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is betterment safe

Betterment is a robo-advisor that allows investors to create and manage their investment portfolios online. Whether you’re building wealth for retirement or other financial reasons, Betterment functions as your digital investing solution. With more than $10 billion in assets under management, the company offers a range of online services, including two investing accounts, tax-loss harvesting features and competitive management fees. But should you use it? Is Betterment safe? Below, we take a closer look at Betterment’s products and services to show you why it’s a safe choice.

Why Betterment Is Safe

Betterment’s got a large reputation to uphold. Recognized as one of the largest online investing services, the company has hundreds of thousands of clients to please. But before we determine whether this robo-advisor is safe, let’s look at the products and services it offers.

The investment management account options Betterment offers are Betterment Digital and Betterment Premium. The first option provides portfolio management to users with balances under $100,000. These users receive an annual management fee of 0.25%, and also receive access to in-app messaging with a financial advisor. Betterment Premium, however, charges users with account balances of at least $100,000 a 0.40% fee. You also get phone access to certified financial planners (CFPs). In addition, the company also offers a user interface, a tax-loss harvesting and a mobile app feature.

But can you trust Betterment with your money? The answer is yes. When you manage your investments through Betterment, all the assets and securities in your portfolio are strictly under your ownership. Additionally, your personal investment money and Betterment’s company’s funds remain separate for the entirety of your membership. This means you retain full control over your money, allowing you to add, withdraw or transfer as you please. Furthermore, Betterment cannot use your money to pay for any of its company costs, and it also has a fiduciary duty to invest for you and act in your best interest. In addition, if you choose to close your account with Betterment, it will simply transfer your funds back to your linked checking account.

Finally, the Securities Investor Protection Corporation (SIPC) protects all Betterment accounts (up to$500,000 per account). This protects you against any losses that may arise as a result of broker error. So if you’re thinking about investing with Betterment, you should have both a safe and successful experience.

Are all Robo-Advisors Safe?

is betterment safe

Robo-advisors have grown in popularity largely because they offer convenient, automated online investing advice and management for lower fees. Some of the top robo-advisors include Vanguard, Betterment and FutureAdvisor. These digital services additionally provide automated investment tools that allow you to build your portfolio. While many robo-advisors primarily use non-human investing consultation, many companies are offering users both the robo-advising and the traditional advising option. In other words, some services also allow you to speak to a human financial advisor while building your portfolio digitally.

But are all robo-advisor services safe? Most robo-advisors, like Betterment, operate under a federal fiduciary standard. For instance, FutureAdvisor is registered with the U.S. Securities and Exchange Commission (SEC), so it has a federal duty to serve your best interests. Furthermore, most robo-advisor companies also maintain heavily encrypted websites, so you typically won’t have to worry about your data and money’s safety. However, there are certain measures you can take to enhance your own safety. This includes downloading malware preventive software and turning on your computer’s firewall.

You can also determine the best advising option through a few other ways. Thorough research can go a long way in your online investing search. One way to choose the right advisor is to see what others are saying. All robo-advisor services generally apply the same safety measures for their users’ investment portfolios. However, you could gain additional insight by assessing the experiences others, including coworkers and friends, have had with the company.

What to Do If You Feel Your Money Isn’t Safe

If you’re concerned about the security of your money, you should first try to get in touch with the company’s customer service representatives. Normally, they’ll be able to offer comprehensive solutions on how to proceed. However, if you’re worried that your funds are at risk, you can also close your account with the company. The company will then transfer your money back to your checking account. Betterment, for instance, transfers its users’ money back to their personal checking accounts after they close an account. While the step is necessary in the worst case scenario, you should first communicate with a company representative to see if the company can provide a solution.

The Takeaway

is betterment safe

Overall, Betterment can be a great, low-cost online investing service if you’re confident in the security measures it takes. While the robo-advisor maintains its status as one of the largest digital services in the county, it also maintains its fiduciary duty to its users. Although the company’s account minimum for speaking with a CFP is relatively high, it also allows you to establish an account with Betterment Digital at any balance. So whether you decide to invest with Betterment or another advising service, remember to choose the service the best maximizes your safety and transforms your investment dreams.

Tips on Investing

  • If you’d like to invest but aren’t sure where to begin, you should consider seeking professional advice. A financial advisor can help you develop a plan for reaching your financial and investing goals. SmartAsset’s free financial advisor matching tool makes it easier to find a financial advisor who meets your needs. First you’ll answer a series of questions about your situation and your goals. Then the program will narrow down your options to three registered investment advisors who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.
  • You should also determine whether you even need a robo-advisor. While robo-advisors serve many well, others grow their wealth by managing their own investment portfolios. If you decide a robo-advisor is suitable to your financial situation, make sure to carefully weigh the products and services offered by each company you research.

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Rickie Houston CEPF® Rickie Houston writes on a variety of personal finance topics for SmartAsset. His expertise includes retirement and banking. Rickie is a Certified Educator in Personal Finance (CEPF®). He graduated from Boston University where he received a bachelor’s degree in journalism. He’s contributed to work published in the Boston Globe and has worked alongside award-winning faculty for the New England Center of Investigative Reporting at Boston University. Rickie also enjoys playing the guitar, traveling abroad and discovering new music. He is originally from Wilmington, North Carolina.
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