Ellevest vs Betterment

Ellevest vs Betterment

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Ellevest is a strange sexy beast in the crowd of robo advisors.

With its own line of estrogen-powered bling, a grassroots (and growing) crowd of self-proclaimed ‘Elle Raisers and an algorithm tailored to – wait for it – female investors – it is hard to look away…even for a moment.

Ellevest is woman-founded, women-led and women-strong, but there is no sign on the digital door proclaiming “femmes only!” Men are welcome as well and the algorithm Ellevest runs from will adjust itself accordingly based on the data each user provides.

Ellevest opened its online doors in 2014, six years after Betterment created the robo advisor industry with its own launch in 2008.

Since Betterment’s bold move, the robo advisor that started it all has done anything but rest on its considerable laurels. Rather, Betterment has continued to study its own market, adjust to new emerging trends, tweak its offerings and upgrade its user experience to evolve with the times.

Most recently, Betterment gave its online platform and already-popular mobile apps a complete overhaul, to its users delight.

While Ellevest was rolling out merch with slogans like “I AM the rich man” and “Just buy the f**cking latte” last year, Betterment quietly slipped into the retail black with assets surpassing the $18 billion mark.

So which robo advisor has the right suite of offerings for you?

Who Does It Best? Ellevest Vs. Betterment

With assets hovering just under the $300 million mark, Ellevest is a krill in the jaws of humpback whale Betterment.

Ellevest Homepage Screenshot

However, it bears mentioning here that what investors of any gender really want is a robo advisor that delivers trustworthy service with transparent fees and a reliable return on investment.

Which one of these robo advisors, industry founder Betterment or niche upstart Ellevest, does it best? Let’s find out.

Ellevest is best for:

  • Female investors seeking an algorithm built just for them.
  • Investors who are also interested in receiving career coaching and personalized financial planning for no extra charge (available with Premium plan).
  • Investors seeking a higher level of service somewhere between Betterment’s two choices of $0 and $100,000 (Ellevest’s $50,000 minimum Premium service is a happy medium here).

Betterment is best for:

  • Investors seeking a tried-and-true robo advisor that has been put through its paces.
  • Investors seeking support for trusts (Ellevest does not support trusts at this time).
  • Investors who are also interested in traditional banking products (checking account, high-yield savings account).
  • Investors who want support for joint taxable accounts (Ellevest offers support only for individual taxable accounts).

Should Any Robo Advisor Other Than Betterment Ever Be An Option? You Decide

If Betterment had lazed around after it founded a whole robo advisor industry, this question wouldn’t even be on the books today. But the robo advisor that introduced the world to robo advisors has continued to stay competitive, even cutting-edge.

Betterment has also continued to stay true to its roots by appealing to a mainstream user base, where newer robo advisors like Ellevest are increasingly using niche marketing strategies to stay competitive.

Betterment Investing PageSo really, the only reason to consider any robo advisor other than Betterment is if the other robo advisor does everything Betterment does equally well and provides another desirable perk Betterment does not offer.

This might well be the case for Ellevest, at least for a certain segment of the robo advisor user market.

First, let’s look at what Ellevest and Betterment both do and do well:

  • Both have socially responsible investing options.
  • Both have $0 minimum and higher level investing options with competitive fees.
  • Both offer goal-based investing with a range of options around popular themes (kids, home, retirement, marriage, college, et al).
  • Both offer impressive free budgeting, financial planning and investing learning tools.
  • Both offer free access to financial planning experts at the Premium account level.
  • Both use robo advisor algorithms grounded in Modern Portfolio Theory (MPT) principles.
  • Both offer periodic account rebalancing to account for drift.
  • Both offer tax benefits: Betterment in the form of tax loss harvesting and Ellevest in the form of tax minimization methodology.

So these are the major areas where we feel Ellevest and Betterment are truly neck in neck from a competitive standpoint to attract new users.

