Betterment charges its clients one advisory fee and no commissions, but it doesn’t fit the strict meaning of fee-only. Its own filings describe other income tied to clients’ accounts: payments from banks on clients’ cash, a share of payments for order flow and securities lending earned by its affiliated broker, and support payments from some outside portfolio managers. On $1 million, Betterment Digital costs $2,500 a year and Premium $6,500, against a median $4,500 for a flat-fee planner.
Fee-only means the client is the only one paying: no commissions and no other payments tied to the products or accounts you’re advised into, to the firm or its related companies. Betterment comes closer than most large firms, and its filings say exactly where the other money comes from.
How Betterment is paid
The advice comes from Betterment LLC (CRD 149117), an SEC-registered investment adviser. Its Form ADV Part 1, filed October 27, 2026, reports pay as a percentage of assets (Item 5E). Commissions aren’t checked, and under other business (Item 6A) Betterment isn’t a broker-dealer or an insurance agent. Item 7A reports one kind of related business: a broker-dealer.
That broker is MTG LLC, which does business as Betterment Securities. Every managed account is held there, and Betterment charges a single wrap fee that covers advice, trading and custody. The Form CRS (October 27, 2026) adds that fund fees are separate and “Betterment does not receive any portion of such fees.” No fund manager appears among its related companies.
On the people, the CRS says all employees get a base salary, some get a discretionary bonus and equity options in the parent company, and “no compensation is based on the performance or selection of specific securities.” Some teams are paid more for bringing in assets: the Licensed Concierge team, which helps clients with transfers such as rollovers, receives “incentive compensation based on revenue from assets.”
What else the filings disclose
Cash. Uninvested cash is swept to FDIC-insured accounts at program banks. Betterment receives payments from those banks, “set at Betterment’s discretion up to the maximum each bank is willing to pay,” and those payments “reduce the interest paid to clients.” Only Cash Reserve balances earn interest; cash inside managed portfolios doesn’t. Betterment says it targets a small cash allocation, generally 0.5% of a portfolio, and waives its advisory fee on swept cash.
Trading and lending. Betterment Securities receives part of the payments for order flow that its clearing firm, Apex, earns on Betterment’s trades. The CRS calls this a conflict, since the payments rise with trading volume. Betterment Securities also takes a share of income from Apex’s securities lending program, which clients can join to earn lending income themselves.
Other payments. The brochure lists support payments from some third-party portfolio managers whose strategies appear on the platform, and a one-time payment from Ascensus for each new 529 account opened in certain plans. It also pays bloggers, podcasters and other promoters for referrals.
A regulator’s order. On April 18, 2023, the SEC found that between 2016 and 2019 Betterment misstated or left out material information about its tax-loss harvesting service. From January 2016 it scanned accounts on alternating days while saying in some materials that it scanned daily, and two coding errors stopped harvesting for some clients. The SEC found the issues hurt over 25,000 client accounts. Without admitting or denying the findings, Betterment was censured and agreed to pay a $9 million penalty, to be distributed to affected clients.
What Betterment costs
The published fees, from Betterment’s pricing page and brochure:
| Plan | Minimum | Advisory fee per year | Notes |
|---|---|---|---|
| Digital | None to open; $10 deposit | 0.25% | $5 a month instead, under $24,000, unless you deposit $200 or more a month |
| Premium | $100,000 | 0.65% on the first $1 million | Adds access to financial consultants by phone, video, chat or email |
| Self-directed investing | None | No advisory fee | You pick the stocks and funds |
Both plans get a discount on larger balances: the rate falls by 0.10 percentage points on the part between $1 million and $2 million, and by 0.15 points above $2 million. Premium’s extra 0.40% isn’t charged above $1 million. Fund expenses come on top, and Betterment Securities charges $75 to transfer an account out ($100 from December 1, 2026).
Worked out on those rates, before fund expenses:
- $500,000: Digital $1,250, Premium $3,250.
- $1 million: Digital $2,500, Premium $6,500.
- $2 million: Digital $4,000, Premium $8,000.
Among fee-only firms that publish prices, ongoing planning has a median of $4,500 a year (middle half $2,400 to $7,200), and the median percentage fee is 1%. Digital costs far less than either because it is mostly software. Premium sits between the two, and the services differ: Premium gives you access to a team of consultants, while a planner’s fee usually buys one person who works on taxes, retirement income and insurance as well as the portfolio. Compare what’s included, not only the price. Our guide to robo-advisors vs financial advisors works through that choice.
Who Betterment may suit
- People who want a low-cost, automated portfolio of ETFs, with tax-loss harvesting and rebalancing, and are comfortable with software doing the work.
- Savers starting small: there’s no minimum to open, and the fee is a flat $5 a month until the balance or monthly deposits reach Betterment’s thresholds.
- Households with $100,000 or more who want occasional access to a consultant without paying a planner’s full fee (Premium).
It fits less well if you want one named advisor who knows your whole situation, or a firm whose only income is what you pay. A common alternative is to keep a low-cost portfolio and pay a fee-only planner for advice: a one-time plan has a median of $2,000, and an hourly planner $300 an hour.
How to check it yourself
- Read Betterment’s Form CRS and its brochure on the SEC’s adviser search. Item 14 of the brochure covers the bank and order-flow payments.
- In Form ADV Part 1, check Item 5E (how Betterment is paid), Item 6A (other businesses) and Item 7A (related companies). Our guide to telling whether an advisor is fee-only shows where each one is.
- Look up Betterment Securities on BrokerCheck for the brokerage side.
- Ask: “How much of my account sits in cash, and what does Betterment earn on it?” and “Who will I talk to, and how are they paid?” More in our questions to ask a financial advisor.
For how Betterment compares with other services, see virtual financial advisors, is Vanguard fee-only and fee-only vs fee-based vs commission.
Compare similar firms
Other fund companies and digital advisers we’ve checked against the fee-only definition: Vanguard, Fidelity, Schwab, Wealthfront, Empower, Facet, TIAA. See all 50 firms.