Betterment Direct Indexing pricing, Betterment tax loss harvesting, and who ships direct indexing today.
Betterment has announced direct indexing and not yet launched it. Here is exactly what it sells now, what its tax loss harvesting does for 0.25%, and what the same $100,000 costs where stock-level direct indexing is already live.
The backtest did not run just now. Tap Backtest it to try again.
Educational only · Never places a trade
In short
Betterment does not offer direct indexing yet. In September 2026 its advisor platform describes it as "available later this year", with three US market sleeves, no minimum for advised accounts and no add-on fee, and its retail site lists it under "Coming next". What Betterment sells today is ETF portfolios with free, opt-in tax loss harvesting at 0.25% a year (0.65% for Premium, which needs $100,000), plus Custom portfolios where you pick stocks and ETFs for the same 0.25%. If you want stock-level harvesting now, Wealthfront S&P 500 Direct and Frec both charge 0.09%, which is $90 a year on $100,000 against $250 at Betterment.
What Betterment sells
Six Betterment products, and the two that are still announcements
Most reviews either skip direct indexing or repeat the 2025 launch promise as if it happened. It has not. This is the whole lineup as Betterment's own pages describe it, including the two rows people are actually searching for.
| Product | Status | Annual fee | Minimum | What it holds | Tax loss harvesting |
|---|---|---|---|---|---|
| Automated investing, Digital plan | Retail, live | $5 a month under $24,000 without $200 a month of deposits, otherwise 0.25% | None | ETFs | Included, you switch it on |
| Premium | Retail, live | 0.65% | $100,000 | ETFs | Included |
| Custom portfolios | Retail, individual taxable accounts only | 0.25% wrap fee | None published | Stocks and ETFs you pick, 5,500+ securities | Included, ETF picks paired with similar funds |
| Self-directed investing | Retail, live | No management fee, no commissions | None | Stocks and ETFs you trade yourself | Not automated |
| Direct indexing, advisor channel | Announced, "later this year" | Inside the platform fee, no add-on | None for advised accounts | Three US market sleeves, sampled | Stock level |
| Direct indexing, retail automated investing | Announced, "coming soon" | Not published | Not published | Individual stocks of an index | Stock level |
The timeline explains the confusion. Betterment bought Rowboat Advisors, a direct indexing and tax optimization software firm, in May 2025. In October 2025 a Betterment product executive told WealthManagement.com that direct indexing would come "in the first half of the year", without high dollar minimums and without requiring whole shares. The first half of 2026 came and went. Betterment's advisor update dated September 1, 2026 says it "previewed direct indexing to pull back the curtain and show you what's coming before the solution is available later this year", and the navigation on that page still reads "Direct indexing coming soon".
On the retail side the wording is softer again. A January 2026 Betterment article says direct indexing and fully paid securities lending are "coming soon to automated investing", and the Custom portfolios article, updated in August 2026, closes with a section titled "Coming next: direct indexing". Neither gives a date or a retail fee. The advisor version, when it lands, is described as a sampling-based portfolio, "aiming to find the most efficient number of positions at a given dollar threshold", with security exclusions built in.
Betterment tax loss harvesting
How Betterment tax loss harvesting works, and where it stops
Betterment's harvesting is included in the advisory fee and is off until you turn it on. The path is Settings, then Accounts, then the TLH section under your first taxable investing account. Once enabled it covers every taxable account you hold at Betterment. It does nothing in an IRA or 401(k), because losses inside a tax-advantaged account have no tax value. If your spouse also has a taxable Betterment account, Betterment recommends linking the two as a taxpayer relationship so harvesting in one account does not trigger a wash sale through a purchase in the other.
The mechanism is fund-level. When an ETF in your portfolio trades below your cost, Betterment sells it, books the loss and buys a similar but not identical fund so the allocation stays on target. Custom portfolios extend this by pairing the ETFs you pick with similar funds where one exists. That works, and it is a genuine reason Betterment's fee often pays for itself: Betterment says nearly 70% of customers using harvesting had their taxable advisory fee covered by likely tax savings, measured on 2022 to 2023 retail taxable accounts.
The ceiling is the fund wrapper. A total market ETF that is up for the year shows no loss to harvest even when a third of the stocks inside it are down. A direct indexing account owns those stocks individually, so each one can be harvested on its own. Wealthfront's ten-year whitepaper puts a number on the gap: a realized harvesting yield of 3.61% a year for stock-level harvesting against 2.60% for ETF-level harvesting, February 2015 to December 2025. That one point a year, at a 24% to 40% tax rate, is the whole commercial case for direct indexing, and it is what Betterment customers are waiting for.
