Acorns vs Betterment Review 2020


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If you struggle to save, Acorns and Betterment make it easy to contribute to your nest-egg and invest passively without having to lift a finger.

The Acorns mobile app rounds up your everyday purchases to the nearest dollar, moves the loose change into an Acorns investment portfolio account and automatically manages the money for you.

Betterment has a feature called Smart Deposit, which sweeps unused cash into your Betterment account and invests it on your behalf.

So, with both robo-advisors offering an automated way to invest your savings, which one is better for you? We compared Acorns vs Betterment on a range of features, including fees, account types, human advice, tax-loss harvesting, account minimums and asset classes.

Acorns vs Betterment


acorns investing robo advisor logo

What Does Acorns Do?

Acorns takes a unique approach to getting people to save and invest more money.

Each time you make a purchase with your credit card, Acorns rounds the price up to the next dollar and invests the change for you. For example, if you buy a coffee for $3.27, Acorns will wound up to $4 and invest the $0.73.

You can also use Acorns as a digital money manager. The app doesn’t require a minimum deposit, and you can invest as much as you want.

You get to choose how aggressively you want Acorns to invest your money, but you can only select between five default options instead customizing your approach.

Is Acorns Right For You?

Acorns tends to work well for people who don’t have strong saving and investing habits. Because the app works automatically, you don’t have to make many decisions after setting up your account.

Acorns is also a good option for people who don’t want to pay high fees.

If you have a portfolio worth $5,000 or less, then you only pay Acorns $1 per month.

With a portfolio size of $5,000+, you pay 0.25% of the balance per year, which is low compared to most traditional money managers.

➤ Free Guide: 5 Ways To Automate Your Retirement

What Does Betterment Do?

Betterment manages a portfolio worth about $15 billion, making it one of the world’s largest robo-advisors. It has established a reputation as a leader in the automated investment management industry.

When you sign up for Betterment, you get to choose between two plans:

  • Betterment Digital
  • Betterment Premium

Betterment Digital doesn’t have an account minimum, so you can start investing with as little as $1. The plan also has a low fee of 0.25% per year, the same as Acorns.

Betterment Premium gives you phone access to certified financial planners. That may matter quite a bit to serious investors. The plan has a $100,000 minimum, though, so it’s not for beginners. Betterment Premium charges a 0.40% annual fee.

Is Betterment Right For You?

Betterment is aimed at investors who want to place their nest-egg in the hands of a trusted money manager with a proven track record.

Entry-level investors that don’t want to get too involved with their portfolios should choose Betterment Digital. Those that want to invest larger amounts and get advice from professionals should choose Betterment Premium.

>> Compare Betterment Vs DIY Portfolio


Acorns Fees vs Betterment Fees

Betterment and Acorns charge 0.25% of AUM for computer-managed investment management services. Human advice is accessible at Betterment at a higher fee schedule. Under $5,000, Acorns charges a monthly flat rate of $1 and provides college students free service.

Fees at Betterment and Acorns are identical for amounts over $5,000. Both charge 0.25% of managed assets. Above $2,000,000, Betterment waives fees for its high net worth clients.

Up to $5,000, Acorns charges a fixed fee of $1 per month. College students also get a bonus of 4 years of free automated portfolio management services when signing up to Acorns with a valid .edu email address.

These fees reflect basic service levels, which at Betterment means purely automated investment management powered by computer algorithms.

For investors who want a little extra hand-holding, Betterment also offers a high tier service, Betterment Premium. This service comes with access to human advice, and costs 0.40% of managed assets respectively.

Betterment Premium clients enjoy account monitoring by human advisors, an annual phone call and unlimited email access to human financial experts, CFP professionals.

Robo-Advisor$5,000$10,000$50,000$100,000Open Account
acorns investing robo advisor logoREVIEW

betterment REVIEW


Account Minimum

Betterment vs Acorns

For basic service, Betterment and Acorns have no account minimums. 

While no account minimums are imposed by either robo-advisor on basic service, Betterment mandates a $100,000 minimum for Betterment Premium.

Robo-advisor$1,000$10,000$50,000$100,000Open an Account
betterment DIGITAL

acorns investing robo advisor logoMANAGEMENT FEES


Compare Betterment Vs Acorns Account Minimums: Betterment has a $100,000 minimum for its Premium service but you can get started with both services at their basic level at no cost.

