Wealthsimple and Betterment – Socially Responsible Robo-Advisors with a Human Connection
Wealthsimple vs. Betterment—Overview
Wealthsimple and Betterment are two robo-advisors that get a lot of focal time on Robo-Advisors Pros, and for good reason: they’re among the best robo-advisors when it comes to available features. Betterment, for one, is on our top five list of robo-advisors with the most assets under management and both Wealthsimple and Betterment are recommended robo-advisors for millennials. Read on to find out how the Wealthsimple vs. Betterment match up turns out. It’s a close contest!
So how do you choose between Betterment and Wealthsimple for your own financial needs?
In this Wealthsimple vs. Betterment comparison post, we’ll walk you through the top features of each robo-advisor, take a close look at the benefits of each, and do a deep dive into their offerings so you can make the best choice for your own financial situation.
If you’re not quite sure if a robo-advisor is for you, check out our pros and cons of robo-advisors article before diving into this Wealthsimple vs. Betterment comparison.
- Wealthsimple and Betterment – Socially Responsible Robo-Advisors with a Human Connection
- Wealthsimple vs. Betterment Comparison – Top Features
- Wealthsimple vs. Betterment—Deep Dive
- Wealthsimple vs. Betterment—The Takeaway
Wealthsimple vs. Betterment Comparison – Top Features
|Overview||Automated investment management robo-advisor platform, covering everything from portfolio allocation to automatic rebalancing, dividend reinvesting, SRI and Halal investing.||A goals based automated investment advisor. Offers a variety of human financial planning options.|
|Minimum Investment Amount||No minimum investment amount for Basic level.||There is no minimum investment amount required for Digital level. $100,000 minimum for Premium.|
|Fee Structure||0.50% of AUM up to $100,000. Wealthsimple Black - for accounts valued over $100,000, 0.40% of AUM.|
Wealthsimple Generation - for accounts valued over $500,000, 0.40% of AUM
|Digital-0.25% AUM up to $2 million.
Premium-For accounts valued over $100,000, 0.40% AUM up to $2 million.
Reduced fees above $2 million.
|Top Features||Human finacial advisor advice. Socially Responsible Investing (SRI), and Halal investing consistent with Islamic principles. Typical rebalancing and tax efficient investing. VIP airport lounge access for Wealthsimple Black & Generation clients. |
High yield Wealthsimple Save and roundup.
|Goal-based ETF investment portfolio. Rebalancing. Tax-loss harvesting. Socially responsible, smart beta + income portfolios. Human financial advisor access available.|
|Free Services||First $15,000 managed for free with signups through Robo-Advisor Pros.com link.||Free investment review.|
|Contact & Investing Advice||Phone or text, Monday through Friday, 8:00 am to 8:00 pm Eastern Time. Email 24/7.||Phone + email support, 7 days per week. All users can text with a financial advisor.|
|Investment Funds||Diversified index funds from 10 different asset classes on regular portfolios, with six in the SRI portfolio; the Halal portfolio includes the stocks of 50 different companies.||Low-fee, commission-free ETFs.|
|Accounts Available||Individual and joint taxable accounts; trusts; traditional, Roth, rollover and SEP IRAs.||Single + joint taxable investment accounts. Roth, traditional, rollover + SEP IRA. Trust.|
Both Wealthsimple and Betterment offer investors a wide selection of features across their various portfolio levels.
Betterment and Wealthsimple robo-advisors share important features:
- Free portfolio review
- Commitment to SRI investing – SRI, which is also sometimes referred to as sustainable investing, is a desired feature in a robo-advisor because it allows investors to make money while still doing good in the world.
- Access to human financial planners
- Tax-loss harvesting
- Diversified investment funds
- High yield savings account
Now, on to the specific best robo-advisor features for each platform.
Wealthsimple Top Features
- Human financial planners are available at all levels
- Halal investment options
- Wealthsimple Socially Responsible Investing
- Tiered system with multiple benefits at Black and Generation levels including free airport lounge access
- First $15,000 managed for free with link from Robo-Advisor Pros
Betterment Top Features
- Texting with financial planners for all investors
- Betterment Premium has digital plus human financial advisors
- A la carte financial planning options for specific financial milestones
- Betterment Socially Responsible Investing, Smart Beta and Income portfolios
- Lower management fees at basic level
Wealthsimple vs. Betterment—Who Benefits?
