A Small Monthly Fee Can Be a Large Percentage
Five dollars a month sounds smaller than 0.25% a year. On a $1,000 account, that monthly charge becomes $60 a year, or 6% of the balance before the investments gain or lose anything.
Betterment charges $5 a month when eligible household investing balances are below $24,000 and qualifying recurring deposits total less than $200 a month. At $10,000, the same $60 annual charge equals 0.60%. At $24,000, a 0.25% annual fee also equals $60.
Annual Digital Investing Fees at Four Balances
Putting every published rate into annual dollars makes the comparison easier to see.
| Provider | $1,000 | $10,000 | $25,000 | $100,000 |
|---|---|---|---|---|
| Fidelity Go | $0 | $0 | $87.50 | $350 |
| Vanguard Digital Advisor | About $1.50 to $1.60 | About $15 to $16 | About $37.50 to $40 | About $150 to $160 |
| Wealthfront | $2.50 | $25 | $62.50 | $250 |
| Betterment | $60 | $60 | $62.50 | $250 |
| E*TRADE Core Portfolios | $3 | $30 | $75 | $300 |
| Merrill Guided Investing | $4.50 | $45 | $112.50 | $450 |
| Schwab Intelligent Portfolios | Below minimum | $0 | $0 | $0 |
The Betterment examples assume the account does not receive at least $200 in qualifying monthly recurring deposits. Vanguard publishes an approximate all-index net advisory cost. Schwab requires $5,000 and charges no direct advisory fee. Promotions are excluded.
Fidelity Go Has a Fee Cliff at $25,000
Fidelity Go charges no advisory fee below $25,000. When the balance reaches $25,000, the published 0.35% fee applies and the annual advisory cost becomes $87.50.
That does not make the service worse at $25,000. It changes the comparison. The investor is now paying more than Vanguard or Wealthfront. The cost also exceeds Betterment's percentage plan and E*TRADE on the same balance.
A Zero Advisory Fee Can Still Cost Something
Schwab Intelligent Portfolios charges no advisory fee or program commission. Every portfolio still holds cash at Schwab Bank, and Schwab earns income from that cash. The investor also pays the expenses inside the exchange-traded funds.
The indirect cost depends on the cash allocation and the interest available elsewhere. It cannot be reduced to one fixed number without the actual portfolio and current rates.
Fund Expenses Sit Under the Program Fee
An advisory fee pays for the managed service. It does not automatically include every cost inside the investments.
Exchange-traded funds and mutual funds carry their own expense ratios. Some providers use affiliated funds or earn money from other parts of the account. A useful comparison checks the program fee and fund expenses separately. Cash, transfer costs and provider conflicts need their own review.
The Lowest Digital Investing Fee Still Has to Fit the Account
- Calculate the annual program fee at the balance you expect to maintain.
- Add the fund expenses and any flat account or transfer charges.
- Check the minimum and account type. Then review tax tools, support and required cash.
- Read the current provider terms before moving or funding the account.
A cheaper account that cannot hold the right account type or provide the help you need is not the cheaper decision. The useful number is the total cost of the service that actually fits.