Advisor Resources

The 401(k) security briefing your plan sponsors need Jul 2, 2026 12:34:37 PM AI-enabled fraud is targeting retirement plans. Here's how advisors can help sponsors. Retirement plans are a high-value, low-vigilance target: big balances, infrequent logins, and multiple service provider touchpoints. AI has made the fraud landscape meaningfully worse in the last 18 months. This is the security briefing your plan sponsor clients probably haven't gotten yet. Why 401(k) plans are uniquely exposed Retirement assets sit at the intersection of everything fraudsters look for: They're often a participant's second-largest asset after their home, logins are infrequent enough that losses can go unnoticed for weeks, and money moves through a chain—advisor, sponsor, recordkeeper, TPA. Fraudsters may use publicly available information to target participants, plan sponsors, and advisors. Here are 7 steps you can take to help protect your clients' security. The 2026 threat landscape The human verification layer that we’ve relied on for so long is no longer reliable. As AI capabilities increase, fraudsters are finding ways to target retirement plans. One type of attack involves voice-based phone calls, where a fraudster convincingly imitates a person's voice using AI, a technique known as a deepfake. Fraudsters are also using deepfake video and increasingly targeted social engineering, where attackers research their victims in advance to make impersonation attempts more convincing. Worryingly, deepfake identity fraud is on track to surge nearly 500% over the course of 2026. What regulators now expect The Department of Labor has issued cybersecurity guidance for ERISA plans that sets a clear bar for what plan sponsors should look for from providers. Key requirements include a documented security program, controls that match today's threat environment—multi-factor authentication (MFA), active monitoring, encryption—diligence on third-party vendors, and an incident response plan that's actually been tested, not just written down and filed away. You can learn more about the DOL guidance and how Betterment addresses it here. Your plan sponsor clients may not know this guidance exists. That's an opening: Cyber diligence is now part of what it means to select a prudent provider, and advisors who can walk sponsors through that checklist are delivering real value. Practical protection for participants Most retirement-plan fraud doesn't come from databases getting breached. It comes from people getting tricked—a convincing phone call, a fake login page, a weeks-long relationship that turns out to be a scam. The basics go a long way: Turn on MFA—app-based, not just SMS. Use a password manager. Add a trusted contact to the account. Check the account balance and activity once a quarter. None of these are complicated, but few participants have done all four. If a participant's email gets compromised, here's the playbook to walk them through: Lock down access. Help them reset credentials to their email account, the plan portal, and any other financial institutions. Force a logout of all active sessions. Re-enroll MFA from a different device. If the attacker had access to the phone or computer the client normally uses, that device may still be compromised—and any new MFA factors enrolled on it could be captured too. Use a phone, tablet, or computer the attacker hasn't touched. Brand-new isn't required; just different. Audit the last 30–90 days. Look at distributions, loans, beneficiary designations, and address changes. Watch for rollover requests. They're the most common follow-on to an account takeover — flag anything that comes in shortly after. Document everything and notify the recordkeeper and the plan sponsor. The paper trail matters. How sponsor-level controls work A key control in managing a retirement plan is the application of access controls to ensure that high-risk activities are restricted to authorized parties. Roles such as advisors or plan sponsors may be established with some plan administration capabilities; however, transactions such as distributions, signer changes, plan amendments, and payroll-related changes require authentication directly from the plan sponsor. A forwarded email, even one that looks completely legitimate, does not authenticate a transaction. The reason the line is drawn there is to make social engineering hard. Fraudsters try to impersonate advisors, plan sponsors, and service providers. How to use this in your practice Security is a natural way to reopen a conversation with plan sponsors who haven't reviewed their provider in a while. The entry point isn't "you should switch providers"—it's "when was the last time anyone walked you through the cyber-diligence side of your plan?" Betterment's Trust Portal and the 401(k) security brochure give sponsors something concrete to work from. Both are available through your Client Success Manager or at trust.betterment.com. Ready to bring a sponsor into the conversation? If you already have an account with Betterment Advisor Solutions, use the Request a Proposal button in your advisor dashboard—it reaches the right team within one business day. If you or a plan sponsor that you support would like to access documentation to support due diligence activities, the Betterment trust portal can be used to access independent SOC audit reports, key policies, and other supporting documentation. If you're exploring offering a 401(k) with Betterment for the first time, learn more here.

