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Betterment and Schwab Intelligent Portfolios are both recognized companies in the digital investment management space. Betterment started as a robo-advisor and has continued to grow its offering with Betterment at Work, targeting employers, while Schwab Intelligent Portfolios is a robo-advisor within the larger Schwab financial universe.
Betterment is known for its no-minimum account balance, opening the door for new clients to enter the investing world. Schwab’s Intelligent Portfolios offers a competitive digital investment advisor with no management fees for the fee-conscious investor, but account minimums do apply. At first glance, Betterment and Schwab Intelligent Portfolios seem quite similar, but a closer examination turns up some essential distinctions that can help you decide which one is a better fit for you.
- 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
- Multi-goal planning options are available to all investors, regardless of account type.
- External accounts can be linked and synchronized to your Betterment dashboard for a full financial picture.
- Live, human customer service is available five days a week to answer questions.
- Low fees, no account minimum, and more account features make Betterment an ideal choice for beginner investors.
- Minimum Account: $5,000 ($25,000 for Premium)
- Fees: $0, expense ratios range from 0.02%-0.18%. ($300 initial consultation plus $30 per month for Premium)
Key Takeaways of Schwab Intelligent Portfolios
- Schwab Intelligent Portfolios requires $5,000 to get started but charges no management fee.
- Investors have the option to choose Schwab’s own low-cost funds recommended by the automated platform or ETFs from other providers.
- Schwab Intelligent Income can help you draw down your portfolio efficiently so that it lasts in retirement.
- Potential and current clients can call and talk to an investment professional or ask questions via online chat—both are available 24/7.
Account Setup
Betterment and Schwab Intelligent Portfolios have similar account setup experiences. With both companies, the investor can easily open an account online by entering in personal information and answering a series of questions about risk tolerance, time horizon, financial goals, and more. Based on the investor’s answers, a portfolio is put together to meet those goals. Schwab Intelligent Portfolios requires the account to be funded before being able to fully view specific portfolio recommendations. Betterment does not require the account to be funded ahead of time.
The major differentiating factor between the two digital investment managers is the account minimum required to open the account. Betterment’s $0 account minimum and $10 to get started investing make it easy for new investors with limited funds. Schwab Intelligent Portfolios, however, requires a $5,000 minimum investment to open an account ($25,000 for a premium account), which puts it out of reach for some.
Account Setup Verdict: Betterment
While both digital investment advisors have very similar processes, we give Betterment the edge in this category because of its $0 account minimum
Account Types
Schwab Intelligent Portfolios and Betterment both offer a wide variety of commonly used accounts types, from general investing to retirement and estate planning.
Betterment
Betterment account types are:
- Individual taxable
- Joint taxable
- Traditional individual retirement account (IRA)
- Roth IRA
- Simplified employee pension (SEP) IRA (for the self-employed and small businesses)
- Rollover IRA
- Trust
- 529 plan (through Betterment at Work)
- Student loan management accounts (through Betterment at Work)
- Cash reserve and checking
Schwab Intelligent Portfolios
Schwab Intelligent Portfolios offers these account types:
- Taxable brokerage: individual, joint with rights of survivorship, tenants in common, community property, custodial
- Traditional IRA
- Roth IRA
- SEP IRA
- SIMPLE IRA
- Revocable living trust
Account Types Verdict: Schwab Intelligent Portfolios
As far as account types go, the two companies are fairly evenly matched. Schwab Intelligent Portfolios does have a larger selection of taxable account types.
Account Services
Cash Management
Betterment
Betterment offers a fee-free, high-yield cash account with funds deposited across several banks. This account is suitable for shorter-term cash needs. This is one of the reasons we selected Betterment as Best for Cash Management. Betterment doesn’t require you to hold any part of your portfolio in cash. As a goal target date approaches, funds will be moved more into bond equivalents, but they can be sold and moved into a Cash Reserve account if you choose.