Now, let’s take a look at what only Ellevest and only Betterment have to offer you. This is where you can make an informed decision about which robo advisor platform is more uniquely tailored to your personal financial and investing needs and goals.

Perks you can only find with Ellevest:

  • A robo advisor algorithm specifically tailored to the unique investing needs of women investors.
  • A middle-range account option with some additional features not available through the basic plan.
  • A unique investing focus called ESG (environment, social, governance) focused on advancing women as well as other socially responsible issues.
  • The option to invest in mutual funds.
  • The chance to receive executive-level career coaching as well as personalized financial planning (Premium plan).

Perks you can only find with Betterment:

  • Support for an Android app.
  • Support for joint taxable accounts.
  • An established, trusted platform that delivers consistently positive reviews over the past decade.
  • Lower account management fees for the Premium account type (0.10 lower than Ellevest’s for a similar service).
  • Reduced account management fees for any amount invested that is greater than $2 million (i.e. 0.40 percent for all funds up to $2 million and 0.15 percent for any funds in excess of $2 million).
  • Expanded customer support options including live chat (Ellevest only offers phone and email options).
  • Free portfolio review with zero obligation – you don’t even have to sign up for the robo advisor to access this tool.
  • The option at the Digital (basic) account level to purchase individual phone sessions with a financial planning expert (45-minute and 60-minute sessions available).

2 Key Ways That Ellevest Is Different Than Betterment

Now that you have a big picture view of how Ellevest vs Betterment stacks up side by side, we can delve into the two key ways that each platform differs from the other.

1. Ellevest is tailored in every way to the female investor.

Ellevest’s founder and CEO, Sallie Krawcheck, used to be a Wall Street insider. She was repeatedly booted from the ranks and endured gender-based harassment throughout her “traditional” career.

Ellevest Founder Sallie KrawcheckKrawcheck chose a male co-founder, Charlie Kroll, which speaks to the fact that Ellevest is not anti-man. In fact, Ellevest makes it clear their primary goal is to “close the gender money gap,” not to exclude a whole gender.

This is an important point especially now, when issues of gender identity are more changeable and fluid than ever before. Ellevest’s primary unique selling proposition is one of inclusion, not exclusion.

Some men as well as many women will doubtless find this appealing on a level beyond the purely financial.

2. Ellevest’s investment strategy may perform differently than all the others.

At least one anecdotal review states that Ellevest’s investing strategy remained stable while every other robo advisor – Betterment included – dipped during a market low.

However, another reviewer states that Ellevest’s portfolio recommendations may be rather more aggressive than truly benefits its users.

In either case, it is clear that Ellevest’s algorithm is unique even when compared to Betterment.

2 Key Ways That Betterment Is Different Than Ellevest

Betterment wouldn’t have lasted so long in the industry it created if it wasn’t constantly improving its own offerings.

Having said that, it is important to recognize that Betterment is literally designed to serve a mainstream user base in a field that is increasingly focused on identifying and serving niche user bases.

What does this mean? It means Betterment was created for every investor. There are pros and cons to this approach, but ultimately it means Betterment, like Ellevest oddly enough, was designed with inclusivity (not exclusivity) in mind.

So let’s take a closer look at two ways that Betterment sets itself apart from Ellevest and all the rest.

1. Betterment meets each investor wherever they are.

Being a great generalist robo advisor is not just about attempting to be everything to every user and offer everything under the sun. That is a recipe to fail rather than a recipe to succeed.

Being a great generalist or mainstream robo advisor is about designing a robo advisor platform that speaks to the basic, fundamental, core investing needs that nearly every person will have: investing for emergencies, major life events, dependents, basic everyday financial security, you get the idea.

Betterment does this very, very well and arguably better than any other robo advisor out there, even Wealthfront, which is widely regarded as its major competitor in this area today.

