Betterment vs. E*TRADE—Which Robo-Advisor is Best for You?

betterment vs etrade

Robo-advisors have pros and cons just like any other financial service, but one thing’s for certain: if you’re going to use a robo-advisor, you’re going to want to pick one that demonstrates security and reliability. When picking the best robo-advisor for you, this Betterment vs. E*TRADE review will help you hone in on two popular platforms – Betterment, a stand alone robo-advisor and E*TRADE part of a larger investment company.

In this E*TRADE vs. Betterment comparison, you’ll see how these two well-known robo-advisors stack up and the side-by-side comparison will help you decide between the two.

Betterment vs. E*TRADE—Overview

What is the difference between Betterment and E*TRADE?

Betterment and E*TRADE share many of the same strengths. Coincidentally, both Betterment and E*TRADE offer SRI and smart beta investment style portfolios. A major difference between Betterment and E*TRADE, however, lies in their target customers.

What is Betterment?

Betterment is a goals-based robo-advisor with a host of portfolio options, ranging from a traditionally passive robo-advisor (Betterment Digital) to the more active Goldman Sachs Smart Beta portfolio.

One of the earliest robo-advisors on the market, Betterment has been around since 2010 and currently ranks third in terms of assets under management, coming up behind Schwab Intelligent Portfolios and Vanguard Personal Advisor Services.

Betterment has one business only – investment management. They are laser focused on low-fee investment management, aligned with proven methods.

Betterment offers several levels of service from Digital to Premium and add on financial planning packages. The Betterment Digital Plan offers texting with financial advisors while all of the other options provide Certified Financial Planner access.

What is E*TRADE?

E*TRADE is a familiar name in investment services. E*TRADE Core Portfolios bring the best of robo-advisors together with the E*TRADE Capital Management investment firm. E*TRADE Capital Management is a comprehensive investment platform offering investment in stocks, bonds, funds and more. E*TRADE also offers prebuilt portfolios for investors who want to manage their own investments, but prefer professionals to select the funds.

The E*TRADE Core Portfolios is their robo-advisory service. Built on best practices investment strategy, like Betterment and most of the robo-advisory competitors, they offer various risk-adjusted investment portfolios based upon your age, risk tolerance level, goals and time line. The E*TRADE Core Portfolios robo-advisor has a detailed questionnaire that is among the most comprehensive among the field. We particularly like that the questionnaire includes best and worst investment outcome for  five sample portfolios.

All E*TRADE Core Portfolio customers have acess to financial consultants, although not all of the consultants hold the Certified Financial Planner designation.

Betterment vs E*TRADE—Top Features

BettermentE*TRADE
OverviewGoals-based digital investment manager with access to financial advisors and cash management.Automated investment management robo-advisor offered by E*Trade Capital Management. Part of larger investment manager.
Minimum Investment AmountNo minimum for Betterment Digital. $100,000 minimum for Betterment Premium.$5,000
Fee StructureDigital-0.25% AUM up to $2 million; 0.15% fee over $2 million
Premium-0.40% AUM up to $2 million; 0.30% fee over $2 million.
0.30%, prorated and paid quarterly
Top FeaturesDigital and hybrid investment management (with financial advisor access) options. All investors can text with financial advisors. Socially-Responsible Investing, income and smart beta portfolios available. Tax loss harvesting available.All users have access to human financial consultants. Offers tax-sensitive, socially responsible and smart beta portfolios.
Free ServicesFree portfolio review.You can complete the Investor Profile Questionnaire to determine the exact portfolio mix necessary based on your own investment goals, time horizon and risk tolerance level.
Contact & Investing AdvicePhone and email support 7 days per week.Chat and email available 24 hours a day, seven days per week. Customer support Monday - Friday, by phone. Branch assistance where available.
Investment FundsLow fee exchange traded funds from diverse asset classes.Low-fee, commission-free, index-based ETFs, including municipal bond funds for taxable accounts.
Accounts AvailableSingle and joint taxable brokerage. Roth, traditional, rollover and SEP IRA. Trust.Individual and joint taxable brokerage accounts; custodial accounts; traditional, Roth and rollover IRAs; SEP IRAs
PromotionsFree account management special promotion.N/A

Betterment Top Features

  • Ability to text with financial advisors at all plan levels
  • Smart Beta and SRI portfolios available
  • Socially Responsible Investment options
  • New, cash management and high yield cash accounts
  • Financial planning a la carte packages and Certified Financial Planners for Premium customers
  • Tax loss harvesting for taxable portfolios

E*TRADE Core Portfolios Top Features

  • Access to human financial consultants for all investors
  • Thorough risk questionnaire to determine personalized portfolio mix
  • Tax-sensitive portfolios
  • Smart Beta and SRI portfolios available
  • Part of the E*TRADE family with broad investment services

Betterment vs. E*TRADE—Who Benefits

If you’re looking for a robo-advisor that offers many premium services for low fees and a low minimum investment, you’ll benefit from Betterment. This robo-advisor is an affordable competitor in the robo market, particularly because it offers access to human financial planners—something investors usually need to pay a premium for.

If you’re a DIY investor who wants your digital investment management platform to be a “one-stop shop,” you’ll benefit from E*TRADE. Active traders who also like like digital and efficient investment management under one roof will enjoy all of the invesment resources. Investors who are willing to pay a fraction more for access to financial consultants, will like that feature for all investors at E*TRADE.

