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Acorns vs Betterment vs Wealthfront: Epic Robo-Advisor Battle

Updated on January 17, 2020 Updated on January 17, 2020
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acorns vs betterment

Competition is heating up among the Robo-Advisors. We get a lot of emails asking which is better: Acorns vs. Betterment vs. Wealthfront so we broke down each of the services to see who deserves your investment.

The whole point of going with a Robo-Advisor is the ease of use. Based on the research, it’s highly unlikely you’ll outperform the market on your own. Better yet, if you tried to do it on your own, it would be much more expensive.

For someone just looking to invest with the right service, it’s getting harder and harder to tell where you should put your money.

Before we get started, I also wrote an incredibly in-depth Betterment Review, an equally detailed Wealthfront Review as well as interviewed the Acorns founders so if you’re looking to go even deeper check those out. In this article, I’ll be focusing more on the nuances of each service than the nitty-gritty features and how they work.

Let the Robo-Advisor battle begin!

A Birds Eye View

Every good investment comparison needs a sexy chart breaking down the differences. I’m not one to leave you wanting so bask in its glory:

Minimum Investment:

Management Fees:

Invest free for up to 1 year

Tax Loss Harvesting:

Portfolio Rebalancing:

Assets Under Management:
$18 billion

Minimum Investment:

Management Fees:

Invest your first $5,000 free, for life

Tax Loss Harvesting:

Portfolio Rebalancing:

Assets Under Management:
$10 billion

Minimum Investment:

Management Fees:
$1, $2 or $3 a month.

Signup and get $5

Tax Loss Harvesting:

Portfolio Rebalancing:

Assets Under Management:
$1 billion

On paper, they’re very comparable but as you know, the magic is in the details. In order to objectively compare Acorns vs Betterment vs Wealthfront I’ve come up with three main rounds the services will battle in to win your investment.

Round 1: Ease of Use and Sex Appeal

Acorns has a beautiful app and a beautiful website. It’s one of the best-designed apps on my phone by a long shot. I’m of course not the only one to notice this – they’ve won some sort of design award nearly every year since they opened their doors.

That’s sexy investing, am I right or am I right? This Round was just going to be called Ease of Use, but Acorns elevated it to Sex Appeal. I’m willing to bet this is the biggest way they get people to try them out. Sexy screenshots.

A beautiful interface can also be a downside though. We’re all about investing for the long-term here so if you keep opening your app just to see the beauty; you’ll also see daily price fluctuations and go slowly insane. That said, we still love beautiful things.

1 / 3


These screenshots definitely play into Acorns ease of use as their app screams hours of OCD design discussions. From adding your checking account (see: Round-Up account later in the article) to selecting your risk tolerance – they make it all very easy. It’s important to note that while I only put up screenshots of their app, their website is equally pleasant to look at.

Betterment, on the other hand, does not have nearly as sexy an app. In fact, their app is pretty plain focusing on getting the job done. Get in, get out, get on with life. If you’re looking for where they flex their design chops, you’ll need to visit their website.

Now, don’t get me wrong, there is beauty in simplicity and this area Betterment has nailed.

They’ve spent hours deciding what to remove from the app and how to tweak the wording to elicit “better behavior” from their customers.

For example, during a market downturn, people tend to act irrationally and sell (you’re supposed to sell high, not low). By conveying the tax implications when you attempt to withdraw they’re able to keep more people doing the right thing. One point for transparency!

Wealthfront has come quite a long way since we first wrote this review back in 2014. They’ve been through at least two complete redesigns and have greatly closed the gap.

While their app does look pretty sexy, all you need to do is compare and read the reviews of Wealthfront vs. Acorns and Betterment, and you’ll see that there are still some issues that need to be dealt with.

Acorns and Betterment have spent an enormous time here and as a result, have figured out quite a bit when it comes to what works. In my opinion, all Wealthfront needs to do is steal the good from their competition, add in their personality and this could be much closer to a tie.


At the end of the day, Acorns and Betterment are easy to use in that it takes almost no effort to set them up or use them. Wealthfront is also pretty easy but requires a little more fumbling around. For a service that bills itself as the easy way to invest, they need to put more focus here.

ROUND WINNER: Acorns. Both Acorns and Betterment are easy to use but Betterment’s app isn’t nearly as sexy, and you have to visit their website to see pretty graphs.

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Round 2: Investing Methodology

Perhaps the biggest question I had when I first started was why should I invest with either of these services? Before any of the Robo-Advisors existed, I just picked the best Vanguard funds I could find and parked my money there.

