[ad_1]
:max_bytes(150000):strip_icc():format(jpeg)/betterment-vs-fidelity-go-3fea7f0f82c948ec863d1f114832ce95.png)
Paid non-client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Learn More about this relationship.
Innovation has sparked the rapid rise of the digital investment management space and led to fierce competition in the industry. Betterment launched in 2008 as one of the early industry challengers and expanded into crypto with the acquisition of Makara in 2022. Fidelity was founded in 1946 and is one of the top brokerage institutions, leveraging vast resources to start its digital investment advisory service, Fidelity Go, in 2016.
The companies have very different origins, and their robo-advisors are quite different. With both companies’ robo-advisors, investors can get started easily due to the $0 minimum account balance requirement. Beyond that, the companies have very different offerings to investors within the robo-investing space. Betterment focuses on portfolio customization and goal planning, while Fidelity Go emphasizes no costs for accounts under $25,000 and low costs thereafter—but offers investors very limited investment selection and customization. We’ll explore the nuances of both offerings so you can decide which platform is the best for your financial journey.
- Account Minimum: $0, $10 minimum to start investing. $50 minimum for rebalancing.
- Fees: 0.25% (annual) for investing plan accounts with at least $20,000 or at least $250 per month in recurring account deposits. Otherwise, the fee is $4/month. 0.65% (annual) fee on accounts with at least $100,000 in assets for Betterment Premium account holders with unlimited access to certified financial planners. There are no management fees for Betterment Checking or Cash Reserve. For accounts with at least $2 million, there is a fee discount of 0.10%.
Key Takeaways of Betterment
- Betterment is our best robo-advisor for beginners and best for cash management.
- External account linking is available for analysis of your financial picture.
- Strong planning tools help you work toward multiple goals such as a home purchase or retirement.
- Premium tier offers access to a human financial advisor.
- Account Minimum: $0 to open an account, $10 to be invested
- Fee: $0 for accounts under $25,000, 0.35% annual fee for balances over $25,000
Key Takeaways of Fidelity Go
- Fidelity Go’s all-digital platform is great for hands-off investors and current Fidelity users.
- Investors wanting to grow their market expertise have access to a vast educational catalog.
- The platform has straightforward goal-setting options, financial calculators, and portfolio strategy.
- Fees are transparent and low, with no cost for the first $25,000 and competitive pricing thereafter.
Account Setup
Betterment
Betterment’s sign-up process is user-friendly and focused on a streamlined onboarding experience. You’ll be prompted to enter personal information and walk through a questionnaire, sharing information regarding your goals, time horizon, and risk tolerance. The investment strategy generally follows a passive approach based on modern portfolio theory (MPT) that is invested through exchange-traded funds (ETFs). Investors looking for further guidance have access to a human financial planner via separately purchased packages or included at the premium tier once $100,000 is invested.
Fidelity Go
Fidelity Go also has a straightforward onboarding journey. The experience is designed to assess your background based on your timeline, risk tolerance, and personal data so a portfolio can be assigned. You can adjust the suggested portfolio’s risk level as well if desired. The investment strategy also follows modern portfolio theory. Underlying assets are invested in an assortment of no-cost Fidelity Flex mutual funds, which are comprised of domestic stocks, foreign stocks, bonds, or short-term investments. You can view estimates on your ability to reach your goals based on the provided data, current balance, and ongoing contributions. Additional guidance relies on educational content, but human financial advisors are available for free once your account balance exceeds $25,000.
Account Setup Verdict: Tie
The account setup at both Betterment and Fidelity Go is fast, straightforward, and entirely online. Moreover, neither service has an account minimum that would serve as a barrier to newer investors with a low balance. As such, this aspect is a relative tie between the two companies.
Account Types
Fidelity Go and Betterment each support the most popular account types across taxable and retirement accounts. However, Betterment provides a wider variety of account types by offering support for other options such as simplified employee pensions (SEPs), individual retirement accounts (IRAs), and trust accounts.
Betterment account types are:
- Individual taxable
- Joint taxable
- Traditional IRA
- Roth IRA
- SEP IRA (for the self-employed and small businesses)
- Rollover IRA
- Trust
- High-interest Cash Reserve account
- Checking account
- 529 college savings plan (only available through an employer)
Fidelity Go account types are:
Account Types Verdict: Betterment
While both institutions offer a variety of accounts, Betterment stands out as the clear winner by providing a more extensive range, including a high-interest cash reserve account, a checking account, and trust accounts.
Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities.
Account Services
Cash Management
Betterment
Betterment offers a checking account and a Cash Reserve account as a part of its cash management offerings. This gives you valuable tools to help further manage your money. It’s worth noting that Betterment won our Best for Cash Management award. The Cash Reserve account is a high-yield cash account, currently offering 4.00% APY, with an introductory rate of up to 4.50% APY for new users for the first three months. The checking account includes a Visa cashback debit card and ATM fee reimbursement in the U.S. and internationally. Additionally, there are no minimum balance requirements or overdraft fees. Betterment also provides automatic sweeps into an FDIC-insured bank sweep account. Subject to certain conditions.
Betterment makes moving money a seamless experience, as deposits and withdrawals can be set up by simply linking a bank account to the platform. These are transacted without a fee. Transfers of other investment accounts can be initiated as well.
Betterment is not a bank. Checking is FDIC-insured up to $250K per depositor subject to certain conditions at nbkc bank, Member FDIC, and deposit network. Cash Reserve offers FDIC insurance covering up to $2 million at program banks, subject to certain conditions.
Fidelity Go
Fidelity Go takes a more narrow approach to cash management by focusing on a sweep account. Newly deposited cash is swept into the Core Money Market Fund, which is the cash sweep vehicle for the Fidelity Go program. Assets are then invested to align with your designated asset allocation strategy.
Since Fidelity Go’s offering is designed to focus on the portfolio management solution, you won’t find loan, margin, spend, credit, and banking options. Fidelity does have all of these features in its larger financial universe, but they aren’t within the robo-advisory itself.
Account Services Verdict: Betterment
Betterment is the winner here, because it offers customers a cash reserve account with a respectable APY of 4.00% and a cash-back debit card. While Fidelity Go offers a cash management account. Its main use is a stopping point for newly deposited cash to be swept into your portfolio. Customers who need more flexibility with their cash deposited in their robo-advisor will prefer Betterment.
Goal Planning
Betterment
Betterment provides a wide range of goal-setting choices that include retirement, education, major purchases, emergency funds, and general investing. These goals are paired with a strong selection of tools and calculators that let you better assess the likelihood of reaching your financial destination. An external account-syncing feature lets you get a more comprehensive view of your overall progress and make adjustments as needed. Furthermore, Betterment investors are able to set goals for cash and crypto accounts as well.
Fidelity Go
Every Fidelity Go account is associated with a single goal, but you have the option to open multiple accounts that each have separate goals and investment risk levels. Goal setting is limited to retirement or, more generally, “something else.” Tools are available to help calculate whether you’re on track and incorporate your balance, upcoming deposits, and a variety of market conditions. Fidelity will suggest ways to increase the probability of reaching your goals if you are off-course. Investors can now view all of their Fidelity Accounts and external accounts through the new Full View. Because this is new, any external accounts will need to be re-linked in order to update information.
Goal Planning Verdict: Betterment
When it comes to goal planning, both companies offer investors a comprehensive look at their financial situation with the capability to link external accounts. However, we give Betterment the edge over Fidelity Go for the ability it gives investors to choose multiple goals within a single account.
Portfolio Construction
Both platforms take care of the investment management so you don’t have to do it yourself, but there are some nuances to the underlying strategies and fund selections.
Betterment
Betterment uses ETFs exclusively to build portfolios, including:
Equities
- U.S. equities
- International developed market equities
- Emerging market equities
Bonds
- U.S. short-term treasury bonds
- U.S. inflation-protected bonds
- U.S. investment-grade bonds
- U.S. municipal bonds
- International developed market bonds
- Emerging market bonds
These ETFs are built around investing preferences, such as long-term growth, value, income, ESG, crypto, or cash.
Fidelity Go
Fidelity Go portfolios are built solely through the use of various no-fee Fidelity Flex mutual funds that can be combined to make up eight different risk levels. Investors utilizing this program can expect their money will be invested in approximately six to 12 Flex Funds.
