Advisor Resources | Betterment for Advisors

Learn how switching custodians could power your practice into the future

Learn how switching custodians could power your practice into the future May 26, 2026 9:15:00 AM Learn how switching to Betterment Advisor Solutions could power your practice into the future. Running an independent RIA comes with big challenges—and even bigger opportunities. Betterment Advisor Solutions gives you an all-in-one custodial platform with the technology and support to streamline your business, serve more clients, and deliver a modern experience across cash, investing, and retirement. Our service and technology can simplify the switch At Betterment Advisor Solutions, we know switching custodians is a big move, so we’ve made sure that not only is the process easy, but that your experience in your first 12 months helps set you up for long-term success. We’ve designed a three-pronged approach to help you make the switch: #1 A dedicated relationship manager You're more than just a number or a customer — you're our partner. The high standard of service we hold ourselves to means that we have no minimum AUM requirement and every firm gets a dedicated single point of contact, no matter their size. Your relationship manager is your guide, ensuring you are fully trained on how to best use all our tools and features throughout your first year. Your relationship manager’s goal is to get you utilizing our platform to its maximum capability for your practice and your clients. #2 Fully digital onboarding Our digital onboarding streamlines the repapering process for you and your clients. You can easily onboard individuals and households, and complete account set up paperlessly. They’ll get a single email to sign off on everything at once. #3 Tax-smart asset transitions Our tooling enables you to granularly control how assets are moved from your current custodian to Betterment Advisor Solutions in a tax-efficient manner. You can leverage our paperless workflows to move assets over in kind. Easily move your client’s funds into your preferred portfolio model while optimizing their tax impact. Our people and technology empower RIAs and their clients each day Once you’ve made the switch to Betterment Advisor Solutions, we’re dedicated to seeing your practice grow. We take pride in being the modern end-to-end custodian for the modern RIA, balancing human support with future-forward technology. As our partner, we give you the tools that help simplify and streamline your practice operations while building a successful book of business. Dedicated advisor support Regardless of your firm’s size, we provide dedicated support to answer all of your questions. Our support team members are platform experts, here to resolve any issues you may face and answer questions from the most mundane to the most technical. We’re more than just chat support. You can reach out via email or phone for any type of issue or question. Your relationship manager isn’t just for onboarding. They’re your long-term partner every step of the way. “Advisors, especially small and mid-sized RIAs most affected by Schwabitrade, shouldn't sit back and accept lower-quality service. We’re here to provide you with a better option.” —Tom Moore, Senior Director, Betterment Advisor Solutions Time-saving automation tools Our tools take care of critical-yet-time-intensive tasks so you can focus on your real value — planning, strategy, and client relations. We automate tax-optimization strategies for you including asset location and tax loss harvesting. Flexible billing gives you the freedom to use custom asset-based, fixed fee, or tiered billing plans and set the frequency your clients are charged. We collect the fees for you and pay them out automatically. Our Co-pilot dashboard aggregates urgent client needs all in one place, becoming your client command center, enabling you to streamline your high-priority work. Exceptional client experience Using our client-facing mobile app and web experience paired with our powerful advisor planning tools, your firm can provide one of the most delightful client experiences on the market. Empower your clients at home or on the go with our interactive portal, giving them convenient insights into their investments. Plus, you can sync held-away accounts so they see all of their savings and investments in one place. Better manage household accounts with a customizable account structure, using bucketing strategies to help clients work towards long-term goals. Engage with your clients on a deeper level with our portfolio analysis, retirement planning, and performance tracking tools. Build your seamless tech stack We integrate with other well-known tools giving you a better experience for you and your clients. And don’t worry, if you work with a tech provider we haven’t partnered with, your relationship manager will explore adding them to our integration options. How Betterment's custody fees work—and why it matters for your clients Schwab and other custodians may say their custody services are “free” but in the RIA space, it usually means that your client is the one paying for it. We charge a simple platform fee that allows us to improve our custody platform while providing exceptional support. This enables you to truly put your clients first and help them grow their wealth.

