Advisor Resources

Getting started with Betterment Advisor Solutions Sep 26, 2022 12:00:00 AM This guide is for investment professionals only. It is not intended for use by private investors. Your use of this website is governed by our Terms & Conditions. Welcome to Betterment Advisor Solutions. Our solution aims to save you time so you can serve more clients, more efficiently, with technology designed to streamline investment management. This guide walks you through the basic steps to get started and contains various resources to help you take advantage of all of the great features available on the platform Part 1: Advisor signup Uploading documents Agreement Automation Feature: If you decide to use this feature, your clients will experience a paperless account opening process. To take advantage of the feature, you will need to provide us with your Form ADV Part 2, Client Agreement, and Privacy Policy (if available). You would upload these documents in the “Agreements” tab of the advisor dashboard so that when the client goes through the signup flow, they will be able to view these documents and electronically sign them. You can learn more about our agreement automation feature, including important disclosure information, here. If you decide to use the Agreement Automation feature, we will display the date and time stamp, as well as the version of the agreement that your client electronically executed on the “Agreements” tab of the advisor dashboard. Those at your firm with “Compliance” access enabled will be able to access the electronic agreements of the firm’s clients through the Compliance page, under “Agreements”. If your agreements change, you can upload them to your firm’s account under the ‘Agreements’ tab so that they can be used for new clients going forward. Please note that Betterment will not automatically send the new terms for your existing clients to agree to; you must send any updated documentation to existing clients outside of the Betterment Advisor Solutions platform. Logos You upload your firm’s logo in the “Settings” tab of the advisor dashboard and this will be used to brand the Client and Advisor Platform, as well as email communications to clients. Please upload a 400 x 100 PNG file and include a knocked out (white version) if available. Anyone with admin access can always update the logos by navigating to the Settings page and using the “Edit” button on the logos section. The default Betterment logo will be used until the firm’s logo is uploaded. Security You can view our security procedures here. Part 2: Fees and billing Betterment Advisor Solutions combines a fixed monthly advisor fee with a platform fee based on your firm’s total AUM with us. The schedule is as follows: Fixed Fee: $150 per funded advisor per month PLUS a tiered wrap fee: Asset Range Wrap Fee $0-$2MM 20bps $2-$10MM 18bps $10-$30MM 16bps $30-$100MM 14bps $100MM+ 12bps NOTE: All of your Betterment assets will be charged the rate based on the tier your firm falls into. When a threshold is met, the wrap fee for your entire client base drops down to the reduced rate. We’ll assess your firm’s assets quarterly and make updates to the overall wrap fee based on where the firm falls at the end of each quarter. You have the ability to set a default advisory fee for your firm and then make adjustments to this fee for each client within your firm. Betterment provides you with the ability to charge an AUM-based fee, a flat fee, or a combined structure-based on tiers. For more information, please visit here. Clients are billed on a monthly or quarterly basis, and both your advisory fee and Betterment’s platform fee are taken directly out of the client’s Betterment account. Once the total fee has been taken out of the client’s account, we assess the amount of your firm’s fee and then initiate an ACH transfer to the firm’s bank account on file. To update the bank account on file, an admin of the firm may navigate to Settings > Fees > Edit. Fee calculation methodology Betterment accrues fees for the period beginning one day before the end of the prior month or quarter and ending two days prior to the end of the current month or quarter. Fees are calculated pursuant to this formula: [sum of the following for each day in the preceding month/quarter: (the balance in a client’s account at the end of the day) * (advisory fee applicable on that day)]. Fees will be realized by selling a portion of the client’s holdings on the last business day of the month or quarter to cover the accrued fee amount. This amount will then be deducted from the client’s account three business days after the transaction date, following the settlement of the resulting trade(s). Fees are billed in arrears and an ACH payment is sent to the advisory firm 2-4 weeks after the end of the month or quarter. Part 3: Client signup and reviewing your clients’ accounts Onboarding a Client The onboarding process is housed in the “Clients” tab within your advisor dashboard. Pre-populated Form: Select “Complete on your client’s behalf.” This will allow you to select the account type, portfolio strategy, and optionally pre-populate some of your client’s personal information. Once you complete the steps, your client will receive a secure link to access the new account workflow via email. They’ll have the chance to correct any pre-filled information and provide missing information during this process. Please note that this link will only be live for 14 days after the time it is sent for security reasons. Blank Form: Select “Share a link with my client.” You will find a unique token link, and you can either copy and paste to a site of your choosing or use the interface to send an email directly. If you send the email using our site, your client will receive a secure link to access the blank new account workflow (live for 14 days for security reasons) via email. If the client does not receive the email, it can be resent to the client by going to the “Clients” tab and resending the invite link. Joint and Trust Account Setup Process: If you would like to set up a Joint account or a Trust account for your clients, one of the clients will need to have an individual account first. Once the client has signed up for an individual account, you can initiate the opening of a joint or trust account on their