Wealthfront vs Betterment

Wealthfront vs Ally Managed Portfolios vs Betterment

Ally Managed Portfolios vs Betterment vs Wealthfront: Overview

Three financial companies that provide investment advice for a fee are Wealthfront, Betterment, and Ally Managed Portfolios. There are some important differences among these three brokers. Let's take a detailed look at them and evaluate their strengths and weaknesses.


A somewhat known company company in the world of brokerage firms is Wealthfront. Established in 2008, it has been attracting customers who desire portfolio management at very low cost. In fact, this company has taken human advisors out of the equation altogether and replaced them with sophisticated computer programs that manage and trade client accounts. By using on-line questionnaires and mathematical formulas, the company is able to keep costs as low as possible.

Wealthfront vs Ally

The broker offers traditional securities accounts along with IRA's, trusts, 401(k) accounts, and education savings plans. There is a minimum deposit requirement of $500 to open a Wealthfront account. All account types are managed in the same computerized way.

The annual fee for the company's automated portfolio management is only 0.25%. This is much lower than the traditional average of 1.00%. To entice new customers, the broker manages the first $10,000 free of charge. The asset-based management fee is levied at the end of each month, based on a monthly rate. Traditionally, brokers have charged a regressive management fee, giving large accounts a discount. Wealthfront is unusual in charging a flat percentage.

Everything in life comes at a price, and the cost of such a low advisory fee is that Wealthfront only invests in ETF's. If you want a certain mutual fund or zooming stock, you won't get it here. The exchange-traded funds the broker invests in have low expense ratios—just 0.12% on average.


Another robo-advisor came on the scene just two years after Wealthfront. Betterment also has discarded the human financial professional, trusting in the ability and cost of computer programs. Various account types are available, including regular brokerage accounts, workplace 401(k) plans, and trusts. The firm requires a nominal $10 to open an account, significantly lower than Wealthfront's requirement. There are no low-balance fees or IRA charges. A Betterment app can be used on Apple and Android devices to track account balances and more.

Betterment vs Wealthfront

Betterment also charges a management fee of 0.25% per year. Account fees at Betterment are applied quarterly. Customers with $2,000,000 or more invested with Betterment do not pay management fee.

The firm offers an in-person financial consultation with a human advisor for clients who have $500,000 or more in total balances across all accounts. The broker's lone office is in New York. Betterment also offers a tax loss harvesting system where ETF's that have generated a capital loss at the end of a tax year are sold to offset capital gains on other investments. This program can help reduce investors' April tax burden.

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Ally Managed Portfolios

Like the first two brokerage firms in our study, Ally Managed Portfolios gives new clients a questionnaire when they open a new account. Unlike the other firms, however, Ally Invest uses the old fashioned method of relying on human advisors to make trading decisions. In order to keep costs down, Ally Invest invests solely in low-cost ETF's. All Ally Invest accounts, including managed and self-directed accounts, can be accessed with a single log-in.

Ally vs betterment

Several accounts can be professionally managed by Ally Invest, including IRA's (Roth, Traditional, SIMPLE, SEP, and Beneficiary formats are available), a Coverdell education account, trusts, and custodial accounts. A new account can be opened with as little as $500.

The management fee is a flat 0.25% of assets annually. Considering that the broker uses human advisors, this is very low. Accounts are billed monthly, and the firm has a $1 minimum monthly fee. Customers who are willing to pay 0.50% per year receive a service called Risk Assist. Under this plan, the firm will monitor the securities markets and sell stock ETF's and purchase bond ETF's if there is a significant decline in equity prices.


Ally Managed Portfolios: Just 0.30% Annual Advisory Fee at Ally Invest!

M1 Finance: Pay $0 broker commissions or fees when you open account at M1 Finance.

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

Final Thoughts

Ally Managed Portfolios (read review) is the way to go for investors who don't trust a software program to manage their life savings. On the other hand, investors who have $2,000,000 or more will benefit from Betterment's (read review) no fee offer. However, the best deal in the industry is with M1 Finance that offers investing completely free. Unlike the Ally Managed Portfolios, Betterment, and Wealthfront it also allows investing in stocks and all ETF's on NYSE and NASDAQ.