Betterment Review 2021

Making Investing Simple

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Betterment Betterment has risen to the forefront as one of the biggest Robo-investing platforms in the industry. But it's far from being just a cold algorithm. It's a good starting point for beginning investors and a useful platform for those more experienced with investing. The robo advisor has no minimum deposit, and its basic account is 0.25% annually. If you need help, there are human advisors who can assist with your retirement account. Plus, they have a cash reserve and management account so that you can organize all of your finances in one place. Here's our Betterment review.

Commissions & Fees - 8.5
Customer Service - 9
Ease of Use - 9
Tools & Resources - 9
Investment Options - 9
Asset Allocation - 8.5


Betterment is a robo advisor that is great for beginners, but advanced investors will like its many features as well. It’s easy to set up, and you can get access to a human advisor if you need it. You can also set up a cash management account at Betterment, so all of your savings, checking, and investing accounts can be easily managed in one place.



  • Simple Asset Allocation
  • Low Management Fees
  • Perfect for Young Investors
  • Tax-Coordinated Portfolio


  • Not for DIYers
  • Cannot Asset-Allocate With External Accounts
  • No REITs or Commodities

What is Betterment?

Betterment is a robo advisor that uses computer algorithms to generate personalized advice and manage your investment portfolio. It is designed so that you have access to a lot of automated options. And because the process is streamlined, it requires little day-to-day involvement. Compared to traditional investment options, it's “set it and forget it.”

This robo advisor is all about the endgame, walking you back through the steps required to meet your end goal. From your initial deposit, monthly savings, and time horizon, Betterment will tell you the chances of achieving your objective.

The company's goal is to maximize your return while at the same time minimizing your risk. Although this sounds like an impossible task, in reality, it's not. So how the heck does Betterment do this? The service uses Modern Portfolio Theory or MPT for short. By investing in a diverse pool of assets, it should collectively lower your risk yet stabilize your returns over the long term.

But is Betterment the best robo-investing service out there?

Betterment Features

Minimum Investment$0
FeesDigital – 0.25%/year; Premium – 0.40%/year
  • Taxable
  • Joint
  • Traditional IRA
  • Roth IRA
  • Rollover IRA
  • 401(k)
  • Solo 401(k)
  • Trusts
  • Limited Partnerships
  • Partnerships
  • Coverdell
  • 529
  • Custodial
  • Non-Profit
  • 401(k) Guidance
401(k) Assistance
Tax Loss Harvesting
Portfolio Rebalancing
Automatic Deposits
Weekly, Biweekly and Monthly
AdviceHuman Assisted
Smart Beta
Socially Responsible
Fractional Shares
Customer ServiceMonday to Friday from 9:00 am-6:00 pm (ET).

1. Betterment Cash Reserve Accounts

Betterment recently introduced a new checking and savings platform. The savings account offers an APY of up to 0.40% as of January 4, 2021. Checking accounts come with a bright blue Betterment Visa Debit Card and provide worldwide ATM fee reimbursement, no minimum required balance, FDIC insurance, and no account fees.

If you're a Betterment customer, you can get a Cash Reserve account without paying a single penny in fees.

Betterment makes funding your savings account a no-brainer, too. The service's Cash Analysis tool examines your checking account to look for excess cash. Then Betterment will use its Two-Way Sweep function to push this extra cash into your savings account.

Of course, you can turn these functionalities on and off.

Further Reading: Betterment Cash Reserve review.

2. Betterment Checking Accounts

In addition to its cash reserve account, you can also set up a checking account with Betterment. Betterment Checking is a low-fee account that you can easily manage through a mobile app.

  • It’s online-only, so you can’t deposit cash, but overall it provides what most people need in a checking account. You can even deposit checks through your smartphone.
  • ATM fees are automatically reimbursed, just like with Betterment’s Cash Reserve account. And accounts are FDIC insured up to $250,000.

