Betterment vs Acorns: Which Robo Advisor for You?

Betterment is a popular online investment service that simplifies the investing process, using advanced computer software to help users save for retirement and other financial goals. Betterment allows investors to pick an investment portfolio (a mix of investments) that fits their preferences, and will manage it for them. If investors want to speak with a financial advisor, Betterment Premium service gives users access to a CFP® for 1-on-1 financial advice.

Acorns is a financial app that allows users to invest their spare change by rounding up purchases. Acorns also offers a bank account, as well as cash back rewards for shopping online through the Acorns app or Chrome extension.

Both Betterment and Acorns are designed to help beginners start investing. We’ve compared both Betterment’s and Acorns’ robo advisory services, breaking down the pricing, investment options, security, and user experience of each.

Betterment vs Acorns Overview

Features	Betterment IA Rating: 4.4 out of 5	Acorns IA Rating: 4.5 out of 5
Account Fees	0.25% Management Fee for Betterment Digital 0.40% Management Fee for Betterment Premium No other account fees apply (e.g. withdrawal, closing, trading, transfer)	Personal: $3 per month, includes investment account, IRA, and checking account Family: $5 per month includes everything in Personal plus kids’ investment account
Expense Ratios	ETF expense ratios from 0.06% to 0.50%	0.03 - 0.34%
Account Minimums	$0 for Betterment Digital and Cash accounts, $100,000 for Betterment Premium accounts	$0 to open, $5 to start investing
Investment Options/Choices	ETFs from 14 asset classes (including stocks, bonds, and emerging markets) Multiple portfolio choices: Betterment Core, Goldman Sachs Smart Beta, Blackrock Target Income, Betterment Cash Socially Responsible Investing (SRI) Portfolio choices: Broad Impact, Climate Impact, and Social Impact	Access to 22 ETFs in seven asset classes
Investment Account Options	Individual investment accounts Traditional, Roth, rollover, & SEP IRA Checking and High-yield savings account Joint accounts Trusts External account linking (for advice, not management)	Taxable brokers accounts IRA, Roth IRA, SEP IRA UTMA/UGMA accounts
Portfolio Construction	Automatic portfolio rebalancing on all accounts	Automatic portfolio rebalancing on all accounts
Tax Strategy	Tax-loss harvesting available on all taxable accounts Tax-Coordinated Portfolio tool Tax impact preview tool Donate shares to charity	None
Customer Service and Support	Phone support available on weekdays from 9 AM to 6 PM EST Email and social media support are available as well	Phone and email support, 6am to 7pm PST, seven days a week
Mobile Compatibility	Fully-functional mobile app to manage your accounts Ability to open cash and investing accounts directly from app	Mobile app available Website is mobile-friendly
Account Setup	Account setup is extremely simple and optimized for mobile users. To open an investment account, select the type of account you want to open, choose a goal, and choose from one of their portfolio options Users can customize their asset allocation with a simple slider	Simple account setup, all done online or through mobile app. Sign up for free with your email address, provide personal information, answer a few questions, and fund the account (no minimum balance required, but $5 needed to make an investment)
Security	Online guides, FAQ articles, and a blog give users access to detailed educational resources Bank-grade data protection, two-factor authentication, FDIC insurance up to $1 million (on cash accounts), and SIPC insurance up to $500,000 (on investment accounts)	Bank-grade data protection, 256-bit AES encryption, two-factor authentication. FDIC insurance ($250,000), SIPC insurance ($500,000)
Ease of access	Betterment is easily accessible on web browsers and through their mobile app	Mobile app for full account management, website offers help center

About Betterment

Betterment is a robo advisory service that uses software-based investment strategies to help users invest their money. There are no account minimums, which makes it a good option for beginners, and it charges a reasonable 0.25% management fee for the Betterment Digital service. It also offers advanced tax-efficient investing options, as well as socially-responsible investing (SRI) portfolios for those who want to invest in socially and environmentally focused investments.

Betterment offers an intuitive mobile app that allows investors to monitor their finances from their mobile device. For those that want to speak to a licensed financial advisor, Betterment offers access to Certified Financial PlannersTM (CFPs®) with the Betterment Premium service. This service charges a 0.40% annual fee, and allows investors to speak with human advisors to have their financial questions answered, as well as creating a custom financial plan for their investments.

Note: Betterment Premium requires a $100,000 minimum investment amount.

About Acorns

Acorns is an investing app and robo-advisor that allows users to invest small amounts by rounding up purchases to the nearest dollar. These “round-up” amounts are then transferred to Acorns from a linked checking account. Once the rounded up change amounts to $5 or more, the funds are invested into the user’s investment portfolio. Users also have the ability to set up a recurring investment into the portfolio.

In addition, Acorns offers a bank account with a debit card and reimbursed ATM fees. Users can invest in a range of low-cost exchange-traded funds (ETFs), which Acorns uses to build investment portfolios, ranging from conservative to aggressive.

There are two levels of service available:

Acorns Personal: For $3 per month, users can open a brokerage account, individual retirement account (IRA), and checking account with a debit card.

Acorns Family: For $5 per month, users get access to everything from Acorns Personal, plus the ability for parents to open kids’ investment accounts (as a custodian).

Main Features of Betterment vs Acorns

Both Betterment and Acorns are designed to make investing easy. They both offer intuitive mobile apps, and both allow users to set up recurring investments for a “set-it and forget-it” approach to investing. Here are a few more of the standout features of each platform.

Acorns Round-Up Feature

Acorns is best-known for its round-up feature, which rounds up purchases to the nearest dollar, and then transfers the difference from a linked checking account. Once the balance of these transfers reaches $5, the funds will be invested. They have coined this “micro-investing,” helping users invest small amounts of money that are hardly noticeable.

