Betterment vs TD Ameritrade

  • Automatic portfolio rebalancing
  • Goal-based portfolio design
  • No account fees fees
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  • No trade commissions
  • Thousands of mutual funds
  • Great deal of third-party research
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Both Betterment and TD Ameritrade are popular robo-advisors that offer low subscription rates, reliable market analytics, and portfolio management tools. Betterment got its start in 2008 while TD Ameritrade started providing stockbroker services in 1971. Both firms now offer easy access to the market for retail investors.

Robo-advisors are perfect for beginning to intermediate investors who want to slowly put money away for retirement or other long-term goals while not having to pay attention to every minor market trend.

Both Betterment and TD Ameritrade can help in this venture, but there are differences between the two firms. You can research the differences between both companies to determine which one is proper for you right here in the debate of Betterment vs. TD Ameritrade.

Betterment Overview

Betterment has a long-established reputation as a robo-advisor, dating back to 2008. It’s a very safe and reliable platform for trading both stocks and bonds.

Pros

  • Allows fractional shares
  • Low Fees, no account minimum
  • Offers socially conscious investing

Cons

  • Mobile app does not feature many tools
  • No direct indexing available

Betterment is great for new and experienced investors. Customers who need help with their portfolios can answer a simple questionnaire related to your investment goals, household income, and risk tolerance to have a profile automatically generated for you. More experienced subscribers are still able to manually arrange their portfolio if they desire, so there’s no risk of being railroaded into any given portfolio.

Betterment Services

A major benefit to investing with Betterment is that there is no minimum balance you must keep in your account. This is one of the great draws for robo-advisors over traditional investment firms. There is no barrier to entry for potential investors, and they can enter the market at any income level.

A service that many robo-advisors are providing is what has become known as automatic rebalancing. This helps to constantly manage your portfolio so that your asset ratios between stocks, bonds, etc. never stray too far from your account’s custom parameters.

This ability to customize your portfolio according to your goals (no matter how experienced an investor you are) makes Betterment a great option for any potential subscribers. Beginning investors can have their portfolios automatically generated while more experienced or focused customers can target their finances around more targeted goals. These can even include morally focused portfolios dedicated to responsible investing in climate change or social justice firms.

Betterment Fees

Betterment’s basic plan charges a 0.25% managerial fee on a given user’s account, and Betterment Premium charges 0.40%. By comparison, this is incredibly low compared to what traditional brokerage firms charge their clients. Some EFTs do come with additional transaction fees, but these will vary based on the security.

TD Ameritrade Overview

TD Ameritrade is another robo-advisor firm that helps investors trade in stocks, ETFs, and options trading. It offers low subscription fees and several unique investment tools that customers will not find on other platforms.

Pros

  • Plenty of charts and data mapping tools
  • Trades in a wide variety of assets
  • Well-reviewed customer support

Cons

  • Does not offer simplified questions for beginners
  • No fractional shares

TD Ameritrade Services

Ameritrade offers plenty of assets, including stocks, bonds, mutual funds, options, annuities, and ETFs. Investors will have no problem locating a security that can fit their financial goals and portfolio specifications.

Investors can customize their portfolios, but subscribers can also go the more traditional route. Ameritrade offers one-on-one financial advice with a minimum commitment of $25,000 and a 0.60% to 0.90% managerial fee. As previously noted, this old form of portfolio management comes at a significantly higher rate than online services such as Betterment.

TD Ameritrade is often praised for its graphing and charting capabilities. Some robo-advisors don’t offer such services, but Ameritrade’s software is easy to read and comes with a variety of formatting options, allowing users to track and highlight an asset’s data related to a specific company or market events.

Unfortunately, Ameritrade does not currently allow for the trading of fractional shares, making it difficult for those on a budget to purchase blue-chip stocks such as Disney or Apple. This might be a major factor for potential subscribers who want to invest in large companies but don’t have the funds to purchase entire shares.

TD Ameritrade Fees

Like Betterment, TD Ameritrade requires no portfolio minimum, and there is no fee associated with initially activating an account.

Most trades are commission-free, but this depends on the asset in question. Users will have to look for any potential commission when looking into a trade.

As previously discussed, there are managerial fees associated with some of Ameritrade’s more premium features such as in-person advising and dedicated guidance.

Betterment vs. TD Ameritrade: The Verdict

Both platforms offer similar services but are ultimately aimed at different demographics. TD Ameritrade offers a variety of securities and does have some in-person advisory services, but this requires a significant amount of funds to invest.

Betterment allows active traders to customize their portfolio but is also a better option for a beginner or casual investors who want their portfolio automatically designed and adjusted by Betterment’s software as the account grows. Many retail investors simply want to invest their money and not worry about constantly checking their portfolios, making Betterment the better option in this regard.

No matter which platform you decide to go with in the decision of Betterment vs. TD Ameritrade, you can get started here!

Bob Haegele

About the Author:

Bob Haegele is a personal finance writer, entrepreneur, and dog walker. Bob has been writing about personal finance for three years and now manages several personal finance sites, including The Frugal Fellow, Modest Money, and Blooming Wealth. You can also find him contributing to popular websites such as Yahoo! Finance, MSN Money, and GOBankingRates. You can see more of his work on Muck Rack and Contently, or connect with him on LinkedIn.