Good news for investors looking for SRI and Smart Beta portfolio options: Betterment and E*TRADE both offer these specialized portfolios.  Also, both robo-advisors claim to use best practices, Modern Portfolio Theory to craft their specific investment portolios.

Ultimately, the minimum investment requirements may end up being the deciding factor in which to choose between Betterment vs. E*TRADE.

Betterment vs. E*TRADE—Fees and Minimums

Betterment Fees and Minimums

Betterment is one of the most accessible robo-advisors on the market, because it has no minimum balance requirement for its Betterment Digital plan. Investors will pay just 0.25% AUM on their Digital portfolios, or 0.15% on portfolios valued over $2 million.

Betterment Premium, the option offering with more features, has a minimum balance requirement of $100,000. Investors will pay 0.40% AUM for their Premium portfolios, or 0.30% AUM when their account value goes over $2 million.

For investors looking for one-to-one financial advice, Betterment also offers a la carte investing advice packages. These packages start at $99 and are geared toward helping clients through life milestones, like retirement planning or saving for college.

E*TRADE Fees and Minimums

E*TRADE requires a $5,000 minimum investment, in line with Schwab’s Intelligent Portfolios. This certainly places it in a bit higher minimum investment amount for robo-advisors; it is less affordable for new investors than Betterment Digital, but is much more accessible than Betterment Premium’s $100,000 minimum.

In terms of fees, E*TRADE charges a flat 0.30% AUM. This fee is prorated and charged quarterly.

The .30% management fee is reasonable for robo-advisors with human financial consultant access.

betterment vs etrade

Betterment vs. E*TRADE—Deep Dive

So who’s really better in the E*TRADE vs. Betterment debate?

Betterment vs. E*TRADE—Human Financial Planners

Both Betterment and E*TRADE offer financial advisor access, but there are several differences.

Betterment offers a la carte Financial Planning packages and all Premium clients access to Certified Financial Planners (CFP). A CFP has more training and expertise than most financial consultants at E*TRADE.

But, all users of E*TRADE Core Portfolios have access to the financial consultants.

Betterment clients can text with human financial planners at both Digital and Premium account levels.

Betterment vs. E*TRADE—Tax-Loss Harvesting

Tax-loss harvesting comes standard for many robo-advisors, but not all. In this instance, Betterment is the clear victor. Betterment offers tax-loss harvesting on their taxable accounts.

E*TRADE, on the other hand, does not offer tax-loss harvesting at all. Within taxable accounts, E*TRADE Core Portfolios offers tax-sensitive funds like municipal bond funds.

Check out our 4- question Robo-Advisor Selection Wizard

Betterment vs. E*TRADE—Investments

The difference between Betterment and E*TRADE is slight in terms of investments. Betterment has a few more offerings than E*TRADE does; still, both robo-advisors have diverse and well-rounded investment offerings for their clients.

Betterment Investments

  • US Small-cap stocks
  • US Mid-cap stocks
  • US Large-cap stocks
  • International Emerging Market stocks and bonds
  • International Developed Market stocks and bonds
  • High Quality bonds
  • Municipal bonds
  • Inflation-Protected bonds
  • High-yield corporate bonds
  • Short-term treasury bonds
  • Short-term investment-grade bonds

E*TRADE Investments

  • US Small-cap stocks
  • US Mid-cap stocks
  • US Large-cap stocks
  • Emerging market stocks
  • International market stocks
  • Municipal bonds
  • High-yield bonds
  • Short- and intermediate-term bonds
  • Treasury Inflation Protected Securities (TIPS)

Betterment vs. E*TRADE—Which is Best? Takeaway

So, which is the stronger robo-advisor: E*TRADE vs. Betterment?

The two are evenly matched in three crucial areas:

  • Both provide SRI options. This means that investors do not need to choose between their values and their portfolio growth—they can invest in sustainable, ethical companies.
  • Betterment and E*TRADE also have Smart Beta portfolio options. Smart Beta portfolios strive to beat the market through a combination of passive and active investment management strategies. Though some experts claim that Smart Beta portfolios over promise, such portfolios have performed well over the years.
  • Human financial specialists are available with both Betterment and E*TRADE. Although more robo-advisors are including human financial planners in their packages, they often come with a hefty price tag. These robo-advisors are still affordable despite this additional service.

Still, Betterment comes out on top for smaller-scale investors, charging only 0.25% AUM on their Digital plan which has no minimum investment amount. Of course, this is only slightly less pricey than E*TRADE’s 0.30% AUM.

That being said, E*TRADE’s minimum investment amount is $5,000. This makes it much more attainable than Betterment Premium’s higher minimum, for investors who prefer financial consultant access.

E*TRADE also has the benefit of offering an extremely detailed initial questionnaire. In the world of DIY investing, this can be an asset for investors who want to make sure they’re considering multiple factors when designing their portfolios. Although both platforms allow investors to adjust their portfolio selection and asset allocations.

Regardless of your robo-advisor choice, each of these platforms come from providers with solid reputations and products.

Go directly to the Betterment Website

Go directly to the E*TRADE Website

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Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t believe is valuable.

 

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