An advisor’s guide to the benefits of solo 401(k)s

An advisor’s guide to the benefits of solo 401(k)s May 21, 2026 12:15:00 PM As you work with self-employed clients, here are five big reasons why a solo 401(k) may be right for them (and your firm). A solo 401(k) might just be the biggest retirement savings growth hack for your self-employed clients — and you can help them navigate it. As more people shift toward freelance work, consulting, and small business ownership, RIAs are increasingly asked about retirement planning by clients who don’t fit the traditional W-2 profile. Enter the solo 401(k): A lesser-known retirement account that just might be the ultimate savings vehicle for self-employed clients of RIAs. However, many advisors overlook the solo 401(k) or assume it’s too complex. In reality, it can be a straightforward, flexible, and powerful option for those who have no full-time employees beyond themselves (and possibly a spouse). The basics: What exactly is a solo 401(k)? A solo 401(k) is a one-participant 401(k) plan for self-employed individuals of owner-only businesses. It works similarly to a standard 401(k)—with employee and employer contribution components—but is designed specifically for businesses that do not have full-time employees other than a spouse. It’s different from SEP IRAs (which only allow employer contributions) and SIMPLE IRAs (with lower contribution limits). For many advisors (and their clients) who are less familiar with solo 401(k)s, two misconceptions commonly get in the way of using one for savings: “Solo 401(k)s are too complicated.” Some solo 401(k) providers (like Betterment Advisor Solutions) offer streamlined setup and modern digital account management. This makes it simple to manage. Once the plan is established, annual maintenance is often minimal—though advisors and participants should be mindful of certain administrative requirements, such as filing Form 5500 once the plan balance exceeds $250,000. “They’re only for high-income earners.” Contribution limits are high (we’ll cover more on that in a minute), but that doesn’t mean a lower-income entrepreneur can’t benefit. Contributions are flexible each year, so clients can scale up or down depending on business performance. Solo 401(k)s are really a simple way for self-employed individuals to save for retirement. And, they offer some added financial benefits that savers can’t get through other plans. Top 5 benefits of solo 401(k)s for your clients As you work with self-employed clients, here are five big reasons why a solo 401(k) may be right for them (and your firm). Benefit 1: solo 401(k)s are tailored for solo entrepreneurs Sole proprietors, consultants, and gig workers have unique needs. They’re juggling business expenses, unpredictable income streams, and personal financial goals. A solo 401(k) allows them to save aggressively in profitable years, and dial back contributions if cash flow tightens. Solo 401(k)s also have the added benefit of allowing spousal contributions. If a spouse is also on the payroll, he or she can contribute just like the primary business owner. This effectively doubles the family’s retirement savings potential and can significantly reduce household taxable income if making pre-tax contributions. What does this mean for advisors? More opportunity. The rise of online platforms, remote work, and freelance marketplaces means self-employment is only becoming more popular. In fact, conservative figures estimate that there are 16 million self-employed Americans. By offering guidance on solo 401(k)s, you can expand your practice to a growing client segment that often has questions about retirement planning but limited employer-sponsored options. Your firm can offer an opportunity they may not have realized they had. Benefit 2: High contribution limits One of the biggest draws of the solo 401(k) is the dual role contribution approach: Employee contribution: In 2025, individuals can contribute up to 100% of compensation or $23,500 (or $31,000 if age 50 or over). Employer contribution: As the business owner, they can also contribute up to 25% of net self-employment income (20% for sole proprietors/partnerships). Total contributions to a participant’s account, not counting catch-up contributions for those age 50 and over, cannot exceed $70,000 for tax year 2025. Combined, dual-role contributions can lead to substantially larger total contributions than are available through SEP IRAs or SIMPLE IRAs. For instance, a SEP IRA lacks the employee deferral option, so having both an employee and employer bucket in a solo 401(k) can help maximize tax-advantaged savings. Benefit 3: Tax advantages The tax benefits are very real when it comes to solo 401(k)s. By helping clients understand these benefits, you can