Axos Invest vs Betterment 2020: Is a Free Robo-Advisor the Way to Go?
Axos Invest is widely known as a free robo-advisor. Yet Betterment created the first-ever robo-advisor. In this Axos Invest vs Betterment comparison we show you which is best for your financial goals — and whether or not ‘free’ is actually worth pursuing.
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In late 2019, it became official – WiseBanyan was no more. The headline-making “free” robo advisor platform, which had been bought by Axos Financial (also Axos Bank) earlier in the year, re-emerged with a new face and name as Axos Invest.
The goal of the purchase and subsequent merger was always to provide customers with a wider array of offerings, including a digital investing platform along with traditional checking, savings and lending offerings.
Now billed as the world’s “first free” financial advisor, this motto refers solely to the lack of account management fees and trade commissions when using Axos Invest/WiseBanyan. So, is Axos Invest really free? There are, in fact, a number of Axos Invest fees involved, as we will delve into here shortly.
In the meantime, as WiseBanyan was busy becoming Axos Invest, Betterment was also busily engaged in its own expansion on two fronts: first, with rebranding its online user experience and its suite of mobile apps, and second, with expanding into the field of traditional banking at last.
The good news here is, both robo advisor platforms are clearly working hard to evolve, upgrade, expand and better serve you, the end user.
The bad news is, it can be more than a little confusing to try to figure out which robo advisor is the right platform for your personal investing needs and goals.
Who Does It Best? Axos Invest vs Betterment
On the surface, Axos Invest and Betterment actually appear surprisingly similar in some fundamental and important ways.
For example, both focus on portfolio-building using three key tactics:
- Both take a basically hands-off investing approach.
- Investing is accomplished via a range of ETFs (exchange traded funds).
- Algorithm and portfolio options are based on Modern Portfolio Theory (MPT).
But from there the basic similarities end and you start to see the divergence between an industry founder/leader and a still-evolving challenger.
For example, Betterment offers socially responsible investing, IRA support and tax loss harvesting at no extra charge and a suite of completely free financial and budgeting tools.
Axos Invest charges for IRAs, charges for tax loss harvesting and has nothing in the socially responsible investing department.
Axos Invest is Best For:
- Investors who value fee-free basic (non-IRA) investing over all else.
- Investors who don’t want tax loss harvesting (or are willing to pay an extra fee of up to $20 for this service).
- Investors who plan to keep their funds in the platform’s holdings long-term (account transfer fees can be formidable).
Betterment is Best For:
- Investors who are willing to pay a reasonable account management fee that includes “free” tax loss harvesting.
- Investors who don’t want to deal with a platform that nickel-and-dimes them with extra fees.
- Investors seeking access to a robust assortment of truly, always free learning tools for investing and overall financial planning.
Should Any Robo Advisor Other Than Betterment Ever Be an Option? You Decide
Here, perhaps the better question should be, if you were to choose a robo advisor that is not Betterment, should that robo-advisor be Axos Invest?
The most interesting aspect of this question is that Axos Invest only remains totally free if you only wish to use its most basic robo-advising services, which are undeniably limited.
Betterment also has a free option for users who are not ready to or do not want to get involved in digital investing but do want and need high quality financial planning and management tools.
In either case, it is only when your investing needs escalate beyond rock bottom basics that you start to see fees enter the picture. They just enter in different ways to serve the needs of different customer groups.
2 Key Ways That Axos Invest Is Different Than Betterment
Here are two key ways that Axos Invest differs from Betterment in how fees are structured and introduced.
1. No fee for basic portfolio management with limited investment options and zero human support.
The basic portfolio-building investment tools are free but they won’t be adequate for every user.
2. Axos Invest fees for extras can quickly add up and many users find them confusing.
If you want support for IRAs and tax loss harvesting, there is a fee of 0.24 percent of your portfolio value.
If you want access to additional ETFs that you can add to your portfolio, there is a fee of $3 per month.
If you want access to rapid transfer services such as quick deposit and auto-deposit, the fee for the Fast Money program is $2 per month.
As you can see, already you are on par with Betterment’s 0.25 percent account management fee (for its basic digital program) AND you are paying up to $5 per month in fees on top of that.
Without careful attention to all these different Axos Invest fees, the company could easily shift from the cheapest robo advisor to one of the most expensive robo advisors.
2 Key Ways That Betterment Is Different Than Axos Invest
In this section, let’s look at the two key ways that Betterment differs from Axos Invest.
1. No fee for online financial and investment planning tools, including RetireGuide.
Betterment also offers a completely free option that doesn’t include investing with the robo advisor.
The free option includes the full range of budgeting and financial planning tools, including the popular RetireGuide. You can also request a free portfolio review of your outside holdings with this level of services.
2. All-inclusive account management fees are affordable and simple.
When it comes to Axos Invest fees, you are going to have to keep track of which fees are for what services as your investing needs expand. But with Betterment you know there is one affordable account management fee of 0.25 percent. And you know that fee only increases (to 0.40 percent) once your holdings reach the $100,000 mark.
Can You Speak to a Financial Advisor with Betterment or Axos Invest?
Depending on your preferences here, you will find there is a clear choice between Axos Invest vs Betterment.
How Much Does Betterment Cost Per Month?
With Betterment, you can speak to a financial planner at any level of service. With the basic digital service, you have the option to schedule a 45 to 60 minute phone session for an additional cost. You can use these sessions for help with a variety of investing choices ranging from how to get started to planning for your retirement.
