reinvestment and does so wisely. This allows for greater potential in growing your portfolio, especially when rebalancing is taken into consideration.
Simple: Many often hold back from investing in the stock market out of fear or feeling like they don’t know enough. Wealthfront makes it incredibly simple and straightforward so you can do other things and learn along the way.
Led by a team of experts: This is part of what really helps Wealthfront stand apart. They have a big-league advisory committee led by Burton Malkiel. You can’t get that anywhere else.
Wealthfront Drawbacks
There are many things to like about Wealthfront, especially for those new to investing. Although no brokerage is perfect. Below are some of the things to keep in mind when considering Wealthfront:
Lack of customization: Regardless of your situation or stage in life, you are going to be offered the same selection of ETFs. You also have no input as to which ones will be selected. This provides simplicity, though for the DIY crowd it may not be a good fit. It is very important to point out that this lack of customization is not unique to Wealthfront, but applies to the Robo-advisor market as a whole.
Wealthfront is not for the DIY investor: The beauty of handing management over to someone else is also a downside to those wanting control. Again, this isn’t unique to Wealthfront and comes with any Robo-advisor.
They don’t know what else you’re invested in: If you have outside 401(k) accounts or other brokerage accounts Wealthfront does not know what you invested in. This can result in being over-invested in certain classes, industries or sectors if you’re not careful. A relatively simple way to counteract this is to sign up for a free Personal Capital account so you can monitor all of your investments in one place.
No pure cash option: Again, like many other Robo-advisors you don’t have access to a money market fund. You buy whole shares with Wealthfront and they leave enough cash to cover management fees and nothing else. For those needing quick access to cash or wanting to pull back temporarily, this is not an option.
Is Wealthfront Right For You?
Whether you are new to investing, or you simply lack the time to invest, Wealthfront can help meet those needs.
Overall we think Wealthfront is an excellent discount broker with one of the best Robo-advisors available.
They are a transparent online brokerage with plenty of tools and features to help you grab hold of your financial goals.
If you’re an investor looking for the middle ground between DIY and hired financial advisor, Wealthfront is perfect for you.
Betterment vs Wealthfront
Now lets take a look at the top Robo advisors in the field, Betterment and Wealthfront. They both have similar investing platforms and create personalized portfolios based on your financial goals.
Although both investment management companies follow similar paths, up close they differ from one another.
Deciding the right discount broker broker coems down to your financial goals and investment planning.
If you want an investment management company that has human advisory available, Betterment might be for you. If you want to invest with 100% digital advisory, Wealthfront is your best choice.
Of course, there are further points to take into consideration when choosing a broker.
Quick Glance
Betterment
Account Minimum: $0 USD
Fees: 0.25%- Digital (basic) plan, 0.40%- Premium plan
Betterment is Great For:
Best for those with a small amount of investing cash
Investors who have specific financial goals such as retirement or purchasing a home
Those who want the option of a service update
Available Human advisors
Yes
Wealthfront
Account Minimum: $500 USD
Fees: 0.25% for most accounts- no commissions on trades or fees for withdrawals
Wealthfront is Great For:
Investors who want to connect all financial accounts and see the big picture
Anyone who interested in a line of credit
Best for investors who want to save money for college
Available Human advisors
No
Now that we understand the makeup of these two, let’s break them down!
Betterment or Wealthfront: Overview
Betterment and Wealthfront are very similar because they are both online wealth management firms.
Both brokers assess your risk tolerance and investment goals. They then take that information to place you in specific exchange-traded funds (ETFs).
This algorithmic process uses the Modern Portfolio Theory, or MPT for short. MPT, in simple terms, constructs a portfolio that seeks to maximize return for a low level of risk.
Supporters of modern portfolio theory believe that what you invest in isn’t necessarily important, but rather how you allocate and diversify your investments across various asset classes.
The benefit to you as an investor is that this investment strategy provides a very hands-off, passive approach. If you’re a new investor or simply want a low maintenance portfolio, you will surely be happy.
Account Overview
Betterment and Wealthfront have similar savings/investment vehicles. Although they are alike, there are important differences to pay attention to.
For the most part, Wealthfront has more account options to choose from. On the other hand, Betterment offers human advisory (with the premium plan).