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. For Cash Reserve (“CR”), Betterment LLC only receives compensation from our program banks; Betterment LLC and Betterment Securities do not charge fees on your CR balance.
Schwab Intelligent Portfolios
With Schwab Intelligent Portfolios, you receive interest from cash in your account through a sweep into an FDIC-insured Schwab bank account. One important factor regarding cash management with Schwab Intelligent Portfolios is that the investor is required to hold between 6% and 30% in cash allocation to the sweep program, which is a relatively high percentage compared to the competition. Holding too much cash in a portfolio can also lead to performance drag.
Cash Management Verdict: Betterment
Betterment takes the cash management category because it doesn’t require you to hold any cash in the portfolio and provides a very competitive cash management account when you do pull money out.
Additional Services
Betterment
Betterment offers checking services through its partnership with nbkc bank; however, these must be set up in a separate account from the automated investing account. Checking services include no-fee checking, a Visa cash-back debit card, national and international ATM fee reimbursement, and no overdraft fees. Transfers to and withdrawals from Betterment are straightforward and fund within one to two days. Automated deposits are easy to set up and can be structured to fund specific goals in order of priority. Withdrawals from your account don’t incur any fees or penalties, and they are similarly easy to make. There are also no management fees for money held in Betterment cash accounts.
Betterment doesn’t offer margin, lending, or individual stock trading at this time. Betterment has added crypto investing options.
Checking accounts and the Betterment Visa Debit Card provided and issued by nbkc bank, Member FDIC. Checking made available through Betterment Financial LLC. Neither Betterment Financial LLC, nor any of their affiliates, is a bank. Betterment Financial LLC reimburses ATM fees and the Visa® 1% foreign transaction fee worldwide, everywhere Visa is accepted.
Schwab Intelligent Portfolios
Schwab Intelligent Portfolios does offer checking services, but they are not within the automated investing account. It is easy to set up an additional Schwab account to gain access to checking or debit cards. It is also easy to transfer money into your account from an external account. Deposits can be made as individual transactions, or you can choose to set up automatic deposits on a recurring basis.
Currently, Schwab Intelligent Portfolios doesn’t offer margin, lending, individual stock trading, or cryptocurrency investing options within the platform.
Account Services Verdict: Betterment
Overall, we give the edge to Betterment when it comes to cash management and account services. When it comes to banking features, both companies do offer options outside of the automated investing account and have made it easy for investors to deposit or withdraw from their accounts. We give a slight edge to Betterment in this category, though, due to its crypto investing options.
Goal Planning
Betterment and Schwab Intelligent Portfolios have both put resources into making goal planning easy for investors. Both robo-advisors have similar planning tools that allow investors to create and track their progress toward financial goals, such as:
- Retirement
- College
- Buying a home
- Vacations
- Building long-term wealth
Goal Planning Verdict: Betterment
On the whole, however, Betterment’s tools for goal planning are more nuanced and advanced than those at Schwab Intelligent Portfolios. One key point is that Betterment allows you to link external accounts and get a full view of your entire financial situation. This data is also taken into consideration for goal projections. External account syncing is not currently available when using Schwab Intelligent Portfolios. When it comes to goal planning, Betterment has a clear edge.
Portfolio Construction
Betterment and Schwab Intelligent Portfolios look similar at the onset when it comes to investing options. As with most digital investment managers, these two companies offer a variety of both proprietary and non-proprietary ETFs in an array of asset classes, from cash to commodities to bonds to emerging or developed market stocks.
Portfolio Construction Verdict: Betterment
A closer examination shows a few key differences, with Betterment having the advantage in portfolio construction in two areas: environmental, social, and governance (ESG) criteria and crypto. Currently, Schwab Intelligent Portfolios does not offer any ESG options. However, you do have the option to exclude up to three of the ETFs if you do not want them as part of your portfolio.
