Acorns vs Betterment (2020): Which is Better for Your Money?

Acorns vs Betterment in 2020: Which is Best for You?

Betterment is known for creating the first-ever robo-advisor. Yet Acorns has become very popular by incorporating easy ways to invest — with amounts as small as your spare change. In this Acorns vs Betterment comparison, we analyze the two on every critical factor to show you which one is better for your financial goals.

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Have you been trying to save but can’t seem to put money away? Acorns and Betterment have a better solution for you with their robo-advisor approach.

With the Acorns mobile app, you can round up everyday purchases, investing your loose change into your portfolio. It requires no minimum deposit, and you can invest as much or as little as you like.

Betterment is a larger robo-advisor that manages about $15 billion in portfolios. As a leader in the automated portfolio management industry, the app offers two plans to help investors get started with saving. This robo-advisor is for more serious investors who want to work with real money managers and invest larger amounts of money.

Acorns vs. Betterment – Quick Comparison 

You don’t have to lift a finger to save passively with Acorns and Betterment, but each robo-advisor has a different approach to building your portfolio and saving money. Here are some highlights from our comparison and review:

Pros and Cons of Acorns

  •  Round up to the nearest dollar and invest your loose change with Acorns
  •  Choose from five different, Nobel prize winning portfolio types
  •  Daily automatic rebalancing
  •  No account minimums, 0.25% management fee assessed annually
  •  Minimal features, only one account type, and no human advisors
  •  Accounts under $5,000 will be charged $1 a month
  •  College students get a free account when they sign up with an .edu email

Join Acorns here.

Pros and Cons of Betterment:

  •  Full robo-advisor with advanced portfolio management that includes tax-loss harvesting and automatic rebalancing
  •  Choose investments based on your methodology or rely solely on the AI tools to manage your portfolio
  •  No account minimums for basic accounts, but you are charged 0.25% per year for a management fee
  •  Two client account types including Betterment Digital (free) and Betterment Premium (charges 0.40% of your portfolio per year for access to human advisors)
  •  Multiple account types including all IRAs
  •  Invest in 12 different asset classes
  •  Lots of retirement planning tools including an AI tool called RetireGuide

Get started with Betterment here.

Acorns vs Betterment Fees

Who wins when it comes to Acorns vs Betterment for fees? Both Acorns and Betterment charge 0.25% of your portfolio annually for managing your account. However, you can access a human advisor with Betterment for a higher fee.

Acorns Pricing and Fees Explained
Acorns’ fees will depend on the balance of your account.

If you maintain a balance under $5,000, Acorns also charges a monthly rate of $1, but college students can access the service for free. However, you have to sign up with a valid .edu address to have fees waived.

For accounts with over $5,000, both robo-advisors charge 0.25 percent of your managed assets. However, for accounts with balances over $2,000,000, Betterment waives all fees.

Betterment offers a premium service for clients who want more hand-holding. This means you can access a human advisor, but the fee is raised to 0.40 percent of your portfolio, which is assessed annually.

Betterment's Pricing, Cost, and Fees Explained
Betterment’s fees will depend on the specific package you opt for you: digital or premium.

Premium clients also have access to phone calls with human advisors, and you can email your human financial advisors.

Neither Betterment or Acorn require an account minimum for basic services, but with Betterment Premium, accounts must maintain a $100,000 balance.

Winner: Since both robo-advisors have no account minimums and assess the same annual fee for basic services, they are pretty well-matched for portfolio management fees. However, Betterment offers premium services that Acorns does not offer.

Acorns vs Betterment Performance

There are a few features that we expect all robo-advisors to have. These include tax loss harvesting, automatic rebalancing, human financial advisors, expense ratios, and socially responsible investing. We look at retirement planning in the next section.

Tax-Loss Harvesting

For tax-loss harvesting, Betterment offers free automatic tax-loss harvesting to all clients, whether you have a basic or premium account. This is part of the reason why Betterment made our list of the top robo-advisors.

Betterment Tax-Loss Harvesting for Digital and Premium Accounts
Betterment offers free tax-loss harvesting for both digital and premium accounts — a serious perk.

Acorns does not offer any tax-loss harvesting assistance. This means that you can potentially earn more with smart investing for tax-loss harvesting with Betterment since the robo-advisor builds a custom tax-coordinated strategy that reduces capital gains taxes. It does this by harvesting your losing investments and allocating assets to tax-advantage retirement accounts instead.

