Product Guides

FAQ: Custom Portfolios for Advisors Build your own custom model portfolios while leveraging all of Betterment’s sophisticated portfolio management features. What are custom model portfolios? The Betterment Advisor Solutions platform allows advisors to customize portfolios ETFs, single stocks, and mutual funds, while maintaining access to Betterment’s suite of automated features including: automated rebalancing tax-loss harvesting asset location / tax coordinated portfolios tax-optimized sales for withdrawals glide path rebalancing and more How do I create custom model portfolios for my clients? To get started, log into your dashboard and navigate to Portfolios > Create a portfolio > Custom portfolio. Follow the prompts in the module to create securities groups, determine risk levels for your portfolio, and more. What are the program requirements? There are no asset minimums or additional fees required to build custom portfolios. I have more questions - who can I talk to and where can I learn more? Please fill out this form, and our team will follow up with you. Security Selection: What securities are supported? At this time, we support ETFs, mutual funds, and single stocks. What ETFs are supported? Almost all ETFs are supported, as long as there is sufficient liquidity and trading volume. How many different asset allocations can be included in one portfolio? For each custom portfolio, firms can define anywhere from 1 to 25 asset allocations. Betterment Automated Features: What is Tax Loss Harvesting (TLH)? How does this feature work with custom model portfolios? Tax loss harvesting is the practice of selling a security that has experienced a loss—and then buying a similar asset to replace it. The switch does two things: it allows the investor to realize, or “harvest”, a valuable loss while keeping the portfolio balanced at the desired allocation. Capital losses can lower your clients’ tax bill by offsetting gains and reducing ordinary taxable income up to $3000 per year. The custom model portfolios program allows firms to designate a primary, secondary, and IRA secondary ETF ticker for each asset class to be used for TLH. Tax Loss Harvesting may not be suitable for all investors. For more information, please see our full disclosure here. How does Tax Coordination work? Tax Coordination is designed for investors who are saving for retirement in more than one type of account, including taxable accounts, traditional IRAs, or Roth IRAs generally with the same time horizon. Once you set it up, Betterment will look across all of the accounts grouped under retirement and automatically reorganize which assets are held in which accounts. Of these three types of accounts, each are taxed differently: (1) taxable accounts, (2) traditional IRAs or 401(k)s, and (3) Roth IRAs or 401(k)s. With Tax-Coordination, the assets are then arranged (unequally) across all coordinated accounts to help maximize the after-tax performance of the overall portfolio. We do this in a way that keeps the overall allocation the same while boosting after-tax returns. We've outlined the potential benefits of Tax Coordination and some reasons you may not want to use it here. For more information on our estimates and Tax Coordination generally, see full disclosure here. How does Betterment rebalance client portfolios? How does automated rebalancing work? More information about Betterment's automated rebalancing feature is available here. What capital market assumptions are used for balance and spending power projections? Firms can input their own capital market assumptions, or Betterment's team can provide assumptions.

Tax-aware migration strategies Advisors have three options when migrating a client to a different portfolio or changing their allocation -- each with its own tax-optimization strategy. A tax-aware approach that may reduce short-term gains and limit wash sales When this strategy is selected, the client’s goal will be migrated in a tax-optimized way. For taxable accounts, we’ll seek to sell tax lots that are at a loss or have experienced long-term capital gains, but will continue to hold, when possible, tax lots with short-term gains until they either become long-term gains or become losses. For tax-advantaged accounts, we will migrate without regard to embedded capital gains. Regardless of account type, we will prioritize reducing wash sales that could lead to permanently disallowed losses for securities held at Betterment. For this strategy, it is important to remember that the account may have high drift in the short run, but if rebalancing is on Betterment’s algorithms will typically rebalance available losses or long-term gains as they arise (subject to any customized drift settings or gains allowance on your client’s account), as long as the security sales involved will not cause any disallowed losses. Set Target Only Selecting this migration strategy will disable automated rebalancing in client taxable and tax coordinated goals assigned to the portfolio. While rebalancing is off, the client’s goal will be transitioned to the new target portfolio by buying underweight securities with cash deposits and dividend reinvestments, while selling overweight securities to fund withdrawals. This election will often result in high drift, especially if the portfolio or allocation change involves a significant change in composition of the portfolio’s holdings. You can re-enable automated rebalancing from your client’s household page or by contacting us at support@bettermentadvisorsolutions.com. If you wish to further manage tax impact, you can also set a gains allowance for your client’s goal prior to re-enabling rebalancing. To learn more about how a gains allowance operates in client accounts, please review our smart transitions disclosure. Rebalance with no tax-impact constraints For this migration strategy, the client’s goal will be rebalanced as soon as possible to the target portfolio. Betterment will perform this rebalance in a tax-optimized way to the extent possible, but we will not delay selling shares even if doing so could lead to a more optimal tax outcome. Choosing this option could lead to the realization of wash sales for securities that have been recently sold. After trading is complete on the change, the account will typically be 100% in balance with the target portfolio. For each of these migration strategy options, Betterment’s Tax-Impact Preview feature is available in the individual client goal migration flow so that the advisor may see an estimation of the effects of the selection. Note that Tax-Impact Preview is not available for bulk portfolio updates.

