Betterment vs. Acorns

Betterment and Acorns are two of the most popular trading platforms on the market. As robo-advisors, neither lets you directly invest money on your own, so you cannot buy or sell any individual assets. This means even bundled assets, such as mutual funds and exchange-traded funds (ETF), are off limits. Investors who prefer to directly manage their money should select another service. However, if you are looking for a hands-off investment option, it is likely that both Betterment and Acorns may work for you. This is what to know when deciding between Betterment vs. Acorns..

For help deciding between Betterment vs. Acorns, consider talking to a financial advisor who can make a professional recommendation based on your long-term goals.

Betterment vs. Acorns: Fees

When comparing Betterment vs. Acorns, it is important to consider what fees each platform charges. There are usually four types of fees to look out for when choosing a trading platform.

Trading Fees. Trading fees are a fixed charge attached to each trade that you make. This can come in the form of a flat fee, also known as the spread. This is the difference between the buying and selling price of an asset, if any.
Trading Commissions. Your broker may charge trading commissions, which are usually a percentage based on the volume or value of each trade.
Inactivity Fees. Inactivity fees are any fees the broker charges you for not trading.
Non-Trading/Other Fees. There may be other fees for trading on the platform. For example, a brokerage might charge you for making deposits or withdrawals into your brokerage account or signing up for additional services.

As robo-advisors, Betterment and Acorns have a different fee structure compared to most platforms. Betterment charges you based on a percentage of the total assets you have in your account. Its Investing option costs $4 per month for balances up to $20,000. However, the fee changes to 0.25% annually if you have at least $250 in monthly recurring deposits or if you maintain a balance between $20,000 and $1 million.

Betterment also offers its Premium service, which includes access to a financial advisor for a 0.65% annual management fee. Progressive fee discounts apply for balances over $1 million. Other benefits include an extra 0.25% Cash Reserve rate boost on your cash savings, a securities-backed line of credit, tax planning tools and priority customer support. There is also a solo 401(k) for the self-employed featuring high contribution limits.

In comparison, Acorns keeps things simple with a flat-fee model and no minimum account balance. There are three tiers to choose from, including Bronze, Silver and Gold.

Acorns Bronze. This offers the firm’s most basic investment services and costs $3 per month.
Acorns Silver. This offers the standard investment package for most users, costing $6 per month.
Acorns Gold. This adds investment options for dependents for $12 a month.

Neither service charges unrelated fees for common activities such as deposit, withdrawal and inactivity.

Betterment vs. Acorns: Services & Features

Betterment and Acorns both offer fairly low-cost robo-advisories. Both are primarily app-based with a very well-designed interface that is easy to use.

However, each caters to a very different market. Acorns is designed for beginner investors. Its core feature is its Round Up automatic investment option, which helps you invest daily so you do not have to budget for a monthly portfolio contribution.

Acorns users can link the service to their spending accounts, such as checking accounts and credit cards. Then, every time you make a purchase, Acorns rounds that purchase up to the nearest dollar. It takes the excess out of your spending and automatically deposits it into your Acorns portfolio. So, for example, if you buy a cup of coffee for $2.78, the transaction would be rounded up to $3.00 even, and Acorns would put the excess $0.22 into your portfolio.

This service is well-designed for newer investors, particularly young ones who still have decades to build wealth. Investing a few dimes at a time is not a fast way to build wealth, but over 30 or 40 years, it can build up. This is, of course, not the only way to invest with Acorns; you can deposit money directly, just like with any other service. However, the automatic investment feature is arguably Acorns’ key selling point.

Betterment, on the other hand, is more straightforward. It does not offer Acorns’ automatic investment feature but focuses more on growing larger portfolios instead. This service generally offers better ways to target your money; for example, you can set specific income targets for retirement so you can be sure you have enough money to retire.

Overall, Betterment has more features for the investor looking to meet their investment goals. Betterment also offers personal investment advice from the firm’s financial advisors. This service is free for Betterment Premium subscribers and costs $300 for Betterment Digital members. There is also free one-time support for your setup with a $20,000 minimum transfer.

From there, both services offer a broadly similar experience. Each asks for basic personal information, such as age, investment goals and income. Then, you can choose from a series of portfolios in which you can invest. Acorns offers five different portfolios, ranging from conservative to aggressive, each built out of ETFs and automatically balanced to reflect that particular fund’s target balance of growth and risk management.