Betterment
Taxable accounts (individual, joint, and trust)
Traditional IRA accounts
Roth IRA accounts
SEP IRA accounts (for the self-employed and small businesses)
401(k) rollovers
Wealthfront
Taxable accounts (individual, joint, and trust)
Traditional IRA accounts
Roth IRA accounts
SEP IRA accounts (for the self-employed and small businesses)
As mentioned before, Wealthfront has a wider range of accounts to choose from. If you’re looking for an investment firm to save for college, Wealthfront is definitely for you.
Features
In one sense, you really can’t go wrong with either of the two brokers. Both of these Robo-advisors provide a variety of helpful wealth management features that help new and passive investors alike.
Although both firms have similar business models, Betterment and Wealthfront offer different features.
Betterment
Wealthfront
Human Advisors
✔
⛔
Cash accounts
✔
✔
Automatic Rebalancing
✔
✔
Tax-loss harvesting
✔
✔
Fractional shares
✔
⛔
Charitable service
✔
⛔
Line of credit
⛔
✔
Socially responsible investing portfolio
✔
⛔
College savings account
⛔
✔
Retirement tools
✔
✔
Betterment and Wealthfront hand-picked features to help investors get an edge and reach their financial goals faster.
Let’s see a few of their main features!
Betterment
Human advice: The premium plan offers unlimited access to human financial advisors
0.40% annual fee- $100,000 account minimum
There are many packages to choose from
Charitable service: Investors can directly give charity
Tax smart giving- investors can donate shares
Betterment takes care of the donation and charitable benefits that you receive
Savings and checking account: High yield cash
Cash reserve account- 0.30% APY
No minimum balance (FDIC insurance up to $1 million)
Portfolio management: Automatic and consistent monitoring of portfolio
SmartDeposits- automatically deposits money in your bank account if balance goes over the requested amount
Rebalancing- constant rebalancing to maintain asset allocation
Wealthfront
Wealthfront Cash Account: A high-interest cash account
Earn 0.26% APY (no fees)
$1 minimum to open cash account (FDIC insurance up to $1 million)
529 College Savings: A savings account to get ahead of college bills
Tax advantages that help you save
This money can be used for tuition, room, board, etc
Portfolio Line of Credit: Once you have $25,000 in your account you have access to credit
Beta Smart- a service that helps investors strategically weigh stocks in personal portfolio (for investors with $500,000 and up)
Betterment and Wealthfront both offer automatic rebalancing, tax-loss harvesting, and portfolios composed of low-cost ETFs.
As you can see, Betterment and Wealthfront focus on different “investors” offering specialized tools.
Portfolios
The sign-up process for Betterment and Wealthfront is relatively simple. You need to answer a handful of questions before opening an account. These questions help them understand your risk tolerance and financial goals
Let’s Check out Betterment first:
Betterment
Betterment tailer fits a portfolio to your risk tolerance and financial goals. As mentioned above, there will be a few questions that you have to answer. This will help Betterment design your personal portfolio.
Betterment builds a portfolio made of ETFs. The ETFs are taken from the following asset
Classes:
Stocks/Equities
U.S total stock market
U.S large-cap stocks
U.S mid-cap stocks
U.S small-cap stocks
International developed market stocks
International emerging market stocks
Bonds/ Fixed Income
U.S high-quality bonds
U.S municipal bonds
U.S inflation-protected bonds
U.S high yield corporate bonds
U.S short term treasury bonds
U.S short term investment-grade bonds
International developed market bonds
International emerging market bonds
If you’re interested in a specific portfolio, Betterment just recently added “ready to go” portfolios:
Goldman Sachs Smart Beta Portfolio
Uses smart beta to choose investments
Socially Responsible Investment Portfolio (SRI)
A portfolio that invests in socially and environmentally responsible companies
BlackRock Target Income Portfolio
A low-risk investment vehicle that only invests in bonds
Wealthfront
Wealthfont will present you with your portfolio only after they understand your attitude towards investing. Similar to Betterment, Wealthfront asks investors general questions to better understand their situation.
Wealthfront customizes a portfolio based on the investor’s age, investment capital, risk tolerance, and goals. They manage clients’ portfolios made up of carefully selected ETFs.
The ETFs are very diverse stretching across numerous asses classes
Below are the following asset classes:
Stocks
U.S stocks
Emerging market stocks
Dividend stocks
Foreign stocks
Bonds
U.S government bonds
Municipal bonds
Corporate bonds
Treasury inflation-protected securities
Emerging market bonds
Alternatives
Real estate
Natural resources
Retirement Planning
If you’re planning on saving for the future, you can’t go wrong with either of these two giants. Betterment and Wealthfront have simple tools that make retirement planning easy.
