Updated 2026-03-20
Principal vs Betterment 401(k) Comparison
Compare Principal Financial (#6, 8.3/10) and Betterment at Work (#20, 6.7/10) side by side across fees, ratings, features, and investment options.
Overall Comparison
| Feature | Principal | Betterment |
|---|---|---|
| Overall Score | 8.3/10 | 6.7/10 |
| Rank | #6 | #20 |
| AUM | $700 billion | $45 billion |
| Participants | 6 million | 400,000 |
| Plan Sponsors | 46,000+ | 1,500+ |
| Founded | 1879 | 2010 |
Ratings Comparison
| Category | Principal | Betterment |
|---|---|---|
| Fees & Costs | 3.5/5 | 4.0/5 |
| Investment Options | 3.8/5 | 3.2/5 |
| Customer Service | 4.2/5 | 4.0/5 |
| Mobile App | 3.9/5 | 4.4/5 |
Fee Comparison
| Fee Type | Principal | Betterment |
|---|---|---|
| Admin Fees | $1,500 - $5,000/year for small plans | $150/month + $6/employee |
| Expense Ratios | 0.25% - 1.5% | 0.03% - 0.15% |
| Trading Fees | Varies | $0 |
| Advisory Fees | 0.40% - 1.0% | Included in platform fee |
Principal Strengths
- Excellent for small business 401(k) plans
- Bundled benefits solutions
- Strong customer service for plan sponsors
- SimpleInvest managed portfolios
Betterment Strengths
- Fully automated portfolio management
- Tax-loss harvesting and tax-smart strategies
- Clean, modern user interface
- Low-cost ETF portfolios
Rollover, Loans & Withdrawals
| Feature | Principal | Betterment |
|---|---|---|
| Rollover Platform | Principal.com | Betterment App |
| Loans Available | Yes | No |
| Withdrawal Methods | Online via Principal.com, Phone (800-547-7754) | Online via Betterment app, Email support |
| Distribution Options | Lump sum, Partial withdrawal, Installment payments, Annuity purchase, Rollover to IRA | Lump sum, Partial withdrawal, Rollover to IRA, Required Minimum Distributions |
Which Should You Choose?
Choose Principal if you want:
- Small businesses
- Bundled benefit seekers
- Companies wanting insurance integration
Choose Betterment if you want:
- Tech companies
- Startups
- Hands-off investors
- ESG-conscious employers
Our Verdict: Principal vs Betterment
Principal Financial wins this comparison with a score of 8.3/10 vs 6.7/10. Principal excels with excellent for small business 401(k) plans, making it the stronger choice for most investors in this matchup. However, the best choice ultimately depends on your specific needs, employer plan availability, and investment preferences.
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Principal vs Betterment: Complete 401(k) Comparison for 2026
Choosing between Principal Financial and Betterment at Work for your 401(k) is an important decision that affects your retirement savings. Principal offers small business focus while Betterment is known for robo-advisor. In terms of fees, Principal charges 0.25% - 1.5% expense ratios compared to Betterment's 0.03% - 0.15%. Principal manages $700 billion in assets and serves 6 million participants, while Betterment has $45 billion AUM and 400,000 participants.
Key Differences: Principal vs Betterment
When comparing Principal and Betterment, consider their core strengths: Principal excels with excellent for small business 401(k) plans, while Betterment stands out for fully automated portfolio management. Both providers offer a wide range of investment options including target-date funds, index funds, and managed accounts. Principal's customer service rating is 4.2/5 compared to Betterment's 4.0/5. For mobile experience, Principal scores 3.9/5 while Betterment scores 4.4/5.
Which Provider is Right for You?
Choose Principal if you prioritize small businesses. Choose Betterment if you're looking for tech companies. Your decision should also consider your employer's plan availability, fee sensitivity, desired investment options, and customer service expectations. For detailed reviews, visit our individual Principal and Betterment provider pages.
Frequently Asked Questions
Principal Financial scores higher in our 2026 rankings with 8.3/10. Principal is best for small businesses, while Betterment is best for tech companies. The right choice depends on your employer's plan and your priorities.
Principal charges expense ratios of 0.25% - 1.5% with admin fees of $1,500 - $5,000/year for small plans. Betterment charges 0.03% - 0.15% expense ratios with admin fees of $150/month + $6/employee. Principal's fees rating is 3.5/5 compared to Betterment's 4.0/5.
Yes, you can roll over between Principal and Betterment. Principal uses Principal.com for rollovers, while Betterment uses Betterment App. A direct rollover avoids mandatory tax withholding. Contact your new provider to initiate the transfer.
Principal offers 401(k) loans. Betterment does not offer 401(k) loans.
Principal scores 3.8/5 for investment options, while Betterment scores 3.2/5. Both offer target-date funds, index funds, and managed accounts. Principal's investment options include Mutual Funds, Target Date Funds, Stable Value. Betterment offers ETF Portfolios, Target Date Portfolios, Socially Responsible Portfolios.
For small businesses, consider plan minimums and per-participant costs. Principal is best for small businesses, bundled benefit seekers, companies wanting insurance integration. Betterment is best for tech companies, startups, hands-off investors, esg-conscious employers. Compare admin fees: Principal charges $1,500 - $5,000/year for small plans vs Betterment's $150/month + $6/employee.
Pavlo Pyskunov
Managing Director & Investment Fund Director
Pavlo Pyskunov analyzes employer-sponsored retirement plans using IRS publications and DOL Form 5500 filings, helping workers maximize their 401(k) savings through data-driven guidance.
Last updated: 2026-03-20