Betterment offers 11 portfolios in which to invest, with options like Core, Innovative Technology, Climate Impact, Goldman Sachs Tax-Smart Bonds and Crypto ETF. This advisor mixes its funds, with some built to balance growth vs. risk, while other funds serve specific purposes.

For example, the firm offers a socially responsible investment portfolio that invests in companies suited to addressing environmental and social issues, while another portfolio focuses on minimizing tax liability. Finally, users can adjust the specific allocation of assets in their portfolio by adjusting their risk preferences.

Betterment vs. Acorns: Online & Mobile Experience

Both of these products are quite well-designed for their specific purpose. Betterment and Acorns are both meant to be used primarily through their apps, and each has an interface that clearly reflects that.

When you sign up for either service, you are walked through a basic series of introductory questions. This will include information, like your name, employment status, income, date of birth and Social Security number.

When reviewing these competing services, we set up a trial account with both services in just four minutes combined. Acorns, as one of its first steps, invites you to link a bank account. While this may deter users who are just testing the waters, it is worth remembering that this is a core feature of the service.

Both services then take you directly to where you can begin investing. As robo-advisories, you are not presented with a screen of assets and options. Instead, both Acorns and Betterment present straightforward options, allowing you to choose the kind of account you want to set up. You can then manage your account with simple tools for navigation.

Here, the difference between the services becomes clear. Betterment offers more options for setting specific financial goals, while Acorns takes on more of a set-it-and-forget-it approach. Acorns’ entire business model is based on setting financial goals and then letting your automatic investments add up over time.

Betterment vs. Acorns: Tax Considerations

When choosing a robo-advisor, it is important to understand how taxes will affect your investments, and how each platform helps (or does not help) manage that impact.

Betterment offers several tax-optimization tools to help investors keep more of their returns. One standout feature is tax-loss harvesting, which automatically sells investments at a loss to offset gains elsewhere in your portfolio, potentially lowering your taxable income.

Betterment also provides tax-coordinated portfolios, which place certain assets in tax-advantaged accounts (like IRAs) and others in taxable accounts, to make your overall strategy more efficient. These features make Betterment a stronger choice for investors who care about minimizing taxes, especially in larger or taxable accounts.

Acorns, by contrast, takes a simpler approach and does not offer tax-loss harvesting or advanced tax strategies. It is designed to be straightforward and automatic, which is ideal for beginners, but it does not optimize for tax efficiency the way Betterment does.

It is also important to remember that gains, dividends and interest from investments on either platform are still taxable. Even though robo-advisors automate the investing process, you are still responsible for reporting income and gains on your tax return each year.

If tax efficiency is a priority for you, or if you expect to have a significant amount of money in taxable accounts, Betterment’s advanced features could help you save more in the long run. If simplicity matters more and your account balances are small, Acorns’ straightforward setup may meet your needs.

Betterment vs. Acorns: Who Should Use It?

Acorns and Betterment are two of the most popular robo-advisors out there, each with its own pros and cons for the diverse market it serves.

New investors, particularly young investors and those just starting out, should choose Acorns. This can be the perfect financial product for teenagers and young adults, as it can help build investment income long before there is the disposable income to really begin building wealth. While Acorns’ pennies-at-a-time approach may not build up fast enough for a 30-something who wants to buy a house, it is an easy and passive way to put your money to work.

Investors who are in a position to build greater wealth and set larger goals should consider Betterment very seriously. For example, this product may be exactly right for that 30-something looking to buy a house. Betterment generally offers a better range of services for building up the kind of wealth you need to make big life purchases (or retire).

Bottom Line

Betterment and Acorns are for people who have decided that the pros of robo-advisory services outweigh the cons. They do not offer the option to directly trade assets, so that if you are looking to manage your own investments, neither of these products will serve you well. However, if you would like to build wealth without having to dive into financial research, both of these platforms have a lot to offer.

Ask a financial advisor about the best brokerage for your accounts based on your long-term investment goals.

Tips on Investing

Betterment and Acorns both let you set long-term financial goals, and they’ll help you build your portfolio around those targets. But what if you want more hands-on guidance from a human? Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Don’t go! Now that you know the highlights of these two products, it’s time to get a bit more into the weeds. In our dedicated brokerage reviews we go into detail on how exactly Betterment and Acorns differ.