Betterment is also unusually candid about when not to harvest at all. Its own help article says it does not recommend the strategy if your future tax bracket will be higher than your current one, if you can realize capital gains at a 0% rate today, if your household's taxable investments are scattered across several brokers, or if you plan to withdraw a large chunk of taxable assets soon. All four apply equally to direct indexing, which is why the question "is it worth it" has a personal answer rather than a universal one. We put the fee and the harvest on the same axis in our direct indexing calculator.
Betterment pricing against direct indexers
What the same $100,000 costs for a year, Betterment against the platforms that ship direct indexing
Each provider's own published rate applied to one balance. The Betterment rows buy fund-level harvesting; every other row buys stock-level harvesting.
| Provider and product | Minimum | Annual fee | One year on $100,000 | Harvesting |
|---|---|---|---|---|
| Betterment Digital, ETF portfolio | $0 | 0.25% | $250 | Fund-level harvesting only |
| Betterment Premium, ETF portfolio | $100,000 | 0.65% | $650 | Fund-level harvesting plus CFP access |
| Wealthfront S&P 500 Direct | $5,000 | 0.09% | $90 | Stock-level, S&P 500 |
| Frec Classic, S&P 500 strategy | $20,000 | 0.09% | $90 | Stock-level, 25 strategies to 0.35% |
| Fidelity Managed FidFolios | $5,000 to invest | 0.40% | $400 | Stock-level, gross fee reduced by a credit |
| Schwab Personalized Indexing | $100,000 | 0.40% | $400 | Stock-level, 0.35% above $2M |
Read the table two ways. On fee alone, Betterment's 0.25% sits between the 0.09% self-service direct indexers and the 0.40% brokerage programs at Fidelity and Schwab, and Premium at 0.65% is the most expensive row by a wide margin because it bundles advice from CFP professionals. On what the fee buys, Betterment is the only row still harvesting at the fund level. Betterment's pricing does fall at scale: 0.15% on the part of a balance between $1 million and $2 million, and 0.10% above $2 million, for Digital and Premium alike. The detail on the two cheapest rows is on our Wealthfront direct indexing fees and Frec direct indexing review pages, and every provider sits in one table on direct indexing platforms compared.
Before you move money, price the exit. Betterment charges $75 for each investing account transferred to another company, and it holds fractional shares, which the ACATS system generally cannot move. Whatever does not transfer in kind is sold, and in a taxable account that has been rising, selling realizes gains. That cost can be larger than several years of fee savings, and it lands in one tax year. Our table of ACATS transfer fees by broker covers what each receiving platform charges or reimburses.
Betterment Custom portfolios
Custom portfolios are the nearest Betterment gets to direct indexing right now
Custom portfolios are the product Betterment points people to while direct indexing is pending. You start from a Betterment template or from scratch, search a library of more than 5,500 ETFs and individual stocks, set the allocation, and Betterment handles the trading, rebalancing, dividend reinvestment and harvesting. The fee is the same 0.25% wrap fee as Betterment's other managed accounts, never charged on cash. For now it is limited to individual taxable accounts; Betterment says joint and trust accounts and IRAs will follow.
The difference from direct indexing is who does the index work. A direct indexing account starts from a published index, holds a large sample of its members at index weights, and keeps tracking error low while it harvests. A Custom portfolio starts from whatever you type in. If you want thirty stocks at weights you chose, that is exactly what you get, and it is managed well. If you want something that behaves like the S&P 500 minus your employer's stock, you are the one deciding which names and weights get you there, and Betterment's portfolio analysis shows sector and country breakdowns rather than a history of how that construction would have tracked the index. Betterment says forward projections and historical backtesting are on the way, but they are not in the product today.
That missing step is the one we built for. In Indexes you choose members, pick a weighting rule, set a rebalance schedule and backtest the whole construction against the S&P 500 before a dollar moves. You can then enter the result in a Betterment Custom portfolio, or take it to a direct indexer and use it to judge how far its exclusions pull you from the benchmark. If a specific stock has to stay out of the index for compliance or concentration reasons, our direct indexing exclusions comparison shows how many names each provider lets you restrict.
Wait for Betterment or switch
A straight answer for the four situations people arrive with
You hold a Betterment taxable account with gains
Wait, and make sure harvesting is switched on. Moving a rising account costs $75 plus the tax on anything sold in transit, and Betterment's direct indexing is priced into the fee you already pay if it arrives the way the advisor version is described.
You are opening a new taxable account for direct indexing
Do not open it at Betterment to wait. New money has no exit cost, and Wealthfront S&P 500 Direct from $5,000 or Frec from $20,000 give you stock-level harvesting at 0.09% from the first loss.
You pay 0.65% for Premium and never call the CFP
Move to the Digital plan first. You keep the automated portfolio and the same harvesting at 0.25%, with no transfer and no tax event. That alone saves $2,000 a year on $500,000.
You want an index of your own design
Design and backtest it first, then choose where it lives. A Custom portfolio can hold it at 0.25%; a direct indexer can approximate it with exclusions. Either way the construction is yours to decide.