There are some features missing, but Betterment has a roadmap of features it’s working on adding soon, including joint checking accounts and direct deposit switching.

Further Reading: Betterment Checking Account review

 3. Betterment Cash Back Rewards

With Betterment, you can earn cashback rewards with thousands of merchants, both online and in-store. Plus, you'll get personalized offers based on your spending habits and location.

You can easily check for current offers on the earn rewards section of your Betterment account. The service is powered by Dosh Cashback app, a service that provides cashback rewards using nearly any linked debit or credit card. Read our Dosh review here.

Rewards are paid out as soon as possible- sometimes as soon as just one day! They are automatically deposited into your Betterment checking account, so you don't need to worry about transferring funds.

4. Betterment's Easy Account Setup

The signup process for Betterment is easy and takes approximately five minutes.

  1. First of all, you respond to a series of short questions about your investment needs.
  2. There is also a slide bar that allows users to set the allocation of their assets — e.g., 60% stocks with 40% bonds. It will also suggest an asset allocation to keep you on track with your goals.
  3. Once you've made your choices, you must then link your personal checking account. You can either transfer money into your Betterment account whenever you want or set up an automated deposit.

When money is moved into the account, Betterment will then automatically purchase exchange-traded funds (ETFs). The purchases will be made based on the way you've defined your asset allocations. Your investments are very liquid, and selling your investments is also made simple. Betterment will perform the “sell” trades for you. Any dividends earned will be automatically reinvested. Portfolios are rebalanced, and tax-loss harvesting is applied (if required) daily.

5. Smart Automation Tools and Goal Setting

Betterment uses several automated tools to help you set your goals, save money, and invest more.

  • Investing — Betterment can help you save for a specific target with your investments, and you're encouraged to set up specific goals. Each goal has a target amount and date and includes at least one investment account. There are currently five types of goals:
    • Retirement Savings — for those saving for retirement
    • Retirement Income – for retirees making withdrawals
    • Safety Net – for growing an emergency fund
    • Major Purchase – for making a future expenditure
    • General Investing – for investing when you’re not sure of the specific future expenditure
  • Retirement– To set up retirement goals in Betterment, link up your external accounts to the goals you've set within the service, and your entire retirement balance will show up in the Summary tab. Betterment will alert you to any allocations found in your external account that doesn't fit with the platform's advice. It will also show you a preview of what your money would look like if you chose to roll over your external accounts into Betterment.
  • Taxes – Betterment helps you save on taxes by automating tax-saving strategies, so it’s one less thing for you to worry about. They do this by automatically applying tax-loss harvesting to your account and using asset location. Essentially, this means that assets expected to be taxed at a higher rate will be placed in tax-advantaged accounts like IRAs and 401(k)s when possible. In contrast, investments with lower tax rates are placed in your taxable investing accounts.

Who is Betterment Best For?

Betterment makes investing easy for beginners. With Betterment, there’s no need to research which investments you need to purchase for your portfolio. The service does this for you automatically. But more advanced investors may want to take advantage of Betterment's tax-conscious advice and features, as well.

Recently, Betterment strengthened its holistic approach to help you reach your goals by allowing you to link up external investing and retirement savings accounts. This way you can get a better, more complete picture of where you are on reaching retirement (or a new house, college education for your kids, etc.). Betterment analyzes these external accounts to advise you on their asset allocation, as well as projecting what your money would look like if you rolled those accounts over to the robo advisor.

Also, you can now manage all of your finances through Betterment's Cash Reserve and Checking service. Not only does this make it easy to fund your investing account, but you can also earn interest on the cash you aren't using, spend with a debit card, and even deposit checks through the app.

Betterment's Portfolios: Customized to Your Needs

Betterment has grown beyond offering just one portfolio, and there are now options to customize. They recommend a portfolio to you based on two parts- asset allocation and fund selection. It includes a combination of stocks and bonds. Depending on your allocation of stocks to bonds, Betterment adjusts the allocation of each individual ETF to meet the efficient frontier. In plain English: Betterment has optimized the portfolio to give you the best performance possible.