have a significant impact on their tax burden, both now and in retirement. Pre-tax contributions: Similar to a traditional 401(k), clients who want immediate tax relief can fund their solo 401(k) with pre-tax dollars, reducing their current taxable income. This is particularly appealing to self-employed individuals, looking to lower their overall tax burden in years of high income. Roth contributions: Many solo 401(k) providers now allow Roth contributions. This means after-tax money goes in, but withdrawals in retirement are generally tax free. Offering both pre-tax and Roth options gives clients flexibility in managing their present and future tax situations. SECURE 2.0 Automatic Enrollment Tax Credit: Many miss this one, but under the SECURE 2.0 Act, if an eligible solo 401(k) adds an auto-enrollment feature to their plan, they can claim a tax credit of $500 per year for 3 years. Benefit 4: No income restrictions on contributions Unlike Roth IRAs, which have strict income limits, solo 401(k)s do not cap your ability to make Roth contributions based on income. High earners who would be locked out of a Roth IRA can still enjoy the potential for tax-free growth through a Roth solo 401(k). And let’s not forget about catch-up contributions: For clients over 50, an additional $7,500 (as of 2024) can be contributed to the employee deferral portion. This “catch-up” feature allows those who got a late start on saving to accelerate their retirement funding. Benefit 5: Prior year contributions for new plans The SECURE Act 2.0 introduced a key benefit for solo 401(k) plans: Business owners can establish a solo 401(k) by the previous year's tax filing deadline (including extensions). Employer contributions for the prior calendar year can be made up until the business’s tax filing deadline. Example: How prior contributions work If your client sets up a new solo 401(k) in March 2024, it can still count as a 2023 plan. Your client can make 2023 employer contributions until April 15, 2024 (or October 15 if they file an extension). This is a powerful opportunity for clients to catch up on retirement savings they might have overlooked during a busy year. Adding value: The advisor's role in a client’s solo 401(k) Although solo 401(k)s can be self-directed by a client, you have an opportunity to add value by guiding your client to the right plan for their overall retirement needs. Here are four ways your firm can help clients navigate solo 401(k)s: Contribution strategy: Help clients determine whether pre-tax or Roth contributions (or a mix) best suit their goals. Timing contributions strategically—especially near tax deadlines—can optimize tax savings and cash flow. Investment guidance: solo 401(k)s often offer a wide range of investment options. Advisors can provide asset allocation and diversification strategies based on each client’s risk tolerance and timeline. IRS rules and compliance: While solo 401(k)s are relatively straightforward, there are filing requirements (e.g., Form 5500 for account balances above $250,000) and rules about loans from the plan. Advisors can help keep clients on track. Long-term retirement planning: A solo 401(k) should be one part of a holistic retirement strategy. Advisors can integrate Social Security planning, insurance, and estate considerations to round out a client’s financial picture. Tips for getting started: Choosing a solo 401(k) provider When recommending or setting up a plan for your clients, look for a provider that offers straightforward pricing, an intuitive digital experience, and proven knowledge in compliance and recordkeeping. Also, consider the breadth of services a provider offers. Some providers also offer tools for RIAs, like custodial services or portfolio management, which can streamline your overall practice management. Introducing the Betterment solo 401(k) The Betterment solo 401(k) integrates smoothly with our all-in-one custodial platform purpose-built for independent RIAs. Modern, digital-first experience: Simplify plan set-up and ongoing management with a 100% digital process. We eliminate the administrative burden traditionally associated with solo 401(k)s by digitally opening and funding accounts with no paperwork required. Seamless ongoing management: We provide compliance support for your firm with no need to manually track contributions. Cost-effective plans: Minimize costs while maximizing savings potential for your self-employed clients. Give clients access to low-cost investments paired with the high contribution limits of a solo 401(k). Plus, clients can include spouses at no additional cost. Roth solo 401(k) option: Give your clients the flexibility to optimize their taxes by using a traditional solo 401(k) or a Roth, whatever is best for their situation.

