Free for 90 days: Sign up now and get 90 days managed free after your first deposit. See offer details


Hoverboard Header

Betterment vs. Schwab: No Hidden Costs. No Kickbacks. Complete Transparency.

Sign up now

Betterment is the original and largest independent robo-advisor.

Seven years ago, Betterment invented the automated investing service, becoming the first of its kind. Don't be fooled by others' fine print, especially when it comes to Schwab's new "no advisory fee" robo-advisor offering. Betterment is built to provide customers with reliable customer support, convenience, automation, and a lower overall cost, all combined to do what's right—for you.

Features and Benefits
Schwab Intelligent Portfolios

Minimum Investment


No Minimum

Schwab Intelligent Portfolios


No Cash Drag

In order to generate revenue on their "free" service, Schwab allocates up to 30% of a portfolio to cash. In certain circumstances, keeping up to 30% in uninvested cash can result in up to a 0.56% annual return penalty, known as a cash drag.1 Betterment's unique technology allows us to make every penny work for our customers—without cash drag.

Schwab Intelligent Portfolios

0.38% to 0.56% Potential Annual Cost
(6% - 30% cash allocation)1

Low Cost: A $100,000, Moderate Portfolio

An expense ratio is what the ETF-issuer charges to bundle the stocks and bonds together. It is the operating cost of the fund you're invested in. A Schwab moderate portfolio (61% stocks) has an expense ratio of 0.23%, whereas Betterment's expense ratio for a comparable portfolio of ETFs, selected objectively, has an expense ratio of 0.12%. For a $100,000 account, the all-in true cost, including the potential 0.56% cash drag, is higher than our expense ratio combined with our advisory fee.


Expense Ratio: 0.12%
+ Management Cost 0.25%
0.37% All-in Actual Cost

Schwab Intelligent Portfolios

Expense Ratio: 0.23%
+ Potential Cash Drag: 0.56%1
0.79% Estimated All-in Cost

No Fund Kickbacks

Betterment invests in a globally diversified basket — carefully chosen for low expense ratios and low tracking error, regardless of the ETF provider. Most selected ETFs are from Vanguard and iShares. We don't receive compensation on any ETFs, which means we make our decisions with your best interest in mind. Schwab receives payments to include certain ETFs, and in the case of its own ETFs, pockets the expense ratio.

Schwab Intelligent Portfolios

Only Passive Funds

Studies have shown that passive investors holding just index funds have a higher chance of success. Schwab uses actively managed funds known as "fundamentally weighted." These active funds systematically depart from passive investing and have roughly 4x higher expenses.

Schwab Intelligent Portfolios

Lower Taxes from TaxMin Lot Selling

Betterment's TaxMin cost basis accounting method goes beyond the industry standard (FIFO). We sell losses first to minimize capital gains due to unnecessarily selling shares.

Schwab Intelligent Portfolios


Tax Impact Preview

See estimates of taxes you will owe in advance, before you adjust investment allocations or make withdrawals, so you always make the most informed decisions.

Schwab Intelligent Portfolios

Automated, Tax-Efficient Rebalancing

Betterment automatically rebalances your portfolio. We sell losses first, and we rebalance your account with every transaction—including dividend payments—to minimize capital gains due to unnecessarily selling shares. Schwab's rebalancing may trigger short-term capital gains taxes.

Schwab Intelligent Portfolios

60-Second Rollover

We have some of the fastest rollovers in the industry, and the process is completely paperless. Schwab's rollovers require a manual process.

Schwab Intelligent Portfolios


Betterment's SmartDeposit feature helps you invest your excess cash automatically — even if you have variable income. Maintain the liquidity you need in your checking account, while making sure that every other dollar is put to work. If you ever need some extra cash, access your money with no withdrawal fees.

Schwab Intelligent Portfolios

No Credit Inquiry

Hard credit inquiries can lower your credit score and remain on your credit report for two years. Betterment does not run a hard credit check when you open an account.

Schwab Intelligent Portfolios

Support 7 Days a Week — Live Chat, Phone, and Email

Our investing may be automated, but we’re certainly not. We're here for you via phone, email, and live chat — 7 days a week.

Schwab Intelligent Portfolios

Explore your first goal

Safety Net

This is a great place to start—an emergency fund for life's unplanned hiccups. A safety net is a conservative portfolio.


Whether it's a long way off or just around the corner, we'll help you save for the retirement you deserve.

General Investing

If you want to invest and build wealth over time, then this is the goal for you. This is an excellent goal type for unknown future needs or money you plan to pass to future generations.

Smart Saver

You could earn 20X more than a typical savings account with our low-risk investing account for your extra cash.

Are you on track for retirement?

Try our retirement calculator to see if you're retirement-ready.

Could your 401(k) be worth more?

Learn how rolling over an average 401(k) to a Betterment IRA could mean 60% lower fees.

Want more retirement guidance?

Read the latest on investing for retirement on our Resource Center.


Sourced as of 3/23/16 from the below links and is subject to change without notice. Betterment fee accurate as of January 30, 2017.

1This illustration compares what would happen if an investor fully invested all assets in an investment portfolio in securities as opposed to leaving a portion of those investable assets in cash. A Schwab moderate model portfolio, as provided on the Schwab Intelligent Portfolio FAQ page, holds 61% stock, 5% gold and other precious metals, 23.5% bonds, and 10.5% in cash.

To calculate the potential cash drag in a Schwab portfolio, we studied expected returns for a Betterment portfolio of 74% stocks, 26% bonds. We selected that Betterment portfolio because it maintains that same proportion of stocks to bonds as in the moderate Schwab portfolio described above. In the first scenario we assumed 89.5% of an investors assets are invested in a Betterment portfolio and 10.5% is held in cash. In the second scenario we assumed all of an investor's assets are invested in the Betterment portfolio, none is held in cash. For our analysis, we assume that this 74% stock Betterment portfolio will have an annual return of 5.36% in excess of the risk-free rate (the risk-free rate is typically very close to the interest rate paid on cash in a savings account). We calculated the expected return that could be earned in the 74% stock Betterment portfolio that was instead lost to the drag of holding 10.5% of assets in cash is 0.56% on an annual basis (also above the risk-free rate). This illustration did not include Betterment's advisory fees because a Schwab portfolio does not include advisory fees.

These calculations are hypothetical and for illustrative purposes only. Investing in securities always involves risks, and there is always the potential of losing your principal when you invest in securities. Past performance does not guarantee future results, and the likelihood of investment outcomes are hypothetical in nature.

Minimum Investment:
Low-Cost ETF Selection:
Order Flow: Schwab Wealth Advisory Disclosure Brochure
ETFs with 4x Expenses:


Search our site