TD Ameritrade Robo Advisor vs Betterment
This Betterment vs. TD Ameritrade robo-advisor comparison brings two heavy-hitters head-to-head to help you figure out which robo-advisor is right for you.
Betterment launched in 2010 and is one of the original robo-advisors. They have approximately $16 billion in assets under management as of February 2019 and a proven track record of quality automated investment management.
TD Ameritrade’s robo-advisor portfolios, founded in 2016, are much newer than Betterment’s services, but that doesn’t push them out of the running. They have the reputation of the TD Ameritrade family backing them and a longstanding history of providing solid financial products.
So how do you choose between Betterment vs. TD Ameritrade? This deep dive into the two robo-advisors will help you choose.
Betterment vs. TD Ameritrade Essential Portfolios Features
|Overview||A goals based automated investment advisor. Betterment bills itself as, “Investing Made Better.” Offers a variety of human financial planning options.||Two digital investment platforms available: |
Essential Portfolios – Typical goals based robo-advisor.
Selective Portfolios – Robo-advisor + human advisor with passive + active management strategies.
|Minimum Investment Amount||No minimum investment amount required for Digital. $100,000 minimum for Premium.||TD Ameritrade Essential Portfolios requires a $5,000 minimum.|
TD Ameritrade Selective Portfolios requires a $25,000 minimum.
|Fee Structure||Digital-0.25% AUM up to $2 million (.15% over $2 million). Premium-0.40% AUM up to $2 million (0.30% over $2 million)||Essential Portfolios – 0.30%|
Selective – Depending upon specific portfolio selected + amount of money invested, fees range from .90% to .55% AUM
|Top Features||Goal-based ETF investment portfolio. Rebalancing. Tax-loss harvesting. SRI, smart beta + income portfolios. Human financial advisor access.||Fully automated and low cost, Essential Portfolios builds, manages, and rebalances your investments. Five available portfolios range from conservative to aggressive. Designed with future goals in mind. Rebalanced annually or more frequently if needed.|
Selective portfolios offer human financial advisors + 4 types of investment management portfolios including both passive and active management investment strategies.
|Free Services||Betterment retirement savings calculator.||Educational resources available on the TD Ameritrade website.|
|Contact & Investing Advice||Texting for all clients. Betterment Premium and planning packages have access to financial advisors. Phone and email support, 7 days per week.||“24/7 Phone |
In Branch office with TD Ameritrade representative.”
|Investment Funds||Low-cost, commission-free ETFs. Includes value-based funds.||Diversified, low-cost index funds (ETFs + mutual funds) from six different asset classes for Essential + Selective portfolios. Actively managed funds available for Selective portfolios. All funds recommended by Morningstar.|
|Accounts Available||Single & joint taxable brokerage. Roth, traditional, rollover & SEP IRA. Trust.||Individual & joint investment accounts. Roth, traditional, SEP, SIMPLE & rollover IRAs. Coverdells. Trusts. Solo 401(k)s & Solo Roth 401(k)s. Corporate & business accounts. UGMA/UTMA.|
Betterment vs. TD Ameritrade – Overview
What is Betterment?
Betterment is one of the legacy low-fee robo-advisors with the option for pure automated investment management or a hybrid, digital plus human advisor financial management. This means that you get an investment portfolio that lines up with your goals, time horizon and risk level.
Betterment’s assets under management clock in at number three, after Vanguard and Schwab, with over $16 billion and more than 400,000 accounts.
In our Betterment Review, we have named this platform one of the best robo-advisors for millennials, but you shouldn’t write it off if you’re outside that bracket. Betterment earns this distinction for a few important reasons: cost, options, minimums, and customization.
Betterment is a goals-based robo-advisor that helps investors clearly articulate and track individual objectives. Users can customize their goals and easily see if they’re on track to meet them. It’s extremely affordable, with low fees and no minimum investment requirement.
Additionally, Betterment investors have the option to pursue socially-responsible investments, which appeals to the many individuals who want to earn money while making a difference in their communities or society at large.
What is TD Ameritrade Essential Portfolios?
In our TD Ameritrade’s Essential Portfolios Review we delve into this growing robo-advisor’s automated investment platform. As part of the TD Ameritrade family, investors can access the wealth of products and services offered by this large investment company.