It wasn’t until I learned how they invested that got me hooked.

While both Betterment and Wealthfront boast that they use Modern Portfolio Theory to determine investments, Acorns takes the bragging one step further to say that their “portfolios are developed with help from Dr. Harry Markowitz, the Nobel Laureate commonly referred to as the Father of Modern Portfolio Theory“. Impressive.

Modern Portfolio Theory acorns

That said, this is about as much as you’ll find from Acorns on how they do things. I get that most people don’t care to know the details but what about the people who do? Are we not sophisticated enough to handle it?

1 / 3

Investing Methodology

Betterment not only tells you what’s going on but they jump a few sharks in the process.

In addition to giving you an exhaustive 3,386-word white paper entitled “Our Investment Selection Methodology,” they proceed to give you interactive graphs and charts in every conceivable form of asset allocation.

It seems that not only do they want to share every nuance of their decisions, but they also spent a considerable amount of time making it easy to digest and, dare I say, enjoyable to discover.

Betterment made a very conscious decision to treat me like an adult. Better yet, it feels like there is nothing to hide, all their cards are on the table. With all the attention to detail around educating me it makes me think about how much attention to detail is baked into their product.

Their Investment Methodology maximizes your return depends on your personal risk tolerance and allocates your money among asset classes that would work best for you.

Acorns has 6 ETF’s (exchange-traded funds) that they will invest you in depending on the risk level you select:


Betterment has 20 ETF’s across 12 asset classes that they invest you in depending on the risk level you select. The reason this is so much higher than what Acorns invests in is due to Tax Loss Harvesting – a feature Betterment has and Acorns doesn’t:

  • US Total Stock Market – VTI and SCHB
  • US Large-Cap Value Stocks – VTV and IVE
  • US Mid-Cap Value Stocks – VOE and IWS
  • US Small-Cap Value Stocks – VBR and IWN
  • International Developed Stocks – VEA and SCHF
  • Emerging Market Stocks – VWO and IEMG
  • Short-Term Treasuries – SHV
  • Inflation-Protected Bonds – VTIP
  • US Municipal Bonds – MUB and TFI
  • US High-Quality Bonds – AGG
  • International Developed Bonds – BNDX
  • Emerging Market Bonds – EMB and VWOB

Wealthfront’s Chief Investment Officer has a reputation that certainly precedes him. Burton Malkiel was a director at Vanguard for 28 years, served on the Council of Economic Advisers, was president of the American Finance Association, was dean of Yale School of Management and wrote the popular book A Random Walk Down Wall Street that’s sold over 1.5 million copies. If the guy never slept a night in his life, I wouldn’t be surprised.

Their Investment Methodology white paper is certainly very nerdy and includes plenty of charts and graphs.

I found it really cool that they shared their expectations as compared to other industry standards as well as their expected standard deviation of those results. Sufficiently nerdy with enough references and citations to make your favorite Librarian proud.

Wealthfront has 18 ETF’s across 9 asset classes that they invest you in depending on the risk level you select. While still crushing Acorns, there is some less asset class diversification when compared to Betterment.

  • US Total Stock Market – VTI and SCHB
  • International Developed Stocks – VEA and SCHF
  • Emerging Market Stocks – VWO and IEMG
  • Real Estate – VNQ and SCHH
  • Natural Resources – XLE and VDE
  • US Government Bonds – BND and BIV
  • Inflation-Protected Bonds – SCHP and VTIP
  • US Municipal Bonds – VTEB and TFI
  • Dividend Stocks – VIG and SCHD

This is coming after my less than awesome impression of Wealthfront’s interface. It certainly restored a lot of confidence but, I have to admit, when you compare it to Betterment’s work in this area they are simply outdone.

I learn through interaction, and I was able to gather more from Betterment’s approach just tooling around on their page for 5 minutes.

ROUND WINNER: Betterment. It certainly came down to Betterment. vs. Wealthfront. Betterment just made better choices, went the extra mile to really educate their customers and aren’t afraid put it all out there. Not to mention they run Monte Carlo simulations and use heavy data analysis to make the best decisions. I’m thoroughly impressed. Celebrity names only go so far; I want to see and actually absorb the gory details.

Round 3: Advanced Features

Why invest in either Acorns, Betterment or Wealthfront? Sure, laziness is a factor, but they already share everything they put my money into, what keeps me from just investing myself and saving the fee?