Tax Loss Harvesting

Betterment vs Acorns

Tax loss harvesting is designed to reduce capital gains taxes by offsetting losses from losing investments with gains from winning investments. Betterment offers free automatic tax-loss harvesting assistance to clients. Acorns does not provide tax-loss harvesting services at this time.

When stock markets fall, it is easy to succumb to fear and sell your investments. Betterment realizes this and its user interface emphasizes that such declines are opportunities to harvest tax losses.

These tax losses can boost annual average returns and have a positive effect on portfolio value over time.

For example, if you have a portfolio with $200,000 that has accumulated tax losses of say $20,000 over a few years, the tax deduction you enjoy might ultimately result in say $6,000 of investable assets.

Invest that $6,000 at a rate of 8% annually and it has the potential to produce on average $480 of additional earnings that would otherwise have been lost had you not harvested any tax losses.

When you compare the potential $480 of additional annual earnings with the fees of 0.25% on the Betterment Digital service, which amount to $500 on a $200,000 portfolio, you can see that tax-loss harvesting can go a long way towards covering your annual fees.

Over the long-term the savings from tax-loss harvesting have the potential to pay the fees entirely!


Tax loss harvesting is one way to create a tax-efficient portfolio.

If you have taxable and retirement accounts, a tax-coordinated strategy that allocates assets optimally to minimize overall taxes is another smart way to build a tax-advantaged investing strategy.

Betterment automatically builds a tax-coordinated strategy for clients.

Acorns does not offer tax-loss harvesting services at this time like other robo-advisors.

Acorns vs Betterment: Tax Loss Harvesting? Betterment wins easily in this category by providing tax-loss harvesting assistance to reduce capital gains taxes by harvesting losing investments to offset profits from winning investments. It also provides a tax-coordinated strategy to optimally allocate assets between tax-advantaged retirement accounts and taxable accounts.

Human Financial Advisors

Acorns vs Betterment

Betterment offers a hybrid robo-advisor service that combines automated investment management with human advice. Acorns has no equivalent human dimension to its service at this time.

Neither Acorns nor Betterment makes human advice available to clients for basic service offerings. However, Betterment does cater to clients who want access to CFP professionals via its higher tier service, Betterment Premium.

You will need at least $100,000 to get access to human financial advisors at Betterment, a high hurdle compared to the minimum thresholds of some other robo-advisors, such as Vanguard Personal Advisory Services, which has a $50,000 minimum.

Acorns does not provide a human component to its technology-powered investment management services at this time.

Acorns Vs Betterment: Which is Better for Human Financial Advisors? Betterment comes out ahead on providing human assistance to clients via higher tier services. Acorns has no equivalent human financial advice services.


acorns investing robo advisor logo

Automated Retirement Planning

Acorns vs Betterment

Betterment makes it easy to set financial goals, sweep unused cash from checking accounts into investment accounts and target retirement goals. Acorns helps you build a nice investment account, but because the amounts invested from each transaction are small, the overall nest-egg size you can build is unlikely to be sufficient to reach the level needed to sustain retirement spending.

Acorns Retirement Planning

If you find it hard to squirrel away those nuts you know you will need for winter time or retirement, Acorns and Betterment make it easy for you, albeit in slightly different ways.

After you link your credit and debit cards, the Acorns app can help you effortlessly save a little each time you buy something by rounding up your loose change to the nearest dollar and investing it.

You don’t have to think about putting away a little extra each month, Acorns does it automatically for you. This is a very nice feature for people who struggle to save.

Plus, college students and beginner investors without much spare change to invest will hardly notice the extra pennies, dimes and quarters swept into their investment accounts one transaction at a time.

Betterment Retirement Planning

Betterment has a feature called Smart Deposit, which does something similar.

Instead of investing the rounded-up loose change from each transaction, Betterment invites you to set a monthly amount to cover standard expenses.

Above that threshold, unused cash in your checking account is swept into an investment account designed to target financial goals you have targeted.

For example, if your financial goals include saving for a car, a new home, or a vacation, Betterment lets you sweep cash into those bucket accounts easily.

The amounts you can invest at Betterment tend to be larger so while Acorns helps you to build a nest-egg, it may not be large enough over time to meet your retirement needs.

It’s certainly beneficial and so an Acorns account can be used in conjunction with a Betterment account, which is better structured to help you achieve your financial goals and retirement objectives.

Automated Retirement Planning: Should You Choose Acorns Or Betterment? Betterment helps you save unused cash with its Smart Deposit feature that sweeps unused cash into dedicated investment accounts. Acorns automatically invests loose change that is rounded-up with each purchase transaction you make. Because the amounts invested at Acorns are smaller, Betterment is more likely to help you reach your financial goals.

