Stash vs. Betterment

Stash and Betterment are two well-known robo-advisors. But what happens when the two are compared on many aspects — fees, investment options and strategies, performance, mobile experience, and more?

Stash entered 2020 with a major win already in its back pocket. This young, still-fresh upstart – an industry disrupter – announced a partnership with the popular app WeAre8.

What is so monumental about this joint offering? Here, it is not just the obvious audience-sharing that literally doubles face-time for both. It is also the unique coming together of an app that connects influencers seeking brand sponsorship with investors seeking to build socially responsible investing (SRI) portfolios.

In this Stash vs. Betterment comparison, we break it down to show you what differentiates the two.¹

General Comparison and Overview 🔍

And what has powerhouse foundational platform Betterment been up to while Stash was pushing the boundaries of integrating investing with financial education?

Betterment had a bit of a rough year in 2019. In a surprising throwback to the fintech industry’s pre-robo advisor traditional banking era, the company was plagued with regulatory hassles as it attempted to roll out new checking and savings account options for its users.

Betterment then followed that up with its own industry-disrupting shift to serve the B2B marketplace with a new spin-off that serves RIAs (registered investment advisors) directly.

Suffice it to say comparing the two gets interesting quickly. Both robo advisors have a ton of value to offer — so which is better, Stash or Betterment?

The question really is, which is the right robo advisor platform for your investment needs and goals?

What is Stash? 💡

Those who should consider Stash:

• ☑️ People who want an app-driven experience.
• ☑️ Investors who want lots of socially responsible investing (SRI) options.
• ☑️ Investors who prefer a flat account management fee structure.
• ☑️ Investors seeking incentives to invest, such as tying investing to spending patterns.

What is Betterment? 🤔

Betterment is better for:

• ☑️ Anyone who is seeking the combination of a robo advisor with human advisor.
• ☑️ People who want both a web (online) option and an app-based access point.
• ☑️ Investors who are seeking socially responsible investing (SRI) options.
• ☑️ Investors seeking a single portal to maintain an overview of assets in multiple areas.
• ☑️ Investors who prefer the more traditional percentile-based account management fee structure (i.e. 0.25 percent for this size portfolio, 0.40 percent for that size portfolio, et al).

So that’s a quick overview of where each robo advisor digital platform is aiming with its ideal customer persona. But sometimes finding where you fit best isn’t quite so simple as taking a quick snapshot.

If that’s the case, keep reading to see which is better: Stash or Betterment.

The Big Picture: Stash vs. Betterment ⚔️

As you just learned, putting Stash side-by-side with industry founder Betterment brings up some interesting questions.

Can there be one “right” robo advisor platform for each of us? 

When Betterment opened its digital doors back in 2009 and introduced the fintech industry to robo advising, the company didn’t have any competition. Slowly, competitors began to pop up, most following in Betterment’s footsteps to some degree.

Today, you have a wealth (pun absolutely intended) of robo advisor platforms to choose from and a mind-boggling level of diversity to sort through as you do it.

This can make comparing two less-similar robo advising platforms a smart move: by identifying what you don’t want and what doesn’t work for you, you can more quickly identify what you do want and need and what will work.

So that is our goal here. Which robo advisor, Stash or Betterment, is the right choice for you personally? We will go into much more depth here in the following sections on the pros and cons, advantages and drawbacks to using each.

But if you have arrived at this article seeking a broad-brush overview of each platform’s “target customer,” so to speak, we have that for you too.

Robo Advisor Experience: Stash vs. Betterment 📊

One surprise lurking inside the comparison between Stash and Betterment is that, for a platform that targets regular, everyday Americans, Stash takes a do-it-yourself approach to assessing risk, evaluating fees, and diversifying a new from the ground up portfolio while giving its customers access to unlimited financial education.

Stash offers more than 30 different “investing umbrellas,” each with its own catchy theme (examples include Social Media, All That Glitters, Big Money, et al). But it is up to you to do your due diligence to figure out what each header refers to, dig down to find out what the return is on each, identify high and low-fee options and learn the other particulars are of each investing option.

This can be a heady proposition for the eager young investor with more zeal than patience or time to undertake this sort of investing research.

Contrast that with Betterment, with its auto-manage feature that asks only that you input certain key data (age, retirement date ETA, risk tolerance) and then literally builds your portfolio for you through the robo advisor algorithm.

If you are always on the go with limited time and/or interest in learning investing from the bottom on up, a do-it-for-you model is going to look pretty attractive after the first 10 minutes of combing through a big digital stack of learning center resource articles about investing!

Once large numbers enter the scene, the question always turns into ‘which platform has better returns’? Well, returns depend on the specific package utilized.

Here is a look at the basics of how each platform is structured so you can see where you might best fit in:

Stash vs. Betterment: Fees Compared ⚖

Time to get into the fees, the least favorite criteria to discuss, but a very nessecary one.

Growth Account 👤

$3 per month fee, retirement account investing options, smart portfolio, no support for kids’ investing, Stock-Back^® Card¹ included, option for Stash Banking account¹, access to online learning tools.

Stash+ Account 👔

$9 per month fee, retirement account investing options, smart portfolio, support for kids’ investing (2 max), Stock-Back^® Card included, option for Stash Banking account with card, money market report insights, access to online learning tools.