behalf afterwards. Joint Account Setup Process: If you’d like to open a joint account on behalf of your clients, at least one of the two clients involved must have a personal account before creating the joint account. The personal account does not need to be funded, nor does it need to be linked to a bank account. For detailed steps on getting the account open, please visit here. Trust Account Setup Process: Advisors are able to add a trust account for any existing client with just a few clicks. If you’d like to open a trust account for a prospect, you’ll first need to invite them to open an Individual Taxable or any of the three available IRA accounts. Once the client opens the account they’ll appear in the Clients tab of your Advisor Dashboard. Then follow the steps detailed here to complete the process. Reviewing your Clients’ Accounts From the Clients page, you will be able to view an overview of your clients’ accounts by clicking a specific client’s name. Once you have clicked on the specific client, you will be able to see an overview of their account(s). On this page, you can also take actions on a client’s behalf (such as initiating withdrawals or deposits and updating allocations), or log in as the client to see their view of the dashboard. If you go to the Settings tab, you will also be able to edit the firm billing plan assigned to the client’s household. This page will also provide you with a bit more detail on each client’s goal(s), their specific allocation(s) and investment returns. Part 4: Client funding Clients can fund their accounts in four different ways: (1) linking an active checking or savings account, (2) wiring cash, (3) rolling over an existing IRA account, 401(k) account or other similar plans, and (4) transferring in eligible securities and cash from existing accounts using the ACATS system. Linking an active checking/savings account This process must be initiated by the client. The client needs to login to their Betterment account and navigate to Settings > Funding accounts. They will then be guided to select a bank from our pre-populated list of common providers or by searching for their institution .If they select one of the listed providers, they will be prompted to enter their online banking username and password. If the client does not feel comfortable linking their account electronically or does not have an account with one of the providers listed, they may select the manual option and enter in the routing and account number for their bank account. Wiring cash Wire transfer instructions can be generated by the advisor and the client from the “Transfers” tab in the client portal. After you select the account, the instructions will be generated. The client will be able to do the same and have them emailed to themselves. Our support team can provide your firm with wiring instructions if you are unable to generate them or are having any issues. Rolling over and IRA account, 401(k), or other similar plan This process can be initiated by either the advisor or the client. We use the Direct Transfer method, which has no negative tax consequences. Advisors can generate paper rollover instructions by going to the client page in their advisor dashboard and clicking “Start a transfer.” Once generated, the rollover instructions will be emailed to the client with the advisor copied. The client can generate instructions by logging in to their account, and once logged on they will click on the “Transfer or Rollover” button and then “Rollover to Betterment.”. They will be prompted for the type of account, the name of the provider for the account, the account number, and the approximate balance in the account. Finally, they will electronically agree to our IRA terms. IRA: If the client’s account is not able to be transferred electronically, Betterment will generate an IRA transfer form that will be emailed to the client, which they can also access from their account’s Activity tab. This form will need to be signed by the client and then sent to the institution they are rolling over from. 401(k) and other retirement plan types: Once a client has agreed to the terms, they will be emailed specific instructions on how the rollover check needs to be made out, as well as where the check needs to be sent. Once they receive these instructions they will need to reach out to their provider and provide them with these instructions. ACATS Transfers Betterment supports ACATS transfers of many ETFs and mutual funds, select single stocks, and all USD cash positions. We’ve created an automated account transfer flow, which will ask you a series of questions on behalf of your client and ultimately determine if the account is eligible for an automated transfer. It’s possible that some of your client’s holdings are not currently allowed to be moved via ACATS. When prompted to add your client’s specific tickers, if any search returns a “No match” or you receive a notice that says the ticker is not supported, unfortunately, you’ll only be able to submit a PARTIAL TRANSFER REQUEST on behalf of your client for the supported tickers. Any requests submitted for a full transfer will be rejected. For any holdings that we cannot move via ACATS, you can direct your client to liquidate and then transfer the cash proceeds to Betterment. Any related tax implications should be discussed prior to making this recommendation to your client. Part 5: Dashboard basics: Understanding your advisor dashboard Summary Page This page provides a summary view of the advisor’s clients and their activities. It also includes a search field to access specific households. Weekly Net Deposits: This visual provides an overview of net inflows transacted into client’ accounts per week over the last 8 weeks. These values include withdrawals, deposits & transfers in, auto-deposits, and rollovers. Hover over each week’s bar to view a breakdown of amounts for each of the categories listed. Total Balance: This visual provides a historic view of the advisor’s book value over the last several months and is reflective of the previous market day’s close. Clients Tab This page is where you can invite clients and track all existing clients. The “Invite Client” button on the right-hand side of this page will allow you to invite the client with a pre-populated or blank form. There