Introduction
Betterment and Fidelity Go are two digital investment platforms that offer automated portfolio management, commonly referred to as robo-advisors. Each platform is designed to simplify investing for individuals by using algorithms to manage portfolios based on user preferences and financial goals. Despite their shared purpose, Betterment and Fidelity Go differ in their approach, features, pricing, and investment options. This article provides a detailed comparison of the two services based on their current offerings.
Company Overview
Betterment
Betterment is an independent investment advisor that focuses on goal-based portfolio management using exchange-traded funds (ETFs). It serves individual investors, financial advisors, and businesses. The company manages client assets using proprietary algorithms designed to optimize returns based on risk tolerance, time horizon, and investment objectives.
Fidelity Go
Fidelity Go is part of Fidelity Investments, a long-established financial services company. It provides automated investing through managed portfolios constructed from Fidelity Flex mutual funds. Fidelity Go is integrated into the broader Fidelity ecosystem, offering customers a unified experience across brokerage, retirement, and banking services.
Fees and Pricing
Betterment
Betterment offers two service tiers:
- A digital plan that charges a flat monthly fee for lower balances or a percentage of assets for qualifying accounts with recurring deposits or higher balances.
- A premium plan available to clients with larger balances, which includes access to certified financial planners and a higher annual advisory fee.
Fees cover portfolio management, goal tracking tools, and automated rebalancing.
Fidelity Go
Fidelity Go does not charge an advisory fee for accounts below a specific asset threshold. Once that threshold is reached, a fixed percentage fee is applied annually. The platform uses Fidelity Flex mutual funds, which have no additional fund-level expenses, simplifying cost transparency for users.
Account Types
Betterment
Betterment supports a range of account types, including:
- Individual and joint taxable accounts
- Traditional, Roth, SEP, and rollover IRAs
- Trust accounts
It also offers integrated cash tools, including a checking account and a cash reserve account, both of which provide liquidity and interest-earning features.
Fidelity Go
Fidelity Go offers:
- Individual and joint taxable accounts
- Traditional, Roth, and rollover IRAs
While Fidelity provides a broad suite of financial products, Fidelity Go does not include dedicated checking or high-yield cash management tools within its automated investment service.
Investment Approach
Betterment
Portfolios are constructed using ETFs that span various asset classes, including domestic and international equities, bonds, and alternative assets. Betterment applies principles of Modern Portfolio Theory to maintain diversification and automatically rebalance portfolios to match users’ risk profiles.
Multiple portfolio strategies are available, such as socially responsible investing or income-focused options. Portfolios are rebalanced regularly based on market movements and user activity.
Fidelity Go
Fidelity Go uses proprietary Fidelity Flex mutual funds to build diversified portfolios tailored to the investor’s financial goals and risk tolerance. Asset allocation is determined by an investor questionnaire and adjusted automatically over time. Portfolios are designed to reduce fees and offer exposure to a broad range of investments.
Tax Optimization
Betterment
Betterment includes several tax-efficiency tools:
- Tax-loss harvesting: Identifies opportunities to sell assets at a loss to offset capital gains, potentially reducing overall tax exposure.
- Tax-coordinated portfolios: Allocates assets across different types of accounts to improve after-tax performance.
These strategies are designed to operate automatically and enhance long-term returns.
Fidelity Go
Fidelity Go does not offer automated tax-loss harvesting or coordinated asset placement. It provides limited tax management options, such as the inclusion of municipal bond funds for taxable accounts, but lacks the more advanced tax features available with Betterment.
Financial Advisor Access
Betterment
The digital plan provides automated advice and goal-setting tools. Clients enrolled in the premium plan receive access to human financial planners who can offer personalized guidance via phone or video, subject to a minimum account balance.
Fidelity Go
Clients with balances that meet a minimum threshold gain access to Fidelity coaching services. These sessions are designed to provide guidance on financial planning topics and are conducted by Fidelity representatives. The service is included as part of the advisory fee for eligible accounts.
Cash Management
Betterment
Betterment offers two key cash management products:
- Cash Reserve: A high-yield cash account for emergency funds or short-term goals, with competitive interest rates and FDIC insurance through partner banks.
- Checking Account: Includes a debit card, ATM fee reimbursements, and FDIC insurance, providing integrated access to funds.
These features enable users to manage both investment and cash needs within one platform.
Fidelity Go
Fidelity Go does not include a cash management account as part of the robo-advisor service. Users may access other Fidelity banking products separately, but these are not linked directly to the Go platform.
Rebalancing and Automation
Both platforms use automated portfolio rebalancing to maintain target asset allocations. When market movements cause a portfolio to drift from its intended allocation, the system automatically adjusts the holdings to restore balance.
Betterment incorporates tax efficiency into its rebalancing process. Fidelity Go performs rebalancing based on changes in market values or customer profiles but does not include tax-based adjustments.
Security and Protections
Both Betterment and Fidelity Go are registered investment advisors. Client accounts are protected by the Securities Investor Protection Corporation (SIPC), which covers securities up to applicable limits in case of broker failure.
Cash in sweep or deposit accounts is covered by the Federal Deposit Insurance Corporation (FDIC), subject to the insurance limits. Both platforms use encryption and authentication protocols to secure customer data and accounts.
User Interface and Experience
Betterment
Betterment provides a dedicated mobile app and website designed for goal-based investing. The platform includes tools for tracking financial goals, adjusting investment settings, and accessing both checking and savings products.
Fidelity Go
Fidelity Go is accessed through the broader Fidelity mobile and web platforms. It offers a consistent experience for users who also maintain brokerage or retirement accounts with Fidelity. While not a standalone app, the service is fully integrated with Fidelity’s infrastructure.
Key Comparisons
- Minimum Account Size: Betterment requires no minimum for the digital plan. Fidelity Go charges no advisory fee below a certain balance, then applies a fixed fee for higher balances.
- Access to Human Advisors: Betterment offers financial planner access with its premium tier. Fidelity Go includes coaching with qualified balances.
- Tax Optimization Tools: Betterment provides comprehensive tax strategies. Fidelity Go offers limited tax-related options.
- Cash Management Features: Betterment includes checking and high-yield cash accounts. Fidelity Go does not integrate these features into its robo-advisor service.
- Investment Vehicles: Betterment uses ETFs. Fidelity Go relies on Fidelity Flex mutual funds.
Conclusion
Betterment and Fidelity Go both provide effective automated investment management, but they serve different investor needs. Betterment is structured for individuals seeking advanced tax strategies, integrated financial tools, and flexible portfolio options. Fidelity Go is designed for simplicity, cost efficiency, and easy access to investment management within the Fidelity platform.
Choosing between them depends on the investor’s financial goals, account size, need for advisor access, and preference for specific features such as tax optimization or cash management. Both platforms maintain strong security practices and provide a reliable foundation for automated investing.