How AI is disrupting software stocks in 2026

How AI is disrupting software stocks in 2026 May 20, 2026 10:52:44 AM AI coding tools are driving a wedge between broad tech and software-only funds. Here's what the divergence means for client portfolios. Software has a problem. It’s called AI. For all of the technology’s dazzling displays of prose, picture-generation, and problem solving, code is very much its most fluent language. As of April 2026, Google reported that human-generated code has dwindled to 25%. Tech companies with their own AI products are well-positioned in this environment. They own the tools to automate software engineering and can directly profit from others doing the same. Smaller software companies, however, face a more precarious outlook. The mere prospect of a DIY software future has turned investor sentiment against the Software as a Service (SaaS) businesses, raising predictions of a “SaaSpocalypse” in the process. Why pay for expensive enterprise software when you can build it yourself in-house? To see this trendline in action, look no further than two funds: Invesco QQQ Trust (QQQ) and iShares Expanded Tech-Software Sector ETF (IGV). QQQ is made up of the 100 biggest non-finance companies listed on the Nasdaq stock exchange. Filtering out financial firms means it’s heavily concentrated in broad-based technology companies like Alphabet (Google), Amazon, and Microsoft—all mighty players in the AI investment boom. IGV, meanwhile, primarily holds the software industry, including Salesforce, Adobe, and Intuit. While many of them are racing to integrate AI into their products themselves, they don’t own the underlying technology. These two funds have historically moved in lockstep. As goes software, so goes the broader technology sector. At least until recently. Something snapped late last year, and that correlation broke down. That something was Claude Code, an AI coding tool from Anthropic that went mainstream in late 2025. Its significance for markets lies in what it signaled: AI “agents” could soon handle complex workflows that businesses currently pay SaaS to manage. The investment research firm Citrini added fuel to the fire in February 2026, with the release of“The 2028 Global Intelligence Crisis," a report that imagined a near future where AI agents steal the market share of not just SaaS companies—but major tech and finance firms, too. For all of its alleged shortcomings in sound macroeconomic thinking, the paper went viral and moved markets. Taken all together, software stocks have experienced significant downturns over the last 12 months. With valuations in the software space having reset considerably, there may now be more cushion against further downward price pressure. Many of these businesses are also actively adapting their models—so, it would be premature to count them out. The chart below compares the price-to-earnings ratios currently to those at the beginning of 2025 for a sample of the largest software companies in the world. Stocks like Adobe and Salesforce are trading at a 50% discount now relative to early 2025, based on this valuation metric. More generally, with all of these uncertainties and headwinds out there for sectors like software, why is the market near all-time highs? Some of that resilience may reflect investor momentum, but the more fundamental explanation lies in strong corporate earnings growth. The primary source of investment returns over the long-term is growth in net income—companies' ability to become more profitable. Even as the war in Iran has been going on, analysts have revised their 2026 earnings growth estimates upwards. That's true across the board, with the U.S. as well as firms in Europe, Japan, and emerging markets forecasted to see an acceleration in profit growth. In spite of the headwinds from the conflict in Iran, this earnings backdrop remains a meaningful tailwind for clients holding diversified portfolios with a long-term investment horizon.