There are some overlaps between who benefits from these robo-advisors, which makes the choice between these two difficult at times!
You might benefit from Wealthsimple if:
- You prefer socially responsible or Halal investment options.
- You have $100,000 to invest and desire free airport lounge access.
- You are OK paying a bit more at the Wealthsimple Basic level to access human financial advisors. Wealthsimple clients get phone access to human financial planners at all portfolio levels.
You might benefit from Betterment if:
- You like a goals-based investment strategy
- You want lower fees at the basic level. Betterment is on the low end of robo-advisor fees (0.25% AUM) for their basic Betterment Digital level.
- You are OK texting with human financial planners at the basic Betterment Digital portfolio level; Premium clients get more of the human component.
- You want access to occasional financial planning sessions only, not ongoing financial advisor conversations.
A big question to ask yourself here is: which features am I willing to pay for?
Wealthsimple vs. Betterment—Fees and Minimums
Wealthsimple Fees and Minimums
Wealthsimple has three different account types so investors can choose the fee structure that works for them.
All Wealthsimple portfolios receive:
- Diversified investment choices
- Tax-loss harvesting
- Wealthsimple financial advisors
- Wealthsimple app
- Free portfolio review
At the basic level, the aptly titled Wealthsimple Basic requires no minimum investment amount. The Wealthsimple Basic plan charges 0.50% AUM in fees and includes all of the standard features listed above.
The management fees drop to 0.40% with the Wealthsimple Black plan. In exchange, investors must have a minimum investment of $100,000.
Additional Wealthsimple Black features include:
- Additional tax efficiency, such as the use of tax efficient funds.
- Quarterly, scheduled financial planning session with an expert advisor, to help you meet your goals.
- Priority Airport Lounge access when traveling.
Wealthsimple Generation also charges 0.40% AUM, although it offers personalized services and requires a minimum investment of $500,000.
Additional Wealthsimple Generation features include:
- Individualized investment plans that consider all your assets, not just those invested with Wealthsimple. The plans consider your tax consequences, goals and complete financial picture.
- VIP airline lounge access, like the Wealthsimple Black plan
- Health plan discount of 50% off Medcan for Canadians
Betterment Fees and Minimums
Betterment offers two different account types, Betterment Digital and Betterment Premium, plus specialized financial planning sessions with human advisors that are assessed a flat rate. These a la carte options range from $199 to $299 depending on your financial planning questions.
All Betterment clients receive:
- Goal based investing and access to diversified investment funds
- The popular Betterment app
- Tax-loss harvesting for all taxable accounts
- Texting with financial advisors
- Free investment review
Betterment Digital is the basic option; there is no minimum balance requirement, like Wealthsimple and the Betterment expense ratio is 0.25% AUM or 0.15% AUM on accounts valued over $2 million. The Betterment Digital expense ratio is half of the Wealthsimple Basic management fee.
Betterment Digital features include:
- Personalized financial advice including how much to invest and in what types of funds.
- Low-cost, globally diversified investment portfolios. Your portfolio is designed to maximize your returns at every risk level.
- Automatic rebalancing, back to your preferred percentages invested in each fund.
- Tax-loss harvesting strategies for taxable accounts.
- Holistic view of all of your accounts, even those outside of Betterment.
- Access to licensed financial experts via the smart phone app texting feature with expected response within a day.
Betterment’s a la carte financial planning packages are a draw for investors that don’t need ongoing financial planning advice, only limited help with specific questions such as: ‘Should I buy a home?’ or ‘How can I prepare for retirement?’ Coupled with the zero minimum investment amount and .25% management fee, this feature is great for investors with finite financial planning needs.
Betterment Premium, on the other hand, requires a minimum investment of $100,000, similar to Wealthsimple Black. The initial AUM fee is 0.40% for Premium, but that drops to 0.30% AUM for accounts over $2 million.
Betterment Premium features include:
- All benefits of Betterment Digital
- Human financial advice on all investments, within and outside of Betterment accounts. That includes managing 401(k)s, real estate, stocks and more.
- Unlimited access to CFP® credentialed financial advisors for all life planning decisions that impact your money; retirement, having a child, getting married and more.