is also a unique link on this page which you can send to clients to establish an account. Any person who uses this link to set-up an account will automatically be associated with your firm so you can manage the account. You will also collect an advisory fee for this account. Impersonation Feature: When you select a client’s name from the list, you will see a “Login” button to the right hand side, which will allow you to log in as the client. This is great for a remote service model or to help easily answer questions over the phone. Billing Feature: On the “Settings” tab within each household’s overview page, you will find an Edit button next to where the client’s fees are listed, which will allow you to apply a different billing plan made available by your firm’s administrator(s). The assigned billing plan will apply to all investment goals within the household. Portfolio Strategy Adjustment Feature: A similar Edit button will be available next to the client’s designated “Portfolio Strategy” where you are able to adjust the portfolio strategy assigned to each goal as well as the asset allocation (stocks/bonds). Agreements Page This page will display each client you have onboarded via the agreement automation feature. It will also allow you to view the version of the agreement your client electronically signed. If you upload updated documentation, please note that Betterment does not re-send these to existing clients. You will have to send the updated documentation to clients outside of the Betterment Advisor Solutions environment. Support Tab This will provide you with contact information for our Betterment Advisor Solutions support team for both you and your clients. Part 6: Resources We have a great FAQ section with more information and basic questions.

How to Start an RIA (A Guide to Going Independent) Feb 15, 2024 5:52:26 PM The process of becoming a registered independent advisor can be daunting. Here’s what you should know as you start your own advisory practice. Congrats, you’ve decided to start your own RIA! This exciting step can grant you the freedom to create a practice that better aligns with your vision, for both your business and your clients. Whether your goal is to provide personalized investment management or to expand your client base and increase profitability, we’ve got the details to help you get started. In this guide, we’ll cover how long it can take to get set up, key questions to determine if you’re truly ready, and the three phases of launching your firm. How long does it take to start an RIA? While it can take a few months to register as an RIA, the bulk of the transition work will take longer. We recommend allowing four to six months for implementing your plan to transition to an independent RIA. This process, however, could take more or less time depending on the complexity of your firm. Are you ready to go independent? At the outset, we recommend taking a thoughtful approach to answering the following questions: 1. How will your current job influence your transition to independence? 2. Are you prepared to cover the costs of launching and running your new firm? 3. Are you committed to the time requirements for starting a new firm? The next three sections in this article provide a more detailed roadmap, broken down into three phases, to fully assess your readiness to make the transition to being an independent RIA. We’ll review how to leave your current job, along with the steps involved in starting a successful firm. Please note that this content is meant to serve as general guidance, and is not legal advice. Phase 1: Leaving your job and laying the groundwork This first phase is all about building the foundation for your success. As a new business owner, you have a critical advantage: your desire to leave your current role and venture into your own firm. This motivation will give you a head start and can lead to a shorter gap between your last paycheck and your new firm’s first client invoice. Obtain legal counsel and tax guidance Throughout the entire transition process, your legal counsel can help provide guidance on specific subject matter. From reviewing your non-compete agreements with your current employer to helping you set up your business entity, your attorney will help protect your interests. If hiring an attorney for certain steps, such as establishing a legal entity, is too expensive, you may want to consider leveraging affordable services such as LegalZoom. Additionally, having access to a tax advisor early on will be convenient for addressing your tax-related questions. Consult with other RIAs who have taken this path Gaining insight from peers who have started their own RIA can help boost your confidence and better plan ahead for unexpected issues. If possible, speaking to RIAs who transitioned from your current firm can provide even greater insight. (Read how Jason Hamilton, founder of Keep It Simple Financial Planning, launched and built his $40 million firm.) Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Obtain necessary certifications You’ll most likely need a Series 65, or similar license from FINRA, to work as an Investment Advisor Representative. However, some states may waive the Series 65 if you hold another designation such as a CFP® or CFA. Find your office space It’s best to think about your office space early on to avoid potential delays later in the process. Before selecting your office space, whether it be a home office, coworking space, or a standalone physical office, remember to examine your firm’s needs. To help determine what is best for your firm, consider your own work preferences, potential growth for your team, and your clients’ desired working style. Budget for personal income and spending As you transition from your current employer to building your own firm, you’ll most likely experience a decrease in income until you rebuild your book of business. Make sure to plan ahead for personal and business expenses. Identify prospective clients While you likely can’t tell your clients that you’re leaving your existing job or starting your own firm, you can start planning. Think carefully about the types of clients you’d like to work with at your new firm. It may be helpful to select a niche you would like to serve. One way to identify a niche is by