Betterment vs Fidelity Go
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In a surprising mid-year move last year, robo advising industry founder Betterment announced its entry into the traditional banking arena.
Whoa. What’s that again?
Yup. The robo advisor service that started it all decided to tackle the big banks head on. Of course, Betterment says this was the plan all along. Was it or wasn’t it?
The point is now moot because as traditional banking giants move en masse onto Betterment’s turf, it is only natural to see Betterment’s top brass respond in kind with the launch of its own proprietary checking and savings account products.
Fidelity, meanwhile, has its own turf wars to tackle.
The late-year merger between Schwab and TD Ameritrade found Fidelity’s upper echelons anxiously issuing public reassurances that, in a nutshell, their services would remain superior to either.
As they say there, more to be revealed.
Meanwhile, in this comparison-focused article, we take a close look at Betterment, acknowledged robo advisor industry founder and still market leader, versus Fidelity’s own much newer robo advisor called Fidelity GO.
Who rules the roost for this round in the robo advisor ring – champion or challenger? Read on to find out.
Who Does It Best? Betterment vs Fidelity Go
If every robo advisor was created equally, we wouldn’t need more than one. As the competition continues to intensify, differences quite literally abound. This means the key to picking the right/best robo advisor platform for your needs and goals is to identify what makes each platform unique.
Here is a broad-brush overview designed to help you identify which robo advisor, Betterment or Fidelity Go, may initially seem like a better fit for you.
Betterment is best for:
- Anyone looking for a rock-solid industry-leading platform with a robust investor following.
- Newbie investors who want a hands-off, turnkey investing solution.
- Investors who have a specific investing goal in mind (i.e. send child to college, buy a home, retire by such-and-so date).
- Investors seeking a solid portfolio review with zero commitment.
- For high value investors who want some hands-on expert financial guidance, the Premium plan delivers good value in the simple form of a higher management fee rather than a flat fee.
Fidelity Go is best for:
- Anyone seeking a discount investing option through a stable, reputable financial institution.
- $10 account minimum to begin investing offers a low barrier to entry for newbie investors.
- Investors who want more manual control over their digital investing.
- The option to invest in mutual funds is a relative rarity in the robo advisor arena and Fidelity delivers here.
- Investors seeking a fully investment-focused (versus budgeting or financial management-focused) option.
Should Any Robo Advisor Other Than Betterment Ever Be An Option? You Decide
In early 2019, Forbes made a surprising announcement.
Fidelity Go had just been named The Robo Ranking’s “best overall” robo advisor for 2019.
Fidelity Go received high praise as a strong performer with a low overall cost and low minimums to begin investing. While their account management fee of 0.35 percent is higher than some, with zero fees elsewhere, it all ends up evening out.
Intriguingly, not only was this Fidelity’s first appearance on the list since its launch in 2016, but Fidelity Go also won two other notable honors in subsidiary categories:
- Best Robo Advisor: Performance at Low Cost (awarded first place)
- Best Robo Advisor: From Incumbent Financial Institution (awarded first place)
How did Betterment fare in the same report, you might now be wondering? Good question!
Betterment earned the following distinctions:
- Best Robo Advisor: For First Time Investors (awarded first place)
- Best Robo Advisor: Digital Financial Planning (awarded honorable mention)
2 Key Ways That Fidelity Go is Different Than Betterment
So how is Fidelity Go different than Betterment?
In other words, what does Fidelity Go have to offer that even Betterment can’t match?
Let’s take a look at two key ways that Fidelity Go sets itself apart from Betterment.
1. You can invest in mutual funds.
With at least $2,500 to invest, you can use Fidelity Go to add mutual funds to your portfolio. So Fidelity Go has few if any other competitors in this area.
It is also worth mentioning here that Fidelity Go uses Fidelity’s own suite of proprietary mutual funds, which is a stark departure from the non-proprietary approach most robo advisor platforms offer.
In other words, while other platforms typically exclude their in-house (and thus potentially advantageous to them) funds from the mix, Fidelity provides only these funds as investment options. Unfortunately, this also means Fidelity Go is not able to offer tax loss harvesting (more on this topic in the next section here).
It also feels worth noting on this point that Fidelity’s fine print takes pains to note that it is not acting as a fiduciary agent when it assumes an advisory or brokerage role on clients’ behalf. This is a stark departure from how Betterment and other leading robo advisors position themselves in the digital investing marketplace and is definitely worth paying attention to.
As a side note, the other investment option you have with Fidelity GO is ETFs (exchange traded funds), which is an industry standard among robo advisor platforms.
Betterment offers a variety of portfolio types, including socially responsible investment (SRI) options, all of which are comprised of ETFs. No mutual funds are available.
2. You can choose to manually adjust your portfolio.
With Fidelity Go’s newer robo advisor platform, you can adjust your portfolio in two important ways:
- Asset allocation
- Investment percentages
2 Key Ways That Betterment Is Different Than Fidelity Go
Whenever you are comparing two essentially strong robo advisor platforms, your choice will rarely boil down to which one is “better.” Rather, you are aiming to discover which one is better for YOU.
