in Investment Advisors from Betterment LLC
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Betterment 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 is not tied to a particular company or product and can therefore offer unbiased investment advice.
What fees does Betterment charge?
Betterment uses a fee-only model.
This means Betterment 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.
|Management Fee||0.25% - 0.4%|
|Account Transfer Fee||$0|
|Account Termination Fee||$0|
|Investment Expense Ratios||0.07% - 0.15%|
|IRA Annual Fee||N/A|
|Options Per Contract Fee||N/A|
|Futures Contract Commission||N/A|
What management fees does Betterment charge?
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. Betterment charges an annual management fee that starts at 0.25% and ranges up to 0.4%.
What are the investment expense ratios of Betterment?
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 charges an investment expense ratio that starts at 0.07% and ranges up to 0.15%.
What features does Betterment 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 allows you to rebalance your investments back to your target asset allocation at set intervals.
Full-service brokerage: Betterment provides access to a wide selection of financial advice and products, such as facilitating trades, managing portfolios, and wealth management services.
Betterment 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 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 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 support?
Betterment LLC offers the following types of assets and account types.
|Supported Options||Unsupported Options|
These are the investment options Betterment LLC offers its clients.
|Supported Options||Unsupported Options|
What is the minimum amount you have to invest to open an account with Betterment?Betterment does not have a minimum amount to open an account.
How does Betterment compare to other investment advisors?
|Independent/Registered Investment Advisor|