segmenting prospective clients based on factors such as their profession, age, and interests. By targeting clients who align with your existing book of business or your new firm’s vision, you can more effectively reach your ideal customers. Create a business plan A business plan will serve as a guide for your firm and should, at the very least, explain your target market, outline the unique services you will offer, define your strategies for reaching your key audience, and establish metrics to evaluate the success of your plan. Additional areas to consider including in your business plan are financial projections, competitive analysis, risk management, and a tech stack strategy. Plan your business branding It’s important to choose your firm’s name early on, as you will need it for obtaining a website, registering your business, and developing a marketing plan. Consider whether you want to use your personal name in the firm’s name or choose a new, branded name. Be sure to conduct thorough research on your preferred name to avoid any potential trademark conflicts. If you are a small firm and you are the face of the brand, your personal name can work well. However, opting for a branded name may be a strategic choice if you have a smaller niche in mind, plan to grow into a larger firm, or desire to differentiate yourself from competitors. Use your current job’s benefits While you are still employed, plan to take advantage of all the employee benefits you will miss when you are self-employed. You will have to replace some benefits, like health insurance, but some you may outright lose unless you can afford to pay for them. Maximize your current benefits by fully utilizing your healthcare plan, participating in employee-sponsored training, and acquiring certifications covered by your employer. Phase 2: Starting your business and getting your first client This phase is when the heavy lifting to get your firm up and running kicks in. From legally registering your firm to launching your first marketing campaign, you’ll end this phase with your first few clients, ready to grow. Register your business entity You’ll need to formally create a company by registering in the state where you are located or in a favorable state such as Delaware. RIAs commonly choose to establish their business as either a corporation or a limited liability company (LLC). However, your attorney and tax advisor can help determine the best option for your firm. Set up a business bank account and credit card To set up your bank account, you’ll need to get your EIN from the IRS website. With your EIN, you can go to the bank of your choice and open a business bank account and credit card. While we can’t recommend a bank, a good starting point would be your own personal bank or seeking a referral from a trusted small business. One tip: Avoid fees whenever you can. It’s worth shopping around for a bank account if your current options impose high fees. Select an RIA compliance consultant You’ll need a Chief Compliance Officer for your firm. You can serve in the role yourself, hire internally, or outsource the function to a consultant. Outsourcing can help manage risk and save time upfront during your firm’s registration. A compliance consultant can streamline the registration process with the SEC or state authorities. We recommend working with RIA in a Box, a preferred partner in the Betterment Advisor Solutions’ RIA Tech Suite for new firms. Register your firm with the SEC or state regulators Depending on which state your firm is in and your starting AUM, you may have to register with the SEC or your state regulatory authority. Typically, if your RIA manages more than $110 million in AUM, it is required to register with the SEC. If your AUM is between $100 million and $110 million you may still be eligible to register with the SEC, depending on your state's rules. And if your RIA manages up to $100 million in AUM (or up to $110 million in some cases), it generally needs to be registered with the state securities regulators where you operate or have clients. It's important to note that states have their own specific regulations, so consult with your attorney or compliance consultant to make sure you register correctly and file all necessary forms and documents. Obtain relevant insurance You’ll want to obtain insurance to protect your firm against common risks. Common types of insurance include directors and officers liability, professional indemnity, errors & omissions (E&O), fiduciary liability, cyber liability, employment practices liability, and health/dental/vision insurance. The larger and more complex your firm becomes, the more insurance you may need. Choose an RIA custodian There are many custodian options available for your firm to choose from. If you select Betterment Advisor Solutions, you’ll have access to a vertically integrated solution that allows you to Custody assets Build and manage custom model portfolios Open new client accounts in minutes Control billing Streamline your practice’s back-office operations with cutting-edge features Within portfolio management at Betterment Advisor Solutions, utilize automated trading, rebalancing, tax-loss harvesting, asset location, and more. Set up your tech stack Your tech stack will include many different and often integrated softwares. The four essential pieces of software for RIAs are wealth management, financial planning, CRM, and compliance. In addition, you may also require other tools for tasks such as accounting and invoicing, file management, email marketing, and video conferencing. Create a website and email address While you can use online tools to create your own website, it may be more efficient and produce better results to hire a small, affordable web design agency. In addition to logo and website design, agencies can also provide help with setting up email accounts using Google or Microsoft, if needed. Create a marketing plan and launch your firm Launching your firm is a one-time opportunity, making it crucial to thoroughly plan your marketing strategy for both your current network and your desired target audience. You can leverage a marketing agency, hire freelancers, or choose to market yourself if you have the necessary skills and resources. As part of this initial go-to-market campaign, you’ll also