What’s new from Betterment Advisor Solutions Jun 30, 2026 4:17:48 PM More advisor control and automation across onboarding, portfolio management, and billing with smarter allocations, migration insights, and streamlined invoicing. Get more control and automation at every step of the client experience. Now you can onboard clients with smarter initial allocations, migrate accounts with deeper portfolio insights, and enable itemized invoices at every fee assessment. Table of contents Portfolio management Smarter initial allocation Increased visibility on portfolio changes Upcoming: Fully Paid Securities Lending Program Billing New: Client invoices Onboarding Docusign on client agreements Integrations Slant Greenboard Retirement AI plan benchmarking How Defining Wealth built a retirement practice from scratch using our platform Top content How a former Dimensional VP kept his investment philosophy and now runs a lean, modern practice on Betterment Tax-smart charitable giving for your clients Launching soon: AI-powered onboarding, direct indexing & unified managed accounts Smarter initial allocation Select a portfolio strategy and Betterment will assign an appropriate starting risk level based on account type, goal, and time horizon. You can always override it, but the initial allocation work is done for you. Clients’ accounts land in a smarter starting default, and you can deliver consistency across your entire book. Increased visibility into bulk portfolio migrations Get a clear view of how portfolio changes will affect clients at scale before execution. The bulk migrations flow now surfaces expanded details on your selected migration strategy, including rebalancing status, gains allowance remaining, and the number and types of accounts impacted. Log in to explore now You can now enroll clients in our Securities Lending Program Your clients will be able to earn additional income on eligible shares they already hold through our upcoming Fully Paid Securities Lending (FPSL) Program. Through FPSL, clients can lend fully paid stocks and ETFs from their Betterment account to institutional borrowers. Your clients will share the income generated from these loans, while maintaining economic ownership of their investments including the ability to sell their shares at any time. Enrollment is open now; lending and payouts will begin once the program launches, with Betterment facilitating the process, making it easier for both clients and advisors. Learn more Automated client invoices Starting in July, you can automatically generate and deliver itemized client invoices at the time of every fee assessment, so you can focus on your clients—not your compliance checklist. Each invoice includes billing period dates, total fees assessed, fee formula, AUM basis, and itemized Betterment and advisor fees. Invoices are published in your dashboard and in your client’s documents tab with optional email notification, helping ensure consistent delivery of required billing details. Explore billing Client agreements with Docusign Docusign is now integrated into client onboarding and account opening. You can send client agreements for electronic signature, capturing the client's name, initial, email and the date signed. You can also maintain multiple versions of your client agreement, designating one as the firm default and selecting the right version for each household at onboarding. Through the new Client packages tab, you’ll have access to all of your households’ signed agreements, with the ability to review timestamps, and download individual or bulk pdfs. Each package includes client agreements plus key Betterment documents such as Form ADV, Form CRS, and the privacy policy. Explore our client agreement automation Two new integrations that help you streamline manual tasks Slant: Get a clearer view of what needs your attention. Slant combines CRM, AI note-taking, data enrichment, and project management in one platform. You can interact with client records, automate workflows, and surface next steps without manual CRM upkeep. Greenboard: Simplify compliance monitoring with the ability to access Betterment data. Greenboard pulls account information through the ByAllAccounts feed at no additional cost, helping reduce manual oversight and streamline compliance workflows. View all integrations AI-powered benchmarking With our new AI-powered benchmarking tool, you can easily contextualize how a plan's participation and contribution rates stack up against national benchmarks. The refreshed plan sponsor dashboard brings everything else into focus too, putting priority tasks, plan insights, and payroll status in one place, so sponsors and advisors can quickly see what needs attention. How Defining Wealth expanded into 401(k)s without growing headcount Jacob Gardner, co-founder of Defining Wealth—an RIA serving Millennial and Gen Z entrepreneurs in Nashville—needed a 401(k) solution for his business-owner clients but lacked retirement plan infrastructure and a team already stretched to capacity. That’s when he turned to a platform he was already familiar with. With Betterment, he launched three plans without adding headcount. The setup was straightforward. Jacob stepped into the 3(38) investment manager role, taking full discretionary authority over plan investments, while Betterment handled compliance and day-to-day operations as the 3(16) partner. That meant he could expand into retirement services without hiring a specialist, building new infrastructure, or disrupting what was already working. Learn more about our 401(k) solution One custodian, no excess overhead When Massimiliano De Santis, a former vice president at Dimensional Fund Advisors, launched his own RIA, he set out to find a partner that could keep the practice lean without compromising his investment approach. He chose Betterment Advisor Solutions as his sole custodian, a platform uniquely suited to his clientele that took on the day-to-day execution of investment management, compliance recordkeeping, reporting, and back office operations, while the investment thinking remained entirely his own. The result was a self-sustaining practice that freed him to focus on what matters most, building client relationships and driving growth. Take a look inside his practice What's next for our portfolio management suite Portfolio management is entering a new phase. For years, advisors have had to choose between automation and control, stitching together different systems to get the flexibility, tax optimization, and customization they needed. What we demoed live earlier this month represents one built-in system where high-growth firms can thrive — new advisor controls, expanded portfolio construction capabilities, and deeper tax-smart automation designed to help firms personalize more without sacrificing scalability. Here's what's live, what's launching soon, and why it adds up to something advisors don't want to miss: AI-powered onboarding, direct indexing, unified managed accounts, and new tax simulation tools. Watch a preview Why charitable giving may be your most underutilized client conversation Bring tax-smart charitable giving into client conversations with Daffy, a modern donor-advised fund platform available on Betterment that helps advisors integrate giving into broader planning strategies. In a recent webinar, Betterment sat down with Adam Nash, CEO and co-founder of Daffy, to discuss the case for DAFs in today’s tax landscape. They covered real client scenarios, including tax-efficient rebalancing, contribution bunching, and high-income year planning. The session also provided an overview of Daffy’s platform and how advisors can incorporate charitable giving into their planning conversations. Watch the webinar Log in to explore what’s new, or reach out to your relationship manager if you’d like to take a closer look at any of these features. If you’d like to take a look around with someone from our team, book a demo.

