Betterment Review: A True Assessment From A Money Expert

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  • Betterment Review: A True Assessment From A Money Expert
Author: Joseph Reinke, CFA

There have been many robo-advisors launched in the past ten years.  A handful stick out.  Betterment being one of them.

In this Betterment review, we’ll take a look at how the platform works, its benefits and drawbacks, and whether or not it’s right for you.

The Unique Perspective Of This Betterment Review

We spent almost a year at FitBUX researching robo-advisors to partner with.  They all have major disadvantages and flaws.

However, we choose Betterment to use with our hybrid robo advisor because of their technology.  I will note these technologies below when discussing the benefits of using Betterment.

This review is unique because I have used various robo-advisors from a consumer stand point and business stand point.

Therefore, I will be sharing what are true benefits vs. disadvantages.

This is important because many sites and reviews will tell you something is a benefit. They sell it like its a major thing but in reality its not.

In fact, their flaws tend to drastically outweigh the benefits.

So what exactly is Betterment?

Betterment an online investment platform that helps users save money and invest for their future.

They do so at a low cost relative to a financial advisor because they are a traditional robo-advisor.

Features That Are Benefits & Disadvantages of Using Betterment

I’m going to blend most of the benefits and disadvantages together in this review because many features are both.  Therefore, its easier to state them together rather than illustrating all the benefits and disadvantages separately.

Opening Accounts & Transferring Money On Betterment

One of the best features of Betterment is how easy it is to open accounts.  They’ve reduced this process to a couple of minutes. Therefore, they are one of the best in the industry when it comes to this.

Transferring money is easy as well…. Sometimes.

If you are doing a deposit from a bank account and want it to be recurring then Betterment’s technology is awesome.  They give you choices such as bi-weekly, weekly, and monthly deposit.

Its easy because they have you link your bank account.  However, their are two major user flaws when doing this that can be extremely frustrating:

  1. You are given the option to link accounts on your dashboard. However, those are view only accounts.  You have to navigate to your settings and add a funding account.  For example, if you link your Wells Fargo account on the dashboard then want to fund your investment from that account, you can’t.  You have to link it a second time as a funded account.  This can be extremely confusing and frustrating for users.
  2. Your funding account such as your bank account or credit union my not link to Betterment.  If that is the case they have a ‘manual’ way of depositing money.  This is the same problem all companies have. However, Betterment buries in their settings how to do this and they are very cumbersome with it.  Therefore, if your bank account doesn’t link, you may be better off using another company such as Fidelity.

Transferring Investment Accounts

So what if you already have an account such as a 401k you need to rollover or a Roth IRA you want to transfer?  These are two different types of transactions so I’ll take discuss each separately.

If you have an existing IRA, Roth IRA, or taxable investment account transferring it to Betterment can be easy but most of the time its a pain in the butt relative to other options.

Its easy because you maybe able to link the account to Betterment then simply click a button and say transfer. This is an awesome feature that others don’t offer.

However, many companies don’t link and you have to do the transfer manually.

Doing it manually isn’t the problem.  As stated above, other companies make you do it manually.

The major disadvantage occurs at Betterment because they only allow you to invest in ETFs.  Therefore, if you currently hold stocks or mutual funds in your existing accounts you’re going to run into one of two problems:

  1. If you transfer the assets, such as a mutual fund, you can do so but Betterment won’t let you invest more into it.  On top of that, not all mutual funds are accepted by Betterment. Therefore, you may have to sell some of them before transferring.
  2. Since Betterment doesn’t allow you to invest in anything else besides ETFs, many people sell all their assets before transferring. This isn’t a problem if you are transferring IRAs. However, if you are transferring taxable accounts, you may face taxes from liquidating your assets.

If you are rolling over an employer account such as a 401k or 403b then the process in terms of ease is the same with Betterment as every where else.  The ease of the rollover will be based on how easy it is to work with your existing company.

The only knock on Betterment for rollovers is getting the appropriate account number.  Once you set up the initial tranfer, when you want to pull the document up again its buried on your profile.

This is one of the major items FitBUX Coaches have to assist members with, i.e. doing 401k roll overs. However, as mentioned, this process is the same across the board regardless of who you use.

Betterment’s Investment Options

Next up in this Betterment review is one of the most important features.  Their investment options.

Betterment only gives you the option to invest in ETFs.  On top of that, you can’t invest in single ETFs.  You can only invest in prebuilt portfolios.

This is an advantage if you are looking to keep things simple.

In fact, this is one of the reasons why FitBUX partnered with Betterment. They allow us to build our on portfolios of ETFs for our hybrid robo-advisor.

Plus, its our belief that those that would like an easy way to manage money do so at the lowest cost.

If you want to do individual investments and make your own choices, which we always encourage, then you should never pay anyone to manage your money. You should be doing it yourself.

Therefore, we view this as a positive for certain investors.  However, if you want a more hands on approach you’re better off going somewhere else such as Interactive Brokers.

Cash Accounts

Betterment offers a cash account which has a very competitive return of 3.5% as of January 2023.  This is awesome.

However, there are two drawbacks.

