Choosing a custodian is a major step when starting a registered investment advisor firm. It’s your custodian’s job to manage and maintain client assets on behalf of your firm. Betterment for Advisors is one option you might consider. This technology-driven platform is designed to help advisors deliver superior service to clients as efficiently as possible.
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What Is Betterment for Advisors?
Betterment for Advisors is an RIA custodian that’s designed to help advisors manage their growing practices. The platform was launched in 2014 by Betterment, one of the largest robo-advisor firms in the financial services space.
Since its launch, Betterment for Advisors has undergone numerous updates to enhance the range of services and features offered to advisors. The most recent came in March 2024, when the platform announced that it would be adding mutual funds to its custom portfolios.
Betterment for Advisors Key Features
Betterment for Advisors is an end-to-end custodian that emphasizes the use of technology to help advisors grow their practices. Betterment offers services for advisors in five distinct categories:
- Portfolio management
- Back-office integration
- Client experience
- Cash management
- Advised 401(k) plans
Here’s a brief look at how Betterment serves advisors in each of these areas.
Portfolio Management
Betterment offers access to portfolios with flexible investment options and equips advisors with the digital tools they need to manage them. Advisors can:
- Build custom portfolios using more than 1,500 exchange-traded funds (ETFs)
- Construct portfolios with Dimensional Funds
- Choose from more than a dozen curated turnkey portfolios, based on their clients’ goals
Advisors can also take advantage of automated investment tools for rebalancing and tax-loss harvesting to build tax-efficient portfolios.
Back-Office Integration
Managing the back-office can be time-consuming, so it’s understandable that many advisors choose to outsource this branch of operations. Betterment for Advisors makes it easier to streamline the back office and automate your most important tasks.
Some of the things advisors can simplify through Betterment include:
- New client onboarding
- Client billing
- Client account management
Betterment provides advisors with a dedicated relationship manager, and you also have access to Betterment support specialists should you need help or have questions.
Client Experience
Client experience can influence retention rates and referrals, both of which can shape your firm’s growth outcomes. Some of the features Betterment offers to help improve client experience include:
- Account aggregation and syncing for assets held away
- Interactive, self-directed client portals
- Goal-based planning tools
- Portfolio analysis, retirement tracking and performance tracking tools
Again, this approach reflects Betterment’s tech-focused approach to serving RIAs and their clients.
Cash Management
If you work with clients who prefer to keep some of their assets in cash, it’s important to ensure they’re getting a decent return on their money. Betterment for Advisors includes access to a Cash Reserve account that features a competitive yield.
Here are some of the other highlights of this account:
- No monthly or maintenance fees
- Up to $2 million in FDIC coverage through Betterment’s program banks (doubling to $4 million for couples)
- Unlimited withdrawals
- No minimum balance requirements
You’ll also have access to automated savings tools that your clients can use to work toward their financial goals.
Advised 401(k) Plans
If you manage one or more 401(k) plans, you may be interested in Betterment’s capabilities in that area. The platform offers:
- Customizable investment options
- Administrative and compliance support
- Comprehensive and user-friendly advisor dashboards
- Onboarding specialists and dedicated support
Betterment integrates with most payroll providers, which can help with automating plan management and administration.
Betterment for Advisors Pricing and Billing
Betterment for Advisors does not charge transaction or trading fees. Instead, pricing consists of:
- Fixed fees, charged monthly
- Tiered wrap fees
Betterment determines the wrap fee based on the total assets under management you have with the platform. As your AUM increases, the wrap fee decreases. Betterment reviews firm assets quarterly and updates the wrap fee accordingly.
You can set a default advisory fee for your firm and adjust it for individual clients. Betterment allows you to charge:
- AUM-based fees
- Flat fees
- Tiered fees
The tiered billing model allows you to set a fixed fee for the lowest asset tier while charging an asset-based fee for higher tiers.
When clients are billed, either monthly or quarterly, your advisory fee and Betterment’s platform fee are taken out of the client’s account. Betterment then collects its fee and transfers the remainder to your firm’s bank account.
Who Is Betterment for Advisors For?
Betterment is designed for financial advisors who are ready to embrace the possibilities of tech to improve their firm’s efficiency and increase revenues. The platform serves advisors who:
- Are ready to transition to an independent RIA model
- Want to grow an existing practice
- Are interested in diversifying their clientele
- Would like to streamline the onboarding process
Small, mid-sized and larger firms can utilize Betterment’s services to manage client assets and accounts. There is no minimum AUM required, which could make it attractive to new RIAs with no assets under management.
Getting Started With Betterment for Advisors
If you’re interested in partnering with Betterment for custodian services, you have the option to schedule a demo to test out the platform’s features. Should you decide to move ahead, the next steps include:
- Adding your firm’s logo and branding
- Uploading required documents, including your Form ADV, Client Agreement and Privacy Policy, if available
- Setting your fee information
- Choosing an onboarding process for your clients
Betterment’s support team can walk you through the setup process to ensure that you’re completing all of the required steps. They can also help you get familiar with your advisor dashboard and the various features you have access to through the platform.
Frequently Asked Questions
What are the pros and cons of Betterment for Advisors?
Betterment is designed to appeal to advisors who want tech-friendly solutions that can make it easier to manage and grow their financial advisor business. On the pro side, it’s a comprehensive platform that’s equipped to meet multiple needs for advisory firms of all sizes. If there’s a con, it’s that Betterment doesn’t publish updated pricing information for advisors online. You’ll need to reach out to Betterment for Advisors support or schedule a demo to learn what you’ll pay for custodian services.
Is There a Minimum AUM for Betterment for Advisors?
Betterment recognizes that firms of every size need quality service from their RIA custodian. For that reason, there is no minimum AUM advisors need to get started with the platform.
How Do I Contact Betterment for Advisors?
If you need to contact Betterment for Advisors, you can call support at (718)-400-6898. Support is available Monday through Friday from 9:00 a.m. to 8:00 p.m. ET. You can also submit a secure online form to have someone from the Betterment for Advisors team reach out to you.
Bottom Line
Choosing an RIA custodian requires some research to find the right provider. Betterment for Advisors aims to make running your business easier so you can focus on your clients. Reviewing all of the platform’s features or scheduling a demo can help you decide if it might be right for you.
Tips for Growing Your Advisory Business
- Offering a stellar client experience can increase retention rates and potentially help you gain new clients through referrals. However, relying on referrals alone to grow your business may not be enough. If you’re looking for new ways to expand your client base, you might consider working with an advisor marketing platform. SmartAsset AMP, for instance, is designed to help advisors find right-fit leads while giving them the tools they need to build relationships and increase conversions. Get started today.
- When considering any RIA custodian, it’s helpful to look at what you’re getting versus what you’re paying, and which features or services you’re most likely to use. Some custodians offer more features and benefits than others, but it doesn’t make sense to pay for more than what you need.
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