Which Robo-Advisor Is For You: Schwab Intelligent Portfolios or Betterment?
There is no shortage of robo-advisor options available to the public now, which is great news for those looking to invest! The bad news is that sometimes the multiple options can be overwhelming. Schwab Intelligent Portfolios vs Betterment is a difficult choice, as we recommend and like both robo-advisors.
It’s easier, in theory, to visit a human financial planner and just have them tell you how to invest instead of choosing a robo-advisor all on your own… right?
Not necessarily. While there are many similar robo-advisors on the market, we’ll help you decipher the difference between them. Today we’ll be looking at Schwab Intelligent Portfolios vs. Betterment, including their similarities and where they differ.
- Which Robo-Advisor Is For You: Schwab Intelligent Portfolios or Betterment?
- Betterment vs Schwab Intelligent Portfolios — Overview
- Betterment vs Schwab Intelligent Portfolios — Top Features
- Schwab Intelligent Portfolios vs Betterment — Who Benefits?
- Betterment vs Schwab Intelligent Portfolios Robo-Advisors Takeaway
While only you can decide which financial moves are right for you, this Betterment vs Schwab Intelligent Portfolios overview will help you determine which robo-advisor best fits your financial situation.
Betterment vs Schwab Intelligent Portfolios — Overview
Both Schwab Intelligent Portfolios and Betterment are goals-based robo-advisors, which makes them seem more similar than they are. Goals-based robo-advisors ask potential investors questions to determine the client’s risk tolerance, any target retirement dates, or other lifestyle milestones that may impact the client’s financial needs.
These robo-advisors also craft personalized portfolios based on the responses to these initial questions. The goals that you’re saving for will impact the types of investments each robo-advisor recommends. Betterment just instituted the “Cash Reserve” option for emergency funds and short term goals. While Schwab typically includes a cash allocation in each investment portfolio.
This means that while your risk tolerance is taken into account, the robo-advisors might also recommend additional investment opportunities outside your preferred risk level that would help you meet your financial goals.
Visit the Robo-Advisor Selection Wizard, answer 4 questions, and find out which robo-advisor is the right one for you.
Schwab Intelligent Portfolios and Betterment each provide their clients with access to human financial planners, but their level of availability varies widely. Read the deep dive section that delves into the financial planner options at both Schwab and Betterment.
Betterment vs Schwab Intelligent Portfolios — Top Features
Schwab Intelligent Portfolios and Betterment have a lot in common. Both offer tax-loss harvesting and portfolio rebalancing, while simultaneously offering goals-based portfolio options.
Betterment Top Features Overview:
- Goals-based investing (opportunity for multiple goals)
- Portfolio rebalancing
- Tax-loss harvesting
- Diversified stock and bond investment options
- Alternate investing strategies including; socially responsible, smart beta and target income portfolios
- Diversified stock and bond investment options
- Access to human financial planners at all account levels (texting access only at basic Betterment digital)
- Free high yield checking and savings with Betterment Cash
If you lack the Schwab’s $5,000 investment minimum, then choose Betterment.
Schwab Intelligent Portfolios Top Features Overview:
- Goals-based investing
- Portfolio rebalancing
- Diversified stock, bond, real estate and alternative investment options
- All portfolios include an allocation to cash
- Tax-loss harvesting (accounts over $50,000)
- 24/7 phone access to human assistance, every day of the year and branch availability for in-person meetings
- Free, no management fee, investment management
- Access to financial advisors
Read: Robo-Advisor FAQ for explanations of these terms.
While many of these top features overlap, Betterment offers alternative strategy investing and texting with financial advisors, while the basic Schwab Intelligent Portfolios robo-advisor doesn’t charge a management fee.
Schwab Intelligent Portfolios vs Betterment — Who Benefits?
Investors looking for a robo-advisor with a low initial financial requirement, either because they want to get their feet wet or do not have the finances available for a large up-front investment, will benefit from Betterment’s services. With no initial minimum investment requirement, Betterment clients can start investing without a hefty cash stash.
While Schwab Intelligent Portfolios has the backing and services of the Schwab Investment Company. And Schwab Intelligent Portfolios doesn’t charge a management fee.
For a fee, both robo-advisors offer access to human financial advisors.
While Betterment offers a wider range of human advisor access, including texting with financial advisors.
- Betterment is best if you have less than $5,000 to invest and want to text with financial advisors.
- Schwab is best if you want free investment management and are okay with having part of your investment in cash.
- Both offer financial advisor access.
Fees and Minimums
Fees Winner: Schwab Intelligent Portfolios wins with zero account management fees.
Minimums Winner: Betterment wins with no minimum initial investment required.
With a minimum initial investment of $5,000 Schwab Intelligent Portfolios has a higher minimum balance than many robo-advisors, with quite a few often coming in at $300 or less for initial investments. Betterment is one such robo.
Betterment is more immediately accessible with no minimum initial investment required to start using their services.
When it comes to fees, however, Schwab seems to be the easy victor. Schwab Intelligent Portfolios has no account management fees! For many investors, this makes up for the $5,000 initial investment required to get started. However, for more advanced financial advising there is a fees:
- Schwab Intelligent Portfolios Premium combines the Schwab robo-advisor service with a human financial planner for a $300 one time set up fee and $30 per month, regardless of account balance. fee of 0.28% AUM on accounts with a minimum of $25,000 in assets.
Betterment, on the other hand, has a more complex fee structure depending on the account type:
- Betterment Digital customers can expect to pay 0.25% AUM in fees for accounts valued up to $2 million, or 0.15% AUM when their accounts exceed $2 million.
- Betterment Premium customers will pay 0.40% AUM for accounts up to $2 million, or 0.30% for accounts with over $2 million invested; this rate increase does come with access to a human financial planner!