Anthropic's new plugin changes how advisors should think about AI

Anthropic's new plugin changes how advisors should think about AI May 19, 2026 4:10:00 PM Anthropic's new Wealth Management plugin does meeting prep, plan drafting, and TLH screens out of the box. The question for advisors has shifted. An analysis: In February 2026, Altruist launched AI tax planning inside Hazel, the feature meant to position it as an AI operating layer for independent advisors. Just 60 days later, Anthropic released 10 ready-to-run agent templates for financial services, including a Wealth Management plugin for Claude that accelerates meeting prep, generates pitches, and assists with portfolio analysis and tax-loss harvesting screens out of the box. Each template is a reference architecture built from three parts: skills (task instructions and domain knowledge), connectors (governed data access), and subagents (specialized pieces of the workflow). The skills are file-based Markdown, customizable, and free to install from GitHub. The announcement was framed as a new tool for advisors. What it actually is, is a useful lens for evaluating everything else in your stack. What Anthropic’s wealth management plugin can do for financial advisors Anthropic's Wealth Management plugin sits inside Claude and connects analytical workflows across an advisor's existing systems. It integrates with market data providers, CRMs, and internal document repositories to help advisors centralize information and automate portions of client prep and portfolio analysis. To understand what changed and what didn't, it helps to think about the advisor tech stack in three layers: Interface—dashboards, forms, alerts, reports, chat. Intelligence—interpreting client data, drafting recommendations, surfacing planning opportunities, prioritizing work. This is the layer vendors have been packaging and selling. It is also the layer foundation models do natively, with a few lines of context. Execution—opening accounts, moving money, placing trades, managing tax lots, rebalancing, harvesting losses at scale, supervising activity, maintaining the auditable record. AI is moving fastest through the first two. The third is different. Execution requires balance sheet, broker-dealer infrastructure, regulatory standing, and engineered systems that act on real client accounts under fiduciary control. No foundation-model release replicates that. It is not a software problem. “The right frame for evaluating your advisor tech stack is not AI versus non-AI. It is analysis versus execution.” A model can identify a tax-loss candidate. A platform with brokerage, custody, and tax-lot awareness can implement tax-aware management at scale. A model can draft a rebalance memo. An execution layer can place the trades. A model can summarize a tax return. It cannot become the tax professional, the custodian, the broker-dealer, or the supervisory record. The strategic question is no longer “will AI replace software?” It is: Which features are becoming AI-native utilities, and which systems still create durable value because they control data, workflow, governance, and execution? Why AI commoditization changes how advisors should evaluate technology The obvious objection is that software providers can package these AI capabilities into polished advisor workflows faster and more efficiently than most individual firms could build on their own. And that’s likely true. It doesn’t undercut the argument, it reinforces it. The intelligence layer is being commoditized whether firms build internally, buy third-party software, or combine both approaches. What’s changing is that the underlying AI capabilities are becoming increasingly portable across platforms and providers. Portability changes how advisors should think about software differentiation. Analytical workflows—summarization, planning drafts, portfolio screens, document review—can now move relatively quickly between tools, plugins, and model providers. What does not move nearly as easily is the infrastructure layer underneath. Custody, brokerage operations, compliance frameworks, supervisory systems, and automated execution capabilities are significantly harder to replicate or replace. Those systems require operational scale, regulatory infrastructure, and years of workflow development. The asymmetry is significant. As AI capabilities continue to spread across the industry, the most durable parts of an advisor tech stack are likely to be the systems responsible for execution—not just analysis. What most firms can realistically build The tools to assemble a basic advisor-AI workflow are now genuinely accessible. A motivated firm can stand up meeting prep, client review packets, document Q&A, draft emails, plan summaries, drift reviews, and tax-loss candidate screens using off-the-shelf plugins and customizable skill files. The first layer isn't that hard to build. Sustaining it is a different problem. The skills that make an AI workflow actually useful—investment philosophy encoded as text, tax-review processes, compliance language, approval rules—drift the moment regulations shift, markets move, or the firm's own process changes. Keeping them current isn't a one-time project. It requires rigorous, ongoing supervision to ensure the AI's outputs