What breakaway advisors experience when they start up with Betterment Jun 25, 2026 9:34:42 AM A practical guide for breakaway advisors on how to launch the right way—and what to expect when you do. Going independent is one of the biggest professional decisions an advisor can make. The planning phase—after you've decided but before you've made the move—is where the foundation gets built. The platform you choose, the technology you set up, and the client transition process you design will shape your first year and beyond. For breakaway advisors facing hundreds of tech decisions with limited operational experience, the goal is to find a foundation that doesn't require you to stitch tools together—and a custodial partner invested in your success from day one. With Betterment Advisor Solutions, advisors don't just get infrastructure—they get a partner that brings dedicated service and support and built-in tax optimization to every client interaction, from the moment of onboarding through every growth phase ahead. We sat down with our Platform Solutions team to find out what it’s really like to transition to Betterment. What does the onboarding process look like when you first join Betterment Advisor Solutions, and how long does it take to get up and running? We can have a new firm set up in about 15 minutes. Once an advisor signs up, and we review their ADV and filings, the account will be activated and they can log in. Setting up an account involves a few steps: The advisor uploads their business logo, gets their agreements in place, sets up billing preferences, and starts building their firm’s custom portfolios (if desired). With a bit of planning, a firm-specific setup could happen in an hour. For advisors who have just completed registration and are racing to onboard their first clients, that speed is meaningful. You're not waiting weeks to get operational. How does Betterment support the client transition process, from account opening to ACATS transfers? The transition process is one of the things I'd highlight as a real differentiator with Betterment. Everything is digital. For many advisors, that alone is a departure from the paper-heavy processes they're used to. Account opening takes just a few minutes, and we have a paperless ACATS workflow that makes moving assets over pretty straightforward. The platform supports a wide range of ETFs, mutual funds, and stocks. Our team will help create a custom migration plan based on the portfolio strategies you plan to use for your client. What I think advisors really appreciate is what happens after the assets land. You choose a tax-aware migration strategy and set a gains allowance for each client, and the system transitions accounts accordingly. Smart tax lot selection is embedded in automated rebalancing transactions, so it avoids short-term capital gains and only triggers long-term gains up to the budget you’ve set. Before anything gets sent to the client, you get a full review. At that point, you can update settings, check the transfer details, and only then send the request over. You're always in control of what goes out, and it’s all completely digital and easy for the client to authorize with a few clicks. The same logic applies when you're updating a portfolio strategy on an existing goal. You can review and edit rebalancing settings the same way. What does day-to-day practice management look like on the platform once you're live with clients? Once you're live, day-to-day management all runs through Co-Pilot, which is essentially your command center for tracking client activity and anything that needs your attention, all in one place. The experience is fully digital and vertically-integrated, so you're not bouncing between systems. You can act on individual accounts or work in bulk with scaled tools, depending on what the day calls for. The biggest difference with Betterment is automation. When you're building a firm from scratch, often with a lean team, automation isn't just nice to have. It's what makes the economics of a new independent practice actually work. Say a client calls and wants to put $5,000 into their IRA. Instead of your team needing to log in and invest the cash by manually buying securities, the deposit is automatically invested according to the portfolio strategy and allocation you’ve selected for the client. Fee calculations, account rebalancing, the ongoing maintenance work—it's all handled. But the key is that it’s flexible. You can customize the automation, break things into manual processes when you want more control, or turn it off entirely. It's really the best of both worlds. How does automated rebalancing work, and how much time does it save advisors on portfolio maintenance? Automated rebalancing is one piece of a broader suite of tax-smart portfolio management tools that all work together behind the scenes. Betterment offers both reactive rebalancing (using deposits, withdrawals, and dividend reinvestments to minimize drift) and proactive rebalancing (based on drift triggers you can customize as needed). It even handles complex situations like concentrated stock positions or inherited portfolios. Multiply that across a full book of clients, and the time savings—plus the after-tax performance impact—are significant. For a firm without a large operations team, this is the infrastructure that lets you manage a full book of clients without proportional headcount. What does the tax-smart transition process look like from the advisor's perspective, and how do you communicate it to clients? From the advisor side, you're never doing this alone—you have