Alison Considine

Advisor Spotlight: Eric Rodriguez, WealthBuilders Nov 16, 2022 9:19:40 AM For this Advisor Spotlight, we welcome Eric Rodriguez, CFP® and the Founder of WealthBuilders, LLC to chat about taking a more life-centered approach to financial planning. Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Advisor: Eric Rodriguez Firm: WealthBuilders, LLC Bio: Eric is a Certified Financial Planner® and the Founder of WealthBuilders, LLC, an independent, virtual RIA based out of San Diego, CA. Eric is the author of R.E.T.I.R.E. On Your Terms: 6 Steps To Build Wealth and Co-Host of The Avocado Toast Podcast. He started his career as a registered rep for a broker-dealer that was heavily focused on product sales. That firm left him with a bad impression of the financial industry, so he switched careers to strategic B2B sales where he thrived. About eight years later, Eric was introduced to real financial planning when he started working at LearnVest. He was inspired to launch his own firm, WealthBuilders LLC, in 2017. Firm Bio: WealthBuilders is an independent fee-only fiduciary wealth management firm. WealthBuilders specializes in working with progressive early to mid-career professionals and business owners who are passionate about aligning their wealth with their values. Why did you decide to become an advisor? My parents didn’t talk about money growing up. They argued about it. I wanted to change that for us. I wanted to normalize talking about money and building wealth, and I wanted to make it a positive experience. This is what inspired me to become a CFP®. What are some questions that you wish more clients would ask? How do you measure success with your clients? Why? What do you think is the biggest mistake people make with their money? Not having a customized wealth plan that aligns their key values with their money. Having a wealth plan that includes a vision for your ideal future, key values, the unexpected, and goals to achieve can have a profound impact on your financial success. What does your firm's current tech stack look like? How has technology impacted your work? I run a solo practice —having a solid tech stack is essential to running my business successfully, especially with back office responsibilities. Having a partner like Betterment helps me streamline client onboarding and ongoing investment support so I can focus on other aspects of my business. My firm's tech stack includes Betterment Advisor Solutions as my custodian; G-Suite for all business functions; Asset-Map for initial client conversations; eMoney for complicated financial plans; Riskalyze for risk tolerance; Holistiplan for tax planning; AdvicePay for retainer client fees; Calendly for prospect/client bookings; Wealthbox as my CRM; Mailchimp for client communication and newsletters; Quickbooks for accounting; Canva for marketing and one page plan creation; Loom for custom client videos; and Adobe Acrobat for contract management and editing. How have the recent trends toward remote and hybrid work impacted your relationship with clients? I work with a lot of clients in tech and most have always been hybrid. Prior to the pandemic I was meeting with my clients virtually about 70% of the time. Now it's 100% virtual. It saves us both valuable time and money. What do you think is the biggest opportunity for advisors today? Automating their portfolio management and back office and focusing more time on truly helping clients align their resources with their life goals. Evidence shows that a more life-centered approach to financial planning can help clients make better decisions and improve financial wellbeing and life satisfaction. If you won the lottery, what would you do with the money? I'd love to give my family and close friends enough money to fund some of their dreams. Give to non-profit organizations focused on closing the racial wealth gap and climate change. Take our immediate and extended family on a big annual trip and pay for everyone. Hire a full time helper like Jeffrey from the Fresh Prince of Bel Air! Invest the rest wisely. If you could only give one piece of financial advice, what would it be? Prioritize your immediate goals and take action. For example, if a down payment is at the top of your goal list, then open an investment account and aggressively start saving.

Betterment answers your tax season questions—from 401(k)s to HSAs Sep 27, 2022 12:00:00 AM A timely Q&A about tax management on the Betterment platform. It’s tax time! Read on as Eric Bronnenkant, Betterment’s Head of Tax, and Nick Holeman, Betterment’s Head of Financial Planning, discuss common tax queries. Which combination of retirement accounts will likely provide this particular client the most beneficial tax savings over their lifetime? Nick: The words of this sentence were chosen very carefully because it's likely going to be that one retirement account alone is not enough to fully optimize things. It's going to be a combination, and it's going to depend on this particular client’s situation. We're not focused solely on minimizing taxes today. We want to try to minimize and control taxes over the client's lifetime to try and