A few of the retirement accounts Betterment and Wealthfront have to offer are below:
Traditional IRAs
Roth IRAs
SEP IRAs
401(k) rollovers
Betterment
Betterment takes retirement seriously. They stand by goal-based investing and help you reach your goal.
Betterment allows you to connect external accounts to help you see the “whole” picture. They also offer many retirement accounts. You can choose one or a few, they will help you reach your retirement goals.
At Betterment, they offer an in-depth retirement plan based on your goals. They have a projected spending tool that can help you understand how much you’ll be able to spend in your golden years.
Wealthfront
Wealthfront has an all-in-one retirement planning platform. They use math and algorithms to estimate net worth at retirement. This is derived from your financial goals and current income levels.
Wealthfront takes your life situation into consideration and when things change, so does your plan. With their tools, they will direct you to a free-living comfortable retirement.
Minimum Investment
Betterment and Wealthfront are two different investment companies and it is likely that they will be different in many ways. They do contrast one another in minimum deposit, but not my much.
Betterment: $0 USD
Wealthfront: $500 USD
Annual Fees
All brokerages charge fees one way or another. Over a lifetime those fees can turn into hundreds of thousands of dollars.
Betterment and Wealthfront are Robo- advisors. They provide custom individual investment portfolios for a very low fee.
Let’s see how they compare against one another.
Betterment
Betterment offers two main investment options: Digital and Premium.
The Digital plan contains personal Robo-advisory services, automatic rebalancing, and tax loss harvesting strategies. The cost is 0.25% of assets annually- no minimum balance is required.
The Premium plan offers everything the digital plan received plus human advisory and guidance towards reaching personal financial goals. This plan has an annual fee of 0.40% and you must have a minimum balance of $100,000.
Wealthfront
Wealthfront has a single plan. Similar to Betterment, they offer Robo-advisory services, automatic rebalancing, and tax loss harvesting to their clients. The cost is 0.25% annually but you must have a minimum balance of $500.
Accounts up to $500,000 can invest with the Smart Beta program. This is a program that strategically and intelligently weighs the investments in your portfolio.
There are no fees for signing up, closing an account, account transfers, or withdrawal.
Tax Advantages
A comparison of Betterment vs. Wealthfront would not be complete without diving into taxes. Taxes play a critical role in investing.
Both Betterment and Wealthfront take advantage of tax-loss harvesting.
What is Tax-Loss Harvesting?
Tax-loss harvesting is the practice of selling a security that experiences a loss, then buying a highly correlated security in its place.
You can use that loss to offset your taxable income. Tax-loss harvesting keeps you exposed to the market while obtains a “loss”. That loss will give you a bigger tax savings when you cash in and pay capital gains tax.
Wealthfront has an edge on Betterment offering a feature known as Direct Indexing. Through Direct Indexing, you harvest losses with individual stocks in the S&P 500.
It is important to point out that investors must have at least $100,000 in their Wealthfront account to take advantage of this feature.
Security
Betterment and Wealtfront have top levels of security. They offer two-factor authentication and are insured from many angles.
Betterment
The Securities Investor Protection Corporation (SIPC) provides insurance to investors with Betterment accounts. This insurance covers up to $500,000 (per account) of missing assets.
Betterment also protected cash accounts. The FDIC insures Betterment checking accounts up to $1 million dollars.
Wealthfront
Wealthfront maximizes the protection of investors with the same protection. Your cash accounts are insured but the FDIC and your investments are insured but the SIPC.
Customer Service
Betterment and Wealthfront understand the importance of quality customer service and act accordingly.
Betterment
Betterment has great customer service and is there to help you out. There are two main ways to get in touch with Betterments customer service.
You can call them directly or send an email. Their support team is available from 9 AM- 6 PM Eastern time. Unfortunately, Betterment doesn’t have an online chat.
If you opt for the premium plan, you can get help from a human financial advisor, just make an appointment. We must remind you that there is a higher annual fee with the premium package.
Wealthfront
Like Betterment, Wealthfront doesn’t have an online chat, but they do have a great support team.
They are open from Monday through Friday, 7 AM-5 PM Pacific time. Wealthfront is also active on twitter. They frequently offer suggestions and customer support tips.
Our Verdict
The comparison of Betterment vs Wealthfront is not an easy one to answer. Both firms have low fee structures, excellent features, tax-friendly strategies, and great customer service.
