Betterment VS Axos: The Showdown

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Axos and Betterment are both robo-advisors, providing unique capabilities to enable investors to access reasonable investment counsel. Both provide online platforms, complementary applications, automated portfolio rebalancing, and tax-harvesting services.

In this comparison, we have examined 2 of the most popular robo-advisors: Betterment and Axos. These two most popular options are squared up in a head-to-head matchup. Now it is time for the last battle; standoff of the robo-advisors. We have to emphasize once again that the concept of ‘best’ in this case will be given your scenario and circumstances that is best for you.

We will examine every facet to see if it suits the suitable investment.

 

Betterment Overview

Betterment is an online financial advisor that utilizes automated solutions to manage clients’ money. The platform is designed with the core aim to give users a professional solution, focusing on providing world-class investment methods brought by the industry’s best and brightest and applying them to meet their client’s goals.

The platform advises wise investment decisions based on a portfolio of well-diversified ETFs. Rebalancing, dividend reinvesting, and tax loss harvesting are just a few portfolio-related tasks that are automated for the user’s convenience.

The platform delivers one of the top services in terms of value-for-money. Considering the fees that other robo-advisors charge, Betterment’s sophisticated features are hard to come by in other robo-advisors.

Both investment strategies and all the other robo-advisories are similar. It’s worth noting that Betterment was a pioneer in passive investing through ETFs as one of the earliest automated investment businesses.

Unlike robo-advisors who don’t delve into too many details about why they prefer index investing, Betterment has done a terrific job explaining why they follow such a strategy to their investors. In a specific area of their website, they present a series of studies (part of which are Nobel-winning) on why passive investing is superior to active portfolio performance.

Betterment’s investment options use a wide range of ETFs to construct portfolios. When it comes to the performance of its investment recommendations, the robo-advisor is entirely open and honest.

Betterment says its long-term investing approach helps its consumers earn 2.66 percent more annually than a conventional investor. The outcome, the corporation maintains, is accomplished by decreasing taxes, lowering fees, and diversification.

Additionally, the robo-advisor includes predefined strategies including “Socially Responsible Investing,” “Goldman Sachs Smart Beta,” and “BlackRock Target Income,” in addition to custom options. Betterment uses an automatic rebalancing tool to keep its users’ portfolios on the cutting edge of strategy.

All this, plus their tax-loss harvesting features, makes Betterment one of the complete robo-advising packages on the market. For accounts exceeding $100 000, Betterment provides self-adjustments of the weights of each asset included in an investor’s portfolio.

betterment

Betterment Fees

Betterment has a proper pricing structure; however, it isn’t the best on the market with free solutions like Axos. To summarize, here’s how much each service costs:

  • Basic service charge – 0.25 percent each year
  • Zero dollars are required as a bare minimum in your account.
  • Advice from Betterment’s CFP® professionals – 0.40 percent a year

The account must have at least $100,000 to be eligible for a professional consultation.

The 0.25% for basic accounts is minimal, considering that it covers access to an automated investment management service, all transactions, transfers, and trading fees, and the automatic rebalancing of your portfolio.

Customers are also entitled to the usual expense ratios customary for ETF products. On their website, you can get more details about the cost.

Axos overview

Since Axos Financial acquired Axos in October of last year, the company has been known as Axos. In October 2019, Axos relaunched Axos as Axos Invest.

With the phrase, “investing should be a right — not a privilege,” Axos presents itself as a free investment management choice. The goal of the business is to provide investment services free of additional charges.

You may appreciate utilizing Axos if you’re starting to invest, as the minimum is a mere $1. You may have any size account and still enjoy free robo-investing, unmatched by any other robo-advisor tested.

More experienced investors may prefer a firm offering a more comprehensive range of investment options or additional services beyond the primary brokerage. One premium package is available from Axos for people with taxable accounts requiring tax-loss harvesting.

Axos Strategy

Axos develops portfolios across multiple asset types. The four pillars of the company’s investment strategy are diversification, minimal costs, passive investing, and early investing for all customers. Each portfolio is customized to the unique consumer, so your automated portfolio will consider your stated risk tolerance. Axos would select various security allocations for a more risk-tolerant customer. Exchange-traded funds (ETFs) with passive management will be chosen from a pool of more than 1,400 ETFs.

Rebalancing is also included at no charge in your account. Your portfolio is rebalanced when you add money to your account, take money out, or get dividends. Rebalancing will occur if your portfolio deviates by 5 percent or more from the intended allocation. Rebalancing can help you stay on pace with your financial goals (referred to as “milestones” by Axos while reducing your taxable income.

You may use the site’s bar slider to adjust your stock and bond allocation whenever you create or amend a financial milestone. You can’t add or delete ETFs or equities on your own. Automated investment advisors take care of the details, but you’ll still need to monitor the account from time to time. Changing your investments won’t be possible if you don’t adjust your milestones and risk tolerance.

Taxable investment accounts, Roth IRAs, standard IRAs, rollover IRAs, and SEP-IRAs are all options at Axos.