- Betterment also offers a la carte financial planning sessions ranging from $150-500 (learn more about this below).
Overall, both robo-advisors offer reasonable fees.
Access to Human Financial Planners
Winner: Betterment wins with texting access for all account holders and a la carte financial advisor access for Digital clients. Although Both Schwab Intelligent Portfolios Premium and Betterment Premium both have Certified Financial Planners available.
This is a big one for robo-advisor investors. When you need professional advice, where will you turn? Both of these robo-advisors offer access to human financial planners, but in varying degrees.
Betterment offers greater financial advisory choices:
- All Betterment clients can text with financial advisors.
- Betterment Premium members, with a minimum account balance of $100,000, have unlimited access to Certified Financial Planners for a management fee of 0.40% of AUM, with reduced fees as assets grow.
- If the $100,000 minimum is too steep, clients can opt for a low-fee financial planning package that includes help with specific financial goals. From “Getting Started”, “Financial Checkup”, “College and Marriage” Planning to the “Retirement Planning Package”, there’s an option for various life stages. The fees for individual packages, which include chats with a financial advisor range from $149 to $399.
At Schwab you can talk with a human at a branch although financial advice from a Certified Financial Planner is only available with the Schwab Intelligent Portfolios Premium Plan.
- The basic Schwab Intelligent Portfolios robo-advisor, doesn’t provide official financial advisor access, but you can visit a branch and discuss how to use the platform with a representative.
- The Schwab Intelligent Portfolios plan charges a $300 set up fee and $30 er month and requires a minimum of $25,000 AUM. This entitles you to dedicated certified financial planners that you can consult with by phone or video chat. Each of these salaried CFPs claims an average of 10 years of experience and uses the same planning software. This creates consistency across the platform.
Winner: It’s a tie. Both Schwab and Betterment offer many account types.
There’s not much competition in the account department.
Schwab Intelligent Portfolios and Betterment offer the same basic investment accounts that one would expect from a robo-advisor, including individual or joint investment accounts, and IRAs (Roth, traditional, or rollover). Both Schwab and Betterment also offer trust accounts.
For small business owners, Betterment adds SEP IRAs while Schwab has a SIMPLE IRA.
Winner: Schwab offers a greater number of funds than Betterment.
Both Betterment and Schwab offer superb diversity in investment funds covering the U.S. and international equity markets and a variety of fixed income bond funds.
Schwab also offers real estate investment trusts and a master limited partnership. Schwab offers a greater number of fund choices than Betterment.
In addition to the basics, Betterment offers several value-oriented equity funds, along with the previously mentioned socially responsible, smart beta and target income portfolios.
Check out; Betterment vs Axos Invest
Both robo-advisors use low fee, highly liquid diversified exchange traded funds from a variety of providers.
Realistically, an investor would have sufficient diversification with either of these robo-advisors.
Ultimately, there’s no guarantee that a greater number of funds correlates with higher investment returns.
Tax Loss Harvesting
Winner: Betterment offers tax-loss harvesting for all taxable investment accounts.
Only available in taxable accounts, this is the process of selling losing funds and replacing them with similar funds. This process is done to lower your taxes, which may ultimately boost your investment returns.
Schwab offers tax-loss harvesting for their taxable accounts valued at more than $50,000. You must enroll in this service.
While Betterment offers tax-loss harvesting to all clients.
Winner: Betterment wins, by a thin margin.
Betterment has a robust retirement planning calculator that answers questions such as:
- Am I saving enough for retirement?
- When can I retire?
- What will my retirement look like if I don’t boost my savings?
- What are the financial implications of moving to a different place for retirement?
- Are there better ways to invest for retirement?
Schwab has a decent retirement planning calculator on their website, although it’s not specific to the intelligent advisor robo-advisors.
Although Betterment’s retirement planning tool is better, this isn’t necessarily a deal breaker. There are a lot of solid “free” or low-fee retirement planning calculator available online.
Yes, both Schwab and Betterment robo-advisors are good. Each robo provider is part of a strong and reputable company and will manage your money responsibly for low fees. Choose the one that best meets your individual needs.
Each of these robo-advisors are good and suitable for the appropriate individual. Since the basic Schwab Intelligent Portfolio has no management fee, we rank this one higher than Vanguard.
Investing with the Betterment robo-advisor is a sound way to grow your wealth. It is a well-respected company with an excellent investment strategy. Be aware than any investment account will go up and down.
Betterment vs Schwab Intelligent Portfolios Robo-Advisors Takeaway
Although their fee structures and minimum investment amounts make these two robo-advisors seem to be in vastly different categories, they actually have more in common than they do different! Both are goals-based robo-advisors, and offer the basics of tax-loss harvesting and portfolio rebalancing, as well as a nice variety of account types.
Apart from their minimums and fee structures another differentiating factor is their access to human financial planners, which varies depending on account type and the fees. However, neither robo-advisor will leave their clients completely alone; customer services is readily available through each robo seven days per week.
While Betterment is the more easily accessible robo-advisor, with no minimum initial investment and low account management fees, Schwab’s $5,000 minimum initial investment is offset by its free account management services. Both robo-advisors are equipped to provide quality portfolio management services while ensuring their clients are putting more of their money into their investments—not into account management fees.
Finally, both hold a spot on the coveted “Robo-Advisors with the Most Assets Under Management” list.
Depending upon your specific needs, you might prefer one over the other.
You can’t go wrong with either robo-advisor as each offer robust investment options, access to financial advisors and are well-regarded companies.
For more information:
Read the Complete Betterment Review
Read the Complete Schwab Intelligent Portfolios Review
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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.
Disclosure: Barbara A. Friedberg, website owner has a Schwab Intelligent Portfolios SIMPLE IRA account.