want to incorporate a plan to message your current clients and introduce them to your new firm. Consult with your attorney on all marketing communications to ensure you are compliant. Phase 3: Establishing yourself in your first year Now that you’ve launched your new RIA, your first year is about establishing your firm as a leader within your financial planning niche. Establish your client pipeline Now is the time to implement your marketing strategy to grow your pipeline. Common marketing activities include networking, sharing thought leadership content on a blog or social media, attending events, and utilizing email marketing. Additionally, implementing a robust sales process, can help you move prospects from cold leads to warm opportunities and eventually, active clients. Establish your client experience The initial experience your clients have with your firm is critical. First impressions help drive future client retention and referrals. Ensure that your onboarding processes for new clients are clear and enjoyable, while also building trust both as an advisor and (more importantly) as a person. As a client’s tenure with your firm increases, it’s important to strategize tactics such as video calls, in-person meetings, newsletters, performance reports, and webinars to continue to build a strong client relationship. Establish your operations As a business owner, your operations will need to be evaluated on an ongoing basis. After implementing your tech stack, the next step is to establish processes to efficiently run your business. During your first year, it is beneficial to have monthly or quarterly process reviews to ensure that you are maximizing the potential of your tech stack. Besides managing daily business operations, it is important to plan for accounting tasks, tax filing, and other reporting requirements. Your firm’s long-term success It takes confidence and leadership to start an independent RIA. It’s very hard work. But it can be truly rewarding, and we’re here to support you. Betterment Advisor Solutions is ready to be your end-to-end custodian, supporting your firm with our cutting-edge technology. We’re here to help you grow—you have a dedicated relationship manager who pairs with our operations and customer service teams to help scale your practice. Our platform streamlines onboarding, billing, portfolio management, and reporting to help you deliver a high-quality, personalized client experience. Ready to learn more? Get a demo today.

"What Do You Do?": Compelling Value Propositions for Financial Advisors Aug 4, 2022 1:04:31 PM As your advisory practice grows, you will find yourself having more and more conversations about what it is you do. These conversations are key to growing your network, your client base, and ultimately your business, so it’s important that you can describe your practice clearly, confidently, and concisely. If you can articulate the value you bring to the table, and if you can do so in a way that differentiates you from your competition, these conversations become much easier. Plus, it makes your marketing efforts more effective, from designing your business cards to writing your website copy. In this guide, we will look at examples of how to articulate your value proposition as a financial advisor (answering the question, “What do you do?”), as well as how to form your unique selling proposition (answering the question, “Why should I work with you, specifically?”). Value propositions for financial advisors A value proposition is a simple statement of what you provide to your clients. Most companies have a generic value proposition built into their business category. For example: Grocery stores provide value to consumers by giving them a single place to buy different types of packaged goods in consumer quantities. (Otherwise, people would have to create relationships with dairies, produce providers, and large CPG brands themselves.) Dentists provide value to patients by cleaning and inspecting mouths in ways that consumers wouldn’t otherwise have the means, equipment, and expertise to do. Law offices provide value to clients by renting out their knowledge of law and policy, saving clients the time and effort of learning to practice law (and avoiding the costs of accidentally handling things illegally). Likewise, in the financial advice space, the value you provide to your clients comes from several generic sources. These sources fall into two major buckets: financial value and extra-financial value. Financial value vs. extra-financial value Financial value is the most straightforward benefit you provide. It simply refers to the ROI that your clients realize through working with you. This includes generating returns, avoiding losses, managing and optimizing deposit limits, etc. Extra-financial value is more expansive. This refers to all the “extra” benefits that someone enjoys besides the ROI—it’s what some financial advisors have begun to refer to as ROL, or “return on life.” This includes value sources such as: Planning: objectively envisioning what your clients can accomplish. Your clients can be inspired to change their investing, spending, and saving habits simply because you helped them set a vision and make a plan to realize it. This can create feelings of confidence and security that could be difficult to come by otherwise. Organization: helping your clients know if they’re on track. By organizing your clients’ financial lives, you give them the assurance that at any point in time, they can quickly check in to see if they’re on track to meet their goals. You also make it much easier for them to access information they need for tax reporting, estate planning, and other wealth management activities. Accountability: keeping your clients on track. Just like a personal trainer holds their clients accountable for reaching their fitness goals, you’re the voice that reminds and encourages your clients to work toward their financial goals. Expertise: educating and counseling your clients. You’re the financial expert, so your clients don’t need to stay abreast of the stock market, monetary policy, fiscal policy, inflation, and the like if they don’t want to. Instead, you keep them informed on what they need to know, and you’re available to educate them on what they want to know. Almost