 

Axos Fees

Axos traverses a significant foothold in the robo-advisor sector by not collecting fees. The best part is that there is no yearly charge and no commissions on trades, transactions, or rebalancing. As a result, getting started with digital investing has never been easier. Deposits start at just $1, rather than the $500-$5,000 that other businesses ask. This firm also has a unique feature: it does not scale up with larger clients. Some firms will charge a greater yearly percentage fee as you raise the size of your accounts. Axos, however, does not charge you until you close your account. The organization employs automation to lower consumer expenditures to the absolute minimum.

While your account is maintained for free, there are costs for money. Axos employs low expense ratio funds with fees ranging from 0.03 percent to 0.13 percent. You may check the frequently asked questions page on Axos’s site if you want to need details of the fund’s charges.

Trade with Axos

Axos currently provides one premium option that will cost you money. The Tax Protection program will cost around 0.24 percent yearly, limited to $20 monthly. Three features are available as an extra add-on to this service, saving you money at tax time. The first is tax-loss harvesting, which the corporation renames as WiseHarvesting. The next is selective trading for people with numerous investment accounts. The third is IRA conversions for more significant tax savings. All of the choices within the premium package might benefit more experienced investors with taxable accounts. If you’re comfortable with a free account, you won’t have a significant negative impact from not selecting these superior alternatives.

Specific activities will cost a little cash for every account, such as $5 for each printed monthly statement and $10 for an IRA account termination. Axos offers free e-funds transfers; however, local and international wire transfers cost $25 and $50, respectively. If you want to receive a check, you’ll pay $5.

  Betterment Axos
Overview Goal based robo-investment advisor. Betterment bills itself as, “Investing Made Better.” Offers a variety of human financial planning options. Free automated investment management robo-advisor with access to add-on features for low fees.
Minimum Investment Zero minimum balance required. $1.00 minimum balance required.
Fee & Costs Digital-0.25% AUM up to $2 million. 0.15% for accounts over $2 million. Zero account management fees for basic plan. Optional Wise Harvesting fee 0.25% AUM for taxable accounts-capped at $20/month. Portfolio Plus charges fixed $3 per month. Fast money package charges $2.00 per month.
Premium-0.40% AUM up to $2 million-Includes unlimited access to CFP. 0.30% for accounts over $2 million.
A la carte financial planning sessions from 150 to $500.
Primary Features Investment rebalancing. RetirementGuide Calculator for planning. Tax loss harvesting. Betterment Digital clients can text with financial professionals. Betterment Premium clients have access to meetings with financial advisors. Automated financial advice, rebalancing & tax-loss harvesting. New Portfolio Plus gives investors access to scores of investments covering many industries & sectors.
Many diversified stock & bond fund choices.

Betterment vs. Axos Service & Feature Comparison

Account Options

IRAs, Traditional and Roth, SEP, and Rollover IRAs are available with Betterment and individual and joint tax-advantaged accounts. Personal investment accounts, Roth IRAs, Traditional IRAs, and SEP IRAs are available with Axos. Joint, trust, and custodial accounts are not available at this time.

Rolled within Betterment’s cheap charge structure are numerous premium services. These include automated portfolio rebalancing, tax-loss harvesting, and goal-based investment. Investors may also link outside accounts, allowing them to see their whole net worth on one dashboard. Betterment then uses this data to provide recommendations on how to save money on fees while also avoiding the waste of idle funds. Betterment also provides Smart Deposits, allowing Betterment to invest your surplus funds automatically.

WiseBanyan (now AXOS) uses the term “milestones” to describe its goal-based investment approach. Those milestones might be a Rainy-Day Fund, Retirement, Build Wealth, or Custom. Axos enables automated portfolio rebalancing every time you make a deposit, withdrawal, or collect dividends; however, tax-loss harvesting is a premium option.

Trade with Betterment

Education and Research

Concerning financial planning and education, Axos falls far short. Unlike many of its rivals, the organization has not developed a library of educational resources to assist its investors in learning about financial planning. Axos also provides a lesser degree of customization, investment portfolios based purely on the age and risk tolerance of the user and not on specific savings objectives.

Betterment offers more impressive features—Betterment’s Retire Guide can help you ensure you are remaining on track to retire on time. Its Smart Deposit tool automatically deducts predefined installments from your checking account.

Betterment offers more personalization than Axos, allowing for goal-based investment instead of a one-size-fits-all portfolio. However, like its competitor, Betterment’s portfolio of instructional offerings leaves much desired.

Range of Investments

The foundation of Betterment and Axos’s investment offerings is the belief that a well-diversified portfolio will outperform the market.

Axos provides ETFs from 11 asset classes, which incur an annual fee ratio of 0.12 percent. In contrast, Betterment gives customers a combination of ETFs from 12 asset classes.