>> Compare Betterment Vs M1 Finance

Account Types

Betterment vs Acorns

Betterment supports an extensive range of taxable and retirement account types, including Trusts, IRAs, Rollover IRAs, SEP IRAs, and Roth IRAs.

Betterment features an extensive range of account types, including:

By contrast, Acorns will only cater to clients with taxable accounts.

These are fine for beginner investors and college students. More sophisticated investors with more complex financial situations who have multiple accounts will find Betterment superior.

Account Type betterment acorns investing robo advisor logo
Individual Non-retirementYESYES
Joint Non-retirementYESNO
Traditional IRAYESNO
Custodial AccountsYESNO
529 PlansNONO
401(k)NO (but, will advise)NO

Asset Classes

Betterment vs Acorns

Betterment supports up to 12 asset classes, which compares favorably to Acorns, which supports ETFs from 6 asset classes.

Betterment also offers a highly transparent guide on how it invests your money, called Our Investment Selection Methodology. This guide has interactive charts that make it easy to understand precisely how your funds are allocated by asset class, geography, and weighting.

Acorns investment methodology was supported by Dr. Harry Markowitz, who is the Nobel-prize winning father of Modern Portfolio Theory, which virtually every robo-advisor relies on to invest client funds.

Betterment Vs Acorns: Asset Class: Overall, Betterment wins this category with a broader asset class selection, though Acorns gets plaudits for having Dr. Harry Markowitz as an ally.

Overall Winner

Betterment vs Acorns

Overall, Betterment is the better solution if you had to choose just one robo-advisor. However, Acorns and Betterment can be used together.

Acorns WinsBetterment Wins
Portfolio Management Fees: Acorns provides free portfolio management to college students for up to four years.Portfolio Management Fees: Up to $5,000 of assets managed, Acorns charges a flat fee of $1 per month. Above that level, the charge is 0.25% which is identical to what Betterment charges for its basic service, Betterment Digital.
Betterment and Acorns are matched on management fees above $5,000. Where Betterment has the edge is for clients with over $2,000,000, at which time Betterment waives its fees.
Retirement Planning: Acorns is an obvious choice for individuals who struggle to save and want an automated solution that requires minimal effort to build and grow a retirement nest-egg.Retirement Planning: Betterment offers a RetireGuide feature that lets you spot gaps between your savings levels and retirement goals. If you’re on track or falling short, you will be able to easily spot areas of improvement and make adjustments.
Expense Ratios: Low expense ratios are a feature at Acorns – they range from 0.05% to 0.15%Expense Ratios: Betterment has low expense ratios between 0.09% to 0.17%, slightly higher than Acorns but only marginally.
Human Advisors: Between Betterment and Acorns, only one choice exists for investors looking for human advice. Acorns offers no such service while Betterment has two tiers of service catering to live advisors.
Asset Classes: Acorns provides half as many asset classes as Betterment, which provides an extensive range of 12
Account Types: Betterment features qualified and non-qualified accounts, but Acorns only caters to non-qualified taxable accounts.
Tax Loss Harvesting: Betterment harvests tax losses to offset losses from losing positions against gains from winning position to lower capital gains taxes. Betterment also offers a tax coordinated service to allocate assets across tax-advantaged retirement accounts and taxable accounts.

Which Robo-Advisor Is Best For You: Acorns or Betterment?

Acorns and Betterment have their own pros and cons. For the most part, young people and new investors should check out Acorns. Experienced investors with more money should take a close look at Betterment to decide whether it has the services they want.

Both offer low-fee automated investing solutions that cater to slightly different financial goals and audiences. Beginner investors, college students and individuals who struggle to save should carefully consider Acorns, which makes it easy to round-up each debit and credit card purchase to the nearest dollar and invest the loose change.

Betterment is a more comprehensive robo-advisor service that caters to the taxable accounts Acorns supports, as well as retirement accounts and trusts. Tax-loss harvesting and tax-coordinated strategies are available at Betterment, though not at Acorns. And Betterment has a broader range of asset class to support diversified client portfolios.

It is unlikely that Acorns nest-eggs will grow sufficiently large based on the low dollar amounts invested be able to sustain retirement spending, but together with Betterment the two services offer a nice complement to each other.

Unlike some other robo-advisors where the decision is binary, Acorns vs Betterment, is more like Acorns + Betterment. You can use both, but if you had to only pick one, Betterment has more bells and whistles.





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