Betterment Core Portfolio

Their core portfolio includes Vanguard stock and bond ETFs, including the Vanguard U.S. Total Stock Market (VTI), Vanguard U.S. Large-Cap Value (VTV), Vanguard FTSE Developed Markets (VEA), Vanguard FTSE Emerging Markets (VWO),iShares Emerging Markets Bond (EMB), iShares iBoxx $ Investment Grade (LQD), iShares Barclays Aggregate Bond Fund (AGG), iShares Barclays Short Treasury Bond (SHV) and more.

In addition to their core portfolio, Betterment also offers the BlackRock Target Income Portfolio and the Goldman Sachs Smart Beta Portfolio.

BlackRock Target Income Portfolio

The BlackRock Target Income Portfolio is a diversified 100% bond basket. Investors can choose from four risk levels, each with its own targeted level of income yield. The higher the potential income, the greater the risk. This portfolio could be a solid choice for retirees looking for stable, dependable income as well as a way to preserve their nest eggs. It's also a solution for investors who would like a lower-risk investment than stocks.

Goldman Sachs Smart Beta Portfolio

The Goldman Sachs Smart Beta Portfolio is designed for those in retirement or investors wanting a low-risk portfolio. The portfolio is 100% composed of bonds to give investors income with low risk. Goldman Sachs Smart Beta Portfolio seeks to outperform a conventional investing strategy using smart beta. It intends to give investors higher returns by eschewing market capitalization weightings in and across equity asset classes. With a smart beta approach, overall market performance is considered only one of many factors that can affect investment returns. By addressing other factors, this strategy means more risk but also the potential for higher returns.

Flexible Portfolios

Flexible Portfolios allow users to adjust the individual asset class weights. You'll still receive feedback from the Portfolio Analysis tool as to the risks of your selections, but the choice will ultimately be up to you. With Flexible Portfolios, you'll have access to features that can save you at tax time, such as tax-loss harvesting and tax coordination. And these portfolios work with all account types — including Roth and Traditional IRAs. Available for investors with $100,000 or more in investable assets at Betterment, these portfolios allow you to customize your portfolio by adjusting your individual asset class weights. You'll receive feedback from the Portfolio Analysis tool on your selections. It's not valid for Betterment's Socially Responsible Investing, BlackRock, or Goldman Sachs portfolios.

I would still like to see some additional asset classes beyond ETFs, such as commodities and REITs. But Betterment's philosophy is that REITs and commodities held on their own — rather than within an ETF — could overexpose your portfolio.

Socially Responsible Investing Portfolio

In addition to the three portfolios outlined above, Betterment also offers socially responsible investing (SRI). They also allow customers to donate shares directly from their accounts to charities. This can save investors at tax time because they will avoid capital gains taxes on donated shares.

In designing its SRI portfolio, Betterment took two goals into account:

  1. Reducing exposure to companies involved in activities deemed irresponsible on either an environmental, social, or governmental level.
  2. Increasing exposure to companies that are striving to solve ecological and social challenges.

They have three SRI focused portfolios:

  • Broad Impact Portfolio — This includes ETFs with high ESG ratings and keeps investments balanced.
  • Climate Impact Portfolio — For investors that want to make sure they're supporting companies working to reduce carbon emissions. Includes ETFs that are focused on green investments.
  • Social Impact Portfolio — This includes two ETFs that support companies empowering minorities and promoting gender equality in the workplace.

Betterment's socially-responsible portfolio options are great for investors who want their dollars to impact the world and make sure they are investing in companies that are helping make the world a better place.

Customer Service

Betterment offers both phone and email customer support for all of its cash and investment accounts. Betterment's phone support is available Monday to Friday from 9:00 am-6:00 pm (ET).

They also offer email support if you're rolling over or transferring an account to their service.

