Betterment vs. Personal Capital: Which One is Better?

Robo-advisors Personal Capital and Betterment offer to create a balanced portfolio for you, though the two platforms have different approaches. Having reviewed over 30 robo-advisor portfolios, we will help you compare Betterment and Personal Capital. Keep reading to learn which robo-advisor you should pick.

SustainFi   Updated April 4th, 2022

Personal Capital Advisors Corporation (“PCAC”) compensates SustainFi for new leads. SustainFi is not an investment client of PCAC. Some of our posts may contain links from our affiliate partners. However, this does not influence our opinions or ratings. Please read our Terms and Conditions for more information.

At a glance

  • Both Personal Capital and Betterment will help you invest and even connect you to a human financial advisor. But, because their approaches are so different, the best option depends on what you are looking for
  • Best for beginners: Betterment. Betterment is a low-cost, low-minimum robo-advisor. It may be a better option if you don’t have a complex financial life or a lot of assets or are simply looking for the lowest-cost solution
  • Best for high-net-worth investors: Personal Capital. Although Personal Capital’s fees are higher, you get access to dedicated human advisors and advanced tax minimization strategies

Keep reading to learn more.

Minimum investment

$100,000

Minimum investment

$10

$100,000 for Betterment Premium

Management fee

0.49% - 0.89%

Management fee

0.25% - 0.40%

Socially responsible investing

Yes

Socially responsible investing

Yes

Human advisors

Yes

Human advisors

Yes (extra fee)

Tax-loss harvesting

Yes (stock-level)

Tax-loss harvesting

Yes (fund-level)

What is Betterment?

Founded by Jon Stein in 2008, Betterment is the first and most successful robo-advisor judging by assets under management (which reached $29 billion in early 2021). The robo-advisor uses algorithms based on the Modern Portfolio Theory to create the right portfolio to meet your goals, such as saving for retirement or growing your wealth.

Betterment has two service tiers, Digital and Premium. Betterment Digital charges a 0.25% annual fee, and there is no minimum balance. Betterment Premium charges a 0.40% fee, and you need at least $100,000 to get started. In return, you get access to human financial advisors.

🔔 Check out the full Betterment review.

What is Personal Capital?

Personal Capital is a hybrid advisor that combines a robo-advisor with human professionals. The company likes to call itself a “digital wealth platform.” Founded in 2009, Personal Capital was acquired by a Canadian insurer, Empower, in the summer of 2020. In September 2021, the company had over $21 billion in assets under management.

Personal Capital has a higher account minimum ($100,000) and charges higher fees (0.49%-0.89%) than most robo-advisors. But it is not a typical robo-advisor, so comparing it to low-cost robo-advisors that don’t provide the same level of service isn’t fair. With Personal Capital, you get ongoing access to a human financial advisor. He or she can help you with complex financial needs, like optimizing your portfolio for stock option ownership.

In 2018, Personal Capital launched its Socially Responsible Strategy, which reached $1 billion in assets by mid-2020.

🔔 Read the full review of Personal Capital.

Betterment vs. Personal Capital: Account types

Personal Capital and Betterment both support the following account types:

  • Individual and joint taxable investment accounts
  • Retirement accounts for traditional, SEP, and Roth IRAs, plus rollover 401(k)s
  • Trusts

💰 The winner: Tie.

Betterment vs. Personal Capital: Checking accounts

Betterment offers two cash management accounts:

  • Betterment Cash Reserve, a high yield savings account, is FDIC-insured and pays a 0.35% APY as of April 2022
  • Betterment Checking Account, a no-fee checking account that comes with a Visa debit card. The account is FDIC-insured for up to $250,000 and reimburses all ATM fees. You can get cash back rewards from thousands of brands like Dunkin, adidas and Walmart

Personal Capital lets you open a cash account, which pays a 0.05% APY. The APY goes up to 0.10% if you are a customer of Personal Capital advisory services. (And you probably won’t be opening an account with them if you are not an advisory customer). There are no fees or minimum balance. The account is FDIC-insured. However, you don’t get a debit card, so you can’t withdraw cash at an ATM.