The first advanced feature is automatic rebalancing, a solution to what is commonly referred to as Drift.


Simply put, Drift is what happens to your portfolio over time as some investments grow faster than others. Since the past is no indication of the future, it’s important to maintain your portfolio account balance.

It also helps significantly reduce risk. If in year one you think you’re at a 50% risk level, it better stay on that path. Both services protect you from risk with zero tax implications.

One problem with trying to mirror what Acorns, Betterment or Wealthfront does on your own is that you’ll get charged commission from your broker every time you buy or sell. None of these Robo-Advisors charge you transaction fees so should you contribute to or withdraw from your account – it’s free. That savings alone pays for the use of the services.

After Automatic Rebalancing and Zero Transaction Fees, that’s where the feature similarity ends. Each service has one killer feature distinguishes it from the pack.

1 / 5

advanced features

Acorn’s core feature is Round-Ups. The idea is that you link your checking accounts and credit cards to Acorns and they will round every transaction up to the nearest dollar and invest it. Spent $5.06 at Starbucks? You’ve just invested $0.94.

All these small acorns start to add up and before you know it you’re saving and investing. This is perfect for the person who has trouble saving.

Wealthfront and Betterment offer core a feature called Tax Loss Harvesting (Betterment calls it TLH+). TLH harvests the natural dips in the stock market as losses to weigh against your gains automatically. I explain TLH in depth in our Betterment review as well as our Wealthfront review.

As it turns out, Wealthfront was first to market here, but these days the service is practically the same on both services.

Without going too deep, with clever behind the scenes work both Betterment and Wealthfront work to reduce your “on paper” investment gains. Most people will pay a 15% tax on their investment gains in their taxable account.

With TLH you can expect to increase your overall market gains by 0.99% or pay 14.01% in taxes. So, for every $1,000 you invest, you can gain up to $10 more in tax savings.

Acorns doesn’t provide Tax Loss Harvesting. If you expect to earn more now than when you retire, Tax Loss Harvesting can be very beneficial bringing significant gains over time to your portfolio.

Wealthfront now offers stock-Level Tax-Loss Harvesting, an enhanced form of Tax-Loss Harvesting that looks for movements in individual stocks to harvest more tax losses and lower your tax bill even more and is available for taxable accounts between $100K and $500K.

With features like Stock-Level Tax-Loss Harvesting, you stand to make a lot more through economies of scale than you would below that price threshold. Stock-Level Tax-Loss Harvesting is available for no extra cost to taxable accounts over $100,000. It’s an enhanced form of TLH that looks for movements in individual stocks within the US stock index to harvest more tax losses and lower your tax bill even further.

Betterment went outside the box and created RetireGuide. Most financial tools give a lot of lip service to retirement and how important it, is, but few actually put their money (and talent) where their mouth is. Betterment set the bar very, very high.

They cover the basics like “how much do you make” and “when do you want to retire” but every retirement calculator you’ve ever used does that. That’s the price of entry. What really impressed me is how they account for things like existing assets and cost of living in how much income needed in retirement.

For example, if I lived in Ames, Iowa (zip: 50010) like Thomas, Betterment’s calculator tells me that my cost of living will be 4% less expensive than the national average. However, I live in Hoboken, so it’s 116% more expensive than the national average.

Therefore I’ve got to save an epic amount more both if I want to continue living here AND retire here. Having Betterment break things like this down for me is eye-opening, to say the least. Perhaps, I need to retire next door to Thomas.

Good calculators give you the answer; great calculators make you think. This is a great calculator.

ROUND WINNER: Betterment narrowly wins here. Again it comes down to Betterment vs Wealthfront here. While Wealthfront’s Direct Indexing is insanely awesome, you need to have $100k with them to take advantage which rules out almost everyone.

Round-Up by Acorns is a novel idea and perfect for the non-savers, but it won’t exactly make me more money. I want my money to grow faster automatically, and TLH does that. Couple that with RetireGuide and you’ve had a platform I can get behind.

Acorns vs. Betterment. vs. Wealthfront: Bottom Line

FINAL WINNER: Betterment

As we’ve mentioned on the show, we think Betterment is the best platform for the average investor. Wealthfront offers your first $15k (managed free), then again at $100k and they don’t require an account minimum and there is no minimum deposit.

Acorns is a very cool and unique addition to the Robo-Advisor space but when it comes to my money I want some real advantages if I’m going to be paying for it.

