By Claire Boyte-White | June 20, 2018
Betterment is an online, robo-based portfolio brokerage with a human touch, focusing on providing individualized investments with modern tools.
Jon Stein founded Betterment, the first publicly available robo-advisor, in 2008. The motive was to create the most customer friendly investment platform in the world. Unlike some robo-advisor brokerages, Betterment has no do-it-yourself trading platforms, only professionally built portfolios. Betterment's focus on personalization means no two investors will have quite the same investment mix. Betterment offers an automated investment product that feels more like an old-school brokerage relationship, but with all the tech perks and efficiency of a modern robo-advisor.
Because Betterment offers only two managed-portfolio options, the pricing structure is simple. Betterment does not charge any additional transaction, account maintenance, or withdrawal fees. However, fund-level fees are not covered by the Betterment annual fees listed below. Investing in ETFs is one way that Betterment keeps its costs down for all users. Not only are ETFs a good way to gain exposure to a wide range of assets and markets, they are typically more cost-efficient, liquid investments than many other asset types. Betterment's focus on ETF investing enables them to make cost-efficient, tax-efficient portfolios with optimal diversification across asset classes and markets.
*Digital Portfolio includes a personalized investment plan, automated rebalancing and dividend reinvestment, year-round access to support staff, and has no account minimum balance. As of September 18th 2018 Betterment Digital customers with balances over $2 million will pay 0.15% for the portion of the balance above $2 million.
**Premium Portfolio includes everything in the Digital product, plus guidance for your investments held outside of Betterment, unlimited access to Certified Financial Planners, and has a minimum account balance of $100,000. As of September 18th 2018 Betterment Premium customers will pay 0.30% for the portion of the balance above $2 million. Betterment will continue to honor the $2 million fee cap for all existing funded retail customers, even if their current balance is less than $2 million for both digital and premium accounts.
Betterment is a FINRA member, which means it is fully regulated and adheres to all federal investment laws. As a member of the SIPC, Betterment clients are insured up to $500,000 per account type. Betterment uses internal and external systems to ensure corporate and client funds are never commingled. The company also assures clients that 100% of their invested assets would be returned in the event the brokerage fails.
Betterment also takes your online security seriously. In addition to using the latest encryption methods on both public and password-protected sites, Betterment offers two-factor authentication, staff background checks, automatic logouts, and regular hacker checks.
Betterment isn't your typical DIY brokerage, and it doesn't have the same suite of features you might find elsewhere. Instead, Betterment offers value-adding perks to their managed portfolios. From built-in tax-minimizing strategies to round-the-clock access to financial experts, Betterment's features make investing simple, transparent, and accessible.
The Betterment system is set up to help clients create a financial roadmap toward any goal. If your circumstances or goals change, simply update your Betterment profile and the system will adjust your recommended portfolio and contributions accordingly. All clients have access to professional financial advice at any time. The Betterment platform also makes it easy to sync and track all your investment accounts, even those held by other institutions. Betterment's system analyzes your external accounts and helps pinpoint excessive fees, poor performance, and places where idle cash could be put to better use. Those who purchase the Premium portfolio service receive direct access to certified CFPs, as well as personalized investment guidance for any outside accounts.
While their web-based interface is intuitive and user-friendly, you won't find customizable charts, studies and indicators, pages of fundamentals, or backtesting and other tools. Instead, you can quickly and easily view your overall account performance and check on progress towards each of your specific goals. You can also adjust any of your profile settings -such as income, risk tolerance, tax filing status, timeline, and specific goals--so the Betterment system can update your portfolio accordingly.
The dashboard landing page clearly displays all your accounts and individual goals in one place. If you're not on track to meet your goal, the Betterment system lets you know by putting a red 'Off Track' tag next to the goal title. The platform makes deposits and withdrawals a snap, and educational resources and live support staff are just a click away. You can also designate charitable donations, rollover existing retirement accounts, and pull up tax forms from the header menu.
For its intended purpose, there aren't really any downsides to the Betterment platform. Of course, for investors who want to be behind the wheel or need a lot of data to feel in control, this brokerage is likely not a good fit.