every financial advisory practice will provide value through a blend of what we’ve listed above. However, that blend will vary from advisor to advisor. Some advisors will be stronger at building tailored plans, while others will focus more on client education. So while all advisors more or less provide value from the same sources, individual value propositions will vary from practice to practice. How to write your value proposition Writing a value proposition should be a simple process. The statement doesn’t need to be fancy, and it can be as long or brief as you want. But some criteria separate a useful value proposition from a useless one: It should be easy for your audience to understand. Unless your target market is the extremely financially literate, you should avoid technical in-speak. It should be easy for you to remember. Although you can use your value proposition for multiple marketing purposes (more on that later), your value proposition will help you most if it can simply answer the question, “What do you do?” As an RIA, you don’t want to come up with a new answer to that question every time someone asks it. Your value proposition should be your immediate, go-to response. It should sound natural. Don’t treat your value proposition like a composition assignment. Use words that you would use in a regular conversation. Instead of “I optimize and organize my clients’ portfolios so as to maximize return on investment and realize their financial goals,” you might try, “I help people set financial goals, get their finances in order, and keep them on track for reaching their goals.” It should be verifiable. If someone asks you if you have examples or if they ask how your offerings work, you should be able to naturally bring up real-life scenarios that explain or illustrate the value you provide. Example value propositions for financial advisors Your value proposition needs to communicate the benefit you provide to your clients and how you provide that value. Here are some example value propositions: “I help people get their financial lives in order: I manage their investments so that their money is working toward their long-term goals without them needing to worry about it.” “I’m like a counselor, but I focus on people’s finances. I keep my clients educated on how the market works and help them make objective decisions with their money.” “I keep people on track with their financial goals: my clients and I work together to set expectations and milestones, and I help them keep their eye on the long-term.” Ways to use your value proposition As we’ve discussed, your value proposition can be helpful primarily when describing what you do in conversations—especially in the early years of your practice. However, your value proposition will come in handy when: Creating marketing collateral. Your business cards, your letterhead, your email signature, bios and descriptions for community events and sponsorships, your Google My Business description—all the little bits of text you may need to write to describe your business become easier to create when you’ve already articulated what you do. Crafting your social profiles. Your LinkedIn profile, Facebook page, Instagram account—all the places where you describe yourself can benefit from already having articulated your value proposition. Onboarding clients. When you bring a new client in for that first meeting, your value proposition can function as an outline for the ground you need to cover. This will help you set expectations for your client and make sure they are aware of all the services you provide. Organizing your website. If you have articulated what you do, then deciding what pages and content you need on your website becomes much easier. A comprehensive value proposition can be a good starting point for mapping out the content and navigation for your website. Onboarding employees. If you’re ready to hire new talent, your value proposition can be a vital tool for giving new employees an idea of your firm’s goals and what they will be helping your clients accomplish. (Plus, it will help them answer the question, “What do you do?” when it comes up—amplifying your word-of-mouth marketing efforts.) Articulating a unique selling proposition. You’re not the only financial advisor in your market, and knowing what you do is the starting point for explaining why someone should choose to hire you instead of the competition. This last part is important, because a value proposition is just a start when it comes to communicating your value as a financial advisor. Once you have your value proposition articulated, you will want to move on to writing your unique selling proposition. Unique selling propositions for financial advisors While a value proposition describes how your practice creates value, the unique selling proposition makes the case for why you’re the right advisor for your target market. Value propositions are descriptive; unique selling propositions are persuasive. The unique selling proposition (which marketers usually shorten to “USP”) is typically a one-or two-sentence statement that should accomplish the following: Resonate with your target market’s emotions. The USP should involve an emotional appeal: you want to tap into how your most satisfied clients feel (or how you want your future clients to feel). Differentiate you from “the rest” of the financial advisors. This doesn’t need to be a unique product offering. But your unique flavor should be evident when people read or hear your USP. If you focus on helping… people in a certain profession (e.g., medical professionals), or people from a certain background (e.g., first- and second-generation immigrants), or people with certain like-minded values or practices (e.g., homeschooling families), or people facing certain challenges (e.g., newly divorced parents) … … then this should be evident in your USP. It could even come down to a different tone or energy that you bring to your client meetings (e.g., you might be the humorous, nerdy, and/or outdoorsy FA in your city). Plainly state how you help your clients. Your USP should highlight the value you bring to your target audience. This is much easier to do after you have developed your general value proposition. How to use your unique selling proposition Developing your USP can