Review of: Betterment
Investment Website:
Greg Johnson

Reviewed by:
On November 20, 2015
Last modified:June 21, 2017


Betterment makes retirement investing easy. Through their automated process, Betterment helps you create a balanced and diversified retirement account at a drastically reduced price. And since it's all automated, you can just set it and forget it. It's like an "easy button" for retirement savings! Check out our review for more details.

Do you hate high fees? Do you hate conflicts of interest? Do you prefer a do-it-yourself approach to retirement but want a little bit of guidance along the way? If so, Betterment may be just the thing you’re looking for!

Personally, I can’t stand paying high fees when it comes to – well – just about anything. Whether its additional ticket fees for a concert I’m attending or crazy service fees on my cell phone bill, I hate them with a passion – double that hatred when it comes to investing.

High fees on front-loaded mutual funds make me want to vomit, for reals. Besides the fact that I’ve been trained on how to sell those products, I’ve never felt right trusting a recommendation from an advisor who receives a healthy commission from it. Plus, it costs my account good money. Something is wrong with that picture.

All of those fees cost you thousands of dollars over the life of your retirement account. Plus, it is very rare that an advisor can beat the market. That’s why, I prefer to save my money in low-cost investments like index funds and ETFs. These types of investments provide the same type of diversification as mutual funds but with much lower fees.

Any good Registered Investment Advisor (RIA) can help you set up your retirement account using ETFs and index funds. But, if you’re looking for the lowest fee rates, the best option is always to do it yourself. If that option seems a bit scary to you, don’t worry. That’s where Betterment comes in!

With Betterment, you get the best of both worlds: You’ll get some investing guidance at do-it-yourself prices. Plus, it’s totally automated, which makes investing with them super easy. I think Betterment is freakin’ rad, but let’s take a look so that you can make your own decision, shall we?

As I say that, I want you to know that this piece does contain affiliate links. So, if you click on any of our links and fund a Betterment account, we do receive a small commission for the referral. Hypocritical? Nope, because this is all free to you. Using our links doesn’t cost you a dime. So, if you find our review useful and want to open a Betterment account now, we’d really appreciate your support through using our affiliate links!

Before we get started, here are some more of our investment reviews, if you’re interested:

Betterment: A Quick Look

How Does Betterment Work?

Essentially, Betterment is the “easy button” for online retirement investing. Through their automated investment software, they help you create a balanced and diversified retirement account at a drastically reduced price. After you complete the initial interview and account setup, Betterment will create an investment plan that is tailored to your personal goals and time horizon. You have the option to adjust Betterment’s recommendations at any time, but other than that, the entire process is entirely automated. This makes investing extremely simple for you and cost efficient for everybody. Just set it and forget it.


  • Customized portfolio allocation
  • Automated portfolio rebalancing
  • Automatic deposits ($10 minimum)
  • Free to open account
  • No minimum balance requirements
  • Low fee structure
  • Goal setting
  • Tax loss harvesting
  • Passive investing approach
  • Choose your risk tolerance
  • Retirement income tool
  • Retirement guide tool
  • Automatic dividend reinvestment
  • Ability to invest fractional shares

Current Betterment Promotions

The online investment business is a tough game. That’s why almost every online investment company offers a bonus for investing with them. Betterment is no different. Currently, you can take advantage of their standard promotion and get up to 6 months of service free if you sign up here. Just click on the link for more information.

Betterment Promo CTA

Types of Accounts Supported

  • Traditional & Roth IRAs
  • SEP IRAs
  • Rollover IRAs
  • Individual & joint taxable accounts
  • Trusts

Fee Structure

Betterment charges a flat fee based on the amount of money you have invested with them. The more you invest, the lower your Betterment management fee will be. Fees range from 0.15% to 0.35%. Here’s how the tiers break down:

  • $0 to $10,000: 0.35% per year (with auto-deposit) OR $3 per month (without auto-deposit)
  • $10,000 to $100,000: 0.25% per year
  • $100,000+: 0.15% per year


Betterment is registered as a Registered Investment Advisor (RIA) through the SEC. Betterment Securities is regulated as a broker-dealer through both FINRA and the SEC.


According to their website, Betterment takes bank-level security measures throughout their business. This isn’t some “fly by night” organization! They use secure servers, identity verification, and the strongest available browser encryption. Additionally, any Betterment account you open (IRA, Roth IRA, SEP, etc.) is protected by the Securities Investor Protection Corporation for up to $500,000. Furthermore, customer money is kept completely separate from company funds. So, in the very unlikely event that Betterment was to close, you would simply transfer your investments to a new broker.

Betterment In-Depth

What Does Betterment Do?

Betterment has become the largest robo-advisor around, with over 115,000 customers investing more than $3 billion. Their goal is to give you personalized investing advice that you can implement immediately. The company clearly feels that high fees can eat away at your retirement savings. So, they use automated software that is geared toward providing you with the best return possible. This allows them to keep their fees low and makes investing simple for you. Because Betterment automates pretty much everything, you can be as hands-off as you’d like. I like this type of approach because it helps you avoid making emotional decisions. However, if you’d like more control, simply adjust your settings.