Available Assets
| Betterment | Schwab Intelligent Portfolios | |
|---|---|---|
| Individual Stocks | No | No |
| Mutual Funds | No | No |
| Fixed Income | Yes, only in ETFs | Yes, only in ETFs |
| REITs | Yes, available through Flexible portfolios customization option | Yes, only in ETFs |
| Socially Responsible or ESG Options | Yes | No |
| ETFs | Yes | Yes |
| Non-Proprietary ETFs | Yes | Yes |
| Private Equity | No | No |
| Forex | No | No |
| Crypto | Yes | No |
Portfolio Customization
Betterment also has more portfolio customization options than Schwab Intelligent Portfolios. While Schwab Intelligent Portfolios allows you to exclude some recommended ETFs and adjust your risk profile, Betterment offers a Flexible Portfolios option that allows you to fine-tune all the allocations within a portfolio across the asset classes in addition to the usual adjustments of risk tolerance levels.
Portfolio Customization Verdict: Betterment
Betterment takes the customization category due to actually allowing tweaks and fine-tuning. With Schwab Intelligent Portfolios, you can change your portfolio only by redoing your risk questionnaire.
Portfolio Management
Both Betterment and Schwab Intelligent Portfolios provide every market day monitoring.
Betterment
Betterment automatically rebalances your account when the portfolio drifts more than 3% from the target allocation once your account meets minimum balance requirements. Betterment generally uses your regular deposits to dynamically rebalance by putting more towards underweight asset allocations and it will adjust its rebalancing to keep any customizations you’ve made to the target allocations. You can also request to change the rebalancing automation by contacting Betterment.
Schwab Intelligent Portfolios
Schwab Intelligent Portfolios, on the other hand, does not have a set figure when it comes to rebalancing. The company’s philosophy is that the portfolio should be rebalanced periodically to keep the asset allocation consistent with the client’s risk profile. So during times of greater market fluctuation, your portfolio will be rebalanced more often. Schwab Intelligent Portfolios does have a nice management feature where Intelligent Income can be used to manage your drawdown into retirement to ensure your nest egg lasts and is dismantled tax-efficiently.
Portfolio Management Verdict: Betterment
While some investors may appreciate the flexibility that Intelligent Portfolios offers with rebalancing, Betterment’s set target for rebalancing takes the guesswork out of what will happen with your portfolio and when. Betterment has an additional edge in that it allows you to view your portfolio alongside external retirement, banking, and brokerage accounts conveniently in one place and makes portfolio management recommendations based on the entire picture. For this reason, Betterment has the edge in the portfolio management category.
Tax-Advantaged Investing
Tax-loss harvesting is the practice of selling a particular investment that has experienced a loss and then replacing it with a similar one. The idea is to minimize the tax burden for the investor and maintain an ideal asset allocation within the portfolio.
Betterment
Betterment offers tax-loss harvesting to all investors with taxable accounts. The tax-loss harvesting is automatic and does not cost any additional fees.
Schwab Intelligent Portfolios
Schwab Intelligent Portfolios also offers tax-loss harvesting, but only to clients with a minimum account balance of $50,000.
Tax-Advantaged Investing Verdict: Betterment
We give Betterment the edge over Schwab Intelligent Portfolios because Betterment offers tax-advantaged investing for all accounts regardless of balance size.
Betterment is not a licensed tax advisor. Tax Loss Harvesting+ (TLH+) is not suitable for all investors, and certain conditions apply. Read more at https://www.betterment.com/legal/tax-loss-harvesting and consider your personal circumstances before deciding whether to utilize Betterment’s TLH+ feature. Investing involves risk. Performance not guaranteed.
