Betterment for Advisors Case Study Q&A: How AdvicePeriod creates space and time to better serve clients

We recently sat down with Steve Lockshin, Founder of AdvicePeriod, to hear more about his firm and his perspectives on the benefits of working with Betterment for Advisors.

AdvicePeriod is dedicated to focusing clients on the important decisions necessary to manage their wealth. With billions of dollars under management, the firm has repeatedly been recognized as one of the best places to work. In 2019 AdvicePeriod was named "Thought Leader of the Year" and in 2020 Steve Lockshin was named “Innovator of the Year” by We recently sat down with Steve Lockshin, Founder of AdvicePeriod, to hear more about his firm and his perspectives on the benefits of working with Betterment for Advisors. 

Could you give us a little summary of AdvicePeriod? 

We're an RIA that believes most investments are a commodity and what matters most is planning and taxes. Our focus is on tangible results and leveraging technology. 

What have been some of the biggest hurdles or challenges that your firm has faced? 

I think it always comes down to people: getting the right people in the right seats. At the end of the day, this is still a service business.

What are the key traits you look for in partner firms? 

Our partners are not firms but individual advisors at firms that often aren’t keeping up with technology or who don’t believe in active investing anymore. But the number one trait is they believe what we believe. They opt into our philosophy that investing is becoming more commoditized, with planning and taxes being more important. And then culturally, it’s important that they're a fit. 

How have you been able to use technology to help streamline your operations? 

For clients where Betterment fits, it’s super simple: account opening is simple, all the rebalancing is done, the tax loss harvesting is done. Opening an account takes less than two minutes at Betterment, so that really minimizes the intake process. 

At other firms, account opening can take 20 minutes. The workflow hasn't changed, largely because custodians remain the weakest link in the chain. It's still paper. It's still, “You need these forms for this account and these forms for this account. Oh, we gave you the wrong answer. You have to redo the forms.” Some will allow electronic signatures, some won't. It's just a nightmare trying to figure out how to open accounts. 

Why were you early adopters of Betterment’s platform? 

It's because we saw the ability to create time. In fact, as one of my good friends always says: “In sports, when you're on offense, you're supposed to create space and when you're on defense, you reduce space.” And if we're theoretically on offense, trying to grow our business and help more people, then creating time and creating space is of tremendous value. And that's what the platform did for us. 

I think that the tax loss harvesting feature is capable of being a big benefit to our clients. I’m still amazed at how few people understand the benefits of tax-loss harvesting. I show clients how they didn't just get the stated investment return. A client could get an additional 50-100 basis points per year from tax loss harvesting. I think it's also important in a rapidly changing environment that advisors remain on the cutting edge. Utilizing a more forward-thinking company like Betterment that is constantly deploying new technology to improve the client and advisor experience is extremely valuable. 

For which kinds of clients is a platform like Betterment a good fit? 

For us it’s a good fit where estate planning is not a key focus. It's typically super easy for smaller accounts, but there’s no size limitation. I think our largest account on the Betterment platform is $40 million, so it works just fine for large accounts where we don't have estate planning complexity. 

How have you helped advisors you partner with get over any skepticism they might have about Betterment? 

The biggest issues are inertia and the fear of being marginalized. But advisors who are open to new technology and who are looking for efficiencies have no problem. Betterment is all about simplicity and creating time that the advisor can use more productively for the benefit of clients. Advisors have to have confidence in what they’re doing and believe that they’re adding value in different ways. I often use a gym analogy. Clients can get in shape on their own for cheap. But if they want a personal trainer, they know it’s going to cost more. That's similar to our role as advisors, and we shouldn’t feel defensive about trying to justify that. 

Have you ever had a client leave your firm to do it themselves on Betterment retail?

Never, not one. It's actually been the opposite. People will say, “Oh, I have a Betterment account, can I move it over to you guys so you can oversee it?” So we've had a lot of Betterment retail accounts come on to AdvicePeriod, but we haven't seen it the other way around. 

Besides Betterment, what other technologies are you using that others may not be?

I remain amazed at how many firms deploy portfolio management systems and performance measurement systems and still crank out PDF reports when they can just give the client a portal. We’ve organized all of the important documents and give clients 24/7, transparent access to everything so they can see what’s happened over time from both the planning and portfolio perspectives.

Our rollout of Vanilla is a big tech change. Even someone like me, who's super planning focused, had overlooked some very important aspects to being fully prepared with things like healthcare and financial powers for my adult children.

Are you seeing an uptick in ESG or SRI requests from clients? 

No, but I did read one of the big reports that basically said that something like 60% of people are asking about ESG right now. But we’re not seeing it. And the challenge I have with ESG is it reduces predictability because you increase tracking error. So I've always encouraged people to take the extra money they earn from their high confidence of having a properly allocated portfolio and apply it directly to the charities you care about. But we'll see where things go. There's certainly more social awareness today than there was five years ago. 

Are there any specific areas that you think custodians should be focusing on for the next few years? 

People should be able to move their accounts like they change their cell phone numbers. So I'd love to see custodians do that. Also: access to data. But instead of opening up data access, they're starting to close it down again. Ease of account opening. I mean, Betterment's been around since 2010 for retail customers, so online account opening in less than two minutes has been around for some time. We're going on the 10th anniversary of being able to open your accounts online and the major custodians still can't do it. So is it that they can't or they won't or both? 

One last question: any pearls of wisdom for new advisors who are just starting out? 

There’s an old saying in counseling that “you can't be a guide to a place you've never been.” So I would tell everyone to open an account with your own money—not just $10 that you ignore, but enough money so that you pay attention to it. If you're not using the system yourself, then it's hard to say it's good or bad. 

Don't be afraid that engaging a platform like Betterment may lose you clients. Find things that make you look better and do a better job for the client. And if you're not using tax loss harvesting in your practice, you're not doing the best job you can for your taxable clients. 

Disclaimer: This case study was conducted as a Q&A in 2020 and is not reflective of all client experience, which may vary depending on individual circumstances not considered herein, and may not apply to all clients, as past experience is not indicative of future or similar outcomes.