Introducing the RIA Tech Suite The RIA Tech Suite brings together complementary technology platforms to help automate critical back-office tasks for advisors. The RIA Tech Suite brings together complementary technology platforms to help automate critical back-office tasks for advisors. Along with RIA in a Box®, RightCapital, and Wealthbox, Betterment Advisor Solutions is excited to introduce the RIA Tech Suite: a set of services and tools that advisors can use to help automate and streamline back-office tasks. Why should firms utilize the RIA Tech Suite? Together, these intuitive and complementary tech tools can streamline everyday practice management, giving you more time to acquire new business and to provide a better experience for your current clients. Additionally, the RIA Tech Suite includes discounted pricing for firms that adopt two or more of the services—a discount that could save the average RIA firm up to $3,200 in their first year.1 Here are the tools available on the RIA Tech Suite: Betterment Advisor Solutions - A leading digital-first wealth management platform that leverages tax-smart technology. RIA in a Box® - Compliance, cybersecurity, and operational software for investment advisors. RightCapital - Wealth planning software that makes planning easier and more powerful for advisors and their clients. Wealthbox - A leading CRM software application that helps advisors manage their clients and collaborate with their team. The RIA Tech Suite can foster growth for tech-centric firms that are focused on efficient client service and expanding their books of business. “Our goal at Betterment Advisor Solutions is to empower advisors to grow their businesses and build deeper client relationships,” writes Jon Mauney, General Manager of Betterment Advisor Solutions. “The four companies that are part of the RIA Tech Suite all share this objective with a common approach to their services: providing beautifully designed, easy-to-use, and powerful tools for advisors and their clients.” The RIA Tech Suite is now available to all registered investment advisors. You can learn more and sign up for this offering by visiting https://riatechsuite.com. Betterment Advisor Solutions is a member of the coalition known as RIA Tech Suite alongside three other platforms: RIA in a Box, RightCapital, and Wealthbox. The four companies are offering advisors who become new clients of two or more members of RIA Tech Suite, discounts on services provided by such participating companies. Betterment and aforementioned firms are not under common ownership or otherwise related entities, and no compensation has been exchanged between the members of RIA Tech Suite for the purposes of entering into this coalition. Terms subject to change. This offering is for investment professionals only and is not intended for use by private investors. ¹ 3200 USD is an estimate of the maximum amount saved on the annual cost for combined subscription fees across all four services noted in this article. Calculation assumes the average of weighted monthly rates offered across all four services plus their onboarding fees, which are subject to change at each service providers’ discretion, and then applies a 15% discount from each. The discount rate of 15% per company is activated upon engagement of a minimum of two companies. Actual dollar amount saved may vary; Betterment makes no guarantee of the specific dollar amount your firm could save.