Key Portfolio Management Features
| Betterment | Schwab Intelligent Portfolios | |
|---|---|---|
| Automatic Rebalancing | Automatic rebalancing when portfolio drifts 3% beyond target allocation threshold and once account meets minimum balance requirements | Daily account monitoring; rebalanced periodically to keep portfolio allocation consistent with client’s risk profile |
| Reporting Features | Dashboard with tools to see account performance and progress toward goals; emails sent periodically | Dashboard with tools to see account performance and progress toward goals; emails sent periodically |
| Tax-Loss Harvesting | Yes | Yes, for accounts with a minimum $50,000 balance |
| External Account Syncing/Consolidation | Yes: Clients can link retirement, banking, and brokerage accounts to view their full financial picture | No |
Security
Schwab Intelligent Portfolios and Betterment are both up to industry standards when it comes to security. Both firms are members of the Securities Investor Protection Corporation (SIPC), with coverage in place for missing funds, which covers up to $500,000 total value or $250,000 cash in your account. Charles Schwab is a large, traditional brokerage as well and carries overall excess SIPC coverage through Lloyd’s of London.
Security Verdict: Tie
Your portfolio is safe at either of these firms. It is worth noting that none of this coverage protects you from market losses. Instead, it is coverage if the brokerage itself goes under and is rarely activated. Aside from insurance, your data at both firms is protected with strong encryption, biometric entry, and two-factor authentication.
User Experience
Desktop
Betterment
Betterment’s desktop user experience is clean, with a comprehensive dashboard and easy access to accounts, goals, performance, and fund transfers. The ability to connect outside accounts enables users to monitor all of their finances from the Betterment platform.
Schwab Intelligent Portfolios
Schwab Intelligent Portfolios is set up entirely online and the website is very user-friendly. Account navigation is constructed to provide easy access to the information that investors need, including current account balance, history, transactions, goals, and more.
Mobile App
Betterment and Schwab both have mobile apps that offer the same functionality as the desktop experience, so accessing your account on the go is easy and convenient. It has been reported that some users on the Betterment app have experienced difficulty with linking accounts and fund transfers. Schwab app users have noticed a difference in profile updates compared to the desktop login.
Customer Service
Schwab Intelligent Portfolios
Access to customer service is where Schwab Intelligent Portfolios is a standout within the industry. With Schwab, you can:
- Talk to a Schwab investment professional 24/7 via phone
- Access 24/7 online chat for prospective and current clients (offered as a pop-up chat box on the website)
- Schedule an in-person consultation at any of Charles Schwab’s local branch offices across the country
Investors with at least $25,000 in their account can opt for Schwab Intelligent Portfolios Premium, where a human advisor provides unlimited advice for a $300 setup fee and $30 per month thereafter.
Betterment
Betterment’s customer service is scaled back by comparison. It includes weekday phone and email options. Premium members can schedule meetings with certified financial planners and Investing account members have access to low-fee targeted financial planning packages.
| Betterment | Schwab Intelligent Portfolios | |
|---|---|---|
| Phone Contact Available | Yes, weekdays 9 a.m. to 6 p.m. ET | Yes, 24/7 |
| Pre-Funding Phone Consultation With Certified Advisor | Yes, but subject to minimum investment | Yes, customer service is available via phone 24/7 at any time during the process |
| Online Chat Available | Yes, both existing and prospective clients can ask questions 24/7; pre-scripted answers closely relate to your question | Yes, for existing and prospective clients—existing clients log in, but prospective clients can access chat by entering contact info for follow-up |
| Website FAQ Section | Yes | Yes |
Fees
Schwab Intelligent Portfolios
Schwab Intelligent Portfolios is one of the most competitive in the industry, offering $0 account management fees to all investors in the basic digital account. Once an investor has a minimum of $25,000 in their account, they may choose the Premium plan, which is a $300 one-time setup fee and then $30 per month thereafter. Expense ratios for ETFs offered in those accounts are within the standard industry range, coming in at an average of 0.13%.