While Betterment and Wealthfront have a lot in common traits, each broker also delivers unique features.
The final decision on choosing Betterment or Wealthfront is really up to you and your investment style.
You can’t go wrong with either investment firm.
Now, let’s take a deep dive into Betterment and their company setup!
#4 Betterment Review
Betterment was one of the first pioneers in the Robo-advisory field and today they are one of the best in the industry!
Whether you’re thinking about investing for the first time or you’re looking for a new broker, our team will show what Betterment has to offer!
Quick Look at Betterment
Betterment has become one of the foremost Robo-advisors. They provide low-cost investment management services with the best planning tools available.
Their goal is simple, to offer the best online investment management services to investors that might not have been able to afford them. The secret is their advanced Robo- advisors.
Account Minimum: $0 USD
Fees: 0.25% management fee
Pros:
Super easy account set up
Betterment allows you to synchronize external accounts
You can easily change your risk tolerance
Cons:
You cannot open a line of credit against your portfolio
There is no direct indexing
Betterment is best for:
Those who don’t have a lot of money and want to invest
Betterment is a Robo-advisor that automates and simplifies investing. Since opening in 2008, Betterment has changed the way investing is done with their advanced Robo-advisory services.
They have helped thousands of clients reach their goals and are now managing over $1 billion in investor assets.
Betterment is not a traditional online broker. They help investors with their Robo-advisor services.
This setup is geared to maximizing your return through managed risk.
Betterment has a strong team of CFA charterholders, CFPs and numerous other PhDs in Finance. You can take advantage of all this through the standard brokerage accounts, IRAs, and Trusts Betterment offers.
Now that we understand the basics of what Betterment has to offer, let’s really see what they’re made of!
Betterment Signup & Portfolio Management
One of the great things about Betterment is that they know how to keep things simple. Signing up online is a breeze and shouldn’t take more than a couple of minutes.
Betterment starts off the process by asking questions. These questions were formed to better understand the investor. Betterment puts an emphasis on evaluating risk tolerance.
Once you fill in all the required information and answer their questions you will be ready to invest. Based on your profile, Betterment will create a personalized portfolio with the help of their Robo-advisors.
If you are not sound with your personalized investment portfolio, you can adjust just about anything. All you have to do is input your bank information and transfer money into your account. Betterment will automatically purchase the ETFs and you’ll be on your way!
If you’re a tax conscious investor, Betterment is the place for you. Betterment applies tax-loss harvesting to all taxable accounts. Investing with Betterment exposes you to many features!
Commissions & Fees
Betterment provides a low-cost investment management services to all investors interested. As of today, they are one of the best discount brokerages online (that’s how they made the list!).
Let’s understand the general fees and commissions that investment management companies charge.
For the most part, we can categorize commissions and fees into two main categories, Management fees, and Investment fees:
Management fees-
An expense to the investment firm, in our case Betterment for their investment platform and service.
Investment fees-
These costs are for the purchased securities ( stocks, ETF, options, etc) and go to the investment funds themselves.
Okay, let’s jump back to Betterment.
Betterment has two investing plans: Digital and Premium. They both differ from one another, so let’s compare them.
Digital
Account minimum: $0
Annual fee: 0.25% on accounts up to $2 million, 0.15% over $2 million
Premium
Account minimum: $100,000
Annual fee: 0.40% on accounts up to $2 million, 0.30% over $2 million
Digital
Premium
Account minimum
$0
$100,000
Management fee
0.25%
0.40%
Investment fee
Between 0.03%-0.25%
Between 0.03%-0.25%
Total fee
Between 0.28%-0.50%
Between 0.43%-0.65%
To pull things together, the management fee is 0.25%-0.40% (whether you choose Betterment digital or Betterment Premium). This fee is annual and goes to Betterment. The management fee is a percentage of the assets invested with the broker.
The investment funds Betterment chooses for your portfolio all have fees. Those fees are called investment fees, aka expenses ratio. These fees are annual just like management fees.
Betterment Portfolio Strategy
Betterment portfolio strategy is built using two main steps, asset allocation, and fund section.
Betterment carefully chooses the right investments for their clients. They base their decisions on the investor’s risk tolerance and overall financial goals.
