BlackRock vs. Betterment: what's the difference?

1 min readLast updated May 31, 2024by Unbiased team

We explore the fundamental differences between BlackRock and Betterment, including their services, pros and cons, fees, and investment strategies.

Summary 

  • BlackRock is one of the world's largest asset management companies. 

  • Betterment is an affordable robo-advisor option with a range of excellent tools and features. 

  • Both BlackRock and Betterment are known for their innovative, technologically forward financial service offerings.  

  • BlackRock and Betterment offer vastly different services with minimal overlapping in client types. 

BlackRock vs. Betterment: What's the difference? 

BlackRock is a global investment juggernaut that provides a range of services, including asset management, risk management, and advisory services. It manages trillions of dollars in assets and caters to a diverse client base, including institutions, governments, and individual investors.  

BlackRock is also known for its focus on technology and innovation, particularly through its investment platform, Aladdin, which helps clients manage risks and make informed investment decisions.  

Betterment is a top online financial advisor and robo-advisory firm specializing in automated, goal-based investing services. It aims to make investing accessible and straightforward by offering personalized financial advice and portfolio management through its user-friendly digital platform.  

Betterment financial services employ advanced algorithms to create and manage diversified investment portfolios tailored to individual financial goals, such as retirement planning or wealth building. It is a popular choice for both new and experienced investors. 

What are BlackRock and Betterment's specific investment strategies? 

BlackRock financial advisors are best known for their asset and portfolio management services. It offers an array of investment products, including mutual funds, exchange-traded funds (ETFs), hedge funds, and separately managed accounts. BlackRock manages various asset classes, including equities, fixed income, multi-asset, and alternatives. 

BlackRock also provides advisory services and comprehensive risk management solutions for institutional clients, governments, and corporations. The firm is a leader in leveraging technology in investment management. Institutions use its Aladdin platform for risk analysis and portfolio management. Additionally, BlackRock offers a range of alternative investment strategies, such as real estate private equity, infrastructure, and renewable energy investments. 

Betterment offers automated, goal-based investment services to individuals. Betterment financial advisors create and manage diversified portfolios on a client's behalf according to their financial objectives. It also provides personalized investment advice and portfolio management via its digital platform. 

The firm invests clients' money in low-cost exchange-traded funds (ETFs) across various asset classes, including stocks and bonds. Betterment financial services also include retirement planning, cash management accounts, and guided crypto investing. In addition, the company provides tax-efficient investment strategies, such as tax-loss harvesting, to minimize tax liabilities and maximize after-tax returns.

What fees can I expect from BlackRock and Betterment? 

When working with investment fees, such as trading fees, commissions, inactivity fees, and a number of other charges, there are always fees involved. 

BlackRock fees vary depending on the type of account an investor opens. Most of its revenue comes from investment advisory and administration charges. As a fee-based firm, different fees that may apply include a management fee calculated as a percentage of AUM, wrap fees charged quarterly or monthly, hourly consultation fees, custodial charges, and commissions.  

Betterment fees depend on the firm’s two service levels: Betterment Digital and Betterment Premium. The Digital account costs $4 per month but switches to a 0.25% flat fee if clients have $20,000 across all their accounts. Clients on the basic service level can speak to financial advisors for a one-off consultation fee ranging between $299 and $399. 

The Premium account requires a $100,000 minimum across all accounts for a 0.4% annual fee. It also gives clients unlimited, free consultations with Betterment financial advisors. Crypto investing incurs a 1% charge of the account balance.  

Is BlackRock or Betterment better? 

Both BlackRock and Betterment are excellent investment firms, but each has pros and cons. 

Pros of BlackRock 

  • BlackRock offers a diverse range of investment options. A diverse portfolio minimizes risk for private and public investors. 

  • BlackRock is the global market leader in AUM. 

  • There is more chance of increased profits because of BlackRock's focus on an asset's long-term potential. 

Cons of BlackRock 

  • BlackRock is more suited to institutional clients than individual investors. 

  • The company has had numerous disciplinary and conflict alerts. 

  • BlackRock charges commissions on certain products and services, which can lead to conflicts of interest between BlackRock financial advisors and their clients. 

Pros of Betterment 

  • Betterment offers low advisory fees, making investment accessible to people from all walks of life. 

  • It provides options for different goals and portfolios. 

  • The firm offers tax management strategies. 

Cons of Betterment 

  • Professional advice sessions are relatively expensive for clients on the lower service tier. 

  • Betterment has no direct indexing options. 

Betterment or BlackRock: Which should I choose? 

The investment firm you choose depends on your circumstances and financial objectives. Aside from typical factors like BlackRock’s fees, services, and investment strategies differing from Betterment’s, clients should also consider the following questions: 

How do Betterment and BlackRock remain competitive and adapt to change? 

Betterment remains competitive because its fees are low and accessible to everyone. It offers various ESG (environmental, social, and governance) options and Socially Responsible Investing (SRI) portfolios. In addition, guided crypto investing is also available.  

BlackRock financial advisors use AI and machine learning to enhance portfolio management and risk assessment. They also have a client-centric approach and provide tailored solutions to meet their clients' specific needs. BlackRock frequently acquires companies that enhance its capabilities, such as fintech firms, asset managers, and data analytics companies. They also invest in Bitcoin mining. 

Which platform gives better customer service and support? 

BlackRock customer support is available via email and phone and through a customer service portal on its website. 

Betterment customer support can be contacted via phone and email. In addition, it will answer queries via social media. The downside of Betterment is that face-to-face customer service consultations are only available to some due to the costs involved. 

Can I access my Betterment or BlackRock accounts through their websites and mobile apps? 

Yes, both companies allow account access via their websites and mobile apps. 

Get expert financial advice 

Betterment and BlackRock are vastly different investment firms. They have different structures, with BlackRock’s financial services more suited to institutional clients. Conversely, Betterment is a robo-advisory service suited to private investors from all walks of life. These companies' fees and services are indicative of their investment strategies.  

For expert financial advice, let Unbiased match you with an SEC-regulated financial advisor.  

Writers

Unbiased team

Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.