This is where we are headed in choosing to present how each platform differs from the other rather than attempting to assign subjective values like “better” or “stronger.”
So now let’s take a closer look at two key ways where Betterment differentiates itself from Fidelity Go in the robo advisor industry.
1. Tax-loss harvesting is offered.
Tax loss harvesting is, as its name suggests, a method for using investing losses to minimize year-end capital gains for taxation purposes.
It is completely legal and can be highly desirable once your portfolio grows to become more substantial.
Betterment offers tax loss harvesting as a matter of course with both its digital and Premium account types.
2. Betterment’s suite of financial planning tools are free and unparalleled.
Betterment’s free financial planning tools are among the very best in the financial planning industry – and not just in the robo advising arm of the industry.
Tens of thousands of users visit Betterment not to engage in digital investing but simply to make use of the platform’s free portfolio analysis, financial analysis, financial and retirement planning tools.
Betterment is not so comprehensive as a true dedicated budgeting and money management tool like Mint, but in some ways the platform comes close. In particular, Betterment’s RetireGuide free retirement planning tool earns top marks from users and reviewers alike.
Can You Speak to a Financial Advisor With Either Robo Advisor?
One of the big strengths of a digital advising program could also conceivably be viewed as one of its biggest weaknesses: you are essentially entrusting your financial future to an algorithm rather than to a real live human expert.
Does an algorithm built by humans for use by humans represent a better or worse option than interacting with humans to build your investment portfolio?
It depends. Overall, the rapidly growing popularity of robo advisors speaks to how easily we as a culture have acclimated to trusting digital tools like formulas, algorithms, calculators and forecasters.
But ultimately, the better robo advisor platforms have chosen to hedge their bets here (sorry – pun once again intended) and provide both. In other words, you can strictly use the digital robo advisor algorithm if you wish. And you can also speak to a human financial planner if you wish.
What About Account Security? Who Does It Better?
When it comes to overall account security, from a robo advisor perspective, Betterment has Fidelity Go beat.
While some independent review sites say that Betterment is not directly insured through the SIPC (Securities Investor Protection Corporation), Betterment’s own website makes it clear that they do offer this protection for all customer investments.
Each customer’s investments are protected and insured up to $500,000 on the off chance the platform itself folds.
Fidelity Go does provide Fidelity’s own Customer Protection Guarantee, but this only safeguards against account activity that you did not authorize (so, fraud).
Fidelity’s website makes it clear that your invested funds are not guaranteed or insured by the FDIC (Federal Deposit Insurance Corporation) or any similar entity. Furthermore, the website issues a strong warning that you could lose money.
Fidelity does offer FDIC insurance for cash management accounts and some retirement accounts up to $250,000. And Fidelity offers insurance through the SIPC for up to $1.25 million in uninvested (cash) funds.
Who Does It Better? Customer Service
For an automated online robo advisor platform, Betterment is surprisingly hands-on in their customer service offerings. Both the online portal and the mobile apps offer live online chat during customer service hours: Monday through Friday, 9am to 6pm EST, and Saturday and Sunday, 11am to 6pm EST.
Betterment also maintains phone and email customer support from 9am to 6pm EST for its banking and investing products.
For Betterment Premium customers, dedicated certified financial planners are always available to help.
Fidelity Go has an automated chatbot that is available continually (24/7) but the chatbot can only answer short general questions. If you have detailed questions you will need to get in the toll-free phone queue for the main Fidelity customer service line. Here, wait times can be extensive during open market hours.
Who Does It Better? Online Platform and Mobile Apps
Betterment comes out ahead of Fidelity Go in the realm of mobile experience for one simple reason: its app is designed completely around its two account offerings: Digital and Premium.
To this point, Betterment announced a redesign of their mobile app in mid-year last year. The goal was to upgrade the app to provide a complementary experience to using the online portal. Customers say the upgrade is a win.
Take a look at these user scores for Betterment’s iOS/Apple and Android:
With an average score of 4.65 (out of five stars), clearly Betterment’s app upgrade fits the bill for customer expectations of the mobile experience.
Contrast this with Fidelity Go, which at this point does not have a dedicated mobile app for its robo advisor. Rather, the robo advisor feature is wrapped into the greater Fidelity app.
So while Fidelity Go is fully mobile, getting to that feature inside the Fidelity app can be somewhat challenging.
You have to navigate to the Portfolios menu within the app and then tap “Fidelity Go” to enter the robo advisor and view your investments.
With a 4.6 (out of 5) average score, on the surface it appears that Fidelity’s app is on par with Betterment’s….that is, until you remember that the robo advisor is buried within the greater functionality of the financial giant’s other offerings.
Having a dedicated robo advisor app would be a major step up for Fidelity Go’s offerings – no doubt about it. For more info see our best investing apps.
Betterment vs Fidelity Go – Which Robo Advisor Is Your Top Pick?
So there you have it – a side by side comparison of two industry leaders, albeit that they operate in somewhat different industries.
The only question now becomes, which robo advisor is best for you?