How does Betterment calculate management fees?

Below you can read about how fees are calculated depending on your pricing plan. 

Please note, if you withdraw your entire balance before the end of the month or year, you’re only charged the fee for the days your money was managed by Betterment. Our fees are calculated based on your daily account balance, accrued daily, and charged monthly or upon a full withdrawal. We do not have fees for accounts with a $0 balance, so you can still keep your account open without penalty.

If your total Betterment investing balance is below $20,000 and you do not have a recurring deposit of $250/mo or more, Betterment charges $4 per month. For accounts with greater than $20,000 or a combined recurring deposit of $250/mo or more, the standard fee is 0.25% per year. Beginning July 8, 2024, Checking balances will no longer count towards your $20,000 balance threshold.

If you choose to add on our Premium services — unlimited access to our team of CFP® professionals for users with investing balances above $100,000 — the fee will increase by 0.15%, whether for stock-and-bond investing assets or crypto assets.

Regardless of which price structure your account uses, Betterment’s management fee will be calculated based on your daily balance, accrued daily, and charged monthly. Your total fee will be assessed proportionally to your balances in every investment goal you set at Betterment.

We calculate your fee daily so that we can accurately account for deposits, withdrawals, and market fluctuations that occur. We then total the fees from those daily calculations each month. This especially matters for accounts that are charged the annual fee: the actual fee is prorated, charging you a fraction of the annual fee each month.

If your account exclusively consists of mutual funds (instead of ETFs) due to a transfer into Betterment, we will accrue any fees over or under-assessed because of price fluctuations that occur on the transaction date and apply the difference to adjust the following period’s fee. This additional accounting is due to small price fluctuations inherent in mutual funds.

What if my Betterment balance drops below the $20,000 balance requirement for the annual fee pricing structure?

The management fee you pay is determined by your total Betterment investing balance (based on your combined balance across any stocks and bonds investing accounts, Crypto accounts, Cash Reserve, and cash goals you hold at Betterment) as well as your recurring deposit setup.

If your balance across these accounts is below $20,000, you will be charged $4 per month. However, by setting up at least $250 per month in recurring deposits across your Betterment accounts, you’ll be charged 0.25% of your balance per year instead.

Without $250/mo in recurring deposits, once your average daily balance drops below $20,000, your account will accrue the daily portion of the $4 monthly fee.