Frec vs Wealthfront vs Betterment: Lowest BPS Under $100k

Frec and Wealthfront tie at 0.09% a year, and that is the lowest published fee in US retail direct indexing. Betterment is in this comparison because people ask about it, not because it competes: Betterment does not sell stock-level direct indexing at all, so its tax loss harvesting happens between ETFs rather than between individual companies. Below $20,000 Wealthfront is the only real option. Above it, Frec is cheaper on everything except the S&P 500, where the two are identical.

That is the answer. The rest of this article is the arithmetic behind it, including the part almost nobody runs: at what balance the fee stops eating the tax benefit. Every figure was checked against each firm's own published pages in August 2026. This is educational content, not investment advice, and none of these firms pays us anything.

Frec vs Wealthfront vs Betterment: the lowest bps, side by side

Why Betterment is not really in this race

This is the part worth getting straight first, because a three-way comparison implies three comparable products and there are only two. When we last checked betterment.com/pricing, the phrase "direct index" appeared zero times on the page. Betterment runs ETF model portfolios and harvests losses by swapping one ETF for a similar one, which is a genuine and useful service, but it is a different mechanism from owning 500 individual companies and harvesting the ones that happen to be down.

The difference is not cosmetic. In a year when the index is up but a third of its constituents are down, an ETF-level harvester sees one position that has gained and finds nothing to harvest, while a stock-level harvester sees roughly 170 loss candidates. Frec quantifies the gap in its own disclosures, claiming up to twice the losses of an ETF-to-ETF approach, defined precisely as 38.4% against 20.2% in a simulation of its S&P 500 strategy versus a strategy trading between SPY and IVV.

One correction to that same Frec footnote, since it is the source most often quoted here: Frec describes "Wealthfront and Betterment" together as "roboadvisers that utilize an ETF-to-ETF tax loss harvesting strategy." That is accurate for Betterment and for Wealthfront's classic robo portfolios, but it is not accurate for Wealthfront S&P 500 Direct, which genuinely holds the individual stocks. Lumping the two together understates Wealthfront, and Wealthfront is the one product in this comparison that undercuts Frec on minimum.

So if your requirement is pure stock-level direct indexing rather than blended ETF portfolios, Betterment is out at the first filter, whatever its fee. It remains a perfectly reasonable robo-advisor for someone who wants an allocation managed cheaply, and its 0.25% Digital tier is priced fairly for that job. Just note that on a small balance the flat $5 a month option is proportionally heavy: $60 a year on a $5,000 account is 1.2%, which is more than thirteen times what Wealthfront charges for direct indexing at the same balance.

Frec vs Wealthfront: who has the lowest bps for custom indexing?

On the S&P 500, nobody wins. Both charge exactly 0.09%. At $50,000 that is $45 a year at either firm, and any article claiming one is cheaper than the other on that specific index is comparing something else.

The split comes when you want anything other than the S&P 500. Wealthfront S&P 500 Direct sells one index, as the name says. Wealthfront's broader US Direct Indexing product requires $100,000 and costs 0.25% advisory, which puts it outside the sub-$100k question entirely. Frec sells 25 indices between 0.09% and 0.35%, including small cap, mid cap, value, growth, momentum, dividend, sector, Shariah and ADR-based international strategies. If you want to direct-index the Russell 2000 or the total US market with less than $100,000, Frec is the only one of the three that will do it.

Frec's own headline number needs the same caution as Betterment's, though. The 0.09% is one strategy out of 25, not the platform's price. CRSP US Total Market is 0.13%, Russell 2000 is 0.26%, and the most expensive strategies reach 0.35%, close to four times the advertised rate. Fourteen of the 25 cost 0.15% or more. We put every strategy with its minimum, fee and published harvest rate in one table on the Frec direct indexing breakdown.

Minimums decide more of these comparisons than fees do. Wealthfront opens at $5,000 and Frec at $20,000, rising to $50,000 for the small cap, total market, Russell and EAFE strategies. Between $5,000 and $20,000 there is exactly one stock-level direct indexing product available to a US retail investor without an advisor, and it is Wealthfront's. That is not a close call, it is the absence of an alternative.