be beneficial for fleshing out your marketing strategy. It bridges the gap between what you do and why people choose to work with you. Once your USP is written, you can use it in various ways: Website homepage copy. It can be tough to figure out exactly what to say on the homepage of your website—but if you have already articulated your unique selling proposition, most of the work is done. Your website homepage is the perfect place for your USP to live: it immediately tells your website visitors who you serve, what they can expect, and why they should choose you. Networking with competitors. Unless you are the only financial advisor in your community, you will likely find yourself at networking events with other advisors. If you know what separates you from the rest of the pack, then networking becomes a bit easier. Not only can you naturally differentiate yourself from the other advisors, but you can also differentiate yourself to the other advisors. It’s easier to converse with and learn from other people in your field if they know you’re not chasing their target audience. Advertising copy. Should you start spending money on ads, your USP will help you target your spending on the right audience. It can also increase your return on ad spend, as you won’t be advertising generic services—you’ll be promoting something uniquely appealing. Grow your advisory business with Betterment Your value proposition and USP are two key tools you can use to grow your business. By articulating what you do and why people should choose you, you give yourself an advantage in both your everyday conversations and your marketing efforts. But this degree of intentionality can take time. And processing the demand that comes with effective communication takes even more time. One way to optimize your time as you grow your advisory practice is to invest in tools that reduce hours spent on investment management and back-office admin. If you’re looking for a better way to grow your business, Betterment Advisor Solutions can help. Our platform helps you deliver personalized model portfolios to your clients and manage your entire practice—which means you can spend more time crafting your message, building relationships, and bringing in new clients.

How portfolio rebalancing works to manage risk for your clients Dec 20, 2024 12:00:00 AM 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. 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 avoid 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, 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. 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 preventing 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 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

Introducing a new Donor-Advised Fund (DAF) Nov 19, 2024 2:22:42 PM Betterment Advisor Solutions is excited to announce the addition of Daffy, our first donor-advised fund provider, which allows your clients to make a donation—and an impact—with ease. Clients can now access a cost-effective, subscription-based DAF, where they can set annual giving goals and distribute donations to 1.5 million charities, schools, and faith-based organizations—all in one place. Why donor-advised funds can be ideal for high-net-worth clients With a donor-advised fund, your clients can contribute appreciated assets—like stocks—to a charitable account and receive immediate tax deductions. Contributing to a donor-advised fund can simplify the donation process and give your clients the flexibility to decide when and where to distribute funds to various charities over time. It also enables them to avoid capital gains taxes on the donated assets. Top benefits of a donor-advised fund with Betterment Advisor Solutions Cost advantages: Your clients will pay a flat fee starting at $3/month for self-directed donations, instead of the AUM-based fees incumbents charge that can add up over time. And clients who want to collaborate with their financial advisor can add you to help manage their donations. Compare that to donor-advised funds managed by traditional advisors, like Fidelity or Vanguard, which cost clients $100/month, as of October 2024. Delightful client experience: Clients seeking to maximize the tax benefits of a DAF can manage one-time or recurring donations, set up automatic contributions, and view their donation history—all in one place. They can also give you access to manage everything on their behalf for added convenience. No processing fees: Unlike other providers, Betterment doesn’t charge processing fees for transfers to the donor-advised fund—or for charitable donations. This means 100% of what your clients give goes directly to the charities they care about. How to get started with our donor-advised fund provider Getting started is easy! Clients can navigate to the Transfers tab on their Betterment dashboard. From there, they will scroll down to “Other ways to transfer” and select “Donate to charity.” They’ll receive information on the perks of donating, and at that point, they can choose to donate through Daffy. Here’s how: Make a donation to Daffy. Clients will receive an immediate tax deduction, and their funds will be held at Daffy if they have not yet set up their account. Create a Daffy account. Clients should use this referral link to set up a Daffy account, which is required to manage their donations. Daffy allows your clients to grow their charitable funds tax-free while they decide which causes to support—all for a flat fee, starting at $3/month. Select charities. After creating an account, clients can log into Daffy to make donations to more than a million nonprofits. Managing your clients’ donor-advised fund Your clients also have the ability to add you to their Daffy fund. This will allow you to make charitable donations on their behalf, request a change in the fund’s investment portfolio, access tax receipts, and recommend donations for them—all through Daffy’s advisor portal. Learn more about advisor capabilities on Daffy. Ready to help your clients maximize their charitable impact? Download our user-friendly one-pager to learn more and share with your clients to help support their philanthropic goals. And, check out this blog post to help your clients understand the specific tax benefits of donating shares to a donor-advised fund.

