Betterment Review

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Andrew Hayward
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Betterment offers brokerage accounts and financial planning services to retail investors, including for personal and retirement investing, and cash management services (such as bill pay, check writing, and margin lending).

In this Betterment review, every aspect of Betterment’s service have been researched to provide users with an unbiased account of a firm completely focused on performance and fees.

Read more to find out if Betterment is suitable for your investing requirements.

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Who is Betterment?

Betterment offers brokerage accounts and financial planning services to retail investors, including for personal and retirement investing, and cash management services (such as bill pay, check writing, and margin lending). Betterment accounts allow users to invest in exchange-traded funds (“ETFs”), and bonds. There are minimums of capital invested to lower the expense ratio of the Betterment account.

Betterment has no incentive to direct users to use Betterment products, as they earn .15 -.40% rate on the AUM (Assets Under Management) no matter which security is bought or sold. However, because this fee is divorced from which investment is used, Betterment only has 1 concern: growing your account balance, a goal you likely share with Betterment. Because Betterment does not offer users payment history to brokers, they do not earn PFOF (Profit for Order Flow).

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  • Only trading ETF’s and certain bonds reduces fees and charges.
  • If you need a human touch, Betterment does off that option. 
  • Betterment allows you to invest with socially responsible investing. 


  • No direct indexing
  • Portfolio lacks exposure to commodities or cryptocurrency.
  • No integration with Roth, traditional, rollover, SEP ARA’s, or trusts.
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Betterment Investment Options

The core product offerings of Betterment are a cash reserve account, a checking account, savings accounts, flexible portfolios and bank account and low-cost ETF’s and core bond holdings all operating under the umbrella of the automated “robo” trader. Betterment uses algorithms to trade these assets to try and match your pre-defined target return goal.

Investing Algorithms

A “robo-advisor” or “investing algorithm” is an automated financial advisor who uses algorithms to balance your portfolio if the market or your goals change. Human advisors can also be purchased for $299-$399. It a has a number of key attributes, described below:


Betterment wants investors to obtain all of their financial goals. In order to setup an algorithmic and holistic trading, they start by learning about an individual’s financial goals. What do you want to achieve? How soon do you want to achieve it? The right investment depends on how much you need to earn and how much time you have to earn it.

Automation and discipline

Betterment uses automatic deposits and decisions based on algorithms in the Betterment investment account. The Betterment premium plan comes with unlimited external accounts, and no minimum balance requirement. It’s easy to make steady progress toward your goals. It’s also easier to avoid common investor mistakes. Your portfolio will likely experience short-term losses here and there. It’s part of investing. And your reactions to these losses can have a huge impact on your long-term success. A robo advisor can assist you in staying rational and allocating to your percentage target allocations.

By automating a portfolio and staying disciplined about investing, users will be better equipped to ride out the short-term losses and enjoy long-term gains in their investment portfolio and savings account.


Betterment’s goal is not to help investors pick the perfect stock. Investing in a single financial asset leaves users vulnerable to that asset’s risks. With a single stock, investors could lose everything if a company goes bankrupt, performs poorly, or gets some bad press.

Instead, Betterment helps you build a well-diversified portfolio. Diversification spreads your investments across assets, asset classes, and even markets, lowering your overall risk. Betterment automatically diversifies your portfolio using cash management accounts, integration with an external account based on your goals and desires.

Through socially responsible investing (SRI), users can even diversify their portfolio according to your values.

Betterment has multiple socially responsible portfolios available. These portfolios invest in “Green“, “Sustainable” and other businesses that demonstrate a commitment to social values. However users diversify, this strategy helps them make steady progress toward their goal with no minimum investment or investment accounts required.

Fees and Costs

A robo-advisor can save a lot of money in fees and ongoing costs. They remove human advisors from the equation—unless users want them. When investors have Assets Under Management (AUM) with a robo-advisor, the fees are typically a fraction of what you’d pay for a financial advisor.

Their fees are just 0.25% annually. With a financial advisor, they’re looking at more like 1% to 2%. And since everything is based on algorithms, users won’t pay extra for rebalancing and making other changes to their portfolio.

Manage Taxes

Taxes are one of the trickiest parts of investing. Sell for a profit at the wrong time, and users will be be on the hook for short-term capital gains taxes. Sell the right asset for a loss at the right time, and investors can offset taxes through tax-loss harvesting. Managing taxes wisely helps keep gains consistent and maximize what investors get to keep.

With a robo-advisor like Betterment, this can happen automatically if this feature is elected. The algorithm optimizes tax advantaged retirement accounts to try and keep investors from being hit hard by taxes and fees. A financial advisor can do this too, but will usually charge an additional fee.

Single Retirement Fund

  • A target dated fund that adjusts asset allocation over time based on the retirement year
  • No account minimum needed
  • .12%-.75% annual expense ratio


Betterment is registered with FINRA and the New York Stock Exchange (NYSE) as a broker-dealer. FINRA provides protection of $250,000 if the firm that holds an investors’ assets goes bankrupt. Betterment is recognized as one of the largest online investing services.

Betterment Safety Policies

Betterment has 33 billion dollars AUM (Assets Under Management) and is an extremely safe broker. They use 2FA (Two-Factor Authentication) to verify investor’s logging into an account. They also use state of the art fraud detection on the server side of the account. If the company did go under, you are protected by the SIPC up to $250,000 and $250,000 is protected by FINRA for a total of $500,000.