consistently align with the firm's fiduciary obligations, shifting regulations, and market dynamics. If and when a firm does not have that person, the workflow can degrade quietly until it stops reflecting how the firm actually operates. This is the same reason durable platforms invest heavily in the infrastructure underneath the AI layer. Execution capabilities—moving assets, managing tax lots, rebalancing at scale, maintaining supervisory records—require operational depth that compounds over time, not a one-time build. The firms best positioned to combine intelligent AI workflows with reliable execution likely aren't assembling it themselves. They're building on platforms that have already done the operational work. The AI layer will keep getting easier to access and cheaper to run. What doesn't get easier is the regulatory infrastructure required to act on what the AI surfaces. That gap is where durable value lives. The takeaway The advisor tech stack isn’t disappearing. It’s being reorganized. Packaged software still matters, and for many firms, buying will be smarter than building. But advisors should be increasingly skeptical of software whose primary value is packaging generic AI workflows inside a polished UI. Those capabilities will likely become cheaper, more customizable, and more portable. Durable value will accrue to systems that do what AI alone cannot: connect trusted data, support compliance, execute transactions, implement portfolio decisions, and power a reliable client experience at scale. Two questions are worth applying to every line item in the stack: Is this tool primarily generating, drafting, summarizing, or formatting information? That layer is commoditizing quickly. Is this platform deeply connected to data, governance, workflows, and execution? That layer is more durable. The pace of change matters. Within a single quarter, capabilities that once looked highly differentiated became accessible enough for motivated firms to assemble themselves. And the next wave of commoditization is likely to happen even faster. The firms best positioned for that shift are the ones building on durable operational infrastructure while treating AI as an accelerant for advisor productivity—not the foundation of the business itself. The most durable advisor technology platforms are likely to be the ones that combine intelligent workflows with the infrastructure required to actually execute on them. The key question for advisors is simple: What in your stack is truly durable, and what is ultimately just a UI layered on top of a foundation model?

How to set up the Slant integration

3(21) vs. 3(38) fiduciaries: A guide for advisors

3(21) vs. 3(38) fiduciaries: A guide for advisors Apr 30, 2026 4:15:27 PM Understanding the difference between 3(21) and 3(38) fiduciary status isn't just compliance knowledge—it shapes how you structure client engagements and manage your liability. If you advise retirement plans, your fiduciary designation isn't just a label—it determines your liability, your authority, and how your clients can work with you. Yet many advisors operate under a 3(21) or 3(38) designation without fully examining whether it's the right fit for a given engagement. The difference between 3(21) and 3(38) comes down to one central question: Who has the final say on investment decisions? That single distinction cascades into different liability structures, documentation requirements, and sponsor relationships. This guide breaks both roles down from the advisor perspective. We cover what each designation means for your practice, when each structure makes sense, and where the compliance risks hide when the two get confused. What ERISA actually says about investment fiduciaries Before diving into the differences, it helps to understand where these designations come from. Both 3(21) and 3(38) are defined in the Employee Retirement Income Security Act of 1974 (ERISA)—and both carry fiduciary duty, just in different ways. Key ERISA concepts to know: Fiduciary status: Anyone who exercises discretionary authority or control over plan assets, renders investment advice for compensation, or has discretionary authority over plan administration is considered a fiduciary under ERISA. De facto fiduciary status: Even if your agreement doesn't call you a fiduciary, ERISA may treat you as one based on what you actually do, not what your contract says. Co-fiduciary liability: A plan can have multiple fiduciaries with overlapping responsibilities. Each is liable for their own breaches and, in some cases, for the breaches of others they knowingly allow. 3(16) administrators: A separate fiduciary role focused on operational and compliance duties, not investments. We'll cover this briefly in a later section. Why this matters to your practice If you're providing investment guidance to a plan without a clearly defined fiduciary role in writing, you may already carry liability you haven't formally accepted. ERISA looks at function, not just labels. 