Betterment’s Best Features

Investing Made Simple

Betterment is your "easy button" for retirement savings. Read our Betterment review and learn how to save thousands in fees with their automated system!Betterment’s tagline may read “Investing Made Better,” but it may as well read “Investing Made Simple.” By far, the biggest benefit to using Betterment is that it makes do-it-yourself investing a snap for investors of any level. Once you complete the initial interview, Betterment can handle all of your long-term investing needs for you. The entire process is automated, making it super simple to get the most out of your retirement investments with the least amount of effort. With automatic deposits, tax loss harvesting, and automated portfolio rebalancing, with Betterment, you can really just “set it and forget it.”

Optimized, Diversified, and Personalized Portfolio

Along with automation, the other major reason that Betterment is able to keep your costs down is because they invest your money into low-cost ETFs. This provides you with two major advantages. First, these types of funds carry far fewer expenses than traditional mutual funds, which can mean thousands of dollars in your pocket over the long-term. Second, like mutual funds, each ETF is made up of numerous securities that are designed to mimic a particular index. This provides you with instant diversification within a certain category. Rather than trying to beat the market, which very few people can do on a consistent basis, these funds are designed to follow the market’s ups and downs. If you stick with them, your returns should pretty much mimic the performance of the chosen index as a whole.

If you open a Betterment account now, one of the coolest things they’ll do is personalize your investing experience. Rather than just toss you into some random funds, Betterment’s software makes recommendations based on the answers you give in your initial interview. They will select investments from both stock market ETFs and bond ETFs. Again, they’ll allocate your assets in a way that provides you with diversification and exposure to a variety of different industries, both domestically and internationally.


SmartDeposit is definitely one of the best additions to the Betterment toolkit. With SmartDeposit, Betterment helps you put your extra money to work and saves it before you spend it. Once you get SmartDeposit set up, Betterment will check your bank account once a week for extra cash. If it finds any, it will invest that money for you, helping you to get the best returns on your money and grow your nest egg quickly. Just connect your bank account to Betterment, set a “threshold” amount so that SmartDeposit never leaves you with less money than you need, and watch your retirement savings grow.

Goal Setting

Another excellent feature offered by Betterment is that their software gives you the ability to save for certain goals. During the initial interview process, you can identify certain financial goals and save for them separately. You can set up savings for college accounts, weddings, or big purchases along with putting money away to meet your retirement goals. It’s a pretty sweet feature, and one that I’d recommend you take advantage of.

Retirement Income and RetireGuide™

The RetireGuide™ and the retirement income tool are two of Betterment’s newest features – and they’re both pretty great in their own right. RetireGuide™ allows you to see an entire picture of where your retirement currently stands. The tool considers all factors – including your location, current savings rate, income taxes, etc. – and calculates whether or not you are saving enough for retirement. If you’re already retired, Betterment has a retirement income tool that gives advice on how much you should be withdrawing from your retirement accounts. Of course, you have total control over the final decision. But, like with everything at Betterment, you can set up monthly withdrawals to be made automatically from Betterment to your checking account.

Learn More About Betterment

Other Features of Note

  • Automatic deposits
  • Automatic portfolio rebalancing
  • Automatic dividend reinvestment
  • Fractional share investing

Fees at Betterment

One of the things I love about Betterment is that their fees are very straightforward and easy to understand. There are no trading fees or account minimums. There are no transaction fees and no rebalancing fees. You are charged based on the amount of money you have invested with them, and that’s it. That way, there’s no conflict of interest, either actual or perceived.

Betterment fees

Overall, the fees at Betterment are tough to beat. You get the benefits of a managed account at drastically reduced fees. Accounts with $100,000+ get the best rates, with just a 0.15% annual management fee. Accounts ranging from $10,000-$100,000 are charged at a very competitive 0.25% annual rate. However, the bottom tier gets whacked with a 0.35% annual fee. That is certainly much less than human advisors, but more than some other robo-advisors (like Wealthfront) charge at that level. Management fees are collected on a quarterly basis.

Advantages of Betterment

Low Management Fees – As we just talked about, Betterment’s low management fees are totes attractive! Because everything that Betterment does is automated, they can keep their costs low – which means more money for you. With fees typically ranging from 0.15% to 0.35% of your total investment balance, you’ll be hard pressed to find a better deal from a robo-advisor.

Multiple Investment Options – Although Betterment does not offer the option of investing in single stocks, they do offer a wide array of investment options that are totally suitable for most investors. Most people are going to want to take a look at the traditional and Roth IRAs, although they do offer taxable accounts as well. Personally, I love that Betterment has a SEP IRA option. It’s a great way for self-employed people to be able to fund their own retirement and get a little bit of investing advice without going broke.