💰 The winner: Betterment. It gives you a choice of two accounts vs. one from Personal Capital. You can also get a debit card that earns rewards.

Betterment vs. Personal Capital: Minimum investment

There is a $10 minimum for the Betterment Digital plan. The premium plan, which gives you access to fiduciary financial advisors, requires a $100,000 investment.

Personal Capital’s minimum investment – $100,000 – is comparable to what many human financial advisors need to work with you. However, you need to invest at least $200,000 to choose the Socially Responsible Strategy.

Here are the Personal Capital service tiers:

  • Investment Services ($100k-$200k investment assets.) You get ongoing access to a financial advisor, and your portfolio is invested in exchange-traded funds (ETFs.) You are not eligible for the Socially Responsible Strategy at this service tier
  • Wealth Management ($200k-$1 million investment assets.) You get ongoing access to two financial advisors. Your portfolio is invested in stocks and funds, which you can customize. You are also eligible for the Socially Responsible Personal Strategy
  • Private Client (over $1 million investment assets.) In addition to two dedicated financial advisors, you get priority access to investment specialists and private equity investments 

💰 The winner: Betterment. A $10 minimum clearly makes Betterment more accessible than Personal Capital’s $100,000 minimum ($200,000 if you want to invest sustainably.) However, Betterment Premium also has a $100,000 minimum.

Betterment vs. Personal Capital: Management fees

The more humans are involved, the more expensive it’s going to be. Personal Capital’s fees are closer to financial advisor than robo-advisor fees. A typical financial advisor charges around 1% of assets under management.

For the first $1 million invested with Personal Capital, you pay 0.89%, but that percentage drops to as low as 0.49% for over $10 million invested. Here is the full breakdown:

  • Up to $1 million: 0.89%
  • First $3 million: 0.79%
  • Next $2 million: 0.69%
  • Next $5 million: 0.59%
  • Over $10 million: 0.49%

Betterment’s fully automated service is much cheaper: it charges an annual fee of 0.25% of assets under management. However, Betterment Premium, which also offers financial advisors, costs 0.40%.

Neither Personal Capital nor Betterment charges any account opening fees.

💰 The winner: Betterment. Betterment charges 0.25%-0.40% of assets under management, compared to 0.49%-0.89% for Personal Capital.

Betterment vs. Personal Capital : Smart Weighting 

Most robo-advisors, including Betterment, invest your money in ETFs that mirror the broad market. But the broad market is generally skewed towards more popular sectors, such as technology. For example, technology stocks are over 30% of the S&P 500 index.

To diversify your investments and protect you from market bubbles, Personal Capital puts your money equally in all sectors (excluding fossil fuels for the Socially Responsible Strategy.) In practice, that means that your U.S. stock exposure to any sector is 10-12%.

The downside to Smart Weighting is that you might miss out on the hot sectors while those are doing well.

💰 The winner: Tie. It’s up to you if you think smart weighting is a good idea or not. Personal Capital applies smart weighting, and Betterment doesn’t.

Betterment vs. Personal Capital: Socially Responsible (SRI) Portfolio

Both Personal Capital and Betterment offer socially responsible investing options. ESG portfolios score better on environmental, social, and governance metrics like carbon emissions, worker treatment, diversity, and governance.

Betterment offers three socially responsible investing options: Broad Impact, Climate Impact, and Social Impact Portfolios:

  • The Broad Impact Portfolio: Betterment’s general ESG option includes ESG funds for U.S. stocks, emerging and developed markets stocks, and, for non-taxable portfolios, U.S. high-quality bonds
  • The Climate Impact Portfolio. The Climate Impact Portfolio emphasizes the “E” or environmental factors in ESG. This portfolio features a low-carbon footprint stock ETF (CRBN) and ETFs that divest from fossil fuel reserve owners. According to Betterment, carbon emissions per dollar of revenue for the 100% stock Climate Impact Portfolio are half of those of the conventional (Core) Portfolio. The portfolio adds green bonds – bonds that fund environmentally friendly projects – through a green bond ETF
  • The Social Impact Portfolio. The Social Impact Portfolio adds two impact funds that promote gender diversity and ethnic and racial inclusion. These funds are the SPDR SSGA Gender Diversity Index ETF (SHE) and the Impact Shares NAACP Minority Empowerment ETF (NACP)

🔔 Read the full review of the Betterment Impact Portfolios.

