Betterment vs. Schwab

Betterment and Charles Schwab are two of the best-known names in the investment world that also share many similarities. With their robo-advisor services, they offer additional support with your investment strategy but without the hefty cost of wealth management. Betterment pioneered automated investing technology when it began in 2008, and today, the company remains tightly focused on robo-advising as the core of its services. Schwab started life as a traditional brokerage in 1971 but has grown to include automated investing advice, in addition to its many offerings that include brokerage services, banking services and even its own exchange-traded funds (ETFs). If you are considering opening a new account, this is what you need to know about Betterment vs. Schwab based on crucial factors like services, fees and user experience.

Before opening an account, consider talking to a financial advisor for personalized guidance on how to meet your financial goals.

Betterment vs. Schwab: Overview

As the robo-advisor pioneer, Betterment remains centered on automated investing as its core offering. In fact, for a long time, robo-advising was all it did, but it has since expanded to other services, including brokerage accounts, cash accounts, IRAs and cryptocurrency.

To get started, clients supply information about their risk tolerance and investing goals, which the platform uses to automatically construct portfolios made up of low-cost exchange-traded funds (ETFs).

Although it got a late start in robo-advising compared with Betterment, Charles Schwab has a much larger amount of assets under management through its Intelligent Portfolios accounts. It has a broad array of other financial services..

Betterment vs. Schwab: Fees

Betterment has two plans, a standard one and a Premium subscription. Its standard plan charges accounts with up to $20,000 a $4 monthly fee. Those with account balances between $250,000 and $1 million or those who pay $250, plus a monthly recurring deposit, only pay a fee of 0.25% annually. Tax-loss harvesting is included in the fee.

To maximize your earnings, you can upgrade to the Premium plan for a 0.65% advisory fee. Progressive discounts are available and begin for balances over $1 million.

There are no trading fees, nor does Betterment charge for deposits and checking withdrawals. However, there is a $75 fee for each transfer from your investing account into an external account..

Schwab does not charge any fees for its entry-level Intelligent Portfolios robo-advisor. For Intelligent Portfolios Premium, Schwab clients pay flat fees of $300 to enroll and $30 per month, regardless of assets under management.

Clients of both Schwab robo-advisor account types are responsible for ETF expense ratios. Unlike Betterment, which uses ETFs from other investment firms, Schwab robo-advisor clients can only invest in Schwab ETFs. The expense ratio fees for Schwab ETFs used in its robo-advisor portfolios range from 0.02% to 1.09%, depending on whether you have passively-managed or actively managed funds.

Schwab has a $5,000 account minimum for Intelligent Portfolios customers. For Intelligent Portfolios Premium, the minimum is $25,000.

Betterment vs. Schwab: Services and Features

Automated portfolio management, including tax-loss harvesting, automated rebalancing and access to telephone customer support, are included with Betterment. For an additional cost, Betterment Premium clients can call a certified financial planner for live, personalized advice. Phone support for all clients is available Monday through Friday from 9:00 A.M. to 8:00 P.M.

Betterment’s approach to tailoring investments to individuals uses investment goals as a starting point. It has 11 curated portfolios to choose from, including Core, Innovative Technology, Goldman Sachs Tax-Smart Bonds and Crypto ETF options. Its original Core portfolio emphasizes diversity, low cost and long-term performance, while other more specialized portfolios focus on stocks or bonds, as well as thematic investing portfolios following themes of social and climate impact, innovative technology and income. Investors can also customize portfolios with individually selected weights in various asset classes.

Additionally, Betterment supports a comprehensive list of account types, including 401(k)s, individual retirement accounts (IRAs), trusts, 529 plans and personal checking and savings accounts. Investors can also invest in bonds and cryptocurrency.

Automated investment advice and automatic rebalancing are available from Schwab for all Intelligent Portfolio robo-advisor clients. However, only accounts with a balance of at least $50,000 can use the tax-loss harvesting service.