save them the most cumulative amount of taxes. And as we'll get into, that might not be the type of account that's going to give them the largest tax break today. So, we're going to dive in, but this is the underlying theme or question. The reason why this is so complicated is because there are so many factors and inputs to this decision—kind of this patchwork of special retirement accounts that Congress and the IRS have created over decades. This is why the question is so complicated for us advisors. It's also why it's so confusing for clients. And it's why there's so much bad advice out there. A lot of the clients that I work with have their own CPAs, and I can't tell you how many times I've had to correct them. A lot of CPAs are experts in tax, but they're not experts in looking 20-30 years down the road when it comes to retirement planning. So today, we want to focus on some of the more common scenarios and questions. Traditional IRA vs. Roth IRA? Eric: While this can also potentially be looked at in the Traditional 401(k) versus the Roth 401(k), there are some nuanced differences there, too. For today, we're going to look at the Traditional IRA versus Roth IRA because this is something that typically the client has the most amount of control over in making their own decisions about what account type to choose. And there's a lot of uncertainty; as Nick pointed out, there's also a lot of information. Some of it's good, and some of it could use improvement. So, thinking about someone who's 25, single, earning $50K: Should they be in the Traditional IRA or the Roth IRA? What’s better for them? Eric: Nobody really knows the answer to that question today. You really only know the answer to that question after a whole lifetime. What are your initial thoughts, Nick? What jumps out at you when you look at this type of scenario? Nick: Yeah, I like that we're starting with the basics and we're going to build onto the more complex topics. This is one instance where I tend to agree with the standard advice I hear from other CFP® professionals: When you're younger, you're likely able to expect your income to grow. So paying taxes now is going to be better than paying taxes later. In general, without knowing too much about this client situation, I would probably recommend Roth if I had to give an answer. For someone who's age 40, married, and has earnings of $250K: What type of IRA do you think they might want to consider? Nick: This is where we start to get borderline on some of those tax rules. I don't know all of their adjustments or other things that might lower their modified AGI, but here we're probably going to be phased out of a Roth, so we might not have a choice. We would go with a Traditional IRA. Maybe that's when we start getting into the more advanced topics, like a backdoor Roth IRA. But yeah, probably Traditional. Eric: Right. Regardless of how much money you make, you can always contribute to a Traditional IRA. You just may not get a tax deduction for it if you're covered by a retirement plan at work and you make too much money. So the Roth income limit, you get phased out at about $208,000 for last year; $214,000 this year. It would be tough, even for married couples maxing out their 401(k),to potentially help them get below those thresholds. Tough to meet those MAGI limits. But you definitely brought up a great point as far as the backdoor Roth. So for people who make too much money to contribute to the Roth directly, they can contribute to the Traditional and then do the conversion over to Roth. Fun fact: the Roth conversion income limitation was eliminated permanently in 2010, and as of right now, there is nothing on the horizon that is going to change that. Obviously laws can always change, but it is not scheduled to return at this point. Nick: Backdoor Roths are super powerful potential strategies for high income earners. We talk about them a lot with our clients at Betterment. They're a little more complex, so they're not usually part of the baseline retirement plan that we're building up, but if they have a tax professional involved who’s keeping track of the Form 8606 so they're not getting double-taxed, then a backdoor Roth can be a super powerful strategy. Do contributions to a Traditional 401(k) help me qualify for a Traditional IRA deduction or a Roth IRA contribution? Eric: So let's say you have a married couple where one spouse is earning $214,000, and one spouse put in the $20,500 into their 401(k), now that $20,500 would put them below the Roth income limit. Then they'd go from a situation where they weren't able to make any Roth contribution directly to being able to make the full $6,000 or $7,000 Roth contribution directly. So a contribution to a Traditional 401(k) may help you qualify for other benefits, like a deduction on a Traditional or making direct contributions to a Roth or even other things, like child tax credits and any other AGI sensitive items. Do tax-free withdrawals from a Roth IRA impact social security benefits and Medicare premiums in retirement? Nick: Roth IRAs don't impact social security benefits. They don't impact Medicare premiums. Those are two big potential ways to optimize retirement down the road. It's not just looking at tax brackets, either. I know oftentimes when Eric and I will chat, we’re like, ‘Oh, it's current bracket versus future bracket, and you can kind of decide which one is best.’ And that's true, but that's a little bit too simplified. We know tax brackets fluctuate, and there are other things aside from taxation, as well: social security, Medicare premiums, things like that. So big shout out to Roths if they make sense for each client, but just a reminder not to only focus on tax brackets. Can I withdraw contributions from a Roth IRA without tax/penalties? Eric: The power of the Roth is that you're able to withdraw your regular contributions at any time — tax and penalty free — regardless of your age. Some people use it as an emergency fund; that is a possibility. If you can afford to have a Roth and an emergency fund, that's even better. Let's say you need to use your Roth as an emergency fund: it is potentially a tax-efficient way to withdraw those regular contributions tax and penalty free regardless of your age. I do want to point out that if you wanted to withdraw the earnings, which would come out second, those are subject to tax and penalty if you're under age 59-and-a-half. 401(k) vs. IRA? Eric: The first thing you should think about in this type of scenario is: Can I contribute to both my IRA and my 401(k)? I'm not sure where this rumor got started, but it's definitely been flying around the internet for a long time that if you contribute to a 401(k), you can't contribute to an IRA, which is not true. You can contribute to both. Now, what could potentially be impacted is that if you contribute to a 401(k), you may not get a deduction for your Traditional IRA contribution. So is there an interrelationship of the two? Yes. But it's not that you won't be able to make the Traditional IRA contribution, you just may not get a deduction for it. What are some other reasons why you might want to prioritize a 401(k) versus an IRA? Nick: I'll go with one of the less common ones to make this interesting. Behavioral benefits, right? A 401(k) contribution is going to come directly out of your paycheck before it even hits your account. At Betterment, we're big fans of automation. Out of sight out of mind. If it's so easy to spend your money, we want to try to make it just as easy to save your money. So 401(k)s or auto-deposits into an IRA, vice versa. Those are some great benefits that you can do with their 401(k). Can I access 401(k) funds 10% penalty-free at age 55? Eric: Not everyone wants to work until age 59-and-a-half. Retiring early is on a lot of people's minds, and most people are pretty familiar with the fact that if you want to access 401(k) funds before 59-and-a-half, you have to pay a 10% penalty. IRA 10% penalty exceptions versus 401(k), 10% penalty exceptions are not symmetric. Some are the same, but some are not the same. Nick: 401(k)s are great for age 55 early withdrawals. That's a big win, right? We're talking to more and more clients who are, I don’t know if 55 necessarily counts as FIRE (Financial Independence Retire Early), but we're talking to more and more clients who are getting really into that. Can I borrow against an IRA? Nick: We don't love seeing that, but there's a little more flexibility with borrowing against the 401(k). Eric: Actually, a fun fact about the 55-or-later rule is that you don't even have to be 55, as long as you separate from service in the year you turn 55 or later. So you could potentially turn 55 on Christmas day and leave your job on January 1st of that year, and you still qualify for that 10% penalty exception. One thing you shouldn't do if you want to keep that exception is roll those funds over to an IRA, because you'll lose that 10% penalty exception, even though you're allowed to rollover. Nick: You want to make sure you've got enough funds to be able to bridge the gap between 55 and 59-and-a-half. So you might do a partial rollover, for example. Eric, I don't know what your thoughts are on that, but make sure you're not leaving them hanging out to dry in that little window there. Eric: Yeah. I mean, is the 401(k) penalty-free provision useful? Absolutely. Is it the best thing? Not necessarily. If, let's say, you don't like your 401(k) investment options, you could roll it over to your IRA and then do substantially equal periodic payments for five years, which is longer than 59-and-a-half, so that's more restrictive. If you were willing to give up some control on your payment timing, you still might find the IRA option more attractive. I want to use a retirement plan to partially fund a new home purchase. Should I use my IRA or 401(k) first? Eric: There are a few different ways to fund that. Obviously if people have enough extra money in their non-retirement accounts, that's typically the first place they're looking to fund that first-time home purchase, but not everyone has a 20% down payment available in cash. People are always looking at other alternatives for funds, and that would include a 401(k) and an IRA. What are your thoughts on the 401(k) versus IRA in