The TD Ameritrade robo advisor is also goals-based. The TD Robo offers two types of digital investing.
- Essential Portfolios are fully automated and include all the perks we’ve all come to expect from robo-advisors.
- TD Ameritrade Selective Portfolios robo-advisor is a hybrid model, which includes both automated and human investment management.
At the Selective Portfolios level, however, TD Ameritrade really delivers on services. Selective Portfolios investors can have access to human financial advisors that provide a range of active and passive account management strategies.
Betterment vs. TD Ameritrade – Top Features
Betterment Top Features
- Texting with financial professionals – at all account levels
- Access to financial advisors
- Goals-based robo, with the ability to add multiple goals
- Low fees
- No minimum required (for Betterment Digital)
- Tax loss harvesting
TD Ameritrade Top Features
- Fully automated robo-advisor or hybrid with access to human financial advisors
- Passive and active investment management options
- Access to all TD Ameritrade’s brokerage services including TD Ameritrade Portfolio Planner and TD Ameritrade Automatic Investment
- In person service at TD Ameritrade Branch offices
- Tax loss harvesting
Visit the Robo-Advisor Selection Wizard, take a quick quiz, and find out which robo-advisor is the right one for you.
Betterment vs. TD Ameritrade—Who Benefits?
Betterment vs. TD Ameritrade – Financial Advisors
If you want access to a human financial planner, you could benefit from both robos: Betterment offers access to humans with both their Digital (texting access only) and Premium accounts, and TD Ameritrade provides human advisors with their Selective Portfolios.
The qualifications of the financial consultants between TD Ameritrade vs. Betterment is distinct.
- All Betterment financial consultants are Certified Financial Planners, one of the most elite certifications for financial advisors.
- TD Ameritrade financial advisors hold Series 7 and Series 66 licenses and might hold the CFP designation.
Right now, the Betterment robo-advisor is one of the only robos to sell a la carte financial planning packages. This is a boon for investors who are about to reach a life milestone (retirement, marriage, or college, for example) and want to seek professional advice.
If you envision needing in depth consultation from financial advisors, then you’re assured a Certified Financial Planner with Betterment. For general financial questions, the TD Ameritrade consultants should be fine.
Betterment vs. TD Ameritrade – Fees and Investment Minimums
Betterment and TD Ameritrade each have tiered account offerings so that investors only pay for features they use.
Betterment Fees and Minimums
Betterment has no minimum balance requirements for the digital investment option. Betterment Premium requires a $100,000 minimum. They offer two account types, plus a la carte financial planning sessions:
- Betterment Digital: 0.25% AUM for accounts valued up to $2 million; drops to 0.15% AUM for accounts over that amount. No minimum balance required.
- Betterment Premium: 0.40% AUM for accounts up to $2 million; drops to 0.30% AUM for accounts over this amount. $100,000 minimum balance required.
- Financial Planning sessions range from $199-$299 depending on the type and number of sessions.
If you’re looking for a low-fee or no minimum investment robo-advisor with the human touch, Betterment wins out here. Even their basic portfolio—Betterment Digital—allows for texting with financial planners.
For investors just starting out, the no minimum, low fee Betterment is great.
TD Ameritrade Essential Portfolios Fees and Minimums
TD Ameritrade Essential has a higher minimum balance requirement than many of the robo-advisors we feature on Robo-Advisor Pros. Like Betterment, TD Ameritrade has two account types:
- Essential Portfolios: $5,000 minimum investment required. Fees are .30% AUM, regardless of account balance.
- Selective Portfolios: $25,000 minimum investment required. Fees range from .75% – .90% AUM depending on which specific portfolio is selected and the amount of money in the account
The low 0.25% Betterment expense ratio is enticing for the digital platform. This option offers financial advisor texting. While TD Ameritrade’s essential robo charges a bit more at .30% of AUM.
Despite the lack of financial advisory consultation for the TD Essential robo, you can likely walk into a TD Ameritrade branch or call for minimal financial assistance.
In sum, for the basic platforms, Betterment wins in the fees and minimum contest with lower basic fees and no minimum investment amount.