Betterment Security

Betterment uses two-factor authentication to keep your account secure and browser encryption. You can also set up App passwords to secure your connection to third-party apps like Mint and Turbotax. And if you see any unauthorized or suspicious activity on your account, you can contact Betterment, and they will work with you to recover any losses, provided they were within the last 60 days.

How Much Does It Cost to Use Betterment?

Betterment offers two account types for investing: a Digital Plan and Premium Plan. Included in both plans is the ability to message a financial question to Betterment's financial experts. No different than sending a text message to your friend, you can ask a financial question within Betterment's app. Betterment will respond within its business hours.

Digital Plan:

  • Minimum: $0
  • Annual Fee: 0.25%
  • Features: Messaging via App with financial experts, Rebalancing, TLH+ and RetireGuide

Premium Plan:

  • Minimum: $100,000
  • Annual Fee: 0.40%
  • Features: Messaging via App + Unlimited calls with CFPs; Assistance with external investments
For individuals who want more hand-holding from a human life form than just digital zeros and ones, Betterment offers a Premium tier. This service is optional once you reach the $100,000 investment threshold. The Premium plan's primary advantage is assistance with investments outside Betterment — retirement accounts, stocks, or other life events.

The other benefit is unlimited access to Betterment's CFP professionals. With the Premium plan, you'll be happy to know Betterment can assist with your 401(k) plan and give advice on asset allocation.

Personalized Financial Advice with a Human Advisor

Although Betterment uses a computer program to automate its portfolios, you can get personalized advice. Got a financial question? Just like texting a friend, you can send a message to a financial expert within the Betterment app. This unlimited feature is available to all Betterment customers.

This one-on-one personalized advice is a way to provide advice that addresses life's major milestones sensitively and sensibly and for a low, fixed cost.

The package themes are:

  • Getting Started Cost: $299
  • Financial Checkup Cost: $399
  • College Planning Cost: $399
  • Marriage Planning Cost: $399
  • Retirement Planning Cost: $399

Each package includes a one-on-one call with a licensed financial expert, an action plan specifically tailored for your needs and situation, and exclusive educational content to help keep you informed.

Cash and Checking Account:

  • Minimum: $0
  • Annual Fee: $0
  • Features: Checking and debit card, cash account with up to 0.4% APY as of January 4, 2021, FDIC insurance on checking and cash accounts, retirement planning tools

If you're interested in earning money through a high-yield interest account, you can do so through Betterment's Cash account. While not as high an APY as other high-yield accounts, it's certainly a better rate than most banks offer. And you can get a debit card with Betterment's checking account, keeping both your personal finances and your investment accounts all in one place.

Betterment Promotion: Get Up to One Year Free

Betterment offers up to one year free when you sign up. To qualify for this promotion, you need to deposit at least $15,000 into a new Betterment account. This offer is available for all of their accounts, but you must deposit within 45 days of opening your Betterment account.

How many commission-free months you'll receive depends on how much you deposit. Here's a breakdown:

Initial Deposit Commission Free
$250,000 or more 12 Months
$100,000 – $249,999 6 Months
$15,000 – $99,999 1 Month

How Is Betterment Different?

Betterment was created to make investing as easy as opening a bank account. But let me be clear: Although the service is an SEC-registered broker-dealer and a member of FINRA/SIPC, its investment options are not FDIC insured. Only Betterment’s Cash Reserve and Checking accounts are FDIC insured. Therefore, your returns are not guaranteed and are subject to market risk. It's possible your investment could lose principal. But if you look at other investment options that don't have the principal risk, you'll see that they still have different risk types.

With Betterment, you don't own individual stocks or bonds; instead, investments are held in the form of exchange-traded funds (ETFs). The ETFs own a portion of the equities market via indexing. As a plus, the asset allocation among these various ETFs ensures your account is not weighted too heavily in one particular area, company, country, or sector. While this doesn't lead to unreasonable returns, it prevents you from putting all of your eggs in one basket.