Are there any direct indexing apps that charge less than 0.25% AUM?

Yes, two, and they are the two above. Frec and Wealthfront both come in at 0.09% for S&P 500 direct indexing, and Frec stays under 0.25% on 17 of its 25 strategies. Everything else in the US retail market sits at or above that line: Fidelity Managed FidFolios charges 0.40% for its index strategies and 0.70% for the active ones, Schwab Personalized Indexing charges 0.40% with a $100,000 minimum, and Wealthfront's own US Direct Indexing is 0.25% at $100,000.

Below the retail tier, Vanguard Personalized Indexing and Parametric Custom Core do not publish pricing at all, because they are sold through advisors and negotiated. If a comparison article quotes a fee for either one, ask where the number came from. The full field is laid out on direct indexing platforms.

What is the minimum balance for direct indexing to be worth it?

This is the question underneath all the others, and it has an arithmetic answer rather than an opinion. Direct indexing costs you the fee difference against simply owning an index fund, and pays you the after-tax value of the losses it harvests. It is worth it when the second number beats the first.

Start with a credible harvesting estimate. Providers routinely market 1% to 2% a year of tax alpha. Wealthfront's own published whitepaper, backtesting February 2015 to December 2025, produces 0.18% to 0.44% a year of account value on the US stocks portion, depending on whether your marginal rate is 18% or 44%. We use Wealthfront's range here because it is the most conservative figure published by a firm that sells the product, which makes it the honest one to plan against.

Now the fee side. A broad index ETF costs about 0.03%, so direct indexing at 0.09% costs an extra 0.06% a year, and direct indexing at 0.40% costs an extra 0.37%. Run both against the tax alpha range:

Two things fall out of that table, and the second one is the important one. First, at 0.09% direct indexing clears its own cost at every balance including $5,000, though at the bottom the gain is a few dollars a year and not worth anyone's attention. Second, at 0.40% the fee consumes essentially the whole realistic benefit at every balance. On a $100,000 account paying 0.40%, you need to land at the very top of Wealthfront's range, meaning a 44% marginal rate, just to come out $70 ahead. Land at the bottom and you are $190 worse off than owning the fund.

That is the real finding, and it reframes the minimum question. The threshold that matters is not a balance, it is a fee. Direct indexing at 9 basis points is worth doing as soon as you can meet the minimum. Direct indexing at 40 basis points needs either a high marginal rate, a genuine need for the customization, or a reason to want the account professionally managed, because the tax argument alone does not carry it. If you are buying a 0.40% product at exactly its minimum purely for tax alpha, run your own numbers before you fund it.

Two caveats keep this honest. Harvesting is mostly a deferral rather than a permanent saving: selling at a loss lowers your basis, so the gain reappears later, and the benefit is the time value of the deferred tax, plus the rate arbitrage if you harvest short-term losses against long-term gains, plus the $3,000 a year of ordinary income a net capital loss can offset. And all of it assumes you have gains to offset in the first place. If you do not, and you have already used your $3,000, a harvested loss just sits as a carryforward doing nothing this year. It is worth checking what your realized gains actually were before you plan around them, which is a question for last year's return and this year's brokerage statements rather than for a comparison table, and increasingly a job you can hand to software that reads the tax documents for you.

What is the cheapest way to do 100% direct indexing without traditional RIA fees?

Frec, if you can meet the minimum, and Wealthfront if you cannot. Both are priced at a small fraction of the 0.50% to 1.00% a traditional registered investment adviser charges to run a separately managed account, and neither requires you to talk to anyone before investing.

The word doing the work in that question is "100%". If you want your entire equity allocation held as individual stocks rather than a blend of direct indexing and ETFs, check what each product actually holds. Frec Classic is fully direct: you pick an index and hold its constituents. Wealthfront S&P 500 Direct is likewise stock-level within the S&P 500, though Wealthfront's own page lists a 0.02% to 0.09% expense ratio line alongside the 0.09% management fee, so ask what that covers before you assume 0.09% is the all-in number. Betterment's portfolios are ETFs throughout, so a 100% direct requirement rules it out by definition.