a dedicated Platform Solutions manager guiding the transition, plus relationship management and customer support as backup. The tax-smart tooling itself is comprehensive, and included with the platform fee: tax-loss harvesting, asset location, smart tax lot selection, gains allowances, sell-only substitutes, and rebalancing, all working together. This isn't a bolt-on feature set—tax-efficient investing has been part of how Betterment was built from the beginning, which means advisors can deliver genuinely personalized, tax-aware advice at scale. On the client communication side, we've found that clients who receive clear, thoughtful comms ahead of a transition are rarely upset by the process. They actually appreciate it. We give advisors the resources to make that easy: onboarding videos, communication templates, and plenty of lead time to address questions before they come up. When clients see how carefully the transition has been planned, it builds trust right from the start. What level of human support is available to advisors, and how quickly can you reach someone when you need help? Going independent doesn't mean going it alone. On average, it takes about a minute to answer your call, and under one business hour to answer emails.* You have a dedicated Platform Solutions manager guiding the transition, plus relationship management and customer support as backup. How does the platform integrate with the tools advisors are already using, like their CRM, financial planning, and compliance software? Betterment is a vertically-integrated custodian. Our platform is built to fit into the workflows you already have rather than replace them. Our integrations automatically connect Betterment accounts to your existing CRM, financial planning software, and compliance tools, so client information, investment holdings, and account activity all show up in your dashboards without extra legwork. The great thing about the platform is that it has all you need to launch or transition your existing practice, with the ease and sophistication of Betterment’s technology as the foundation. What does the client-facing experience look like, and how do clients typically respond to the new experience during a transition? The client experience is honestly one of Betterment's biggest differentiators for advisors. Betterment was built as a consumer platform first, so the app and web experiences have always been at the forefront of what we do. Clients can also sign up, link their accounts, and start navigating on their own without needing to call anyone for help, which takes routine onboarding tasks off your team’s plate so they can focus on what clients are really paying for: advice. As for moving clients onto the platform, the main concerns are usually: how long will this take, and will my clients push back against the change? But we’ve found when advisors communicate clearly and confidently, clients tend to follow their lead. What does a compliant transition actually require? A compliant transition typically unfolds over 90 days—reviewing your employer agreement, forming your entity, getting registered, and building out the business infrastructure you need to operate. For a full step-by-step breakdown, see our guide. *Based on Betterment internal data October 2025 - March 2026.

What better portfolio management looks like for high-growth RIAs Jun 23, 2026 9:19:09 AM One platform for custody, onboarding, portfolio management, and billing—built for advisory firms that are scaling fast. Portfolio management is entering a new phase. For years, advisors have had to choose between automation and control, stitching together different systems to get the flexibility, tax optimization, and customization they needed. What we demoed live on June 9 represents one built-in system where high-growth firms can thrive: New advisor controls, expanded portfolio construction capabilities, and deeper tax-smart automation designed to help firms personalize more without sacrificing scalability. Our goal is simple: to build the only portfolio management system high-growth advisory firms need—one that gives advisors the freedom to manage portfolios their way, with powerful tax-smart automation always within reach. We covered a lot of ground. Here's what's live, what's launching soon, and why it adds up to something advisors don’t want to miss: Onboarding is critical to lasting client relationships Automation and control aren't in conflict Direct indexing is coming, without minimums or extra fees Tax tools are already embedded—and more precise than most advisors realize Coming soon: More control, more automation, more AI If you want to see it in action, you can watch the webinar here. Onboarding is critical to lasting client relationships Most platforms treat onboarding and portfolio management as separate problems. We don't. In the demo, we walked through a new AI-powered onboarding flow. Advisors can upload a client's brokerage statement, and our document reader extracts account data, holdings, and transfer information automatically. It pre-populates the client invitation instead of requiring manual entry at every step. Asset transfers are bundled directly into that invitation, so the move from new client to assets on the way happens in one flow instead of two. The system also surfaces holdings that fall outside the target portfolio before anything is transferred. Advisors can choose to liquidate before the transfer, bring holdings over with rebalancing disabled, or let automation handle it. The platform is transparent about what is going to happen before it happens. "We want to remove friction from the advisor workflow. So that's where we're taking our first pass, improving asset transfers, because we know that the work to onboard a client can be incredibly labor-intensive and operationally expensive." —LT Hardy, Product Manager, Betterment Advisor Solutions For firms onboarding clients at scale, reducing that operational weight at the front end can really compound across every new relationship. Automation and control aren't opposites, and you shouldn't have to choose This was probably the clearest through-line of the entire demo, and it's worth saying directly: "You have things that you want to automate, and you have things that you want to control. But really, it's not about living at one end of the spectrum or the other."