Betterment is the largest independent robo advisor (we think it's one of the best). Unlike the robo investing products offered by big names such as Schwab Intelligent Portfolios or Fidelity Go, Betterment doesn't own any of its recommended funds. It's also a fiduciary, meaning it's legally bound to act in your best interest. So you can have peace of mind that the platform is working for you.

Add the fact that you can manage all of your personal finances with Betterment’s Cash Reserve and Checking account, and it’s a service that even the most experienced investor could find appealing.

Betterment Competitors

HighlightsPersonal CapitalBettermentWealthfront
Minimum Investment$100,000$0$500
401(k) Assistance
Two-Factor Auth.
AdviceAutomatedHuman AssistedAutomated
Socially Responsible

Other Competitors to Betterment:

Betterment Pros & Cons


Simple Asset Allocation
—Betterment teaches the ropes to invest and, more importantly, proper asset allocation.

Low Management Fees
—A flat-rate 0.25% annual fee for Betterment's automated service. 0.40%/year for its advisor service.

Perfect for Young Investors
—Betterment makes investing accessible to young investors by automating the investing process.

Tax-Coordinated Portfolio
—With tax and tax-deferred accounts at Betterment, it's possible to minimize the taxes you pay while investing.

RetireGuide Calculator
—An easy-to-use retirement planner tool, although not as comprehensive as Personal Capital's Retirement Planner.

Flexible Portfolios
—If you have $100,000 or more to invest, you can use Betterment's Flexible Portfolios to customize your asset allocation.

Analyze Accounts Beyond Betterment
—Betterment will now let you analyze the retirement savings accounts you have outside its platform. This aggregation can help you keep your portfolios straight and well maintained.

Personalized Advice Packages
—Betterment now offers advice packages created to answer your pressing financial questions, from getting started to retirement planning.

Goal-Based Investing
—Betterment lets you align your investments -- including those outside the platform -- to your specific financial goals.


Not for DIYers
—For advanced, high-net-worth investors who want to do it themselves, Betterment might not be the perfect fit. If you can roll your own asset allocation and know investment theory, there's little need for using a service like Betterment. In addition, you may need tax advice, which Betterment cannot offer.

Cannot Asset-Allocate With External Accounts
—he biggest limitation of Betterment (and most other robo advisors) is it can manage only accounts at Betterment. While Betterment can display your 401(k) plan, it cannot create an overall asset allocation plan with your 401(k) in mind.

No REITs or Commodities
—Betterment does state these asset classes don't increase returns, but from some research, we've seen they do decrease volatility.

Bottom Line: Is Betterment Worth It?

Without question, Betterment's fees are much lower than you'd find if you were to hire a traditional financial advisor. If anything, with a professional money manager, you would get similar or weaker returns but pay much more in management fees. With the introduction of human advisors, Betterment has become a formidable competitor to Vanguard's Personal Advisor Services. Still, the more advanced investor might do better doing it themselves with a more diverse asset allocation selection and save money in annual fees in the process.

With a focus on the end-user, Betterment aims to provide users with a holistic plan to help them maximize their portfolios and meet their goals. If you're looking for strategies for improving all of your investment portfolios, Betterment might be a great fit for you.

Larry Ludwig

Larry Ludwig was the founder and editor in chief of Investor Junkie. He graduated from Clemson University with a bachelor of science in computers and a minor in business. Back in the ’90s, I helped create some of the first financial websites for firms like Chase, T. Rowe Price, and ING Bank, and later went on to work for Nomura Securities. He’s had a passion for investing since he was 20 years old and has owned multiple businesses for over 20 years. He currently resides in Long Island, New York, with his wife and three children.