The portfolio is a mix of stocks and bonds composed of ETFs. Betterment focus on low-cost ETFs that cover the asset classes below:
Stocks/Equities
U.S total stock market
U.S large-cap stocks
U.S mid-cap stocks
U.S small-cap stocks
International developed market stocks
International emerging market stocks
Bonds/ Fixed Income
U.S high-quality bonds
U.S municipal bonds
U.S inflation-protected bonds
U.S high yield corporate bonds
U.S short term treasury bonds
U.S short term investment-grade bonds
International developed market bonds
International emerging market bonds
Bottom line, Betterment builds a personalized portfolio for investors to maximize yields. They base portfolios on risk tolerance and investment goals.
Betterment Features & Tools
Betterment offers so much more than your average online Rob-advisor brokerage.
Let’s checkout Betterments features one by one!
Tax-loss Harvesting
Tax-loss harvesting is the practice of selling a security that experiences a loss, then buying similar security in its place.
Betterment does this to obtain a loss which will offset your taxable income. This will result in bigger tax savings when paying the IRS for capital gains.
Tax-loss harvesting is tricky, but Betterment takes care of it automatically. They buy and sell at the best times maximizing your financial gains
Automatic Rebalancing
A balanced portfolio is crucial when investing in the stock market. The main idea is to “scatter around your eggs”. Never put them all in the same basket.
Betterment constantly balances and maintains your personal asset allocation. All you have to do is establish your goals. From that, they calculate your risk tolerance and create a portfolio based on you.
Betterment regularly rebalances your portfolio when cash flows into your account or leaves.
RetireGuide
Betterment has a cutting edge retirement planning section! They let you link external accounts (401(K)s) to their retirement planning tools.
Simply add in all the information you see fit to get a full picture. RetireGuide offers in-depth retirement planning advice on how to save and whether you are saving enough to reach your goal.
Although it can’t be 100% accurate, Betterment RetireGuide is based on algorithms and math. For the most part, they offer great insight into reaching your retirement goals.
Additional Portfolio Options
Betterment is constantly advancing and improving their services. They just recently added a variety of investment portfolios.
These portfolios are optional. If you’re interested go for it!
Goldman Sachs Smart Beta Portfolio
A portfolio that uses smart beta to choose investments
Socially Responsible Investment Portfolio
A portfolio that invests in socially and environmentally responsible companies
BlackRock Target Income Portfolio
This portfolio is a low-risk investment vehicle that only invests in bonds
Betterment Everyday Cash Reserve
Betterment created a Cash Reserve checking account that offers 0.30% APY. If you have money lying around that you’re not interested in investing, Betterments Cash Reserve is a great place to leave it.
There is no minimum balance so it doesn’t take much to open up an account. With Betterment, you are FDIC insured up to $1 million.
Charitable Giving
This is a feature that shows Betterment’s true colors. Betterment gives you the option to donate directly from your account.
They take care of the transfer and the charitable benefits that you receive from the IRS. We recommend checking with your tax consultant/accountant prior.
Betterment’s Customer Service & Educational Tools
Betterment has a good amount of educational information in their resource center. Their articles cover topics about retirement planning, tax minimization, and general saving tips. They also have a few videos explaining how to use the platform.
Whether you are looking for something educational to read or you’re having issues with your account, Betterment will help you out. These services are available whenever you need them. Simply log onto your Betterment account.
If you need assistance, you can call or send an email to Betterment. Their support team is available from 9 AM- 6 PM Eastern time. Unfortunately, Betterment doesn’t have an online chat.
Is Betterment Safe?
Yes, Since 2008 Betterment has had a very positive track record. Betterment strongly believes in security. They take many steps to protect investors from external dangers and hackers.
The Securities Investor Protection Corporation (SIPC) protects Betterment accounts up to $500,000 (per account). This is insurance that protects the investor if there were any losses due to broker error.
FDIC provides protection for cash in Betterments Everyday Saving accounts up to $1 million and any cash in Everyday Checking up to $250,000.
Betterment Advantages
Betterment has grown in popularity since their launch in 2008. Since then, they have become bigger and better.
Betterment is an investment management company that is always looking to get better. Below are some of the pros to consider when looking at opening a Betterment account:
No minimum balance: This is often overlooked, but a zero minimum balance is a big perk. Betterment lowers the barriers of entry so anyone can start investing. This is a huge win for those who want access to professional guidance but don’t have the funds to get it.
Wise rebalancing: You never know how a portfolio will react to the stock market. That’s why rebalancing is so important. Betterment keeps this in mind as they rebalance portfolios every time funds enter or exit.
Price: It’s easy to see that Betterment offers a ton of value for their platform. That is not terribly common in the online brokerage space.