3(21) fiduciary: The co-advisor role A 3(21) fiduciary is a co-fiduciary who provides investment recommendations, but leaves final decision-making authority with the plan sponsor. What you do as a 3(21) advisor: Analyze the plan's investment lineup against objectives and the investment policy statement (IPS) Recommend additions, replacements, or removals from the fund menu Document your rationale for every recommendation Attend investment committee meetings and advise on fund performance Monitor the lineup and flag underperformers, but do not act unilaterally What the plan sponsor retains: Final authority over which funds are selected, retained, or removed Fiduciary liability for the investment decisions they make based on your advice The duty to act prudently on the recommendations you provide Your liability as a 3(21): You are still a co-fiduciary, which means you can be held liable for imprudent recommendations, even though you don't make the final call. The sponsor's liability doesn't insulate you from your own. 3(21) works best when: The sponsor has an active investment committee with sufficient expertise to evaluate recommendations The plan has a strong governance infrastructure: documented meetings, a current IPS, and clear decision-making processes The sponsor wants an engaged advisory relationship but prefers to remain in control 3(38) fiduciary: the discretionary manager role A 3(38) fiduciary is an investment manager who assumes full discretionary authority over plan assets. You don't recommend—you decide, implement, and act, without requiring sponsor approval for each investment change. What you do as a 3(38) manager: Select, monitor, and replace plan investment options at your discretion Execute fund changes without having to go through a sponsor approval process Manage the investment lineup to meet plan objectives and IPS guidelines Provide regular performance reporting to the plan sponsor and committee What falls under your remit: Fiduciary liability for investment decisions, with the sponsor being relieved of liability for the choices you make Responsibility for acting prudently, with care, and in the best interest of plan participants Documentation, which includes the written 3(38) agreement, quarterly reviews, and scope of authority What the plan sponsor still owns: Liability for hiring you as the 3(38) manager The duty to monitor you in your role as 3(38) manager 3(38) works best when: The sponsor has limited internal investment expertise or a small, informal committee The plan sponsor's primary goal is to minimize personal fiduciary exposure You have the systems, infrastructure, and capacity to manage investment decisions efficiently across multiple plans 3(21) vs. 3(38) at a glance This table is a quick reference to help evaluate which structure fits a given engagement. You can use this table when talking with a plan sponsor client about their decision. Comparing 3(21) and 3(38) fiduciaries DIMENSION 3(21) FIDUCIARY 3(38) FIDUCIARY ERISA Reference Section 3(21)(A)(ii) Section 3(38) Fiduciary Type Co-fiduciary / Investment advisor Investment manager (discretionary) Discretion level Non-discretionary Advisor recommends and sponsor decides Full discretion Manager selects and implements independently Who decides Plan sponsor retains final decision-making authority 3(38) manager makes all investment decisions Liability transfer Shared with the advisor and sponsor both carry fiduciary duty Shifted with investment liability moved to the 3(38) manager Sponsor still owns Full investment decision liability Duty to prudently select and monitor the 3(38) manager Advisor liability Yes, for imprudent recommendations Yes, for imprudent exercise of discretionary authority Documentation needs IPS alignment, meeting minutes, recommendation rationale Written 3(38) agreement, scope of authority, performance reviews Best if sponsor… Has active committees with investment expertise and governance resources Seeks liability relief with minimal day-to-day involvement Advisor role Analyze, recommend, document — but not decide Select, implement, and replace funds independently How to determine which role fits your engagement Choosing between 3(21) and 3(38) isn't just a client preference question; it's a practice management decision that touches your liability, your workflows, and your infrastructure. Here are four factors to work through for any new plan engagement: 1. What is your firm's appetite for discretionary liability? Taking on a 3(38) role means the liability for investment decisions follows you. Before assuming that role, confirm that your E&O insurance covers discretionary investment management for ERISA plans, and that your compliance team is aligned. 2. How sophisticated is the sponsor's governance structure? A 3(21) relationship requires the sponsor to have the bandwidth and competency to evaluate your recommendations and make informed decisions. For sponsors with thin committees, limited documentation habits, or minimal investment expertise, that's a real risk — both for the plan and for you. 3. What's the plan's size and complexity? Larger plans with diverse investment menus and active participant engagement may benefit from the rigor of a co-advisory 3(21) relationship. Smaller plans—or sponsors stretched across multiple responsibilities—might be better served by a 3(38) structure that takes the decision-making burden off their plate. 