The funds are diversified by including:
- Domestic stocks
- Foreign stocks
- Bonds
- Short-term investments
While this approach keeps costs low, using only proprietary funds is a limiting factor even if the funds themselves perform as expected. Investors seeking socially responsible or crypto options will also need to look elsewhere.
Available Assets
| Betterment | Fidelity Go | |
|---|---|---|
| Individual Stocks | No | No |
| Mutual Funds | No | Yes |
| Fixed Income | No | No |
| REITs | Yes | No |
| Socially Responsible or ESG Options | Yes | No |
| ETFs | Yes | No |
| Non-Proprietary ETFs | Yes | No |
| Forex | No | No |
| Crypto | Yes | No |
Portfolio Customization
Betterment
Betterment’s Flexible Portfolios gives users the most control over their investment decisions. While all Betterment portfolios allow for adjustment in risk levels, Flexible Portfolios expands on this feature by letting investors choose specific amounts to allocate to particular asset classes. This feature may be best geared toward advanced investors looking to fine-tune their portfolio strategy. Flexible Portfolios also give investors access to additional asset classes including commodities, high-yield bonds, and REITs.
Fidelity Go
Fidelity Go walks each investor through a questionnaire and suggests an investment strategy based on how the investor answered questions regarding financial goals, risk tolerance, and time horizon. Investors can then see the breakdown of stocks, bonds, and short-term investments that Fidelity Go will choose to invest their money. At this point, the investor can accept the suggestions or explore other investment strategies and investment allocations and pick a different mix.
Investment allocations range from:
- Most conservative mix: 80% bonds/short term investments and 20% stocks
- Most aggressive mix: 100% stocks.
Beyond choosing the investment style, which dictates asset allocation, investors do not have any additional options for customization.
Portfolio Customization Verdict: Betterment
Investors will appreciate Fidelity Go’s care in setting up its customer’s accounts to align with their risk tolerance and financial goals. However, Betterment takes the win in the portfolio customization bracket with the ability to allow customers to add crypto and REITs to their portfolios.
Portfolio Management
Both platforms automatically rebalance your portfolio, although each platform takes a separate approach to this strategy.
Betterment
Betterment rebalances your allocation when the portfolio drifts beyond your target allocation threshold using several different methods, including:
- Cash inflows or outflows rebalancing: Every cash flow in or out of your account allows for rebalancing to occur very precisely with fractional shares.
- Buy/sell rebalancing: If there are no cash flows coming into or going out of the account, a 3% shift away from the portfolio target levels will automatically trigger a rebalance. Betterment will sell assets in overweight categories and buy underweight asset classes.
- Allocation change rebalancing: If the investor manually changes portfolio targets, any change of 1% or more will automatically initiate a portfolio rebalance to obtain the newly appointed targets.
Fidelity Go
Fidelity Go also rebalances your portfolio once the allocation drifts beyond certain thresholds. You can link other Fidelity accounts and external accounts to the platform through Full View, so you can conveniently view these all in one place. Fidelity Go also buys and sells investments in your account to keep it closely aligned with the investment strategy that you’ve chosen. So any changes made to the risk level, goals, or time horizon will affect the allocations and the rebalancing. Additionally, if you choose the asset allocation strategy that is recommended and enroll your account in Smart Shift, Fidelity Go will change your asset allocation strategy over time based on your profile information, your investment goal and time horizon, and when you expect to begin withdrawing money from your account.
Portfolio Management Verdict: Tie
Both robo-advisors will rebalance your portfolio when your account drifts. It’s important to note that Betterment provides a clear specification of when it will initiate a rebalance. Fidelity Go’s rebalance schedule, on the other hand, is vague and does not go into detail about when a rebalance will be initiated.
Tax-Advantaged Investing
An important aspect of investing in taxable accounts is tax optimization. Betterment offers tax-loss harvesting for users with taxable accounts. Fidelity Go doesn’t offer tax-loss harvesting but does provide tax-advantaged funds (i.e. municipal bonds) to reduce your tax burden over time.