—Devon Klumb, Director of Sales, Betterment Advisor Solutions In practice, that means a portfolio management suite that spans from fully automated to fully manual. On the automated end, our model marketplace offers expert-built models with tax-loss harvesting, rebalancing, and tax coordination available across third-party and Betterment managed options. For advisors who prefer hands-on execution, we're expanding trading controls later this year. In between sits the unified managed account experience that will launch early this fall. Advisors will be able to blend first-party models, third-party models from the marketplace, proprietary firm models, and direct indexing sleeves into a single client portfolio. They will also be able to build around existing holdings, manage around legacy positions with embedded gains, and preview the full tax impact of a rebalance before trades execute. Crucially, the platform's tax tools—tax-loss harvesting, drift controls, fractional shares, automated rebalancing—run across the full spectrum. Your clients get the same infrastructure regardless of where their portfolio sits on it. Direct indexing is coming, without minimums or extra fees We previewed direct indexing to pull back the curtain and show you what’s coming before the solution is available later this year. Betterment's direct indexing will offer three sleeves covering the U.S. market to start, available to drop into any client portfolio in any combination. There are no minimum asset sizes for advised accounts, and direct indexing is included in the platform fee—no add-on cost. The feature that makes it genuinely useful for complex client situations: security exclusions. If a client is an officer of a public company, holds concentrated exposure elsewhere, or simply doesn't want dollars in a particular name, advisors can provide that instruction directly and the system will minimize tracking error around it. Exclusions aren't an edge case—they're built into how the offering works. The system will take a sampling-based approach, aiming to find the most efficient number of positions at a given dollar threshold. No unwieldy index replicas. No noise cluttering a client's account. Tax tools are already embedded—and more precise than most advisors realize Tax efficiency has always been central to how Betterment's platform works. What the team walked through is how much granular control advisors already have over it, and how many of those tools are already running for their clients today. The gains allowance feature lets advisors set a per-household or per-account cap on realized gains for the calendar year. Every automated rebalancing decision the platform makes gets evaluated against that number. Before any trade executes, advisors will soon be able to see exactly what will be sold, what will be purchased, what the after-trade drift will look like, and how the transaction tracks against the gains budget—with the ability to switch lot selection methodology and watch the numbers update in real time. For advisors managing a long tail of clients who deserve sophisticated tax management but can't justify fully custom treatment for every account, this is what scalable personalization actually looks like in practice. The platform applies the same rigor at $50,000 that it applies at $5 million. Coming soon: More control, more automation, more AI In the webinar, we focused on what's available today, but several meaningful additions are on the way. Direct indexing is launching later this year, with three sleeves covering the U.S. market. Advisors will be able to drop any combination into a client portfolio, with no minimum asset sizes and no add-on cost. Security exclusions are built in from the start, so advisors can account for concentrated positions, restricted securities, or client preferences — and the system is built to minimize tracking error around those instructions automatically. Manual mode is also coming, giving advisors direct trade control for situations where automation should step aside. Buy or sell specific positions, choose a tax lot strategy, and route proceeds to cash or a linked bank account. Beyond onboarding, AI is being built into more of the advisor workflow. Performance reporting, meeting prep, and client proposals tools are all areas where AI features are in development — with the goal of putting more of the platform's data to work for advisors before, during, and after client meetings. And in the second half of this year, new advisor-facing controls over money movement are coming. Deposits, withdrawals, and transfers between accounts are all getting new tooling. The "sell directly to withdraw" flow shown in the demo is the first among other updates in our ambitious product roadmap to meet the needs of advisors. Watch the full recording to learn more, or explore the platform.