Questions people actually search
Betterment direct indexing and tax loss harvesting, answered
Does Betterment offer direct indexing?
Not yet. In September 2026 Betterment still describes direct indexing as coming: its advisor site says the solution will be "available later this year" with three US market sleeves, and its retail custom portfolios page lists direct indexing under "Coming next". Today Betterment's managed portfolios hold ETFs, plus Custom portfolios where you choose stocks and ETFs yourself.
When will Betterment launch direct indexing?
Betterment has not published a date. It acquired the direct indexing firm Rowboat Advisors in May 2025 and told the trade press in October 2025 that direct indexing would arrive in the first half of 2026. That window passed. Its September 2026 advisor update says "later this year" for advisors, and retail automated investing is only described as "coming soon".
How much will Betterment direct indexing cost?
For advisors, Betterment says it will be included in the platform fee with no add-on cost and no minimum asset size for advised accounts. For retail customers there is no published fee. If it follows the Custom portfolios precedent, it would sit inside the 0.25% wrap fee, but that is our inference, not a Betterment statement.
How does Betterment tax loss harvesting work?
Betterment watches your taxable account for ETFs trading below what you paid, sells them to book the loss, and buys a similar but different fund so your allocation stays close to target. It runs at the fund level because the portfolios hold ETFs. You switch it on under Settings, Accounts, TLH, and it then applies to all your taxable accounts.
Is Betterment tax loss harvesting worth it?
It is worth it if you have realized gains to offset, or can use the $3,000 a year of ordinary income deduction, and it costs nothing extra. Betterment itself says not to use it if your future bracket will be higher, if you can realize gains at 0%, if your taxable money is spread across brokers, or if you plan a large withdrawal soon.
Is there a Betterment tax loss harvesting fee?
No separate fee. Harvesting is included in the Digital plan at 0.25% a year (or $5 a month on small balances) and in Premium at 0.65%. The cost is the advisory fee itself. Betterment states that nearly 70% of customers using harvesting had their taxable advisory fee covered by likely tax savings, a figure it bases on 2022 to 2023 retail taxable accounts.
Betterment vs Wealthfront tax loss harvesting: which harvests more?
Wealthfront, above $100,000 or in its S&P 500 Direct account, because it harvests individual stocks rather than funds. Wealthfront's own ten-year whitepaper measured a harvesting yield of 3.61% a year for stock-level harvesting against 2.60% for ETF-level harvesting. Betterment is ETF-level until its direct indexing ships, and both charge 0.25% for the managed portfolio.
Should I switch from Betterment Premium to Frec to cut wealth management fees?
Only if you do not use the CFP access. Premium costs 0.65% on balances under $1 million, which is $3,250 a year on $500,000. Frec Classic costs 0.09% on its S&P 500 strategy, or $450. The switch is not free: Betterment charges $75 per account transferred out, and fractional shares that cannot move by ACATS are sold, which can realize gains.
Frec vs Wealthfront vs Betterment: which has the lowest bps for custom indexing?
Frec and Wealthfront tie at 9 basis points for S&P 500 direct indexing. Betterment's lowest managed rate is 25 basis points, and for that you get an ETF portfolio or a Custom portfolio you assemble yourself rather than stock-level direct indexing. Frec's 9 bps is its floor: its 25 strategies run from 0.09% to 0.35%.
Can I build my own index at Betterment?
Partly. A Custom portfolio lets you pick stocks and ETFs and set their weights, and Betterment then rebalances and harvests. What it does not do is help you decide the weights, or show you how the construction would have performed against the S&P 500 before you fund it. That is the design step we built Indexes for.
Sources and scope
Where every figure comes from, and what this site is
Fees, minimums, the $75 transfer fee and the $1 million and $2 million tiers come from Betterment's help article "What are Betterment's fees?". The Custom portfolio fee comes from "What does a Custom portfolio cost?". Launch wording comes from Betterment's advisor article on portfolio management for high-growth RIAs, its Custom portfolios article and its article on automating your investing. Harvesting steps and the four do-not-harvest cases come from Betterment's help article on turning on Tax Loss Harvesting. Competitor rates come from Wealthfront's, Frec's, Fidelity's and Schwab's own pages and filings, and the harvesting yields from Wealthfront's stock-level tax loss harvesting whitepaper.
Indexes is analysis software. We are not affiliated with Betterment or any provider named here, we are not a registered investment adviser, and we never hold assets or place trades. Nothing on this page is investment or tax advice. Betterment's product is changing this year, so confirm current terms with Betterment before you act on any row above. If you are comparing a broader set of managed options, our tax loss harvesting software comparison covers twelve providers, and the Betterment alternatives page sets out the switching options side by side.
Know the index you want before Betterment, or anyone else, holds it for you
Pick the members, set the weights, backtest the construction against the S&P 500 and track it from there. No account to fund and no trade ever placed.