Betterment Financial

Written by Dennis

Concerned you don’t save enough for retirement or even an emergency? Do you end up with some cash in your bank
accounts on a regular basis and want to earn a return now? Don’t know where to start? Betterment Financial provides both incentives and opportunities to invest. To get started, your mobile device and the desire to learn is all you need.

Betterment is a leader in the Robo-advisory
industry and is one of the first to use technology to propose a portfolio and simplify the investment process. The company has added new asset groups over the years since its founding in 2008, releasing a savings plan in July 2019. A checking account is up and running in 2020. In comparison to similar products sold by companies such as Personal Capital, Betterment does not need a minimum
investment for entry. Also, it pays rates that are significantly smaller than other competition.

There are several ways to use Betterment:

  • You can merge all of your financial accounts without investing and get an overall image of your assets
  • You can invest in one of their portfolios
  • Also, you can build a Flexible Portfolio with some of your preferences.

Taxable accounts aim to maximize after-tax returns by use of tax-loss harvesting, and portfolios are rebalanced when appropriate.

How to Get Started

First, we need to set up an account.
Luckily, Betterment boasts one of the most straightforward accounts to set up. Betterment asks you a series of questions to help you to get an understanding of what sort of investment is appropriate for your situation. Additionally, it asks about your age, annual income, pretax profits, your target, and if anything, how much you have already saved. There are none of the usual questions relating to risk.
Instead, Betterment gives you a solution for asset allocation and its associated uncertainty, which can be adjusted by changing the ratio of equity and fixed income kept in the portfolio.

Furthermore, you are encouraged to connect external accounts, such as a bank, to your Betterment account, both to provide
a full image of your assets and to enable simple cash transfers to a Betterment
portfolio of investments. Users are able to open an individual or joint
account, both Roth and traditional IRA accounts, as well as trust accounts.
Clients interested in opening a traditional IRA can now, under the (SECURE) Act
of 2019. The new legislation increases the age at which participants must take
necessary minimum distributions (RMDs), from age 70.5 to age 72. There aren’t
college savings 529 plans, solo 401(k) accounts, or (UGMA) accounts.

Betterment provides five types of portfolios, and after a portfolio is funded, customers can switch strategies. In addition, the platform will even inform you before making a change if there are any tax implications. One of the first things you’ll note about the recommendations from Betterment is that they offer this material for free. In other words, you should take its advice completely, save it or print it, and go to some other place to invest. Of course, it is hoping you can follow its advice and start investing in-house. You can set up recurring or one-time investment for this. In the end, every proposed plan consists of a mixture of stocks and bonds that change automatically based on your current age. When you grow older, automatically the percentage breakdown between the investment types changes.

From there, the company recommends a set of targets that will help you achieve. This may involve setting up a safety net, retirement fund or general investment.

Now, let us look at each type of investment or savings plan Betterment provides:

Safety Net

Betterment acknowledges the establishment of a safety net for customers its highest priority target for most investors.
Using this as a target, the company wants to help you build a portfolio of investments that are rising faster than inflation but not too risky. Stocks are likely to be included in the allocation but not as much as other proposed plans. After all, if there is a financial disaster, a safety net would be easy to tap.


The sooner you start planning a retirement plan, the more flexibility you have. Given this, Betterment will offer suggestions even if you’re looking to retire in under a decade. Generally speaking, the younger you are, the more Betterment suggests stock ownership over bonds. When you get close to the retirement age, the ration between the two moves in favor of bonds.

General Investing

Betterment offers simple general investment advice and preparation if you have no underlying target. The target has no specific purpose or date of withdrawal baked in the advice. As such, it is an excellent way to generate long term savings and achieve alike goals.

Advantages of Betterment

  • Simple and easy to configure an account.
  • Portfolios are completely open prior to investment.
  • You can synchronize external accounts to specific goals.
  • Add a new target at any time.
  • Quickly change portfolio risk or turn to another form of a portfolio.
  • Easily track your progress.

Disadvantages of Betterment

  • No direct indexing.

User Experience

Desktop Experience:

Betterment’s website is developed to guide you through the goal setting and monitoring process. The method is clear, and
it is easy to follow. In their FAQs, when you access a topic, the site maintains a list of the articles you have already read. Some choices— such as clicking on the Help link— spawn a new window, so after a while, you might end up with plenty of open tabs.

Mobile Experience:

The native apps are built to make all the functionality available, but there is plenty of scrolling in certain places to get to key features. Computer and mobile features are similar. On your mobile device, you can set all of your goals and savings, but there is quite a bit of
data entry when you open an account first.

Betterment doesn’t deliver a tablet-specific app but resizes its mobile app to use the extra screen space.

Customer Service

Online chat is incorporated into mobile devices and the site for clients to access at any time. Customer support is available from 9 a.m. to 6 p.m. via email and telephone. Eastern time on weekends. With a premium account, you can get assistance from financial planners at any time, but if you have a basic account, you’ll pay a small fee to see a planner.


Betterment’s Resource Center contains hundreds of well-written and insightful posts on financial savings and how to reduce the tax burden. A couple of tutorials are also available to help you find out how to use the app. Betterment has devoted some articles to help
investors understand the components of the portfolio and how the business handles adverse market events such as Brexit.


Security at Betterment is necessary. The website is encrypted, and phone applications provide two-factor authentication.

Is Betterment a Good Fit For You?

Betterment is one of the early leaders of Robo-advisors, as well as Wealthfront. This early experience has led to a goal-setting process.
It has been reinforced by the opportunity to pull in external accounts for a consolidated view of your progress towards those targets. The speed at which it has attracted clients and assets is extraordinary. Also, Betterment offers several portfolio choices and customizations.

Compared with other independent hybrid advisors, such as Personal Capital, the human advice service is inexpensive. Investors
with taxable accounts are probably better off at Wealthfront.


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