Betterment vs Ally in 2021



Overview of Ally Invest and Betterment


Do you want a low-cost digital advisor for your next brokerage account? Betterment is famous for being one of the first robo advisors in the world. But now, other brokerage firms like Ally Invest offer computerized management. Could a broker like Ally Invest actually be a better option? Take a look at this:


Category 1: Investing Styles


Betterment started the robo craze, but it hasn’t changed very much in the years since. It still offers digitally-managed accounts only, although it does have some banking tools we’ll look at shortly. The company’s software program trades low-cost ETFs.

Ally Invest has a robo service that also invests in exchange-traded funds with very low expense ratios. In addition to its automated account service, Ally Invest also offers self-directed trading in the following assets:

- Equities
- Fixed-income securities
- Currencies
- Mutual and closed-end funds
- Option contracts

Winner: Ally Invest


Promotions


Ally Invest : Up to $3,500 cash bonus + $0 commission trades.

Betterment: Get 1 month free of Betterment service if you invest $5,000 – $24,999.



Category 2: Research and Educational Tools


Ally Invest customers get a large selection of security analysis widgets. These include screeners for all of the assets it offers. Search variables include:

- Implied volatility
- Economic sector
- 5-year price performance
- Beta vs. S&P 500

Security profiles on Ally’s site have a moderate amount of information on them. Perhaps the biggest highlight is free stock reports from CFRA.

On top of the research tools, Ally’s site also hosts learning materials (mostly articles, but a few videos are there as well) that cover many investing topics. Thanks to its partnership with Ally Bank, there are also articles on banking and finance.

Because Betterment only offers robo advising, there are no research tools to speak of. There is a list of FAQs on the company’s website that is sure to help new clients. And then there are the articles and videos that cover various topics, such as:

- 9 Tax Planning Moves to Consider Before 2021 Ends
- How We Built 3 New Socially Responsible Investing Portfolios
- How Can Tax Loss Harvesting Help?

Winner: Ally Invest


Category 3: Trading Software


To cover its self-directed program, Ally Invest has a lot of trading tools. First is the website, which has a trade bar at the bottom of the screen. Then there’s LIVE, a browser platform with good charting and options tools. And finally there is Quotestream, a desktop program.


Ally Invest


And that’s just for security traders. For currency trading, Ally Invest offers MetaTrader 4 and its own in-house forex platform.

Without any self-directed accounts, Betterment’s software, which consists solely of a website in this category, is geared towards portfolio management and account tracking. For example, one tool projects future account balance based on recurring deposits and asset allocation.


Betterment vs Ally


Winner: Ally Invest


Category 4: Mobile Apps


Betterment’s mobile app mirrors its website with the same basic tools. There are widgets for funds transfer and account monitoring.

As with computer software, Ally Invest offers many tools in this category to fulfill its self-directed mission. Forex traders get a separate app to trade currencies. The regular app delivers mobile check deposit and Zelle transfers on top of trading tools such as:


Ally Stock Investing App


- Charting
- Order ticket
- Options chains

Winner: Ally Invest


Category 5: Cash Management


For no charge or minimum, Betterment offers two banking options: a checking account and a cash reserve account. Both of them come with FDIC insurance, and the checking option delivers a debit card with ATM fee rebates.

Ally Invest customers can add checks and a debit card to an existing brokerage account, but the company requires a steep $100,000 to do that. Plus, there are fees for these banking tools.

An easy workaround is to open a fee-free deposit account with Ally Bank and then link it to an investment account. These accounts have no fees or minimums.

Winner: Pretty even


Category 6: Portfolio Management


Ally Invest offers two portfolio management packages, both of which are computerized services. The first is completely free (except for very small ETF expense ratios). The caveat is that the program keeps a whopping 30% of an account’s assets in cash that is not FDIC insured.

The second program keeps the cash position below 2% and charges a 0.30% management fee.

Betterment also has two packages. The base model is a pure robo account with a 0.25% annual fee. The Premium service costs 0.40% per year but comes with unlimited conversations with certified human advisors.

Winner: Betterment


Category 7: Other Services


Fractional-share Trading: Betterment’s robot, but not Ally Invest’s, is able to trade fractional shares. Ally Invest also fails to offer whole-dollar investing for self-directed accounts.

Dividend Reinvestment Program: Ally offers DRIP service inside of self-directed accounts. Cash dividends inside of robo accounts eventually get reinvested at both firms.

IRAs: Both broker-dealers have Individual Retirement Accounts. Ally Bank also has them in case you want FDIC insurance.

Winner: Overall, it’s Ally Invest


Our Recommendations


Long-Term Investors and Retirement Savers: Although Betterment does have IRAs, it doesn’t have target-date mutual funds, which Ally Invest does have. We recommend Ally.

Stock/ETF Trading: With Ally Invest’s robust software (and the fact that it’s the only broker in this competition to offer trading in stocks), it is the easy choice.

Mutual Fund Investors: As already mentioned, Ally Invest is the only option here.

Small Accounts: Self-directed accounts at Ally Invest have a $0 minimum balance. Managed accounts, however, have to deposit $100. Betterment’s regular accounts have no minimum balance requirement, although its Premium service does require a very steep $100,000.

Beginners: Ally Invest.


Promotions


Ally Invest : Up to $3,500 cash bonus + $0 commission trades.

Betterment: Get 1 month free of Betterment service if you invest $5,000 – $24,999.



Judgment


We do like Betterment’s robo service, but Ally Invest delivers so much more.


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