Note: Users can link a debit or credit card to round-up purchases, but funds can only be transferred from a linked checking account.

Acorns Kids’ Investing Accounts (UTMA/UGMA)

With the Acorns Family plan, users can open investing accounts for their kids. These UTMA/UGMA custodial investing accounts are similar to standard Acorns’ investing accounts, with access to the same ETFs and investment options, but they are also transferable to the child once they turn 18 years old. This is a great way for kids to start investing small amounts and build a habit of saving money.

Note: UTMA/UGMA accounts may reduce a child’s eligibility for financial aid, such as student loans or grants. We recommend consulting with a financial professional before opening a custodial account for your child.

Acorns Rewards

Acorns has partnered with over 12,000 online retailers to offer cash back when you use the Acorns Earn Chrome extension. This extension allows users to earn bonuses while shopping online, and the cash back bonus is deposited into a user’s Acorns account. As with the round-up feature, once the cash back balance reaches $5, it is invested.

Acorns also offers rewards for shopping at partner retailers or finding a job through the Acorns mobile app. This helps users turn cash back rewards into investments, directly from the Acorns app.

You can also receive a $10 sign-up bonus from Acorns. Get your $10 bonus here.

Betterment Tax Optimization

Betterment gives users a few different ways to save on taxes while investing. It offers tax-loss harvesting, which lowers the capital gains taxes for investors with taxable (non-retirement) investment accounts. For users with both standard and retirement investment accounts, Betterment places funds that produce more taxes into tax-advantaged accounts, such as an individual retirement account (IRA). Betterment also offers a “tax impact preview” tool that shows users the possible taxes owed for any buying or selling within their investment portfolio.

Betterment Investment and Portfolio Options

Betterment offers access to a large selection of low-cost ETFs in 14 different asset classes, which makes up each investment portfolio. This allows users to build a diversified investment portfolio. Here are the portfolios offered by Betterment:

Betterment Core - Offers a mix of stock and bond ETFs
Goldman Sachs Smart Beta - This portfolio is designed to attempt beating the stock market
Blackrock Target Income - 100% bond investments designed as an income-producing portfolio for retirees
Betterment Cash - Not an investment portfolio but a high-yield savings account

Betterment also offers 3 different SRI Portfolios to choose from:

Broad Impact - Stock portfolio of ETFs that have high ESG (Environmental, Social, Governance) ratings
Climate Impact - Climate-conscious ETFs with low carbon footprint
Social Impact - Two ETFs (NACP and SHE) supporting minority empowerment and gender diversity

Betterment Access to Financial Advisors

Betterment offers several ways to access a CFP® as part of its service. If you’re a Betterment Digital customer, you can book a consultation with a CFP® for a flat fee. The cost is $299 for a 45-minute consultation, and $399 for a 60-minute consultation.

If you’re a Betterment Premium customer, for a 0.40% annual fee, you’ll get unlimited access to a team of CFPs®, via phone or video calls. This option is great for investors that want help building a custom financial plan for their lifestyle and needs. Betterment Premium requires a minimum $100,000 investment portfolio.

Who Betterment Is Best For

Betterment is ideal for beginner investors that want access to a wide range of investing options and tools for a low annual cost. Betterment’s goal-based mobile app, tax optimized investing strategies, and selection of investing portfolios make Betterment one of the best robo-advisors on the market today.

For those with $100,000 to invest (or more), Betterment Premium is a good option to gain access to CFPs® for one-on-one investing advice. While the fee is higher than Betterment Digital, paying 0.40% for access to human advisors is a relatively low cost.

Overall, Betterment Digital is a great option for beginner investors that want an investment service to take care of the details for them, and Betterment Premium is a good option for investors with larger account balances that want unlimited access to human advisors.

Want more? Check out our full Betterment Robo Advisor Review.

Who Acorns Is Best For

Acorns is ideal for new investors that want to invest small amounts of money without having to personally choose the investments. Acorns offers simple investment portfolio options, and the spare change is invested according to a user’s investment portfolio.

Acorns also offers full banking services, such as a checking account, rewards debit card, and access to free ATMs around the country. Acorns is also a good option for investors that love cash back rewards, but want those rewards invested. The free $10 from Acorns to get started doesn't hurt either.

Want more? Check out our full Acorns Review.

Summary

Both Betterment and Acorns help beginners start investing with a small amount of money, offering no account minimums and the ability to set up recurring investments. Both also help investors choose a diversified investment portfolio of ETFs, helping them invest toward long-term goals.

While Betterment offers far more advanced investing tools, such as tax-loss harvesting and multiple portfolio options, Acorns allows users to gamify investing by rounding up purchases and investing the spare change. Betterment does offer a better value for those with lower investment balances, as the Acorns flat fee may end up costing more. But both services encourage beginners to invest regularly, which is ultimately a win for everyone.

My personal choice between these two companies is Betterment. With goal-based planning, automated investment management, multiple ways to save on taxes, and access to financial planners for Premium users, Betterment is one of the best all-around robo-advisor services.

When to choose Betterment

You prefer a wide selection of portfolio options
You want access to tax-loss harvesting
You want a fully-managed portfolio
You want access to ETFs in over a dozen asset classes
You want access to human advisors

When to choose Acorns

You want to start investing in small amounts
You prefer gamifying your investments
You prefer a flat-fee for your investment service
You want access to discounts and rewards

Looking for the best robo advisors? Check out our complete guide: The 13 Best Robo Advisors

References:

https://www.betterment.com/resources/
https://www.betterment.com/investments/
https://support.acorns.com/hc/en-us/articles/360053303353-What-is-Two-fa...
https://www.acorns.com/chrome-extension/