Betterment also uses certain technologies to help protect your account:

  • Betterment’s website employs various security features—visible and invisible—to help keep users safe.
  • Betterment SimpliSpeak biometric login
  • Betterment MyVoice biometric login
  • Internal controls
  • Customer verification
  • Restricted customer data access
  • Fraud detection
  • Employee security trainings
  • Encrypted communications
  • FDIC Insurance
  • SIPC Insurance

Betterment Special Offers

Betterment Youth Pack gives an extra $50 for any amount over $100 deposited for an investor under 18 entering the online brokerage space for the first time.

The Betterment Starting Pack offers $50 for any new account opened with more than $100 in the account.

Betterment Education

Betterment offers excellent educational resources for beginning investors just starting to enter the market or needing a refresher course on some aspect of Betterment.

Betterment’s explains taxable accounts, betterment portfolios, overdraft fees, Betterment does not offers a large amount of macroeconomic, microeconomic, and industry-specific research that is useful for active traders and financial advisors.

Common questions I get asked about Betterment

These are the most common questions I get asked about Betterment, so I will try to answer these as best I can, to give you a better view on whether Betterment is the right investment choice for you.

How easy is it to withdraw funds?

It is simple to sell Betterment, ETFs, and most Betterment fixed income with no transaction fee, or account management fee. After you sell, the Betterment ETF’s and bonds should be ready to transfer within five to ten minutes. Some Betterment and non-Betterment accounts do have a settlement procedure so make sure you read the prospectus on all ETF’s and bonds you purchase to understand whether you have an immediate withdrawal period or 2-5 business days of settlement period.

What is the average return on Betterment?

For the latest numbers available, Betterment has a total of 8.8%. This may not seem like an incredible return, but the risk tolerance needed to get that 8.8% is very low. For a higher return, you can choose one of Betterment’s growth ETF’s.

How fast can I make my first trade?

Betterment allows instant access to your betterment cash reserve, checking account, savings account, and cash management account.

However be mindful that your trade might not be executed that day — the slower pace of transfers around your brokerage account is an attempt to protect you from your own emotions. Do you want your broker slowing down your trades? I can see both side, but your mileage may vary.

How many subscribers does Betterment have?

Betterment has 700,000 subscribers using the latest data available.

Do you pay taxes on Betterment?

Give that all the contributions are pre-tax dollars, the transfers from your core portfolio to a checking or savings account is taxed as ordinary income.

How safe is Betterment?

Betterment is extremely safe, and offers multiple security options internally as well as 2 factor authentication for users to login.

Does Betterment trade mutual funds for $0.00?

No, Betterment only trades ETF’s (and some fixed income) with low expense ratios.

Can you lose money with Betterment?

It is possible, however your personal capital is protected by FDIC insurance up to $500,000.

How do I contact Betterment?

You can call Customer Service at 1 (800) 343-3548 24 hours a day, 7 days a week. You can also send a chat, or email Betterment.

Who is Betterment for?

Betterment is completely focused on keeping the expense ratios low without using human financial advisors. You receive a Betterment cash reserve, a checking account, and tax loss harvesting, The account generally has a lower percentage fees for larger portfolio balances. For a fee, you can also receive professional investment portfolios with investment advice and flexible portfolios.

Does Betterment provide research?

Betterment does not provide capital markets or company research. They have a series of beginner tutorials and articles to help new investors understand the system Betterment uses

Is Betterment a Good Way to Make Money?

Betterment has an excellent reputation, and it’s one of the best low-cost platforms for passive and patient investors. The company focuses on algorithmic trading traders with a long time horizon, and the education on Betterment is focused on that one objective. The trader can dynamically select their risk tolerance through their selections in the Betterment core portfolio.

Betterment makes money by charging for automated investment management, and by selling access to financial perspectives (Certified Financial Planners) if the investor requires more help choosing bonds or low-cost ETF’s. Betterment does not use PFOF (Payment for Order Flow) like other large brokers. This could be a benefit if spreads are charged at a natural rate, instead of they artificially changed based on your order on a specific brokerage.

Does Betterment have hidden fees?

Betterment offers a Zero Fee Total Market and Zero Fee International fund that have no account manage or minimum balances which could be good for retirement investors. Betterment also does not sell your data to other brokers. For these products, Betterment does not have hidden fees.

Does Betterment let you trade pre-market?

Extended Hours trading are offerings Betterment offers to brokerage customers, investment advisor, and market makers to trade certain ETF’s on investment account before and after the standard hours of the major U.S. stock exchanges and Nasdaq. Betterment accepts premarket orders from 7:00 – 9:28 a.m. ET, and after hours orders from 4:00 – 8:00 p.m. ET.

Is the Betterment trading platform good for low-cost ETFs and bonds?

Betterment provides a suite of robust ETF and bond screeners for the investment portfolio. Several pre-built and customizable screeners are available for ETFs and fixed income. The ETF screener has more than 140 criteria and about 20 themes such as a retirement account, artificial intelligence, drones, and cloud computing. Combined with a robo advisor and patience, Betterment is an excellent platform for low-cost ETFs and bonds.

Betterment FAQs

Should I buy TIPS (Treasury Inflation Protected securities)?

With the highest inflation in forty years, TIPS could be a good option for your portfolio. TIPS protect your portfolio against inflation by adjusting the principal every 6 months. The principal amount is adjusted by the real rate of inflation. There also “STRIPS” which stands for Separated Treasury Inflation Protected Security which allows traders to trade the bonds as “zero” interest bonds.

Can I buy bonds in non-dollar denominations?

The short answer is yes, but they are not recommended for Betterment investors. Buying a bond in a foreign currency (USD/MEX) denominated in U.S. dollars is a safe bet because it removes currency risk. However, they are more expensive.

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