2026's IPO pipeline: What it means for portfolios Jun 16, 2026 11:05:08 AM The mechanics behind mega-cap IPO inclusion—and what advisors and plan sponsors should know before these companies hit the indexes. A wave of high-profile IPOs is coming to market in 2026, and the names involved are unlike anything the market has seen in years. SpaceX, OpenAI, and Anthropic are all targeting public listings this year, with a combined estimated valuation exceeding $3 trillion, though only a portion of that value will initially come to market. How much comes to market, and when, is something each company and its underwriters are managing deliberately. The relevant question isn't whether these companies will dominate headlines. It's how they'll enter the indexes, how much exposure your clients and participants will actually have, and what that means for portfolio construction going forward. How these companies enter the indexes and when When a company goes public, its shares don't automatically land in broad market indexes. There's typically a seasoning period that gives markets time to establish pricing, assess financials, and let float develop. But the scale of the 2026 IPO pipeline has prompted several major index providers to revisit those timelines. The changes vary, and the differences matter. The NASDAQ-100 Index moved first. On May 1, 2026, it introduced a fast-track entry process for mega-cap IPOs, reducing the required trading period from three months to 15 days when certain criteria are met. It also replaced the minimum float requirement with a modified market capitalization test. The practical result: a company like SpaceX could be eligible for inclusion in the NASDAQ-100—and by extension the $500B QQQ ETF—within two weeks of its IPO. CRSP, which powers the Vanguard Total Stock Market ETF (VTI, ~$1.8T AUM), already had a five-day fast-track in place and is keeping it. What changed is the addition of a float-adjusted market cap test that gives large IPOs a clearer path to qualifying even when their public float is limited. SpaceX could appear in VTI within five trading days of going public. FTSE Russell has proposed a fast-entry framework for IPOs expected to rank among the top 500 U.S. companies by market cap, with potential inclusion around five trading days post-listing. Those changes are still subject to final consultation. MSCI has proposed simplifying its early inclusion criteria by introducing transparent size thresholds anchored to its existing Mid Cap market cap levels. Under the proposal, large IPOs would typically be added after the tenth trading day. Also still subject to final consultation. The S&P 500 is the notable exception. Following its own consultation in early June 2026, S&P Dow Jones Indices opted to maintain existing eligibility requirements for the S&P 500, S&P MidCap 400, and S&P SmallCap 600, including the 12-month seasoning requirement and the positive GAAP earnings screen. S&P did introduce a fast-track for its broader Total Market Index and Dow Jones U.S. Total Stock Market Index, allowing eligible mega-cap IPOs to enter within five business days. But the flagship S&P 500 is holding the line. Float-adjusted weighting: Why the headline valuation isn't the portfolio weight Even for indexes that fast-track these IPOs, the exposure your clients or plan participants will have is likely much smaller than the companies' total valuations suggest. That's because most major indexes weight constituents by float-adjusted market cap, not total market cap, and the 2026 mega-cap IPOs are expected to launch with very limited public float. Take SpaceX: With a targeted valuation approaching $2 trillion and a planned raise of up to $75 billion, only roughly 3–4% of total shares would be publicly trade-able at IPO. The remaining ~96% stays locked up with Musk, employees, and private investors. The NASDAQ-100's updated rules add a 3x float multiplier for weighting purposes, so a 4% float is treated as a 12% adjusted float. Applied to SpaceX at its expected IPO size, that translates to an adjusted market cap of roughly $225 billion rather than the full $2 trillion. The result is an estimated index weight likely in the 0.5–1% range for the QQQ. That's still meaningful, but a far cry from what the headline valuation alone would imply. Across indexes, some analysts estimate cumulative passive demand for SpaceX could reach $20 billion in the weeks immediately following its IPO, representing roughly a quarter of its targeted raise absorbed by index funds mechanically, independent of fundamental valuation. That demand dynamic is worth understanding when evaluating post-IPO pricing. What this means for Betterment portfolios For those invested in Betterment's managed portfolios, exposure to these companies will depend on which portfolio they're in—and which underlying ETFs that portfolio uses. The Betterment Core portfolio primarily accesses U.S. large-cap equities through State Street ETFs that track the S&P indexes (including SPYM, which tracks the S&P 500). Given S&P's decision to maintain its 12-month seasoning requirement, Core portfolio investors are unlikely to see SpaceX, OpenAI, or Anthropic appear in their holdings anytime soon following IPO. That eligibility clock starts at listing. Other Betterment managed portfolios, including Value Tilt, Innovative Tech, SRI (Broad, Climate, and Social), and GS SmartBeta, use total market ETFs such as VTI, or actively managed ETFs. Clients and participants in these portfolios have a meaningfully higher likelihood of gaining exposure to these companies shortly after listing, given the faster inclusion timelines at CRSP and other providers. This is a distinction worth surfacing in client and participant conversations, particularly for advisors whose clients hold multiple Betterment portfolios or for plan sponsors whose participants are distributed across portfolio