With the basic digital robo advisor plan, you can also text with financial planners for free.
When you upgrade to Premium, certified financial planners (CFPs) are available at no extra charge (i.e. their help is part of the upgraded 0.40 percent account management fee you pay) to help you at any time.
So, is Betterment worth the cost? This is ultimately up to your need to talk to a human financial advisor — and how much that’s worth to you.
Interested in an account with Betterment? Get started here.
Axos Invest: An Automated Only Robo Advisor
With Axos Invest, the service is fully automated so there is no option to talk with a financial planner. Even the chat feature uses an automated chatbot.
If you opt to also use the Axos Invest banking services, there is live customer support available to you. But this support does not cover the robo advisor feature.
What About Account Security? Who Does It Better?
Account security is becoming a bigger and bigger issue as the finance and investing landscape increasingly moves online.
You just don’t want to invest with any platform or robo advisor without feeling certain your very private, sensitive financial data is safe and secure.
So let’s spend a moment to take a look at how Axos Invest and Betterment secure your data and protect your funds.
Axos Invest: Bank Level Security
Axos Invest advertises that they provide robo advisor customers with “bank level security.” But what does this really mean?
When you scroll down to read the fine print on the Axos Invest website, you see these four additional notes:
- Securities are not FDIC insured and may lose value.
- Cash is not FDIC insured and there is no bank guarantee.
- Cash up to $250,000 held in Axos Invest client accounts is insured by SIPC.
- Securities held in Axos Invest client accounts are insured by SIPC up to $500,000.
So the security that Axos Invest offers you is industry standard. When it comes to security then, is Axos Invest legit? Certainly.
The first point may sound concerning at first but no robo advisor (or any advisory service) will insure client funds against market movements – this is the risk you take when choosing to invest in the market.
With Betterment, you find basically the same information on their website.
- Investments (securities) are not FDIC insured and may lose value.
- Betterment’s client accounts are insured by the Securities Investor Protection Corporation (SIPC) up to $250,000 in cash and $500,000 for each client account.
All of this means that both robo advisor platforms offer strong industry-standard insurance coverage against potential loss of assets due to brokerage failure.
And neither offers any insurance against loss of market value, which once again is industry standard.
Not sure what to look for when it comes to automated investing? Learn how to choose a robo-advisor.
Axos Invest vs Betterment: Investment Types & Asset Classes
When it comes to analyzing the overall investment types and asset classes, it is helpful to remember that Betterment was always designed to be a robo advisor, while WiseBanyan turned Axos Invest was bought and added on to enhance Axos Financial’s traditional banking and brokerage services.
It is easy to see what a difference this makes when comparing your overall investment and portfolio options.
Let’s take a look.
Axos Invest Account Types
Remember when we said earlier that WiseBanyan’s free investing platform is only free up to a point? This is never more apparent than when investigating your options for Axos Invest account types.
The free plan includes individual taxable accounts for one person only. No joint individual taxable accounts are supported at all.
If you want to add on the Tax Protection Package, which assesses a 0.24 percent fee based on your total holdings, you can also gain access to a traditional IRA, Roth IRA or SEP-IRA account.
Betterment Account Types
Betterment charges a 0.25 percent account management fee from the outset. Here are the account types this fee gives you access to:
- Individual taxable account
- JOINT taxable account (with right of survivorship)
- Inherited IRA
- Traditional IRA
- Roth IRA
Now let’s take a look at the different portfolio options you have to invest in when you choose Axos Invest vs Betterment.
Betterment Portfolio Options
Betterment runs strictly on EFTs (exchange traded funds). However, within each fund there is the capacity for a variety of choices: risk level, socially responsible investing (SRI) and asset types (stocks versus bonds).
Axos Invest Portfolio Options
The Axos Invest website states only that the portfolios are EFT-based and vary based on risk and lower-fee EFTs. EFT portfolio construction is based on three factors: time, risk tolerance and funds saved.
Axos Invest vs Betterment: Online Platform and Mobile Apps
Given that you are interested in using a robo advisor versus a more hands-on approach, you will definitely want to select a platform you find easy to use and even one you enjoy using.
The same holds true for the mobile experience if you plan to access your account from your smaller screen smart device.
Axos Invest Mobile Apps
Axos Invest has fared better to date with the iOS/Apple version of its app than with the Android app. With comments like “app freezes and crashes” and “app is broken” it is clear what the issue is with the Axos Invest mobile experience.
With an overall average of 4.05 (out of five stars), the apps aren’t the worst robo-advisor mobile apps out there.
But even Apple app users express disappointment with some recent changes in functionality.
- iOS/Apple app: 4.4 (out of five stars)
- Android app: 3.7 (out of 5 stars)
Betterment Mobile Apps
In mid-2019, Betterment launched a newly redesigned platform and mobile app. The official press release states the redesign was based on user feedback.
Mobile app user reviews to date indicate the redesign has been well received, with a average of 4.65 (out of five stars).
- iOS/Apple: 4.8 (out of 5 stars)
- Android: 4.5 (out of 5 stars)
Interested in other alternatives? See our list of the top robo-advisors for 2020.
Axos Invest vs Betterment – Which Robo Advisor Is Your Top Pick?
Now you have a much better understanding of how these two robo-advisor platforms are similar and different. When it comes to Betterment alternatives, they are out there — and Axos Invest can potentially be one of them.
Which is the best robo advisor platform to meet your needs? The choice is yours!