Betterment
Betterment offers a low management fee of 0.25% (annual) or $4 per month on accounts under $20,000 that do not set up a deposit of at least $250 a month. Premium plan investors are provided with unlimited access to certified financial planners, but must pay an 0.65% (annual) on their account balance if assets exceed $100,000. 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 is a fee discount of 0.10%. Crypto accounts are charged an annual fee of 1% plus trading expenses. Premium is an opt-in program, so investors with large balances can choose to stay with the lower-cost offering. Expense ratios for account investments range from 0.05% to 0.13% depending on the recommended portfolio.
There are a few different scenarios where these fee structures diverge in a head-to-head comparison.
- Investors who have a minimum of $5,000 to invest would pay less in fees with Schwab in a basic account because Schwab has $0 management fees.
- When investors have a minimum of $100,000 and are seeking a premium plan with human advisor access, Betterment is the best option when it comes to fees. However, once that premium account grows above $165,000, an investor would be better off with Schwab’s fee structure due to the flat monthly fee. On an ongoing basis, once the investor has paid the one-time setup fee of $300, fees for the year would be $660 per year with a Betterment Premium account and only $360 per year for a Schwab Intelligent Portfolios Premium account. As the account balance grows, the fee with Betterment will grow ,but it will remain only $360 with Schwab.
Fees Verdict: Schwab Intelligent Portfolios
Even though there are a few scenarios where Betterment is the only option (investors with less than $5,000) or the lower option, Schwab Intelligent Portfolios provides investors with a $0 management fee option in basic accounts or low flat fees for premium accounts.
| Category | Betterment | Schwab Intelligent Portfolios |
|---|---|---|
| Management Fees for $5,000 Account | $48 (Investing) | $0 |
| Management Fees for $25,000 Account | $62.50 (Investing) | $0 ($30/month plus $300 setup fee for Premium) |
| Management Fees for $100,000 Account | $250 (Investing); $400 (Premium) | $0 ($30/month plus $300 setup fee for Premium) |
| Termination Fees | $0 | $0 |
| Expense Ratios | 0.05% to 0.13% | 0.02% to 0.18%, with an average of 0.13% |
| Mutual Funds | N/A | N/A |
The Bottom Line
The biggest differentiating factors between Betterment and Schwab Intelligent Portfolios are account minimum balance requirements, goal planning, and fee structures. Betterment has no account minimum to get started and opens the door of investing opportunity to brand-new investors or those who just don’t have a large amount to invest. However, once an investor has $5,000, the fee structure is better at Schwab for a basic account. Betterment offsets this fee disadvantage by offering more to users in terms of goal-planning support and portfolio analysis that integrates all your external financial accounts.
With these two digital investment advisors, it comes down to what you are looking for in addition to having an automated portfolio. If you are solely prioritizing low fees, then it is hard to beat Schwab Intelligent Portfolios as long as you can clear the account minimum. If you are looking for excellent goal planning, more customizable portfolios, tax-advantaged investing, and a low account minimum, however, then Betterment more than earns its modest fee.
Can I Lose Money at Betterment or Schwab Intelligent Portfolios?
Yes. Any time you invest in the financial markets there is a risk of losing money. Well-diversified portfolios like those built by Betterment and Schwab Intelligent Portfolios are not immune to market downturns and you would lose money if you withdrew during one of these. Over time, however, these portfolios will tend to grow and perform as intended despite low or even negative returns in certain periods.
What Is the Minimum Balance for Schwab Intelligent Portfolios and Betterment?
Betterment doesn’t have an account minimum, but you’ll only be invested once there is enough money in the account to invest ($10). Schwab Intelligent Portfolios requires $5,000 to get started.
Which Portfolio Is the Best on Betterment?
Betterment gives you a number of portfolio choices compared to Schwab Intelligent Portfolios. Picking the best depends on what you are looking for. If you don’t feel strongly and are investing longer-term, it is hard to beat the Core portfolio. If you want more growth, you have the option to add Innovative Technology, Value Tilt, or Goldman Sachs Smart Beta. Betterment also offers cryptocurrency exposure if you are so inclined.
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.
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