Key Portfolio Management Features
| Betterment | Fidelity Go | |
|---|---|---|
| Automatic Rebalancing | Automatically rebalances your portfolio when it drifts beyond your target allocation threshold and once your account meets minimum balance requirements | Portfolios are rebalanced daily as needed if a portfolio is not in line with the financial goals endorsed by the investor |
| Reporting Features | Net worth, goal progress, investment performance, tax | Goal progress, investment performance, tax |
| Tax-Loss Harvesting | Yes | No |
| External Account Syncing/Consolidation | Yes: Users can link external retirement, brokerage, and bank accounts, but only Betterment holdings receive portfolio adjustments | Yes: Fidelity Accounts and external accounts |
Security
Both Fidelity and Betterment make security a priority and have acceptable protocols in place to safeguard your assets and data. Standard Securities Investor Protection Corporation (SIPC) coverage is in place on both platforms for missing funds, which covers up to $500,000 total value or $250,000 cash in your account. Data is protected with strong encryption, biometric entry, and two-factor authentication. Fidelity Go provides an additional Customer Protection Guarantee which reimburses you for unauthorized activity on your accounts.
User Experience
Desktop
Betterment
Betterment has built a user-friendly desktop experience by creating a comprehensive dashboard that is easy to navigate. Account details, performance metrics, goals, and tools are all available at your fingertips thanks to an intuitive site design. If you connect outside accounts to Betterment, you’ll find it relatively effortless to monitor your finances.
Fidelity Go
Fidelity Go users will notice the desktop experience is a more streamlined, simplified version of other Fidelity platforms. Tools, calculators, account management, and reporting features are straightforward so you can smoothly monitor your financial situation. Users not familiar with Fidelity’s experience may find it takes a bit of getting used to, but overall you’ll have everything needed to manage your portfolio.
Mobile App
Betterment
Betterment scores highly for its mobile experience, ranking 4.7 out of 5 stars for the iOS version and 4.7 out of 5 for Android. Generally, you’ll find that the mobile app provides all the features that you would expect to see on the desktop experience. Users who prefer to access their portfolio from the app will especially find this welcome news.
Fidelity Go
The Fidelity Go app has full-feature functionality comparable to the desktop version. It also scores highly on the Apple App Store, with 4.8 stars, and Google Play, with 4.4 stars. However, the Fidelity Go app is built into the main Fidelity app, so investors can easily view all of their Fidelity accounts in one spot.
Customer Service
Betterment
Betterment’s customer service team is available by phone and email from 9 a.m. to 6 p.m. ET, Monday through Friday. Investors who are part of the Premium Investing tier have unlimited access to financial planners. The FAQ and site resources are sufficient for most general inquiries as well.
Fidelity Go
Fidelity Go is primarily a digital experience and you’ll find the available support reflects this. The client success phone line, virtual assistant, and email are all available 24/7. Live chat is accessible between 8 a.m. and 6 p.m. ET, Monday through Friday. The FAQ page is relatively light and may not address more detailed inquiries.
| Betterment | Fidelity Go | |
|---|---|---|
| Phone Contact Available | Yes, 718-400-6898, Monday to Friday 9 a.m. to 6 p.m. ET | Yes, 800-343-3548, 24/7 |
| Pre-Funding Phone Consultation With Certified Advisor | Yes, for investors with $20,000 minimum investment | No |
| Online Chat Available | Yes, chatbot only | Yes, live from 8 a.m. to 6 p.m. ET, Monday to Friday, and chatbot 24/7 |
| Website FAQ Section | Yes, basic FAQs | Yes, basic FAQs |
Fees
Fees are not the be-all and end-all of evaluating a financial institution, but they serve as a crucial element to ensure you’re getting the value needed to achieve your goals and financial outcomes.
Betterment
Betterment provides two separate experiences with different fee structures. The Investing plan includes digital advice, tax-loss harvesting, automatic rebalancing, and the full suite of accounts and portfolios for a 0.25% annual fee, or $4 per month for accounts with a balance under $20,000 that do not set up an auto-deposit of at least $250 a month.
Once an investor has a minimum amount of $100,000 across all Betterment accounts, they are eligible for Premium Investing. The Premium Investing plan is priced at 0.65% annually and includes the Investing plan features plus unlimited communication with a Certified Financial Planner. This additional fee is applied to assets in the investment and cryptocurrency accounts, but not cash accounts. For accounts with at least $2 million, there are also fee discounts based on the type of account the investor has. Not included in either plan fee are ongoing ETF fund fees of 0.05% to 0.13% annually.