Schwab Intelligent Portfolios Premium customers can talk to human-certified financial planners for an additional fee. Both levels of account have access to 24/7 telephone and chat support. Unusual among robo-advisors, Schwab has a large network of physical branches where robo-advisor clients can go for face-to-face service interactions.

Schwab uses six different risk profiles, from conservative to aggressive growth, to direct clients toward appropriate mixes of assets. There are three available investment strategies: Global, U.S.-Focused and Income-Focused.

Schwab Intelligent Portfolio clients can also access several other account types, including IRAs, checking and savings accounts, 529 plans, trusts and general brokerage accounts. Even mortgages and American Express credit cards are available.

Betterment vs. Schwab: Mobile and Online Experience

An investor compares Betterment vs. Schwab.

Since robo-advisor clients mostly interact with firms via websites and apps, the digital experience is important.

Betterment’s user interface is uncluttered and easy to use. Despite its streamlined design, it still makes room for clients to add outside accounts to their Betterment account to get a more comprehensive picture of their finances.

With its thinkorswim platform, Schwab’s interface is not as stripped-down as Betterment’s design, but navigation is still straightforward. Schwab has a large library of investment education articles, including videos, to help answer general financial questions.

However, when comparing Betterment vs. Schwab, the Schwab app definitely falls behind. On the App Store, Betterment’s app earns 4.8 stars, while on Google Play, it has a 4.5 rating. However, while the Schwab app is rated 4.8 on the App Store,its Android app gets only a 2.7 rating.

Betterment vs. Schwab: Investment Options Comparison

One of the most important differences between Betterment vs. Schwab is the range of investment options each robo-advisor supports.

Betterment builds portfolios exclusively with ETFs sourced from outside investment firms. It offers a diverse mix of preset portfolio themes, including:

Core portfolios. These are designed for low cost and broad diversification.
Stock- or bond-focused portfolios. They are suitable for investors seeking more targeted exposure.
Thematic portfolios. These include climate impact, social responsibility, innovative technology, and income-focused strategies.
Custom portfolios. These allow clients to adjust asset weights or select specific ETFs

This flexibility makes Betterment especially appealing to investors who want their portfolios aligned with specific goals or values, socially responsible investing, while still relying on the low-cost ETF structure.

Schwab Intelligent Portfolios, on the other hand, only use Schwab’s in-house ETFs. Investors cannot branch out into mutual funds, individual stocks or alternative assets through the robo-advisor. While this keeps costs low and simplifies portfolio construction, it also limits variety. Unlike Betterment, Schwab does not offer thematic or ESG-focused portfolios; clients instead choose from one of three broad investment strategies matched to their risk profile.

In short, Betterment caters to investors seeking more choices with greater customization and socially responsible investing options. Meanwhile, Schwab’s robo-advisor is best for those who prefer simplicity and are comfortable with Schwab-branded ETFs.

Who Should Use Betterment and Schwab

As two of the best robo-advisors, both Betterment and Schwab are highlights within the financial industry.

Investors with little money to invest but are willing to pay advisory fees may look to Betterment as a preferable choice. Betterment is also a better choice for people who want a completely hands-free approach to investing. Betterment also is a better option for retirement savings.

Those with at least $5,000 to invest who want to avoid advisor fees will likely find Schwab a better fit. Betterment’s apps receive higher ratings, making it better for on-the-go trading, while beginner investors may find Schwab more accommodating, thanks to the option for face-to-face interactions at its physical branches.

Bottom Line

An investor checking their investment performance.

As similar robo-advisor solutions, the differences between Betterment vs. Schwab are modest, with drawbacks balanced by equal advantages. Investors who do not have much money to invest will enjoy Betterment’s zero account minimum. Schwab, on the other hand, appeals primarily to those who want to keep advisory fees to the bare minimum. At the end of the day, it all depends on your financial goals and which investment strategy you want to use to build wealth.

Consider asking a financial advisor how to align your financial strategy with your long-term goals and risk tolerance to maximize your earnings.

Investing Tips for Beginners

If you prefer a hands-on investment approach, a financial advisor could help you create a financial plan for you investment needs and goals. 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 interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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