Betterment investing was founded in 2008 and is based in New York, NY. It is a Registered Investment Adviser or RIA. RIAs have a fiduciary duty to work in your best interest. Betterment investing is not tied to a particular company or product and can therefore offer unbiased investment advice.
Betterment investing Pros & Cons
The Good
The Bad
Trades in low-cost ETFs.
Access to human advisors.
Advanced indexing.
Direct indexing.
Tax-loss harvesting available.
Wide selection of investment options.
Broad selection of account types.
Competitive investment expense ratios.
No minimum amount to open an account.
Betterment investing FAQ
What fees does Betterment investing charge?
Betterment investing uses a fee-only model.
This means Betterment investing gets paid a flat fee regardless of what financial products or services you use. It also means they have a fiduciary responsibility to their clients. Instead of making money on trades commissions or selling products, they recommend an asset allocation and get paid a flat-fee or a percentage of the assets under administration. That requires that they act in their client’s financial best interest at all times.
Betterment Fees
Description
Monthly Service Fee
$0
Annual Fee
$0
Management Fee
0.25% - 0.4%
Fee Based?
What management fees does Betterment investing charge?
Betterment investing charges an annual management fee that starts at 0.25% and ranges up to 0.4%.
Many financial advisors charge based on how much money they oversee by using a fee-structure called “assets under management,” or AUM. For instance, a 0.40% fee translates to $4 per year for every $1,000 an investment advisor manages. Management fees, also known as maintenance fees, cover the operating costs of investment advisors and are typically deducted from your account every month or quarter. The management fee does not cover the underlying expense ratios of the investment vehicles purchased by investment advisors.
What are the investment expense ratios of Betterment investing?
Hiring an investment advisor with competitive investment fees is one of the most important steps to maximizing your portfolio's performance. Investment expense ratios can vary drastically depending on the types of accounts and assets involved. A survey by the ICI puts the average expense ratio for actively managed funds at 0.76% and indexed funds at 0.08%. The investment expense ratios of an investment advisor will vary depending on the type of assets they invest in and whether they attach additional charges to fund fees.
Betterment investing does not charge fees based on an investment expense ratio.
What features does Betterment investing offer?
Access to human advisors: Robo-advisors are great at keeping costs down and helping investors with modest balances make good investment choices. However, it is also nice to have access to human financial advisors when you need them.
Automatic rebalancing: Having a good balance of investments is important. But a well-balanced portfolio is not something you can set up and forget. Markets are constantly changing and can easily throw your portfolio out of balance. Betterment investing allows you to rebalance your investments back to your target asset allocation at set intervals.
Full-service brokerage: Betterment investing provides access to a wide selection of financial advice and products, such as facilitating trades, managing portfolios, and wealth management services.
Betterment investing is registered with the Securities and Exchange Commission, or SEC. Registered investment advisors are required to provide detailed information on the financial and legal status of the company and its staff. This allows investors to examine closely any conflicts of interest and look into the background of the company and its advisory team.
Betterment investing offers the option of direct indexing. Direct indexing allows investors to buy individual stocks in all the companies included in an index without having to pay a trading fee for each one. Among other things, this allows investors to take advantage of tax-loss harvesting tools at a scale that is not possible with traditional index funds.
Betterment investing gives investors access to advanced indexing. This is an investment feature that uses multiple factors to determine the weighting of stocks in your portfolio when using indexed funds. While traditional indexed funds only consider market capitalization, advanced indexing also takes into account other factors, such as dividend yield and volatility.
What type of investment accounts and asset classes does Betterment investing support?
Betterment LLC offers the following types of assets and account types.
Accounts Supported
Supported Options
Unsupported Options
Individual Non-Retirement Accounts
Joint Non-Retirement Accounts
Roth IRA
Traditional IRA
Rollover IRA
SEP IRA
Trusts
529 College Savings Plans
Employer Sponsored Plans
Custodial Accounts
These are the investment options Betterment LLC offers its clients.
Investment Choices
Supported Options
Unsupported Options
Stocks
Bonds
International Stocks
ETFs
Options
Mutual Funds
FOREX
Futures
Pink Sheets / OTCBB
Real Estate
Startups
Marketplace Loans
Cryptocurrencies
Treasury Bills
Fractional Shares
What is the minimum amount you have to invest to open an account with Betterment investing?
Betterment investing does not have a minimum amount to open an account.
Betterment Disclosure:Brokerage services provided to clients of Betterment LLC by Betterment Securities, an SEC registered broker-dealer and member FINRA/SIPC.
Investments: Not FDIC Insured • No Bank Guarantee • May Lose Value. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and Betterment's charges and expenses. Betterment's internet-based services are designed to assist clients in achieving discrete financial goals. They are not intended to provide comprehensive tax advice or financial planning with respect to every aspect of a client's financial situation and do not incorporate specific investments that clients hold elsewhere. For more details, see our Form ADV Part 2 and other disclosures. Past performance does not guarantee future results, and the likelihood of investment outcomes are hypothetical in nature. Not an offer, solicitation of an offer, or advice to buy or sell securities in jurisdictions where Betterment is not registered.
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Editorial Disclaimer: Editorial and user-generated content on this page is not provided or commissioned by the issuer. Opinions expressed here are the author's alone and have not been approved or otherwise endorsed by any financial institution, including those that are advertising partners.
Message from Betterment investing
Our technology helps you get the returns you deserve, and our licensed experts are here to talk if you need them. We don't get paid to sell certain funds, and we don't have funds of our own. That means we'll do what we believe is right for you.