Frec's structure is the closest thing to a self-directed answer here. It operates through Frec Securities LLC as broker-dealer and Frec Advisers LLC as registered investment adviser, and the product is built so that you set the dividend routing, the trading restrictions, the tracking preference and the exclusions yourself, then watch the individual trades. That is a genuinely different relationship from handing $100,000 to a portfolio manager, and it is the reason the fee can be 0.09% at all. We go through the trade-offs of running it yourself in can you do direct indexing yourself.

The strategy you pick matters more than the platform you pick

Here is something the two-way and three-way comparisons all miss. Frec publishes a historical harvest rate for each of its 25 strategies, and the spread is enormous: 55% for Russell 2000, 48% for CRSP US Small Cap Growth, 44% for CRSP US Small Cap, down to 16% for its semiconductor strategy. The S&P 500 strategy that both Frec and Wealthfront sell at 0.09%, the one this whole comparison revolves around, is listed at 25%.

The mechanism is volatility. Small cap indices hold companies whose prices move around far more, so in any given year many more individual positions sit below their purchase price, which is precisely what a harvesting engine needs. It follows that if tax alpha is genuinely your reason for direct indexing, paying Frec 0.15% for CRSP US Small Cap Growth to harvest 48% is a better trade than paying either firm 0.09% for the S&P 500 to harvest 25%. The catch is that most of the high-harvest strategies require $50,000 rather than $20,000.

Which means the honest sequence is: decide what you want to hold, then pick the platform that sells it at the lowest price, rather than picking the cheapest platform and taking whatever index it happens to offer. Under $20,000 that sequence has one answer regardless, because only Wealthfront is available. Above $50,000 it is worth actually looking at how a small cap construction has behaved against the S&P 500 over a full cycle, including the drawdowns, before you commit to the higher-harvesting version. That comparison takes a few minutes to backtest against real market history, and it costs nothing to run before the money moves.

The wash sale problem all three share

No provider in this comparison can see the accounts it does not custody. The wash sale rule under IRC section 1091 covers a 61 day window, the day of the sale plus 30 days either side, and it applies across all of your accounts rather than per account. So your direct indexing account harvests a loss on the tenth, your automatic 401(k) contribution buys a substantially identical S&P 500 fund on the fifteenth, and the loss is disallowed.

In a taxable account that is usually only a deferral, because the disallowed loss is added to the basis of the replacement shares. In a retirement account it is not. Under IRS Revenue Ruling 2008-5, a loss disallowed because the replacement was bought inside an IRA is forfeited permanently, and your IRA basis is not stepped up to compensate. Anyone running automatic contributions into a broad market fund while harvesting the same market in a taxable account should look at the two schedules together before they start, at any of these three firms.

So which one should you use?

Under $20,000, Wealthfront S&P 500 Direct, because nothing else is available to you. From $20,000, Frec if you want an index other than the S&P 500, more control over exclusions and settings, or the higher-harvesting small cap strategies; Wealthfront if you want the S&P 500 specifically and prefer a robo-advisor's simpler surface for the same 0.09%. Betterment if you actually want a managed ETF allocation rather than direct indexing, in which case this was never the right comparison.

And none of them if the account is a retirement account, where there are no capital gains to harvest and the entire tax argument disappears, or if you would be funding at a minimum purely to chase tax alpha that the table above prices at tens of dollars a year. Direct indexing is a real advantage at 9 basis points and a much more marginal one at 40. Knowing which side of that line you are buying on is most of the decision.

If you want the individual matchups in more depth, we work through Frec vs Wealthfront direct indexing on fees and fractional shares, Frec vs Schwab Personalized Indexing on the 0.09% against 0.40% question, and what the research really supports on direct indexing tax loss harvesting.