Betterment is a Robo-advisor service that offers both financial planning advice as well as brokerage services. They also have plans that provide access to their Certified Financial Planners. Depending on your needs, they have pricing for many services, which we cover here.
But how much does Betterment charge for their fees? That all depends on your needs. Betterment pricing mostly falls into two categories:
- Pricing for Investment
- Pricing for Professional Advice
While this article is exclusively about Betterment’s pricing, I do have a full review of my experiences with them. Read my Betterment review for more about how Betterment works and what you can expect.
Betterment Management Fees
Fees for investing at Betterment are called “management fees.” Betterment’s two main plans are their Digital plan and their Premium plan. The Digital plan is strictly for investment. The Premium plan is a combination of investment and advice. Both have their management fees, which we discuss here.
Betterment Digital Plan Pricing
Betterment Digital is Betterment’s initial plan and the plan that I’ve used since 2017. This plan includes fantastic investment tools, such as automatic rebalancing and tax-loss harvesting. It gives you access to globally-diverse ETFs and Betterment’s goal-based approach to investment. The price for this plan is 0.25% per year.
Betterment Premium Plan Pricing
Betterment Premium is Betterment’s next plan, which includes everything I listed in Betterment Digital, but it also gives you unlimited access to their Certified Financial Planner (CFP) network. You will not receive a dedicated advisor, but this is a considerable value nonetheless.
These financial planners can assist you in planning for life-events such as marriage, having a child, buying a house, understanding stock options and other equity-based compensation in a job, and any investments you have outside of Betterment. This plan’s fee is 0.40% per year but does have a $100,000 minimum investment required.
How Do Betterment’s Fees Work?
It might seem confusing if you’ve never dealt with pricing like this before, so I’m happy to explain. What is 0.25%? What is 0.40%? It’s straightforward once you understand it. 0.25% is one-quarter of one percent. 0.25% is easy to understand by picturing a penny cut into four equal pieces. 0.40% is just shy of one-half of one percent, or almost like cutting a penny in half.
On the Digital plan, for each dollar you invest, you’ll pay a quarter of a penny each year. For the Premium plan, you’ll pay a little under a halfpenny for each dollar invested. So, what would the fees be each year if you invested 10,000 dollars? Easy!
- Digital Plan: $25/year
- Premium Plan: $40/year
Remember, that’s just for comparison purposes, the Premium plan has a minimum investment requirement of 100,000 dollars.
What About Betterment Monthly Fees?
Betterment does not charge monthly fees. Instead, they assess their fees quarterly based on the average daily balance of your assets they manage. You’ll see a Betterment management fee every 3-months based on your average daily balance for that 3-months.
If you withdraw money from your account, that will reduce the daily average, which decreases your fee. Similarly, when you deposit money, it increases your average daily balance, which increases your fee. Betterment withdraws the fee from your account balance, so you don’t have to pay a bill every quarter.
Betterment Advisory Fees
Another large part of Betterment’s offering is advisory services. Many people don’t speak with financial advisors and planners, and Betterment is trying to change that. No matter which plans you choose, Betterment still makes accessing a Certified Financial Planner simple. What I like best is that the pricing is always transparent.
Betterment Advice Packages
If you’re using the Digital plan, what do you do if you have a significant financial event, and you want help with it? Betterment offers “Advice Packages.” You purchase advice packages as one-offs, and they allow you to book time on one of Betterment’s Certified Financial Planners’ calendars.
Advice Packages, as of this writing, have a starting price of $199 for a 45-minute “Getting Started” call. They then have $299 packages for 60-minute calls for various life events, including:
- A Financial Checkup package
- A College Planning package
- A Marriage Planning package
- And a Retirement Planning package
Getting a Dedicated CFP from the Betterment Advisor Network
If you love the idea of having access to Certified Financial Planners, but you want a dedicated one, then Betterment can help facilitate that. By contacting Betterment, they can match you up with a CFP that can work with you on an on-going basis.
These advisors work separately from Betterment, even though you’re being matched up through Betterment. Meaning you’ll have a separate agreement with your CFP, with their different pricing, although Betterment does suggest the pricing falls between 0.80% to 1.50%. The CFPs do have an asset minimum, but it varies and starts at 100,000 dollars.
Does Betterment Charge Fees for 401(k) Rollovers?
It does not. It’s possible that your current plan administrator may charge a fee for transferring out of their plan, but Betterment does not charge fees for rolling a 401(k) over to them. I rolled my 401(k) over to Betterment, are you curious how it went? Check out my Betterment 401(k) rollover review.
Betterment Pricing Wrap-up
That’s about all there is to Betterment’s pricing. They’ve always been very up-front with me, and I’ve had no pricing surprises since I started with them in 2017.