this scenario, Nick? Nick: My real thoughts would be neither. Typically if a client's asking me this question, it means that they either didn't plan or they're kind of feeling pressured out of a situation or going beyond their budget. So I know that's being a little judgmental, but typically I discourage both. Your IRA has that $10,000 first time-home exemption, 401(k), you may be able to take out a loan and the provisions are a little bit more flexible if that loan is for home purchase. Depending on the situation, I would probably go to my IRA because it has that smaller limit; it would prohibit them from dipping too much into their 401(k). But there are definitely pros and cons to each. Eric: Right. So you can do the Roth IRA. And now, obviously this is if you need the money, because Roth IRAs are such a powerful retirement savings tool, and the longer you hold the money in there, the better. But let's say you need the money: You could withdraw all of your regular contributions, first tax and penalty free. And then if you've had the account open for at least five years, you can withdraw up to $10,000 of earnings tax and penalty free, too. That can count as a qualified distribution. So an IRA may be useful, but some people have most of their money set aside in their 401(k). And that's where a loan with generous repayment terms, where you're able to push that out over a long period of time, may be attractive. Nick: True. Maybe this is me, but the whole benefit of Roth IRAs is tax-free growth. So if you're not getting a lot of tax-free growth, you're missing out on some of the benefits. It only makes sense to be invested aggressively if you're looking at a long-term time horizon. If you're planning on using a Roth IRA to buy a house next year, you shouldn't have had that money invested super aggressively anyways, which means you're probably looking at cash or more conservative investments, which means you're missing out on the single biggest benefit of Roth IRAs in general, which is tax-free growth. So again, I just don't understand why I see so many people talking about using your Roth IRA for this home purchase exemption or for your emergency fund. I don't understand it, unless it's an absolute emergency; not something I typically recommend. Eric: That's fair. When you're thinking about whether you should be buying a home in the first place, you do want to think about: ‘How is this going to impact my retirement, especially if I'm going to use some or all of my retirement funds?’ to fund that home purchase. HSA vs. 401(k)? Eric: I love HSAs, and I know Nick loves HSAs. You can put money in pre-tax, and it's pre-federal tax, pre-social security, pre-Medicare, pre-most state taxes, except for mine in New Jersey — and California. In general, it's pre-tax across the board and it grows tax deferred, and then the withdrawals come out tax-free in retirement or for qualified medical expenses. There are lower limits for the HSA than for the 401(k) and different rules about what you use the funds for along the way. You actually might be able to save more money in taxes on an HSA contribution than a Traditional 401(k), because the Traditional 401(k) doesn't save you on any social security or Medicare taxes. Those you're always contributing to after those taxes have been applied. I want to maximize retirement savings. Can I use the HSA as a retirement savings vehicle and a medical savings vehicle? Nick: I've seen a lot of advisors get into some sticky situations when recommending using HSAs for retirement. They're not right for everyone. The two biggest rookie mistakes that I see are getting too excited and recommending an HSA without remembering that you need to pair an HSA with a high deductible healthcare plan. If the high deductible plan doesn't make sense for the client in the first place, then the HSA probably doesn't make sense. And the second is if you're going to be using your HSA for retirement, you're probably looking at investing it in more aggressive investments, which means they're going to be a lot more volatile. Whenever I recommend a client use an HSA for retirement, I pretty much tell them we're not going to do this until we have a fully funded emergency fund as well, separate from the HSA, because Murphy's law, worst-case scenario. If we're going to have your HSA be aggressive, I want to make sure that the client also has a separate, lower risk emergency fund just in case something happens. Eric: All great points. I do want to clarify: In New Jersey HSAs are not pre-tax; in Pennsylvania, 401(k)s are not pre-tax, but you do get the HSA deduction in Pennsylvania and you do get the 401(k) contribution in New Jersey. So you always want to look at state laws. They may not drive your decision, but they may be a factor in your ultimate decision. Nick: That's why I always caveat: Make sure to bring in your CPA if you have a client, and make sure that you're all working together. They might know something that you don't, that’s state-specific to your rules or something like that. I want to live a tax-free lifestyle in retirement. Is the trifecta to use an HSA with a Roth IRA and Roth 401(k)? Eric: I love talking about the tax-free lifestyle. How can you get to that point? Well, there are ways. Let's say you max out your Roth 401(k), $20,500, you're not getting any break upfront, but then all the earnings come out tax-free in retirement. Roth IRA for another 6,000 there, no tax break upfront, all the earnings are tax-free in retirement. And then the HSA, you're getting a tax break upfront and even if you're not using it for medical expenses, once you're over 65, then you'll pay taxes. You can also use what's called the shoe box rule, where if you keep track of all of your unreimbursed medical expenses since you opened your HSA, you can use that as an account to withdraw from based on all of those previous expenses. If you accumulated $50,000 worth of expenses since your HSA was opened, you'd still be able to withdraw $50,000 in retirement even though in that year, you may have had no medical expenses at all, because you're able to use that kind of look-back process. Nick: That's personally what I do. I'm looking forward to that. I don't have an actual shoe box, but I've got a spreadsheet — and it's a beautiful spreadsheet. So I'm excited for that. Eric: There are also a number of apps out there where you can save your receipts, whether it comes by email, you can just put that in the app, or you can take a picture if you're at the doctor's office. There are plenty of ways to track these receipts and expenses over time in an efficient way. SEP vs. Solo 401(k)? Eric: There are a lot of self-employed people out there, and they’re always asking, ‘Should I do the SEP or the Solo 401(k)?’ The answer, as with most tax questions, is it depends. It depends on if your goal is to maximize your savings, if your goal is to minimize regulatory filings, there are a variety of factors to consider. Your SEP contribution, you can do 20% of your net earnings from self-employment, up to $61,000. But that's still only 20%. There's no employee contribution — it's all employer contributions. Whereas the Solo 401(k) allows for employee contributions as well as employer contributions and generally still has the same overall limit as the SEP, except for people who are age 50 or older. Let's say we had someone who's a self-employed, 50-year-old who has a business profit of $100,000. SEP or Solo 401(k)? Eric: That person can do just $20,000 into the SEP, but if they did the Solo 401(k), they'd be able to do the $20,000 employer contribution plus the $27,000 employee contribution because that's the $20,500 standard contribution, plus the $6,500 for being 50 or older. Obviously that would take up a significant portion of their $100,000, but at the end of the day, if they have extra money in savings elsewhere that they could use to help maximize their retirement savings, that's something they may want to consider. I prefer to minimize the possibility of regulatory filings. Should I make contributions to a SEP or Solo 401(k)? Nick: Oftentimes when I'm speaking with a small business owner, they might not be able to save that much. Last year, a lot of the entrepreneurs I was talking to had a little bit of a rough year, to say the least. And if you're looking at starting a retirement plan for your self-employed business, SEPs, you might not be able to contribute quite as much. Sometimes, for a lot of people starting out their business, that's not an issue. They wish contribution limits were something they had to worry about, but they're trying to get their business up and running. They’re also just trying to find time in the day to do everything. So for the SEP, if you're not even bumping up against the contribution limits and it requires less regulatory filing, and it's just a little bit easier, it's something to consider. You might be able to contribute more with a Solo 401(k), but on the SEP side, there are some other advantages as well. Eric: Why do people love the SEP? The SEP has no filings with the Department of Labor. As a Solo 401(k), there is a Form 5500 filing once the assets get over $250,000, whereas regardless of how much money is in the SEP, there are no Form 5500 filings. And while I don't think the Form 5500 is particularly burdensome, most people I know would prefer to file fewer forms with the government. I definitely appreciate the avoidance of filing any additional paperwork, even if it's not that burdensome. I want to make Roth type contributions. Should I make contributions to a SEP or a Solo 401K? Nick: I don't think so. Eric: No, there is no Roth SEP. Now what you could do is convert your SEP contribution into a Roth, because there aren't income limits on doing conversions. But if you want to make a regular Roth-type contribution, then it would have to be an employee contribution to a Solo 401(k) subject to the $20,500 or $27,000 annual limits. There are pros and cons on both sides here, and it's very client-specific on whether they prefer the SEP or the Solo 401(k). Which retirement plan should I make contributions to in order to make tax/penalty-free withdrawals before retirement? Nick: There's a few options. The easiest is just a plain old taxable brokerage account. There's no contribution