Investors can specify that they only want their money invested in the stocks of firms that maintain a specific degree of ethical and environmental responsibility, and Betterment wins this round for this feature. Betterment

Betterment and Axos provide portfolios built primarily of low-cost ETFs. Stocks in the United States, in developing markets, in TIPS, short-term treasuries, corporations, municipalities, emerging markets, and foreign bonds are among the available types of assets.

Betterment and Axos allow their users to buy fractional shares, down to 1/1,000,000 of a share, so that every dollar you invest is put to practical use rather than sitting around doing nothing. Most bargain brokers and online portfolio managers demand that you hold all of the company’s stock.

Trade with Axos

Robo-advisors & Financial Advice

To choose the finest robo-advisor for your needs, it is an innovative idea to do much research on these advisors as possible to determine if they fit your style and personal needs. Some may only provide a restricted variety of account types, while others may provide a superb choice of funds. For others, it is critical to know how much each platform charges and whether or not you will have access to human guidance.

Robo-advisors are good because they are not human; they have faster reaction time and utilize algorithms, not emotions, to make recommendations. However, many people are naturally hesitant to abandon the human component of investing entirely.

Betterment wins on this feature. All Betterment investors can text human financial counselors. This is perfect for on-the-go consumers! For investors with greater investment values ($100,000 and more), unrestricted access to counsel from human advisers is offered through phone or video chat through the Premium package.

 

Trading Technology & Apps

Betterment and Axos applications are accessible on the Android and iOS platforms. You may access and manage your account through these applications using the secure PIN or Touch ID. You may also access them anywhere you have an internet connection through the web.

Other Tools & Features

The most distinctive aspect of Axos is the availability of its services free of charge. You cannot match the price of free, especially if you are new to investing. Many features that you need a premium account with other firms, such as no trading fees, free rebalancing, and financial planning tools, come at no cost here. Free rebalancing means that assets will be acquired or sold anytime your account strays more than 5 percent from the investment strategy you specified in the milestone onboarding process to drive your account back on track. This service is provided by Axos for every transaction, including withdrawals and deposits, to ensure that your account stays within the boundaries you choose.

For those who select the Tax Protection Plan, you may choose the features you want active for your account. 

Selective trading is your next choice inside this premium bundle. Wash sales are avoided when you sell or trade an asset at a loss and acquire the same security within 30 days. The selective trading option helps minimize the negative tax impact.

The last feature is an IRA conversion, sometimes called a “backdoor IRA.” You may save money on your yearly taxes by converting your standard IRA into a Roth IRA.

Another feature is Axos’s financial planning site, “All the Wiser,” which premiered in June 2017. Customers can access this feature, and only those with a premium plan may use it. The site helps potential clients discover how to pick financial needs and provides education for clients looking to learn more about investing with Axos. In the “Heroes” area, you will find personal accounts from people who have dealt with money problems firsthand.

Trade with Betterment

My Preference: Betterment Wins Over Axos

Many robo-advisors cater to the same demographic: long-term passive investors looking for a well-diversified portfolio they can “set it and forget it.” To make things as simple as possible for the user, they heavily use exchange-traded funds (ETFs). Consequently, their price structure and the additional profits provided by their tax-efficiency choices are what set them apart the most. Based on the primary aspects we have evaluated in this post, below are our findings on each of the 5 robo-advisors.

Betterment vs. Axos: The Bottom Line

Betterment is a good option for people with much money in their accounts, especially if it is not in a taxable one. Due to their low charge structure for transactions exceeding $100,000, this is possible. Betterment’s retirement planning tool is also the most thorough and might be a critical impact if your main investment aim is saving for retirement.

Axos provides the most basic and least expensive solution. It only charges for its tax-harvesting feature; therefore, if you are determined not to pay any administration fees and have non-taxable accounts, Axos may be the lowest-cost alternative. However, there are concerns about the business model’s long-term viability.

The old phrase is accurate—you get what you pay for. Though Axos wins in the expense aspect, its portfolio construction choices are investment compared to Betterment.

Betterment is a better alternative for retirement investors searching for a more tailored approach to saving and finding goal-based tools to be a more effective motivator to track progress.

Axos’s no-fee platform, on the other hand, may outweigh its lack of other features if you are a hands-off investor trying to deposit money and forget about it.

FAQ

Is Betterment or Axos better?

Betterment comes out as the winner in a head—to—head playoff, at least for now. Its reputation precedes it and has swiftly become the model other start-ups are eager to replicate. While Axos may prove to be a good Betterment competitor, in the meantime, new investors will feel more comfortable going to Betterment.

Is Betterment a safe place to invest?

While Betterment is registered with the SEC and the FDIC does not cover it. As a result, your profits aren’t guaranteed, and you’re forced to play the market’s hand. Then, Betterment’s investment strategy takes a relatively conservative approach to the market.

Is Axos suitable for individual retirement accounts (IRA)?

While your account selections aren’t the most extensive, you can access retirement funds and a tax-advantaged account. SEP-IRA is an option available with both Axos and Betterment. They also offer trusts and 529b plans, but you will pay for services with those businesses.

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