No Account Minimums – You can open a Betterment account now for free, and there are no minimum balance requirements. Additionally, you can deposit as little as $10 at a time, which is awesome if you are just starting out or short on cash.

Tax Loss Harvesting – Like most online advisors, Betterment does provide tax loss harvesting on taxable accounts. (Tax advantaged accounts like IRAs are not affected because they have tax advantages that are already built in.) In very basic terms, Betterment will sell off any investments that have lost value first, offsetting any gains you may have experienced and – thus – reducing your tax bill. Betterment’s software completes this automatically without any additional effort from you.

Betterment – Up to 6 Months Service Free if You Sign Up Here!

Disadvantages of Betterment

No Solo Stocks – When you invest your money with Betterment, you are basically agreeing to take part in a “buy and hold” approach. For most people, this is probably the best way to invest your money anyway. However, if you would like to invest in individual stocks, you don’t have that option here.

Not Much Investor Control – Clearly, automating the investing process is one of Betterment’s biggest advantages, but it can also be one of its biggest disadvantages. Because of the nature of automation, individual investors don’t have a lot of control over which investments they are buying. Betterment will make recommendations from their list of stock and bond ETFs. You’re able to select out of those options and adjust the allocation if you wish. However, that is about as much control as you’ll get. If you want to invest outside of Betterment’s options, you’ll need to open an additional brokerage account somewhere else.

Management Fee for Lowest Tier – Yes. It is free to open an account at Betterment. Yes, it’s also true that there is no minimum balance requirement. However, be aware that if you open a free account, you’ll be charged the $3/month management fee if you fail to auto-deposit at least $100/month. In fact, the management fee for the lowest tier is more expensive than some other robo-advisors like Wealthfront, where your first $10,000 is managed for free. If you’ve got more than $10K in investments, no problem. If not, it’s probably not a deal breaker, but it is worth noting.

Who Should Use Betterment?

In my opinion, Betterment is a great option for a few different types of investors. Personally, I fall under all 3 categories. Here they are:

  1. Buy and Hold Investors – If you are looking to open a retirement account that is easy to manage, Betterment may be a great fit for you. Betterment’s biggest advantage is that it allows long-term investors the ability to passively plan for their retirement. You literally have the option to “set it and forget it.”
  2. Self-Employed Investors – Self-employed individuals need to save for retirement completely on their own. That is what makes a SEP IRA so attractive. The addition of SEP IRA functionality makes Betterment a great place for busy self-employed people to invest. You’re able to receive investing advice, at minimal cost, and save time through the automated nature of the site. It’s fantastic!
  3. DIYers, Value Seekers, Millenials, and Skeptics – If you’re somebody who is skeptical of high-priced investment advisors or wants to do it yourself (with a little bit of help), Betterment is a great option. Betterment gives you a ton of bang for your buck, giving you investment advice at bargain prices. All you have to do is provide Betterment with your intended goals, and they’ll handle the rest for you. Millenials, Gen Xers, and others who are remotely tech savvy are a perfect fit for Betterment. Additionally, there are no account minimums, so the entry barrier is very low.

Who Should Not Use Betterment?

Although I think Betterment is a great place for most long-term investors, it may not be right for everybody. If you are somebody who needs constant reassurance and personal attention, Betterment may not be a good option. Likewise, if you are a highly emotional investor, you may want to spend a little more and hire a human advisor instead. Automated systems like Betterment are not going to be able to talk you off the ledge when disaster strikes the market. Speaking with an individual advisor who can guide you through the rough times could cost you more upfront but save you thousands in the end. If you decide you need a human advisor, I’d highly recommend speaking with a fee-based RIA rather than a commission based salesman.

Additionally, you should remember that Betterment’s over-arching investment strategy takes a “buy and hold” approach. This is great for long-term investors, like those who are investing in retirement accounts. However, if you are looking to trade individual stocks or funds, Betterment is not your place. Instead, you should try a brokerage house like TradeKing to make your trades.

Finally, if you have less than $10,000 to invest and are completely basing your decision on price, you may want to try another robo-advisor. Betterment’s rates for their top 2 tiers are highly competitive, and I like them better over the long-run. However, you can find cheaper options if you’re just starting out and have less than $10,000 to invest. Try Wealthfront instead and get your first $10,000 managed for free.

Betterment Review Takeaway and Bonus

For my money, Betterment is the best robo-advisor around. Betterment makes everything about investing simple. The best part is that the entire process is automated, allowing you to plan it and forget. From their easy 5-minute sign up to their automatic dividend reinvestment, Betterment helps you make the best decisions for your retirement investments. Furthermore, their automatic features like SmartDeposit can money left over in your budget to work for you before you can spend it. Betterment really does make investing smarter!

I hope that you’ve found this Betterment review helpful and informative! Please feel free to ask me any questions you might have. As a reminder, Betterment is currently offering up to 6 months service for free if you signup here! Click the link to get started today.