With Betterment Premium and TD Ameritrade’s Selective Portfolios, there’s a different contest. Betterment requires a $100,000 minimum versus the TD Robo’s $25,000 minimum. Betterment Premium’s .40% fee beats the TD Ameritrade Selective Fees.
Ultimately, for the premium levels, if you have the $100,000 minimum then Betterment Premium is the lower cost option.
Betterment vs. TD Ameritrade – Investment Options
Betterment Investment Portfolio Options
Betterment offers diversified investment portfolios based upon your goals, age and risk tolerance level. At $100,000 plus AUM, you have can use Betterment’s Flexible Portfolios option to customize your asset allocation.
Betterment has recently added three new portfolio options to their menu.
- Socially Responsible Investors – The SRI portfolios allow you to invest with your values and choose to put your money in socially responsible firms.
- Goldman Sachs Smart Beta Portfolios – This approach is good for investors who want to attempt to beat the market and are willing to take on a bit higher risk.
- BlackRock Target Income Portfolios – These bond portfolios are designed for conservative investors seeking cash flow.
Investors can use these new portfolios in lieu of or beside Betterment’s traditional options.
TD Ameritrade Essential Portfolio Options
TD Ameritrade Essential Portfolios has a very easy to understand portfolio breakdown, offering five different levels which range from conservative to aggressive. These portfolios match up with varying degrees of risk tolerance, so investors always know what they’re getting into.
TD Ameritrade Selective Portfolios include 4 categories of investment portfolios which include both active and passive strategies:
- Core Portfolios include mutual funds or ETFs. The TD Ameritrade Select Core Portfolios incorporate a range of investment styles, sectors, market caps and geographic regions.
- Supplemental Income Portfolios are tilted towards fixed income investments with lower volatility and greater dividend payments. This choice is diversified across a range of income-generating asset classes, credit quality and interest rate sensitivity to maximize yields for given risk levels.
- Opportunistic Portfolios are for those investors that seek to adjust their asset allocation based upon market conditions, in an attempt to beat market returns.
- Managed Risk Portfolios are actively managed to create moderate, consistent returns with limited volatility and less exposure to interest rate or stock market risks.
The TD Ameritrade Selective Portfolios offer additional customization, for a price.
Thus, both robos offer a considerable degree of customization in the investment portfolio process. Although, TD Ameritrades more sophisticated portfolios come at a higher price.
Betterment vs. TD Ameritrade – Tax Impact
Betterment attends to tax consequences in both taxable and retirement accounts.
They place assets in accounts that will minimize tax payments.
Betterment offers tax-loss harvesting for taxable accounts.
TD Ameritrade’s Essential portfolios ETF-based robo-advisor platforms offers tax-loss harvesting on all account sizes. Some Selective ETF portfolios in taxable-accounts also offer tax loss harvesting.
Betterment has a slight edge in minimizing taxes.
Betterment vs. TD Ameritrade – The Takeaway
With no minimum investment requirement, Betterment is clearly more accessible to all investors. TD Ameritrade Essential Portfolios, while they are a quality product, can only be funded with a $5,000 minimum investment—something that not all investors may have at their disposal.
Betterment just rolled out Betterment Everyday which is a cash management checking and saving product. Although TD Ameritrade also offers cash management services, Betterment is currently offering among the highest yielding returns for their savings account (the interest rate is subject to change).
If a higher management fee isn’t a concern, at the Selective Portfolios level, TD Ameritrade offers passive or active management strategies.
Investors who want their financial products managed by the same family of companies would benefit from TD Ameritrade. Between the many investment options provided by TD Ameritrade and the products at TD Bank, clients can take care of almost all their financial needs in-house.
In a head-to-head Betterment vs. TD Ameritrade, fee comparison, Betterment wins, with lower management fees for both it’s Digital and Premium offerings.
The best robo-advisor for you in the Betterment vs. TD Ameritrade competition depends upon your own needs.
We recommend assessing what type of investment management you are seeking, and then determine the robo-advisor that best meets your criteria.
That said, we like Betterment for their low fees, variety of financial advisor access, high yield cash management, and diverse investment style options.
Read the complete Betterment Review
Direct Access: Betterment Website
Read the complete TD Ameritrade Review
Direct Access: TD Ameritrade Website
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