Tax-loss harvesting: This was covered above. Tax-loss harvesting helps maximize returns and lower taxable responsibility.
Retirement income: If you’re approaching or in retirement then you know how important it is to make a plan. Betterment offers a great retirement income feature. They allow you to create a system of sustainable cash flow to help you plan your golden years correctly.
Personalized service: This is the real beauty of Betterment or most Robo-advisors for that matter. Betterment is set up to help you reach your goals. Your emotions are removed and they do the heavy lifting of investing for you. This is great for beginners and seasoned investors who just don’t ́t have time to manage their portfolios.
Betterment Drawbacks
Nothing in life is perfect. We are going to go over some of the cons that we noticed with Betterment. Here are some of the drawbacks:
No customization: Yes, your portfolio is customized based on your given situation, however, your portfolio is made up of ETFs. You cannot choose exact stocks or bonds. This will be the case at any Robo-advisor and is not unique to Betterment.
Not for the DIY investor: If you like to manage your own portfolio then a Robo-advisor like Betterment is not for you. This isn’t necessarily a bad thing, but important to know.
No pure cash option: Just as with other Robo-advisors, there is no pure cash option with Betterment. They keep enough funds in your account to fund your quarterly fees but little beyond that. They do this to ensure you’re fully invested.
Is Betterment Right For You?
If you’re looking for a low-cost investment management company, there is no doubt that Betterment is a great option.
Whether you’re new to investing, or you simply don’t have the time, Betterment can help. They have a great Robo-advisory investment system that can assist you with your financial goals.
You don’t need a whole lot of money to start investing. Betterment gives everyone the ability to invest with their $0 minimum. All you have to do is create an account.
If you’re looking for an online broker that takes your risk tolerance into consideration while taking care of the day to day work, Betterment is the best bet!
#5 Personal Capital Review
Personal Capital is a leading discount brokerage firm that provides full investment management service.
The investment management service is similar to a Robo-Advisor, but with much more support.
If you’re interested in Personal Capital and want to know what they’re all about, then you’re in the right place!
We will walk you through Personal Capital step by step.
Let’s go!
Who is Personal Capital
Personal Capital is an online financial advisor and personal wealth management company. As of today, they have over 24,000 clients and are managing well over 12 billion financial assets.
Since Personal Capital was founded (2009), they have been providing both free and paid for wealth management software.
Personal Capital offers financial services to high net investors and those looking to track and manage their money.
How Does Personal Capital Work
Personal Capital has two software products:
Personal Capital Free Financial Dashboard
Personal Capital Wealth Management
These are the two main services that they provide their clients.
There is no requirement to upgrade to the wealth management service and the free financial dashboard provides a lot of value.
Although these two services are somewhat related, they both offer different features and have distinct goals.
Let’s take a look at each one of their services under a microscope.
Personal Capital Free Financial Dashboard
The free financial dashboard is a platform where you can create a full picture of your financial situation.
You can add just about any personal financial information to the platform and get a 360-degree view.
Add your savings account, loans you have taken, investments, your monthly budget, and more.
The more information you add, the better the free financial dashboard can help you. This is a tool to give you a comprehensive look at your current financial situation.
What Does The Personal Capital Free Financial Dashboard Offer
The Free Financial Dashboard has a lot of great features. Let go over the main free financial tools and explain how they can help you.
Net Worth
Budgeting
Cashflow
Retirement Planner
Fee Analyzer
Education Planner
As you can see, the Free Financial Dashboard covers a large array of personal finance sectors. We are going to take a look at each of them, one by one.
Net Worth
What is your net worth and how do you calculate it?
Let’s not get too technical but general speaking, your net worth is your assets minus your liabilities.
Personal Capital allows you to connect your personal accounts and track your liabilities and assets. The net worth section gives you the big picture perspective that you need to meet your financial goals.
Budgeting
Creating a budget and getting on top of your finances is a great wealth-building habit. Personal Capital has an easy to use budgeting tools to help you track money coming into your account and money leaving.
If your main interest is a budgeting platform/software, we don’t think that Personal Capital is for you. Their budgeting tool is great, but they don’t provide a bill payment function.
Cashflow
Cash is king, and that’s especially true when monitoring your cashflow.
Personal Capital’s cashflow feature allows you to see the income that has come in and the expenses that have left your account over 30 days.
That way you can understand where you stand in terms of cash flow and properly stick to your spending and saving goals.