Automatic Rebalancing

Automatic rebalancing is available for Betterment basic and premium users. The service is free for all account types. With daily rebalancing, your portfolio never strays far from your investment strategy and risk tolerance.

Acorns also provides automatic rebalancing for all account types. Investors are able to pick from five portfolios, and Acorns reinvests dividend payments regularly to keep investor portfolios on track. However, it’s not as sophisticated as Betterment and other robo-advisors.

Human Advisors

Betterment offers access to human advisors for its premium members. You can contact a human advisor by email or phone.

There are no human advisors available for Acorns, but the service is meant to be completely hands-off and managed by an AI only. There are no plans to add human advisors for Acorns customers either.

Expense Ratios

Acorns has pretty low expense ratios, ranging from 0.05 percent to 0.15 percent. This is important to make sure that net returns increase or stay positive during periods of low interest rates.

Betterment also offers low expense ratios, but they are not as low as Acorns. You will likely see between 0.09 percent and 0.17 percent expense ratios with Betterment.

Socially Responsible Investing

Acorns does not offer any kind of socially responsible options. You can not select any investments manually or control your portfolio on your own. While there is some flexibility with the “Change Your Potential” tool, there are no socially responsible factors to select from.

Betterment offers investors the ability to choose goals and interests during setup. You can also choose a SRI portfolio based on conscientious investing goals. You can choose what industries and companies you don’t want to support as well.

Other Features

College students are able to invest for free with Acorns. It costs nothing to set up an account and allow the app to round up your savings to start investing.

In addition, Acorns offers a “Found Money” program that allows you to invest money out of thin air when you shop at certain partners, like Nike, Warby Parker, Airbnb, Sephora, and Walmart.

Betterment also offers a tool for charitable giving right within the platform. You can donate shares to charities, and it also helps you mitigate capital gains taxes just by supporting your favorite causes.

Winner: Betterment is the obvious winner in this category. Acorns offers the basics when it comes to features. Acorns vs Betterment performance is a pretty easy call to make.

Acorns vs Betterment: IRAs and Retirement Investing

Both of these robo-advisors try to make it easier for their clients to retire with hands-off automated investing, but there are some tools in Betterment that make it simpler and easier to understand.

Betterment offers a ton of tools for retirement, including RetireGuide. This AI program analyzes all of your savings and accounts, including any 401(k) plans you have through your employer.

Then, it creates a customized retirement plan by comparing your current savings with your desired spending after you retire. It also answers questions such as whether you are saving enough money to retire by a certain point in time. RetireGuide also makes suggestions on ways you can improve.

Betterment Retirement Page
Betterment’s RetireGuide will continually suggest ways you can save for retirement.

In addition, Betterment offers a “Smart Deposit” feature, which allows you to set a monthly amount that will cover your basic expenses. Unused cash in your checking account will be swept into your investment accounts, which are designed to target financial goals that you choose at the beginning of your account setup.

The amounts you invest with Betterment tend to be much larger than with Acorns, which is designed to invest your leftover change from each purchase.

Acorns is set up to make it easy for young people to save money without looking at it. After you link your credit and debit cards, Acorns helps you save a little bit each time you make a purchase by putting your loose change into investment accounts. While this is better than the round-up savings account offered through your bank because you can make money off of your change through Acorns, there are no other retirement planning tools available.

As far as retirement accounts, Betterment offers everything except 529 plans, while Acorns only offers individual non-retirement accounts.

Winner: When it comes to Acorns vs Betterment on IRAs, you can probably reach your retirement goals faster by going with Betterment. However, if you don’t have very much to save and want effortless investing, Acorns does everything automatically for you.

Account Types and Asset Classes

We touched on this briefly in the previous section, but Betterment truly offers almost every single account type available.

With Betterment, you can open the following account types:

  •  Individual non-retirement
  •  Joint non-retirement
  •  Roth IRA
  •  Traditional IRA
  •  Rollover IRA
  •  Trusts
  •  Custodial accounts
  •  SEP IRA

While Betterment won’t manage your 401(k), you can add it to your portfolio and get advice from a human financial planner on how to earn more.

Unfortunately, Acorns only offers one account type, which is an individual non-retirement account.