2. Betterment allows outside-in syncing as well as inside-out investing.

Betterment recognizes up front that it is very challenging to develop a comprehensive investing strategy for now and later if you can’t see all your finances in one place.

Betterment FInancial PlanningThe way Betterment achieves this is unique and important. You can use Betterment’s free financial planning tools to request a free portfolio review right up front – before you sign up for the robo advisor or pay any fees.

This indicates that Betterment isn’t scrambling to sustain itself with more, better, faster. There is a goal of helping you first understand and next grow your financial picture over time.

By syncing your accounts and providing a free place where you can see everything all together in one place, using Betterment serves an important educational role regardless of which robo advisor you ultimately end up choosing.

Can You Speak to a Financial Advisor with Either Robo Advisor?

With Ellevest, there is no mechanism to speak with a financial planner one on one until you have at least $50,000 to invest in the Premium plan. Of course, by then, you are paying for the privilege as your annual account management fee doubles.

With Betterment, you can pay a flat fee to schedule a phone consultation with a financial planner on the Digital (basic) plan. Fees start at $199.

Once you have at least $100,000 to invest and you choose to upgrade to the Premium plan, you can speak to financial experts at any time and your annual account management fee is still lower than Ellevest’s.

What About Account Security? Who Does It Better?

Both Ellevest and Betterment offer industry standard account security and SIPC-based account insurance for their users.

Who Does It Better? Account Types & Investment Asset Classes

Ellevest and Betterment are well matched in terms of the account types that they currently offer.

Ellevest Account Types

Ellevest currently offers three account types: Digital (basic), Premium and Private Wealth.

Ellevest Three Ways to Invest

Digital comes no account minimums (although obviously you will have to fund your account to start investing). The annual fee is 0.25 percent of the value of your account (i.e. if you fund to $100, you will pay an annual fee of $0.25).

Premium comes with a $50,000 account minimum to start. The annual account management fee is 0.50 percent (i.e. if you fund to $50,000, you will pay an annual fee of $250).

Private Wealth is not a true robo advisor. The account minimum is $1 million and the focus is on individualized portfolio management. No fee structure is listed.

If you want to see how much you will pay annually by investing to a certain level based on the fee structure for that level, Ellevest offers a handy calculator right on the accounts page.

Betterment Account Types

Betterment currently offers two account types: Digital (basic) and Premium.

Betterment Pricing PlansDigital comes with no account minimums and a 0.25 percent annual account management fee.

Premium comes with a $100,000 account minimum and a 0.40 percent annual account management fee.

Investment types at Ellevest focus on mutual funds and ETFs (exchange traded funds) which in turn are comprised of bonds, stocks and other asset classes that offer a diversified risk balance.

Investment types at Betterment focus exclusively on ETFs made up of stocks and bonds. Each portfolio is created to provide varying levels of risk for investors with different financial goals.

It is also worth mentioning that both Ellevest and Betterment are set up to act as legal fiduciary agents to their users. This means neither is legally permitted to recommend investment strategies that are not in your best interests.

Who Does It Better? Online Platform and Mobile Apps

In the arena of mobile user experience, Betterment has time and its recent total overhaul (online platform, mobile apps) on its side. Plus, Betterment offers support for both an iOS/Apple app and an Android app.

Ellevest only offers an iOS/Apple app at this time.

Ellevest Mobile User Experience

Betterment Mobile User Experience

Betterment’s recent mobile app upgrade has clearly been a welcome addition to the robo advisor platform’s overall user experience offerings.

Between the iOS/Apple and Android apps, Betterment scores a 4.65 (out of five stars). See related – mobile trading apps.

Which Robo Advisor Is Your Top Pick?

So there you have it – Ellevest vs Betterment side by side. Each robo advisor platform has a ton to offer to the right person. You now understand what makes each platform unique and also more about why those unique aspects exist.

This means the only real remaining question is: which robo advisor can best meet your financial and investing needs and goals at this time in your life?

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 (protechcap.com).