Personal Capital offers an ESG option in partnership with Sustainalytics, an ESG rating agency owned by Morningstar. This option is only offered to customers with over $200,000 in their portfolio. Personal Capital will invest in sustainable U.S. and international stocks and ETFs, excluding controversial sectors like fossil fuels, tobacco, adult entertainment, gambling, and small arms. According to Personal Capital, the Socially Responsible Strategy has performed in line with the benchmark made up of low-cost conventional funds since its inception in 2018.

🔔 Read the full review of Personal Capital’s Socially Responsible Strategy.

💰 The winner: Tie. Betterment and Personal Capital have different approaches to selecting ESG portfolios. Betterment will put your money in a few low-cost ESG funds. Personal Capital puts your money in a basket of individual U.S. stocks and several ESG ETFs (plus conventional investments for other asset classes.)

Betterment vs. Personal Capital : Tax-loss harvesting

Tax-loss harvesting is a tax reduction strategy that involves selling a fund or stock that has experienced a loss. By realizing this loss, you can offset taxable gains on other investments. The sold fund is replaced with a similar one, maintaining an optimal asset allocation.

Both Personal Capital and Betterment offer tax-loss harvesting to clients. Betterment provides tax-loss harvesting at no additional cost at the ETF level. A more advanced tax-loss harvesting strategy, selling individual stocks that have lost money (also called direct indexing), is available from Personal Capital.

💰 The winner: Personal Capital. Both Betterment and Personal Capital offer tax-loss harvesting capabilities, but Personal Capital has more advanced stock-level tax-loss harvesting.

Betterment vs. Personal Capital: Human financial advisors

Personal Capital gives you ongoing access to financial advisors. Investors with over $200,000 invested have access to two advisors.

The Betterment Digital plan doesn’t come with access to human advisors, though you can buy a package for an extra fee ($299-$399 for 45-60 minutes).

Here are some of the packages:

  • Getting Started: $299
  • Retirement Planning: $399
  • Financial Check up: $399
  • College Planning: $399
  • Marriage Planning: $399

Betterment Premium customers, who must have at least $100,000 invested, get ongoing access to fiduciary financial advisors.

💰 The winner: Tie. If you only need a one-off consultation, you can buy a 45-min or 60-min package from Betterment. You can get ongoing personal advisor access from both if you have at least $100,000 invested.

Betterment vs. Personal Capital: Automatic rebalancing

Both robo-advisors automatically rebalance your portfolio. Automatic rebalancing means that the robo-advisors will buy or sell investments to get to the asset allocation that suits your goals.

Sometimes, when one asset class, like stocks, does much better than another one, like bonds, your portfolio may “drift” and become riskier (or less risky) than it should be. Automatic rebalancing solves that.

💰 The winner: Tie. Nearly all robo-advisors now offer this feature.

💰 The Overall Winner

  • There is no clear winner: the best investment platform depends on what type of investor you are
  • Best for beginners: Betterment. Betterment is an accessible, low-cost robo-advisor. Their platform lets you start investing with $10 and pay only 0.25% of your assets. It is cheaper than Personal Capital, but services are automated, and you need to buy hourly packages to access human advisors (unless you are a Premium member, which requires a $100,000 investment)
  • Best for high-net-worth individuals: Personal Capital. With Personal Capital, you get personalized attention from a dedicated financial advisor (or two.) They can help you with complex financial needs like estate planning. You also have access to advanced tax-loss harvesting strategies and private equity investments

🔔 Want to compare more options? Check out the top 10 investing apps.

Compare:


Annual percentage yield (variable) is as of 4/1/2022. Cash Reserve is only available to clients of Betterment LLC, which is not a bank, and cash transfers to program banks are conducted through the clients’ brokerage accounts at Betterment Securities.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

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