  1. Its not a checking account. Therefore, you can’t make payments to items such as credit cards.
  2. There is no cash investment option for IRAs and Roth IRAs.

Two Awesome Benefits Betterment Provides

A review of Betterment wouldn’t be complete without pointing out their two largest benefits.

These two benefits were major reason why we decided to partner with them.

First, Betterment’s tax harvesting technology is phenomenal.

In short, tax loss harvesting is where you strategically sell investments that have gone done in a year while strategically selling ones that have gains.  Therefore, you can negate taxes paid.

Incorporating tax loss harvesting into taxable investment accounts can increase the value of your investments by $10,000s over time.

Second, Betterment’s rebalancing technology is easy.

Rebalancing is crucial to properly managing your investments because it consistently keeps your investments inline with your desired risk tolerance.

For example, let’s say you initially allocated 60% of your portfolio to stocks and 40% to bonds because you were aiming for long-term growth potential.

However, after a few years of good returns in the stock market, your allocation might be 70% stocks 30% bonds.

Since this mix no longer matches what you originally wanted, Betterment will automatically sell some of the extra stock and buy more bonds until you’re back at 60/40

You as an investor and we as a company don’t have to spend anytime doing this because Betterment’s technology does it for us.

This saves a ton of time. Therefore, Betterment as well as those using our hybrid robo-advisor can reduce fees.

Lower costs are always better for you the consumer.

Key Takeaway: Betterment most important features are tax loss harvesting and rebalancing.

Betterment’s Primary Flaws

This Betterment review wouldn’t be complete without pointing out flaws.  Therefore, I’ve included what I consider the major flaws with the company.

Betterment Is Not A Financial Advisor

This may not seem like a big deal and for some it may seem obvious.  However, it is.

Before I go deeper I do want to say one thing.  This actually isn’t just a flaw of Betterment.  Its a flaw with all robo-advisors.

They say you can do goal based investing, etc…

However, one of the biggest flaws of robo-advisors is that they can only output results based on what you put into it.

Betterment asks very little in regards to financial planning.  For example, they don’t factor in debt, family status, future life events, etc…

Therefore, in our opinion, the investments they choose for you can never align with your goals and definitely can not match your true ability to take risk.

That is why we don’t use their robo-advisor for FitBUX members.  We only use their technology, i.e. account opening, rebalancing, and tax loss harvesting.

We then use our own portfolios and match your investments with the data in your FitBUX profile because it incorporates all that information.

No One To Speak To For Financial Help

At Betterment, if you have questions about your situation, their portfolios, etc… you have no one to speak with.  However, this is a major flaw with all robo-advisors as well.

That is why the popularity of hybrid robo-advisors such as the one offered by FitBUX have increased in popularity.

Betterment’s Customer Service

The biggest knock on Betterment from the public used to be a complete lack of customer service.

That has gotten better recently but is still not 100% there.

However, we’ve had great experiences with them so far.  Only small issues that get fixed quickly.

Key Takeaway: Betterment has some drawbacks but they are similar to other robo-advisors.  In addition, the company has improved its customer service in recent years.

FAQs in Relation to Betterment Review

Can Betterment be trusted?

Yes, Betterment can be trusted. They’ve been in business for over 10 years.

They have helped thousands of people save money and grow their wealth. Betterment is also FDIC -insured, which means your money is safe if the company goes out of business.

Is it worth it to invest with Betterment?

Yes, they are a robo-advisor that makes investing simple and easy for busy people that don’t want to get knee deep in their investments.

Their fees are low and they offer good customer service.

Can you lose money in Betterment?

Yes, you can lose money in Betterment. However, this is not because of any fault on the part of Betterment.

Rather, it is simply due to the fact that all investments come with some degree of risk. Therefore, there is always a possibility that you could experience losses when investing through Betterment (or any other platform).

That being said, it is important to remember that Betterment does offer a number of features and protections that can help mitigate your risk.

For example, Betterment automatically rebalances your portfolio on a regular basis in order to keep your investments aligned with your goals.

Additionally, the platform offers tax-loss harvesting which can help you offset any capital gains taxes you may owe.

Overall, while there is always some degree of risk involved in investing, Betterment provides its users with a number of tools and resources that can help minimize those risks.


To conclude this Betterment review, they have some drawbacks.  However, in my opinion the pros of Betterment’s technology outweigh them.

This is especially true if you’re starting out with investing and don’t have much experience.

If you’re looking for a comprehensive financial planning and investing service, Betterment is not a great option. Therefore, if you’d like these services we are more than happy to help at FitBUX.

The good news is with FitBUX you don’t have to spend $2,500 to talk to us because our technology makes financial planning affordable to young professionals.

Talk to you soon.

Joseph Reinke, CFA

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About the Author

Joseph Reinke is a Chartered Financial Analyst (CFA) Charter Holder and founder of FitBUX which has helped over 14,000 young professionals on their journey to financial freedom. Joseph has been personally investing since he was 12 years old.

In addition, he has experience in student loans, mortgages, wealth management, investment banking, valuation, stock trading, and option trading. He has been on 100s of podcast and has been invited to 100s of universities to discuss financial planning with their soon to be graduates.

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