Betterment also supports up to 12 different asset classes. Acorns is only interested in offering ETFs from 6 different asset classes. You can invest across ETFs, stocks, options, mutual funds, and more with Betterment, but your selections are truly limited with Acorns.

With that said, Acorns does use investment methodology from Dr. Harry Markowitz, who won a Nobel prize for Modern Portfolio Theory. However, most robo-advisors rely on this portfolio theory.

Winner: Betterment offers more account types and asset classes. Acorns does not come close in this category.

Usability, Desktop Platform, and Mobile App Experiences

Betterment is pretty easy-to-use and offers tools through your browser. However, it also has one of the best mobile apps. The platform is very helpful with tooltips and guides to show how to use different features.

The platform also allows you to look at and adjust your holdings, see performance data, look at projections, and get advice through RetireGuide.

Betterment Mobile Trading App
With Betterment’s app, you’ll be able to handle virtually every aspect of your investments through your smartphone.

Betterment’s mobile app allows you to do just about everything that you can on the browser as well. You can look over your portfolio, check out funding accounts, manage auto-deposits, and create two-way sweep accounts. There is also a “goal-to-goal” transfer, which customers can use to transfer money between non-IRA targets within your account through the mobile app.

Acorns offers a web and mobile platform. The navigation is pretty simple and easy to figure out. Investors can review their portfolio, check account balances, see “Found Money,” and look at all transactions.

With the mobile app, you can also use the “Past, Present, and Potential” feature to see more insights into your portfolio, such as analysis and current follows of your accounts.

Acorns mobile app - investing with spare change
Through the Acorns app, you can “invest your spare change”.

The Acorns app is fun to use and shows you exactly how well your investments are doing. If you don’t like your potential, you can always tap “Change Your Potential” which lets you change some investments to amp up your account value. In fact, Acorns found its way in our list of the best stock trading apps for 2020.

Winner: Overall, both of these robo-advisors have amazing platforms that are easy-to-use. However, you’ll probably get more out of your investment portfolio analysis from Betterment. Beginner investors may like the simple and straightforward approach of Acorns’ analysis tabs on mobile though.

Frequently Asked Questions: Acorns and Betterment

Can you manually update your portfolio on Acorns or Betterment?

Robo-advisors are designed for hands-off investors, so you technically should not be able to change much about your portfolio once it’s set up for you. However, both of these robo-advisors allow you to make slight adjustments to your investments.

Betterment allows you to use the “Flexible Portfolio” option, which allows you to select investments based on your own methodology. The algorithm still tries to prevent bad investment choices and will make recommendations if it sees that an investment will cause problems.

Betterment Portfolio Strategy
Betterment allows to select from a number of portfolio investment strategies.

The robo-advisor also provides an overall risk assessment, diversification rating, and adjustment recommendations to help investors who choose the Flexible Portfolio option.

Acorns does not allow you to change much about your portfolio. There are five different types of portfolios to choose from at the beginning, and while you can tap “Change Your Potential” on mobile, this is the only area where you can make slight changes to your investments. However, these can only be made based on recommendations by Acorns, not by your own methodology.

Acorns vs Betterment Customer Support

Both of these robo-advisors try their best at customer support, but they’re not as robust as others and neither offers 24/7 support.

Acorns Customer Support

You can access customer support online for Acorns at or by phone. However, we found that email support did not reply promptly and took four days to answer our question.

Phone support had a wait time, but the representative was courteous and helpful. We were able to get an answer within 10 minutes during normal business hours.

Betterment Customer Support

Betterment offers customer support through email and phone. You can call their customer service team Monday through Friday, 9:00 AM to 6:00 PM.

There are a variety of different numbers to call depending on what you want help with. We found that their general support number had a zero wait time and answered our questions promptly.

Acorns vs Betterment: Final Thoughts

Is Acorns or Betterment better?

Acorns offers a truly hands-off, easy way to invest your loose change and earn money. It’s better than a savings account with your bank that simply rounds up your change and sends it to sit in an account.

You can make real money off of your change using Acorns. However, it’s not the best for retirement or big earnings.

If you want to truly earn money, then Betterment is the best robo-advisor for you. With lots of tools, more account types, more asset classes, and an AI retirement planning tool, investors will get a lot more out of Betterment than Acorns.

About Author

Tim Fries Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim is also the co-founder of Protective Technologies Capital (