Fidelity Go
Fidelity Go uses a tiered fee structure based on the account balance. For investors with account balances below $25,000, there are no advisory fees; at a $25,000 or higher account balance, the advisory fee is 0.35%. Regardless of account balance, there are no trading fees, transaction fees, or rebalancing fees. Additionally, accounts are invested in zero expense ratio Fidelity mutual funds that do not charge management fees.
| Category | Betterment | Fidelity Go |
|---|---|---|
| Management Fees for $5,000 Account | $48 (Investing) | $0 |
| Management Fees for $25,000 Account | $62.50 (Investing) | $87.50 |
| Management Fees for $100,000 Account | $250 (Investing), $650 (Premium) | $350 |
| Termination Fees | $0 | $0 |
| Expense Ratios | 0.05% to 0.13% | None |
| Mutual Funds | N/A | None |
Fees Verdict: Fidelity Go
Both Robo-advisors are competitive regarding fees, but Fidelity Go comes out on top in the Fee category. With Fidelity Go, customers with smaller accounts will only have to worry about paying fees once their account reaches at least $25,000. Another cost that investors must note is expense ratios; Betterment charges between 0.05% and 0.13%, while Fidelity Go charges nothing.
The Bottom Line
Betterment and Fidelity Go both provide strong robo-advisor offerings that each stand out in their own way. Deciding between the two depends on your goals, investment management preferences, and desire for financial guidance. Betterment shines as a portfolio management platform given the option to link external accounts, access financial advisors, provide some portfolio customization outside of generic risk level adjustments. The emphasis on goal planning may make Betterment a more suitable option for some investors. The recent acquisition of Makara also lets users add crypto to their investment strategy, and Betterment’s cash management options topped our best in category rankings.
While Fidelity Go does allow investors to link external accounts, the program doesn’t offer access to financial advisors or the ability for portfolio customization beyond adjusting risk levels. Investors who don’t want human financial guidance and aren’t as concerned with creating a customized portfolio may prefer Fidelity Go’s streamlined focus on portfolio management.
Fidelity keys in on cost containment and performance, requiring no account minimum to get started and invest in Fidelity Flex mutual funds, which carry no ongoing fees. For investors with lower balances to invest, Fidelity Go also makes a strong case by making the service free for up to $25,000 and including financial advisor access once your balance exceeds that and incurs the 0.35% fee. This aspect essentially puts the fee structure on par with Betterment’s platform. Existing Fidelity users may prefer the familiarity of Fidelity Go’s site experience and tooling as well. Overall, both platforms help you better manage your money and keep costs low so you can improve your financial well-being.
How We Picked the Best Robo-Advisors
Providing readers with unbiased, comprehensive reviews of digital wealth management companies, more commonly known as robo-advisors, is a top priority of Investopedia. To collect data for our 2024 best robo-advisor awards and rankings, we sent a digital survey with 64 questions directly to each of the 21 companies we included in our rubric. Our team of researchers verified the survey responses and collected any missing data points through online research and conversations with each company directly. The data collection process took place from Jan. 8 to Feb. 9, 2024.
We then developed a quantitative model that scored each company to rate its performance across nine major categories and 59 criteria to find the best robo-advisors. The score for each company’s overall star rating is a weighted average of the criteria:
- Goal Planning – 21.00%
- Portfolio Contents – 17.00%
- Portfolio Management – 17.00%
- Fees – 15.00%
- Account Services – 10.00%
- Account Setup – 5.00%
- Customer Service – 5.00%
- Security & Education – 5.00%
- User Experience – 5.00%
Many of the companies we review for our projects grant our team of expert writers and editors access to live accounts so they can perform hands-on testing. Robo-advisor companies allowed us to do this, as well.
Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the top robo-advisors. Read more about how we research and review robo-advisors.
The above material and content should not be considered to be a recommendation. Investing in digital assets is highly speculative and volatile, and only suitable for investors who are able to bear the risk of potential loss and experience sharp drawdowns. Digital assets are not legal tender and are not backed by the U.S. government. Digital assets are not subject to FDIC insurance or SIPC protections.
[ad_2]
Source link