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  1. I’ve been with Betterment for over 6 years. It was a great experience for a newbie investor. But I’m going to echo the sentiment above. When you need support you will regret putting your money with them. If you or a family member passed away and you are a beneficiary expect to wait a really long time to get through, to get status updates, etc. I’ve tried to call several times and at first my callbacks were getting silenced (new iOS feature) and then I’d try to stay on hold waiting and would get disconnected by Betterment after 30-40 minutes. I’ve tried getting updates on my accounts via my support ticket, by opening new support tickets … it’s been radio silence for weeks. Using an established financial institution I’ve been able to deal with settling an estate within under a week. I’m going on 7 weeks with no reply from Betterment. I’m rethinking having my investment portfolio, checking and IRA with a company with such poor customer service.

  2. Jordan is right. Transferring out is a total nightmare, especially if you have over $250,000, in which case they make you get a Medallion Signature Guarantee, an outdated stamp from a bank certifying that you are who you say you are, and which only a few banks will provide and only if you are a customer with them. Other companies do not require this these days because they have much more sophisticated ways of verifying identity. In addition, they accept electronic inbound transfers, but they do only paper outbound transfers, a transparent way of making it easy to switch to them but hard to switch from them. Their customer service line is woefully understaffed, and the reps have no power to actually fix your issues.

    In addition, you have no control over your money once it’s in Betterment’s hands. Their computers do everything. You can’t choose to sell a fund that you had rolled over because it’s fees are higher; you can’t keep an IRA in cash until you convert it to Roth. To see cost basis you have to download a confusing csv and calculate it yourself against the current value.

    I wish I could go back in time and warn myself to not try out Betterment. It would have saved me so much time and energy. Do yourself a favor and go with a reputable company like Vanguard or Fidelity.

  3. I have some cash sitting in my HSA account. To get better return, I transferred the fund to Betterment investment account. I select it because it is the only choice that HSA administrator specifies.

    I regret of my decision, and now I stuck in the hand of a swindler. Today is first day that my fund has been transferred into my Betterment account. Although the market is up big today, NASDAQ is up 3.69% and S&P 500 Index is up 1.42%. However, my account value is down on its first day with Betterment. Upon further scrutiny, I found that Betterment bought 10 EFT funds on my behalf. However, each and every EFT they purchased are at the high end of the daily price range. Amazed at the Betterment’s “BUY HIGH” skill, I immediately have the doubt that those transactions might be manipulated. The EFTs might be purchased at lower prices but book to my account at higher price, to profit from the difference.

    In order to determine whether the HIGH prices were due to the bad timing and luck, or they are the result of Betterment’s manipulation, I made phone call to Betterment customer service asking for the transaction detail on the trade of these EFT funds. I specifically asked for the timestamps of when the trades were executed (so I can verify with the market data to confirm whether they are legitimate price, albeit they are high and look suspicious).

    After waiting in the music for about an hour, I finally connected to a specialist. However rather than provide the information I was asking, the specialist kept beating around the bush. She referred me to the activity section but there was no information there. Then she educated me that they could not provide me the information because they are not day-trading firm. Then they could not provide me the information because they focus on the long term, blah, blah….

    At the end, I told her that it is federal law and sec rules that Betterment as agent to execute the orders for me, has obligation to be transparent and to disclose the transaction details to me. If she does not have the access to the information, I urged her to open a case for the back office to look into the matter and get back me at later time. But she simply hung up the phone on me.

    Based on the above interaction, now I truly believe that I have been duped by Betterment and the transactions in my account have been manipulated illegally by the greedy Betterment.

  4. Make sure to include in your review that Betterment will give you the worst customer service ever when you are attempting to move your money elsewhere. Attempted to perform a Transfer In-kind to a new brokerage.

    It has now taken 30+ days to transfer money out of a tax-advantaged account. I found out too late that they will not perform a transfer in-kind. It took them 3 weeks to process my transfer paperwork, 1 week to sell assets in the account to cash without my approval, and now waiting on a check to arrive, and they cant even provide tracking. Don’t worry it’s only a couple hundred thousand dollars……….

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