Retirement Planner
Planning for your retirement is a crucial decision to make. We recommend starting early. There are many ways to start investing when you’re young.
The free Personal Capital retirement planner can help you plan for retirement. They have numerous features to help you get a clear perspective of how your golden years will look like.
Fee Analyzer
You might not know it, but you could be paying hundreds of thousands of dollars in hidden fees. Generally speaking, financial institutions charge fees. If you’re not sharp, these fees can add up to huge amounts over a lifetime.
The fee analyzer is a feature that allows you to connect your mutual funds, investing account, and retirement accounts. They also have step by step instructions on how to lower 401(k) fees.
Education Planner
The education planner eliminates the “guesswork” when it comes to financial planning for education.
Simply put the education planner helps you calculate the amount of money you should be saving to cover education costs.
Free Financial Dashboard Summary
The Free Financial Dashboard is a great way to track and manage your money.
Personal Capital has great features that allow you to really understand your financial situation and plan ahead.
You can uncover hidden fees, plan for retirement, save money for education, improve your spending habits, and much much more.
The best thing in all of this is that the free financial dashboard is free!
Now let’s look over the Personal Capital Wealth Management tool.
Personal Capital Wealth Management
If you’re looking for tailor-fit personal advice, Personal Capital Wealth Management could be a good choice for you.
Before we explain the added features, benefits, and investment strategies, let’s have a glance at their conditions.
Quick Look at Personal Capital Wealth Management Service
Account minimum: $100,000 USD
Fees: 0.49%-0.89% annual management fee
Pros:
No commission fees and no hidden fees
Outstanding customer service
Wide range of investment management tools
Great financial advisors
Cons:
High account minimum ($100,000)
The management fee is rather high
Personal Capital is best for:
Passive investors
Investors interested in high-quality (free) financial management tools
Those looking for human financial advisors
Personal Capital Wealth Management (Full Review)
Personal Capital’s approach includes tax optimization, smart weighing strategy, and dynamic portfolio allocation.
Let’s check look at the services and features that Personal Capital Wealth Management offer:
Personal Capital
Account minimum
$100,000
Account management fees
Fees depend on account balance:
$100K-$1M : 0.89%
$1M-$3m: 0.79%
3M- $5M: 0.69%
$5M- $10M: 0.59%
Over $10M: 0.49%
Set up fees
$0
Account fees
$0
Financial planning
$0
Tax-loss harvesting
✔
Fractional Shares
⛔
Portfolio rebalancing
✔
Investment accounts
Taxable accounts
Joint accounts
Trusts
Cash accounts
Non-retirement accounts
IRAs
o
Traditional IRAs
Rollover IRAs
Roth IRAs
Personal Capital does not directly manage 401(k)s or 529 plans, but they will advise on their allocations
Social Responsibility Investing (SRI)
✔
Mobile apps
✔
Web platform
✔
Customer support
24/7 phone line
Email
Personal Capital Signup & Portfolio Management
Upon signing up, Personal Capital asks their clients a few questions. These questions are geared to better understand your risk tolerance, investment goals, and retirement planning.
With help from algorithms and personal preferences, Personal Capital will construct a personalized portfolio.
The process is for you, to better understand how you stand as an investor. It’s all a part of their strategy selection technique.
In short, MPT is the theory on how to lower risk while maximizing returns for investors. MPT says it’s all about diversification when it comes down to investing.
Personal Capital offers seven different asset classes
U.S Stocks
International Stocks
U.S Bonds
International Bonds
Cash
Alternatives
Unclassified
They also rebalance your portfolio periodically to ensure focused asset allocation.
Your assets will be diversified into the following asset classes. The investment percentage in each asset class will depend solely on how you stand as an investor.
These asset classes are made up of low-cost exchange-traded funds (ETFs).
Altogether this allows Personal Capital to provide you with a dynamic personalized portfolio. They also monitor and make adjustments to your portfolio. This includes rebalancing and tax optimization strategies such as tax-loss harvesting.
Personal Capital is very proud of the yields they achieve for their investors. Below is a snapshot of their performance.
The Personal Capital Wealth Management team provides each client with a dedicated personal advisor.
Even if you don’t use them often, it’s relieving knowing that they’re there for you.
What Investment Strategies Does Personal Capital Wealth Management Service Offer?
We dove into the nuts and bolts of Personal Capital to find out how they stand apart from the other online brokers.
From our analysis, we found that Personal Capital has five unique investment strategies. This is what separates themselves from the rest.