The Betterment app, like the web-based platform, is intuitive and easy to use. Users can quickly check on performance and asset allocation, see risk tolerance and other goal settings and make deposits. Unfortunately, the user must still log in to the website to make withdrawals.
The Betterment app makes it easy to view your current account performance and review your goal and account settings. Easy click-through screens show users how to manage their settings. The user can view accounts and goals, edit asset allocation and risk tolerance, make deposits, and transfer funds between goals. Upon initial login, users are prompted to set up either Touch ID or a PIN, adding another layer of security to standard password protection. If you navigate away from the app, you must enter your PIN or use Touch ID to log back in, but the app preserves your last viewed screen: a small but convenient feature.
The primary drawback of Betterment's mobile offering is that it still does not allow users to make withdrawals. Almost all functions found on the web-based platform are available in the app, though you won't find the same depth of long-term returns analysis. Standard asset allocation charts show users where their money is being invested, but to see long-term projections based on your current holdings or Betterment's suggested adjustments, you'll need to head to the website.
Since Betterment's focus is on providing a full-service investment product, customer support isa priority. For regular customer inquiries, support staff are available Monday through Friday, 9 AM to 6 PM (FC: ET), and Saturday and Sunday, 11 AM to 6 PM (for chat only). [FC: ET] App users can contact financial professional via chat with any investment or financial questions and get quick answers sent right to their phones. For clients who select the Premium services, certified financial planners are available over the phone to offer even more in-depth assistance.
Betterment works hard to provide support services for all its clients and has round-the-clock access to CFPs for Premium clients. The Contact page also has easy links to the searchable FAQ page, the dedicated Tax Resources page, and an automated chat bubble that helps users find the FAQ content they need or, if it isn't available, send an email support request directly from the website. Betterment also has a designated account on Twitter for social media help requests.
Betterment's website offers a robust resources section that includes numerous articles on all aspects of investing, from basics to market commentary. The website also includes a selection of calculators and other tools to help users make sound investment decisions.
Betterment provides a number of useful tools and calculators to help users better understand where their money is going and why. Each investment account has its own Portfolio Analysis section that displays the current asset allocation in a clear and accessible way. Users can view specific ETFs, their weights and annual expenses, and the total fund fees incurred annually for the given allocation. Since fund-level fees are not included in the Betterment annual fee, this is an especially useful bit of information. For those who want to think ahead, return projection charts clearly display three categories of projected returns--most likely, worst case, and best case--for your current portfolio.
Though being able to see exactly which ETFs are chosen for your portfolio is helpful, you won't able to access much more information. An external link will take you to the fund prospectus on a third-party site, but you'll have no way of seeing individual funds' historical performance or other key analysis tools without heading to another site. The information provided is a fantastic high-level overview, but will likely not be in-depth enough for investors who like to do some of their own analysis.
Betterment's educational offerings are where the brokerage shines. While there isn't much in the way of charts or other analysis tools, clients and casual visitors can access a wide range of educational articles. Resources include topics like the basics of ETFs, the Betterment ethos, updates on tax law, investment and banking legislation, and high-level strategy.
While the Betterment site isn't built for DIY investors looking to do serious analysis, it is a great resource for investors who are still learning the ropes. Between the Resources and FAQ pages, users can get a great understanding of investment strategies, ETF benefits, retirement planning, tax strategy, and current market trends.
Claire has been writing about personal and corporate finance, retirement planning, investing, and tax policy since 2013.
Claire believes that financial literacy resources and investing education should be readily available to everyone, so she enjoys making complex topics accessible and engaging. Her keen attention to detail and head for numbers have made her a perfect fit for Investopedia.
Claire received her Bachelors from Willamette University with a degree in Psychology.
"I know many people find investing and financial topics overwhelming. As our cultural and economic landscape continues to change rapidly, it's more important than ever for everyone - from new college grads to retirees - to feel comfortable and competent when it comes to financial planning. I consider my role in the industry to be that of a facilitator: breaking down intimidating concepts and making financial literacy accessible to all."
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