Wealthsimple vs. Betterment—Deep Dive
Since thus far Wealthsimple and Betterment have many of the most important features in common, let’s take a deep dive into the real differences between these two robo-advisors.
Wealthsimple vs. Betterment— Fees and Access to Humans: Do You Get What You Pay For?
Betterment is the clear choice if you’re looking for a basic robo-advisor portfolio with a low fee. The fact that you can text with financial advisors and buy additional financial planning packages when necessary, make Betterment the low-fee winner.
While both Wealthsimple and Betterment have no minimum initial balance on their basic plans, the Betterment expense ratio of 0.25% AUM fee is much more appealing than Wealthsimple’s 0.50% AUM fee on their lowest level plan.
The key difference in these basic plans is that Betterment is strictly digital, as the name implies. Betterment investors can text a financial planner, but not speak with one.
For investors that want financial advisor access and lack $100,000, Wealthsimple Basic is the clear choice. You’ll pay a bit more for the financial advisory access at Wealthsimple. The Basic expense ratio is 0.50% of AUM in contrast with the Betterment Digital expense ratio 0.25%.
So, for investors who don’t (yet!) have the minimum balance required to upgrade to Betterment Premium, paying Wealthsimple’s extra management fee might be worth it for access to the human financial advisor.
Fund Management Expense Ratio Example
If you invest $5,000 with Betterment Digital, your annual expense ratio will be 0.25% of AUM or $12.50 per year. (Betterment is also offering a promotion and removes the management fee for investors on a sliding scale – use Betterment website link below)
If you invest $5,000 with Wealthsimple Basic, your annual expense ratio will be $25.00 per year. (Although all investors who sign up for Wealthsimple from a link in this post, receive free investment management for their first $15,000 invested – use Wealthsimple website link below)
Wealthsimple vs. Betterment—Customization
Wealthsimple Basic is very basic when it comes to customization. This portfolio gives investors three options to choose from based on their risk tolerance:
- Conservative, which is 65% bonds/35% stocks
- Balanced, which is 50%/50% bonds and stocks
- Growth, which is 80% stocks/20% bonds
Although Wealthsimple does offer an all-stock portfolio for Sharia compliant or Halal investing and an SRI option.
This is vastly different from the customization allowed with Betterment. Betterment is known as a goals-based robo-advisor, which means the platform makes customized recommendations based on your target financial goals and timeline. Additionally, Betterment has investment portfolios for specific situations:
- Socially Responsible Investments, for investors who want to make a difference
- Goldman Sachs Smart Beta Portfolios, for higher-risk targeted investment strategies with a chance for high rewards
- BlackRock Target Income Portfolios, which are conservative and are for investors who want cash flow
In this category, Betterment is the one to go with if you’re looking for customization and a portfolio that adjusts to your needs.
Wealthsimple vs. Betterment—The Takeaway
In key areas, these Betterment and Wealthsimple robo-advisors are similar. Both Betterment and Wealthsimple have the highest security systems along with digital investment management and financial advisor access.
Investors can get varying degrees of human interaction with each robo-advisor, though the costs associated with each robo-advisor varies from 0.15% AUM for a Betterment Digital account valued over $2 million to 0.50% AUM for Wealthsimple Basic. Betterment also has a la carte financial planning packages that run $199-299 depending on the service.
SRI is valued with each robo-advisor, so clients know their investments are making a positive difference in the world. Wealthsimple, however, also has Halal investment options. While these two investment types sometimes overlap, they don’t always.
Investors who want straightforward investment options with financial advisor access might lean toward Wealthsimple, purely because they make portfolio generation so easy at the basic level and offer all investors access to financial advisors.
Investors who want more customization and lower fees might choose Betterment. This robo-advisor has always marketed itself as goals-based, so investors can feel confident that their needs are prioritized by the computerized algorithms. Betterment also has a distinct advantage in that it is much more affordable, making it an easy choice for investors looking to save money on fees.
Although, robo-advisor performance is not the only reason to choose a robo-advisor, Wealthsimple’s growth socially responsible portfolio won first place in the Nummo one year performance ranking from December 1, 2017 to December 1, 2018.
In the final analysis, both Betterment and Wealthsimple robo-advisors offer diversified portfolios at lower fees than traditional financial advisors. We wouldn’t hesitate to invest in either platform.
Read the Complete Wealthsimple Review
Read the Complete Betterment Review
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