options. Concentration: A broader portfolio consideration Beyond the mechanics of index inclusion, the addition of $3 trillion in primarily tech and tech-adjacent companies has the potential to accelerate an existing trend. Technology and tech-adjacent sectors like Communication Services account for over 40% of the S&P 500. For investors relying on broad market index funds for diversification, it's worth framing this clearly: The indexes will continue to reflect the market as it is—that's the point. But as the market itself becomes more concentrated in a small number of mega-cap names, the diversification benefit of any single broad index fund can erode. This isn't new. The 2026 pipeline would meaningfully accelerate a trend that's been building for years. For advisors, this is a natural conversation to have around asset allocation, particularly for clients who may not realize that their "diversified" index exposure has grown more concentrated over time. For plan sponsors, it's worth considering how participants are distributed across portfolio options and whether the default investment mix reflects the risk profile appropriate for your workforce. For clients who want more customization without giving up automation and tax efficiency, Custom Portfolios will offer a new way to build a portfolio using both ETFs and individual stocks. One important note for clients considering direct IPO positions: The concentration of price-insensitive demand from index funds and retail buyers may temporarily support post-IPO prices in the immediate weeks. As lockup periods expire and float expands, those dynamics can shift materially. Sizing and timing relative to the broader portfolio matters. The bottom line The 2026 IPO pipeline is significant, but the implications for managed portfolios are more nuanced than the headlines suggest. Exposure will vary by portfolio, float dynamics will limit initial index weights, and concentration risk is real but manageable with the right asset allocation. For advisors and plan sponsors, the value is in understanding the mechanics well enough to have clear, confident conversations with the people who are counting on you.

How portfolio rebalancing works to manage risk for your clients Jun 12, 2026 1:30:00 PM Portfolio rebalancing, when done effectively, can help manage risk and keep your clients on track to pursue the expected returns desired to meet their goals. What is rebalancing? Rebalancing is a Betterment feature that seeks to reduce drift in your client portfolios. Betterment performs two types of rebalancing on your clients’ behalf. First, in response to cash flows such as deposits, withdrawals, and dividend reinvestments, Betterment buys underweight holdings and sells overweight holdings. Second, if cash flows are not sufficient to keep a client’s portfolio within its applicable drift tolerance, automated rebalancing sells overweight holdings in order to buy underweight ones, aligning the portfolio more closely with its target allocation. Measuring portfolio drift Over time, the value of various holdings within a diversified portfolio moves up and down, drifting away from the target weights that help achieve proper diversification. Over the long term, stocks generally rise faster than bonds, so the stock portion of your client's portfolio will likely go up relative to the bond portion—except when you rebalance the client’s portfolio to target the original allocation. Clients may also transfer in assets from outside Betterment that are not part of the target portfolio strategy and/or allocation. The difference between the target allocation for your client's portfolio and the actual weights in your client's current portfolio (e.g. their actual allocation) is called portfolio drift. Betterment and partner portfolios For Betterment constructed portfolios (excluding Betterment’s Crypto ETF portfolio*), we broadly define portfolio drift as the total deviation of each “super” asset class (put in positive terms) from its target allocation weight, divided by two. These six super asset classes are US Bonds, International Bonds, Emerging Markets Bonds, US Stocks, International Stocks, and Emerging Markets Stocks. For portfolios that include a cash allocation, drift in the cash allocation is measured alongside super asset class drift. Here’s a simplified example, with only four assets: Target Current Deviation (±) U.S. Bonds 25% 30% 5% International Bonds 25% 20% 5% U.S. Stocks 25% 30% 5% International Stocks 25% 20% 5% Total 20% Total ÷ 2 10% A high drift may expose your client to more (or less) risk than you intended when you set the target allocation. Drift for advisor-built custom model portfolios Your firm may elect to construct a custom Model Portfolio on our platform. If so, drift for these portfolios is evaluated on the security group level, rather than at the super asset class level as described above for Betterment constructed portfolios. Betterment will calculate drift at the security group level for custom model portfolios even if the security group(s) used are pre-populated options provided by Betterment in the interface. Advisors can also set customized drift tolerance thresholds for their client’s portfolio. For reference, security groups are groupings of ETFs that include a primary ticker, and may include secondary and/or IRA secondary tickers designed to help reduce wash sales and allow for tax-loss harvesting opportunities. This means that for custom model portfolios, drift is calculated as the total deviation of each security group (put in positive terms) from its target allocation weight, divided by two. *Please note: As of the date of the publication of this article, Betterment’s default drift tolerance threshold is generally 3% for stock and bond ETF portfolios, as well as portfolios containing mutual funds, and 7% for Crypto ETF portfolios. For custom Model Portfolios that