Betterment Fee Structure 💰

Digital Service 💻

$0 account minimum, runs on the robo advisor digital algorithm using personalized data you add, gives you a portal to view your whole financial picture in one place, automatically rebalances your portfolio as needed, offers tax loss harvesting and asset allocation at tax time.

Premium Service 💎

$100,000 account minimum, includes unlimited access to dedicated financial experts, incurs a 0.40 percent account management fee, guidance on investments held with other entities outside of the platform, investing support for real estate, stocks, 401k plans.

Trading Experience: Stash vs. Betterment ☯️

One question you will likely have is what the actual experience of using Stash vs. Betterment to trade and invest.

On some level, the only way to fully answer this is to give each one a try. But since that can be time-consuming, we hope this section will give you as close to a hands-on experience as is possible without actually signing up.

Stash: A Short History ✍️

Stash launched in 2015, as we mentioned here in the introduction. The company introduced its Apple/iOS app first. The Android app came along about six months later in 2016.

Today, Stash handles investments for a reported 6 million users in the amount of $3B and growing. The platform states that 86 percent of its user base is investing funds for the very first time.

Betterment: A Short History 📜

Betterment was founded in 2008. In so doing, the company created the robo advisor industry that has changed the fintech landscape forever.

Betterment has always offered an online and an app-based interface, which appeals to the wider age range and experience levels of its user base.

Today, Betterment handles a reported $16.8B in investments. With its recent expansions into the investing B2B marketplace, this is likely to continue growing at an exponential rate.

Perhaps most pertinently to Betterment’s long-term intentions as the elder in the marketplace, the platform offers a Satisfaction Guarantee.

Investment Types: Stash vs. Betterment 🆚

It should come as little surprise by this point to learn that Stash and Betterment are also structured differently when it comes to how you invest and what you invest.

The differences can be summed up in this way: Stash is a proponent of relatively active investing, especially when it comes to a robo advisor platform. Betterment, on the other hand, is a firm advocate of passive investing (otherwise known as “set it and forget it” investing).

Can you actually make money on Stash? The short answer is yes. Stash is a legitimate investment app. Returns will largely depend on the investment options you choose.

Stash offers these investment options:

• ☑️ Stocks
• ☑️ ETFs (exchange traded funds)

So with Stash, you can invest in traditional stocks. You can also invest in ETFs, which are represented through the “investing umbrellas” we mentioned here earlier. These umbrellas are divided up based on the types of securities and/or by specific interests or causes. There are 30 umbrellas you can choose from.

While Stash’s fees are structured in a flat-fee formula ($3 or $9/month), the overall account management fees will not exceed 0.25 regardless of whether you choose to fund your account to higher levels.

However, users also bear standard fees and expenses reflected in the pricing of the ETFs. This is the “fine print” new investors, in particular, might fail to read – and this can be a costly mistake.

On their home page, Stash advertises “Investing made easy”. If you scroll down on their website, you will notice an area with an extensive amount of disclosures. If you scroll far enough and keep reading, The fine print disclosure also states that there may be additional fees associated with investing in specific ETFs.

All that to say….read the fine print closely or, well, you’ve been warned.

Betterment offers these investment options:

• ETFs (exchange traded funds)

How good is Betterment? Well, everything you do with Betterment is going to be driven by the platform’s portfolio of ETFs. ETFs are structured across a range of risk tolerance levels, from low to aggressive. You can’t invest in individual securities such as stocks with Betterment. However, you can get involved in socially responsible investing.

The ETFs include stocks (domestic and international) and bonds (domestic and international) across a range of classes. There are five basic portfolio categories or types. The entire structure that Betterment uses to invest your funds is based on MPT, or Modern Portfolio Theory.

The fee structure includes account management fees based on account balance and what are called “expense ratio fees” – fees assessed based on additional expenses associated with investments in a given portfolio. The average expense ratio fee is 0.13 percent according to various sources.

This makes Betterment cheaper from a fees perspective until you get up into the $100,000+ account balance mark.

Stash vs. Betterment: Mobile Apps 📱

Which is better – Stash or Betterment when it comes to apps? With reviews number in the tens of thousands on both counts, the two robo advisor platforms are neck-and-neck in this one area.

Happily, both platforms earn consistently high marks in their Apple and Android apps. This is especially important with Stash, of course, since the investing platform is fully app-based. Betterment also offers an online option accessible via any smart device (tablet, laptop, desktop).

Stash vs. Betterment: Final Thoughts 🎬

So, can you actually make money on Stash? Well, of course you can. But likewise, you can actually make money with Betterment as well.

Both Stash and Betterment are fiduciary agents. This means both have a legal responsibility to put user interests ahead of their own. This is important when choosing a robo advisor platform. Not all financial advisors are fiduciaries!

Both Stash and Betterment have demonstrated their commitment to longevity. While Betterment has twice the experience, this is a young industry overall and there is also something to be said for learning from those who came before.

Ultimately, if you prefer an app-based interface that lets you dig in and learn about investing on a daily basis, Stash may be just your thing. If you need or simply prefer a do-it-for-me model, Betterment is the clear choice. Ultimately, deciding which is better — Stash or Betterment — will depend on your specific financial needs.