Dynamic Portfolio Allocation
Personalization
Tax Optimization
Portfolio Rebalancing
Smart Weighting
Let’s have a quick look at each one.
Dynamic Portfolio Allocation-
A big advantage with the Personal Capital Wealth Management platform is that you are able to see your full financial picture.
This allows Personal Capital to help you efficiently allocate your portfolio. Personal Capital manages your investments and recommends adjustments. They do this to keep your strategy up to date with your changing situation.
Personalization-
Personal Capital understands that investors are different. They keep investing simple and personalized.
Their approach is specifically fit to your life and financial goals. They create a personal strategy based on your priorities and where you are in life.
Tax Optimization-
Tax optimization consists of tax strategies designed to lower the tax an investor must pay to the IRS.
Personal Capital takes advantage of tax-loss harvesting. Tax-loss harvesting recognizes capital gains and lowers the amount of tax you need to pay.
Portfolio Rebalancing-
Buying low and selling high is a lifelong investors tip. Personal Capital carries out frequent rebalancing to find market opportunities for their clients.
They strongly stand by rebalancing and their research shows that rebalancing can largely improve a portfolio over time.
Smart Weighting-
Personal Capital exercise “Smart Weighting” by restraining investment exposure to one specific market sector. In fact, they make sure that your portfolio is well-diversified and balanced.
Personal Capital’s Wealth Management Features
Personal Capital offers the full package to their clients. From budgeting and money management to passive investing, you’re in good hands with Personal Capital.
The Wealth Management platform adds some exclusive features aside from what we mentioned above and we wanted to share them with you.
Financial advisors- The financial advisors are a big part of the Wealth Management service. They have a team of experts and an investment committee constantly working to improve and maintain strategic investment portfolios.
Advice for 401(k)s and 529 plans- Personal Capital unfortunately does not manage 401(k)s or 529 plans. In spite of that, they do give advice and consult about those accounts.
A complete view of your finances- This platform allows you to have a 360° degree outlook on your personal finances. Having all of your investments, expenses, and streams of income in one place is the right way to take control of your finances.
Socially Responsible Investing (SRI)- With SRI you can invest in a more sustainable future. SRI is a way for interested clients to invest in companies more active in environmental, social, and governance issues. This known as ESG and ESG are the pillars used to evaluate socially responsible companies.
Apps- Personal Capital has apps so you can stay connected on the go. Their apps are suitable for Android and iOS devices.
Cash Savings Account- Like Wealthfront and Betterment, Personal Capital offers a savings account. It is called Personal Capital Cash. The account is FDIC insured up to 1.5 million and they are offering 0.05% APY as of 2020. There is no minimum balance required to open a savings account.
Is Personal Capital Safe?
Personal Capital believes in constant security.
For starters, Personal Capital requires you to authenticate each computer/device that you sign in on. Before you can access your account you’ll receive a phone call, SMS, or an email confirming your identity.
This is a great way to maintain account security, in fact, I wish all financial institutions had this level of security.
Personal capital also has fraud detection set up. They have a transactions page where you can see everything that has occurred in your account. This is a fast and easy way to check what’s going on in the event of suspicious activity.
Personal Capital has many layers of security embedded into their platform. We are confident that they take the actions necessary to keep your account safe.
Should You Sign Up For Personal Capital?
The Personal Capital financial software is no doubt one of the best free financial services on the market.
You can sync all of your accounts and monitor your financial situation with no obligations to upgrade.
Personal Capital is an extraordinary Wealth Management platform with some of the best free financial tools available.
Personal Capital is a great service to track and manage your money.
Conclusion
In our best online discount brokers, we went over a lot…
You have read through a full and in-depth E*TRADE review, TD Ameritrade review, Weathfront review, Betterment review, Personal Capital review and you read a betterment vs Weathfront head-to-head comparison.
This discount broker review is heavy and time-consuming to read. With that said we mapped out the best online brokers, compared their accounts, looked at Robo advisors, and more.
This is a serious resource and to reap maximum benefits, we highly recommend reading again.
Choosing the best discount brokerage firm isn’t easy, but if you do your research, it becomes much clearer!
Benjamin is the Co-Founder and CEO of FinancePond. He worked at a private accounting firm before he created FinancePond. Benjamin is an entrepreneur at heart and firmly believes in strong personal finance and investing education. He has a passion for finance and his goal is to cut out the fluff and make personal finance simple for everyone.
by Benjamin Aronson