FAQ: Agreement Automation Process The Betterment Advisor Solutions Client Agreement Automation function will make onboarding your new clients fast, easy, and completely paperless. Will my firm need to update our ADV and/or Customer Agreement to reflect the incorporation of Betterment Advisor Solutions into my practice? Yes, you will need to update your Form ADV Part 2A and most likely your Customer Agreement to reflect the incorporation of Betterment Advisor Solutions into your practice, including (among other things) how your firm uses Betterment’s sub-advisory and brokerage services, and Betterment’s fees. Since each situation is unique, please consult with your attorney or compliance officer. Can Betterment Advisor Solutions automate the signing of my agreement with my client? Yes, you can provide PDF versions of your client agreement, Form ADV Part 2, and privacy policy to include as part of the electronic signup process a client undergoes with Betterment. We also provide reporting in your dashboard about which versions your clients have agreed to, and when. You can read more about our agreement automation feature, including legal disclosures, here. What relationship does the client have with Betterment? Betterment acts as the sub-advisor to your client. You still remain the primary advisor to your client. When your client goes through the new account opening process, they will sign an agreement with Betterment directly as the sub-advisor, and, if you wish, an agreement with your firm directly as the primary advisor. Describe the process your product uses to convert information provided by the client into a risk profile in the interview process. The platform automatically recommends investment goals and associated recommended allocations for each such goal for new accounts established on the platform using the client’s age, information provided by the client during account creation regarding a particular financial goal, and the type of legal account. Am I able to see an archive of electronically executed client agreements? If so, what does this look like? If you enable the agreement automation feature to deliver a paperless account opening process for your clients, an archive of the date/time stamp and the version of the agreement that each client electronically signed is housed on the “Agreements” tab of the advisor dashboard. To learn more about our agreement automation feature, please see here.

Questions about Using Dimensional Funds through Betterment Advisor Solutions Advisors using Dimensional Funds through Betterment can create their own models from scratch or select from a range of pre-built models What is the process for becoming approved for access to Dimensional Funds on the Betterment Advisor Solutions platform? Generally, you will go through an introductory and educational meeting with Dimensional Fund Advisors, after which you should be approved to access Dimensional Funds on our platform. This process can be accomplished in as few as 2 to 3 days. Please email connect@bettermentforadvisors.com to kick-off the approval process. If I am an advisor with access to Dimensional Funds, can I also access them on Betterment Advisor Solutions? Yes, if you are already an advisor with access to Dimensional Funds, you will also be able to access them on the Betterment Advisor Solutions platform. Please contact us at support@bettermentforadvisors.com and we will enable access upon verification from Dimensional Funds. If I already use Betterment Advisor Solutions and have been approved by Dimensional, how long will it take me to get access to create and use Dimensional portfolios once I've made the request? Once you’ve notified us via a message to support, we’ll update your Dimensional Funds status in the Betterment Advisor Solutions platform within 2-3 business days. You’ll receive a confirmation email from us at that time. If I'm new to Betterment Advisor Solutions, how long will it take me to get access to Dimensional Funds once I've completed the process? We typically review new firms on the platform within 5 business days. Please notify us during this time that you are approved to sell Dimensional Funds by sending a message to support@bettermentforadvisors.com. This will allow us to provide access to the Betterment Advisor Solutions platform + Dimensional Funds as soon as your firm’s application is approved. Will there be model portfolio templates available for me to use? We have several templates available for administrators to use as a starting point. Each Dimensional Funds template portfolio corresponds to a specific allocation between equities and bonds and is intended to be broadly diversified. You can use these templates as a starting point. The colleague(s) who have administrator access to Betterment Advisor Solutions will be able to create custom model portfolios using Dimensional Funds. This allows for adjustment of the funds included in the portfolio and their weights. How do I create my own portfolio once approved? Once your firm is approved for access to Dimensional Funds via Betterment Advisor Solutions, your firm's admin person will be able to create model portfolios with Dimensional Funds. It’s easy to create and brand your own custom portfolios from scratch. Firm admins can create client portfolios directly from their Advisor Dashboard through 3 easy steps: Select the “Portfolios” tab on the left Choose the tab labeled “Dimensional Portfolios” Select “Create Portfolio” If additional members of your team need administrative access to the platform, simply have your firm’s primary contact notify us at support@bettermentforadvisors.com. Contact us if you want to become approved with Dimensional Fund Advisors or learn more about Dimensional Funds on the Betterment platform. If you click the link above, Betterment may share your firm name with Dimensional in order to determine firm eligibility to use Dimensional Funds.