4. Does your current engagement agreement match how you actually operate? This is the most overlooked question. If your agreement says 3(21) but you're effectively making investment decisions without sponsor sign-off, you may be operating as a de facto 3(38)—without the formal agreement that would govern that liability transfer. Compliance check If your agreement and your actual conduct don't align, that gap creates legal exposure for you and your client. Before taking on new plan clients, or reviewing existing ones, have your compliance team audit your engagement agreements against how you're actually operating. A quick note on 3(16): The third fiduciary role You'll often hear 3(16) mentioned alongside 3(21) and 3(38). It's worth understanding the distinction so you can have a complete conversation with plan sponsors about how fiduciary responsibility is distributed across their plan. Here's how the three roles divide responsibilities: 3(21): Investment advice and recommendations—co-fiduciary, non-discretionary 3(38): Investment management—discretionary authority, full liability transfer for investment decisions 3(16): Plan administration—Form 5500 filing, required notices, enrollment, compliance documentation A 3(16) plan administrator handles the operational and compliance side of running the plan, not the investment side. Many plan sponsors don't realize they're personally liable for these administrative duties until they're facing a DOL audit or a missed filing deadline. Advisors who can offer—or refer out—3(16) support are providing more complete coverage to their plan clients. Betterment Advisor Solutions supports both 3(21) and 3(38) fiduciaries Betterment Advisor Solutions is built for advisors who are serious about growing a retirement plan practice—not just adding plans, but running them efficiently, compliantly, and at scale. Whether you operate as a 3(21) or 3(38), the Betterment Advisor Solutions platform gives you: A modern advisor platform designed for managing multiple plans with minimal administrative overhead 3(16) administrative services that handle the operational burden—so neither you nor your client carries unnecessary compliance exposure Digital onboarding and participant enrollment tools that can reduce setup friction for new plans Investment management infrastructure that supports discretionary models without requiring you to build it from scratch Clear documentation and reporting to support fiduciary governance—regardless of which role you hold The right fiduciary structure for your clients starts with having the right infrastructure behind your practice. Betterment Advisor Solutions makes it practical—not just possible—to take on more plan clients while maintaining the quality of service your clients expect. Ready to build a more scalable retirement plan practice? Explore Betterment Advisor Solutions. Frequently Asked Questions Q: Am I automatically a fiduciary if I advise a 401(k) plan? Not necessarily. Fiduciary status under ERISA is determined by function, not title. If you're providing individualized investment advice for compensation, exercising discretion over plan assets, or rendering investment recommendations on an ongoing basis, you may be a fiduciary regardless of how your agreement is written. If you're unsure of your status, have your compliance team review both your engagement agreements and your actual conduct. Q: What's the difference between a 3(21) and 3(38) fiduciary? A 3(21) is a co-fiduciary who provides investment recommendations—the plan sponsor retains final decision-making authority and the associated fiduciary liability. A 3(38) is a discretionary investment manager who selects and implements investment decisions independently, shifting investment-related liability away from the sponsor. The key distinction is who has final decision-making authority—and who bears the consequences. Q: Can I serve as a 3(38) fiduciary if I'm an RIA? Yes — registered investment advisers can serve as 3(38) investment managers for ERISA plans, provided the service is within the scope of their investment adviser registration and is clearly outlined in a written investment management agreement with the plan. Many RIAs serving as 3(38) managers also confirm that their E&O coverage extends to discretionary management of ERISA plan assets. Q: What happens if my agreement says 3(21) but I'm making discretionary decisions? This is a significant compliance risk. ERISA looks at function, not just the language in your contract. If you're exercising discretion over investment selections—even informally—you may be treated as a 3(38) investment manager without the formal agreement that governs that liability transfer. That gap can expose both you and your client. If this describes your current practice, review your agreements with legal counsel promptly. Q: How does a 3(16) fiduciary differ from 3(21) and 3(38)? A 3(16) plan administrator is responsible for the operational and compliance side of running the plan—filing Form 5500, distributing required participant notices, managing enrollment, and maintaining plan documentation. It's a distinct role from the investment-focused 3(21) and 3(38) designations. Many plan sponsors are personally serving as their own 3(16) administrator without realizing the liability exposure that carries. Betterment Advisor Solutions offers 3(16) administrative services that can offload that burden from the sponsor—and from you.