What’s new from Betterment Advisor Solutions Jan 6, 2025 10:49:41 AM Discover the latest products and features launched in Q4 2024, designed to enhance user experience, drive innovation, and meet the needs of financial advisors. From an expanded model marketplace and a new donor-advised fund to seamless integration management and improved user access, explore all the latest platform upgrades in Q4 2024. Read on for the highlights and more of what’s in store this year. Table of contents Expanded model marketplace Dimensional's Core Plus ETF Wealth Models Crypto ETF model Donor-advised fund (DAF) A new donor-advised fund New integrations Manage integrations in your dashboard Billing New 401(k) plan fee statements Advisor experience Enhanced controls for secondary users Manage beneficiaries Two-factor authentication Dimensional Fund Advisors: Core Plus Wealth We added new models from leading asset manager, Dimensional Fund Advisors, to our marketplace. Dimensional's Core Plus ETF Wealth Models are designed to pursue higher expected returns for clients, while maintaining broad diversification and managing costs. By combining Betterment’s technology with Dimensional’s consistent, process-driven investment approach, advisors can streamline investment management without sacrificing performance. This launch underlines our continued commitment to expanding our off-the-shelf offerings, which are designed to save time, compress costs, and help you do more for your clients. Take a closer look at Dimensional’s Core Plus Wealth Models. Crypto ETF portfolio Check out our new Crypto ETF portfolio, a new way to help your clients interested in crypto gain exposure to two of the largest and widely traded cryptocurrencies, Bitcoin and Ethereum. Unlike traditional exchange trading, Betterment provides clients with diversified market exposure that’s carefully vetted by our in-house investment analysts. With this automated portfolio, crypto can now serve as a diversified component of your clients’ broader investing strategy at Betterment. –Learn more– Help your clients make a donation—and an impact—with our first donor-advised fund provider, Daffy. This cost-effective, subscription-based DAF lets clients: Donate appreciated assets for immediate tax deductions. Avoid capital gains taxes and costly processing fees. Set annual, automated giving goals to support over 1.5 million charities. Advisors can manage donations, recommend charities, and easily access tax receipts through Daffy’s advisor portal. With this new DAF, you can help your clients maximize their impact and achieve their philanthropic goals, starting at just $3/month. –Learn more– Unify your tech stack We’ve made it even easier to manage your custodial feeds in one place. Connect, disconnect, and oversee all third-party integrations directly in the advisor dashboard. Our latest unlock helps you: Set up integrations with the rest of your tech stack even faster. Synchronize data and reduce workflow inefficiencies. Improve client planning decisions with better insights into client behaviors, market trends, and portfolio performance. Explore and subscribe to any of our existing feeds under dashboard Settings. You can also learn more about our full integration ecosystem and request new solutions here. You asked, we listened: Betterment will send fee statements for all 401(k) plans going forward. The revamped process will mirror how we manage fees for your wealth clients. Here’s what you can expect: A PDF statement and CSV report, detailing fees accrued during the billing period. Email notification to firm admins confirming when statements are available and how to access them in the advisor dashboard. This year, we will continue to improve our billing solution to give advisors more fee flexibility while staying compliant and building client trust. Stay tuned for future updates. Enhanced permissions for secondary advisors Secondary advisors now enjoy the same access to client activity as primary advisors. With the new and improved functionality: Secondary advisors can now be assigned to an account during onboarding to help manage the client or household. Advisors can filter client data based on whether they are the household’s primary or secondary relationship. Primary and secondary advisors can toggle between personal client and firm-wide client account data. –Explore your dashboard– Manage beneficiaries Advisors can now assign primary and contingent beneficiaries to all legal accounts in their clients’ portfolios. Clients can conveniently review and verify the designated beneficiaries as part of their onboarding experience. This new functionality streamlines the account setup process and helps advisors to support their clients in planning for effective wealth transfer. Increased security We’ve elevated platform security by introducing mandatory two-factor authentication (2FA) for advisor profiles. While 2FA has long been required on client profiles, advisors can now add 2FA to better protect client data and reduce risks of unauthorized access—adding an extra layer of security. Your clients trust you with their most sensitive information, and you can trust us to keep it safe. As always, we welcome your feedback. Read up on other updates you might have missed, and keep an eye on your inbox for more quarterly updates. We’ve got a busy roadmap for 2025 and will be sure to alert you to new products and features to come! If you’d like to take a look around with someone from our team, book a demo.