include a cash allocation, drift in the cash allocation is also measured alongside security group drift. *Please note: As of the date of the publication of this article, Betterment’s default drift tolerance threshold is generally 3% for managed portfolios, except for the Crypto ETF portfolio, which uses 7%, and its Betterment-managed custom portfolios on the retail platform, which use a 7% threshold and monitors drift at the security group level. For advisor-constructed custom model portfolios, advisors can set a custom drift tolerance threshold. Betterment may change the default drift thresholds without notice. Rebalancing Betterment automatically takes actions to reduce drift for your client through reactive-flow rebalancing and proactive rebalancing, depending on the circumstances, and with an eye on tax efficiency. If you choose to take advantage of Betterment’s tax-smart transition features, we will aim to respect the customized drift tolerance and gains allowance that you’ve set when rebalancing your clients’ goals. A gains allowance can reduce eligible opportunities to reduce drift through rebalancing, because Betterment will not initiate rebalancing transactions (or will only initiate partial rebalancing transactions) in a client goal with gains in overweight securities above the gains allowance. Learn more. When Betterment rebalances a portfolio with a cash allocation, its rebalancing algorithm will first seek to bring the portfolio's cash allocation back to its target before investing in securities. If cash is below its target allocation, rebalancing will first use available funds (e.g., deposits, dividends, and/or proceeds from selling overweight holdings) to increase cash up to target, and only any remaining available cash is invested in securities; conversely, if cash is above its target allocation, the excess cash above target will be invested in securities as a part of the rebalancing transaction. Reactive rebalancing This method involves buying or selling when cash flows into or out of the portfolio happen. Cash flows (such as deposits, dividend reinvestments or withdrawals) can be used to rebalance your client's portfolio. Fractional shares allow us to allocate these cash flows with precision. Inflows: When a client makes a deposit or receives a dividend, we use the inflow to buy holdings that are currently underweight, reducing their drift. The result is that the need to sell in order to rebalance is reduced. Whenever client drift is higher than normal, we calculate the deposit required to reduce the client's drift to zero, and make it easy for them to make the deposit. Although we show the deposit amount needed to bring drift back to 0%, smaller deposits also help reduce drift. Outflows: Withdrawals (and other outflows) are also used to rebalance, by prioritizing selling holdings that are overweight. Proactive rebalancing When cash flows are not sufficient to keep your client's portfolio’s drift within its applicable drift tolerance (such parameters as disclosed in Betterment’s Form ADV), Betterment seeks to rebalance client portfolios by selling and buying assets, aligning the portfolio more closely with its target allocation. Rebalancing requires a minimum portfolio balance (advisors can review the estimated balance at www.betterment.com/legal/portfolio-minimum). The rebalancing algorithm is also calibrated to avoid frequent small rebalance transactions and to seek tax efficient outcomes, such as reducing wash sales and minimizing short-term capital gains. As with any sell trade, our tax minimization algorithm seeks to select the lowest tax impact lots for rebalancing transactions. Since short-term capital gains are taxed at a higher rate than long-term capital gains, we can achieve higher after-tax outcomes by simply waiting for those lots to become long-term before rebalancing, if it's still necessary at that point. As a result, it’s possible for your client's portfolio to experience higher levels of drift without rebalancing if we have no long-term lots to sell. Generally this is because the account is less than a year old, or a substantial portion of the account’s holdings have been purchased within a year. A client account with a gains allowance can also experience higher drift, since rebalancing will not recognize any gains above the gains allowance. And large positions transferred in via ACATs with embedded gains can also lead to higher drift and delay proactive rebalancing. If you’d like to turn off automated proactive rebalancing in a client’s account (so that Betterment only rebalances client’s accounts in response to cash flows), you can do so in the clients tab of your advisor dashboard. Betterment has discretion to limit or postpone rebalancing in order to prioritize other trading activity on any given day, including days where extreme market conditions produce a higher volume of trading. To learn more about rebalancing, see our rebalancing disclosures. Allocation-change rebalancing Changing your client's target allocation by moving the allocation slider and confirming the change could also cause a rebalance. When you update a client's portfolio strategy and/or asset allocation, Betterment will give you the option to select one of our three tax-aware migration strategies. Depending on which option you select, this could result in selling securities and could possibly realize capital gains. As with all sell trades, we will utilize our tax minimization algorithm to help reduce the tax impact. Additionally, before confirming the allocation change, you can review the potential tax impact of the change with Tax Impact Preview. *The Betterment Crypto ETF portfolio is primarily composed of two ETFs that are market weighted in the portfolio, and as such, do not have geographic and stock to bond super asset classifications. See disclosures for more information. Transaction Timelines