Betterment has a few unfair advantages, and it shows. To start, they’ve picked up over $205 million in private investments. vs. Wealthfront’s $130 million.

They’ve also focused much more on having a well-rounded platform. Some of the most frequent emails we get are about planning for retirement, so any financial advisor should make a priority to give good personalized financial advice. Betterment gets this.

The Smart Deposit feature automatically invests any excess cash in your bank account to makes it easy to start building wealth automatically.

Wealthfront is a sizable step up from Acorns in what it provides to its customers. Their biggest advantage is Direct Indexing – it’s the type of feature I dream about. Unfortunately, it’s only for people that are far richer than I am. Perhaps when they allow normal people like me to use the service, I’ll jump ship.

Both, Betterment and Wealthfront were founded in 2008 so they have a few years head start on Acorns, and it shows. Acorns was founded in 2012, not long before our chat with their CEOs. Four years is an eternity for start-ups.

Acorns is great for Students and people who can only invest what’s found in their couch cushions. Investing the “spare change” of your monthly expenses is a good idea in theory but generally, doesn’t amount to much.

The average American makes 59 transactions a month. If every transaction ended in $0.01, then the average American, would invest $58.41 a month with Acorns. Not enough for most people to retire on.

If you invest more, the Acorns platform is solid but it won’t blow your mind. Of course, Betterment and Wealthfront’s TLH will add 1% to your gains. Is it worth saving 0.15% to lose 1%? I don’t think so.

Get a Deal on Your Robo-Advisor of Choice

We’ve spoken with the CEOs of all three companies. We even got schooled on Opportunity Cost with Dan Egan the head of Behavioral Finance and Investments at Betterment.

As a result, we were able to nab you some deals if you join one of these Robo-Advisors through us.



5 Questions: Roth IRA’s, Investing 10K, and Using Acorns

In this episode discuss Roth IRA’s, how to invest $10 grand and using Acorns to invest your spare change.

1.  Where is the best place for my Roth IRA?  Vanguard has a $1000 entry barrier so it’s in Betterment which may complicate a later rollover.  Should I stay in Betterment or wait until I have the $1000 for Vanguard?  And where should I put it in Vanguard?  

Stay in the Betterment Roth, get to $1000 and roll in into Vanguard Life Cycle Fund which is not as hard as you think.  Stay in Vanguard until you get $100,000 and then go back to Betterment because the fee will be low cost.  The most important thing is to stay in the market.

2.  What is the best way to invest $5,000 when you have no debt but a low-interest mortgage? 

Betterment or a Vanguard index fund.  For that amount of money, Vanguard will have low-cost fees.  But if you don’t want to make any decisions, use Betterment, it’s the easiest way to invest.

3.  How can I stop checking my Betterment account every day?  Please help!  

I do this too.  It’s so hard to stop. Damn geopolitics lately is messing with my shit, losing me money! But remember, we’re in for the long con. Checking it every day is not going to resolve the situation in Syria or Ukraine or Hong Kong.

Delete the apps from your phone for a start.  Make it inconvenient to check. Then schedule the check up.  Set it as an alert on your phone for once a week and only check it then.  Slowly taper up until you’re just checking once a month or so.

4.  Where should I aggressively invest $20,000?  Is this enough to get into real estate in North Jersey?  Our only debt is $13,000 in student loans.

Debt is an emergency so pay off the loan and put the rest in Betterment or Vanguard.  Let the money grow in the investment accounts so you can invest in real estate eventually.

5.  I opened a Betterment account a month ago. Should I start an Acorns account too if I pay for everything on a credit card?

Yes, Acorns will work with credit cards as well as debit. It pulls the rounded up amount from your checking account, not from your credit card.   And it adds up. You aren’t going to retire on your little acorns, but you can use them for something fun like the new iPhone.

Thanks for the questions everyone!  You can send them via Twitter, Facebook or e-mail.

Show Notes

Tank #7 Farmhouse Ale:  A Belgian style ale.

Betterment:  The easy way to invest.

Acorns:  Invest your small change.

Vanguard:  The next step in investing.

Andrew Fiebert - Chief Nerd
Andrew Fiebert is a thirty-something soon-to-be father of twins, a self-professed data nerd, and has worked as a Data Engineer for Barclays Capital and iHeartRadio. He's spent the past six years growing LMM into a multi-six-figure business with over 500 hours of free personal finance education that reaches over 1 million people every month. Andrew has a B.S. in Computer Science and has been featured in Quartz, Forbes, Business Insider, and The Telegraph.
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