limits, there's no age requirements, there's no early withdrawal penalties. They're a little bit easier to plan for; again, you might be missing out on some of the tax benefits, but that's one. HSAs are one as well; it doesn't have an age limit, as long as you've got qualified medical expenses. Roth IRAs, you can withdraw your contributions penalty free and tax free at any time. So there's lots of choices. Eric: Getting back to what we were discussing before, the 55-or-later exception is a powerful tool to access funds pre-59-and-a half without a 10% penalty and avoiding the substantially equal periodic payment option. Being able to withdraw those raw Roth contributions at any time is good too, but the closer that you get to 59-and-a-half, you also want to be particularly cautious. Let's say if you have a Roth IRA and you withdraw earnings before you're 59-and-a-half, those are typically subject to a regular income tax and a 10% penalty. So, whereas if you had made the five years plus 59-and-a-half, you would have gotten that tax free. The difference could potentially be if you're the day before 59-and-a-half. Then it's possible though that you would have to pay taxes and penalty on earnings, whereas once you make it to 59-and-a-half, and you've had the account open for five years, then you get it tax free. It's a very binary type of thing, and you always want to be cautious about where you are relative to that line in the sand. Can Roth conversions be part of an early retirement strategy? Eric: Early retirement is not for everyone. Some people are able to afford it. Some people try to fit their life into an early retirement strategy, and for some people, that works better than others. One thing you already mentioned was some of the five-year rules. If you do a Roth conversion of pre-tax money before you're 59-and-a-half and you want to withdraw those funds in the future before you're 59-and-a-half, there is a five-year holding period for each conversion to avoid the 10% penalty. This rule is designed to prevent people from converting and withdrawing immediately to avoid the 10% penalty. You can still do a conversion at age 45, age 46, age 47, age 48, let's say a rolling conversion strategy, which then you'll be able to access those converted amounts five years later, tax and penalty free. Again, those earnings would have to stay in the Roth until 59-and-a-half to avoid any tax or penalty. Nick: Good points. One thing I found practical to keep in my toolkit so to speak is to get familiar with the IRS website. That sounds like that's a terrifying task, but Google is your friend. “IRS gov Roth IRA,” for example, the first hit is likely going to be the contribution limits for that particular year. So if you forget, it's just something that’s good to be familiar with. Not everyone has an Eric that they can just Slack on demand. I'd say bookmark them, familiarize yourself with them. The IRS has some pretty good pages on Roth IRA, contribution limits, Traditional IRA deductibility limits. So if you can't remember them or keep track with them every year, just get used to Googling. Betterment is not a tax advisor, and all information is solely intended to be educational in nature. Please consult a qualified tax professional. 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Common Questions about Billing Your Clients Sep 23, 2022 12:00:00 AM Get answers to your key questions about billing clients. What billing options are available to my firm? The Betterment Advisor Solutions platform includes a “Billing” page visible to the admin(s) of your firm. This page offers three billing options: Asset-Based Billing, Fixed Fee Billing, Tiered Billing. Learn more about each in our article. How often are my clients billed? Firm admins can select whether to bill clients on a monthly or a quarterly basis. Any changes made will take effect at the start of the next quarter, though a pending change can be cancelled or modified up until that date. All advisors of the firm will be sent a reminder that their firm’s billing frequency is about to change about one week before it goes into effect. How often does Betterment pay me the fees collected on my behalf? Betterment will remit payment to your firm on the same frequency that we collect from your clients, per your discretion. If your firm has elected to bill clients monthly, Betterment will send payment in the first two weeks of each month. If your firm has elected to bill clients quarterly, Betterment will send payment in the first two weeks of each quarter. Firm admins must supply bank account information in Firm settings to receive payments. How are billing plans created? Any admin(s) of your firm will be able to create a new billing plan by following the steps below: Log onto the advisor dashboard Click Client Billing, located in the menu on the left In the top right, select “Create a billing plan” Enter a unique name for the new billing plan and select the billing plan type. (See below for specific billing plan types) How are billing plans applied? The advisor of a household will be able to do this by following the steps below: Log onto the advisor dashboard Click Clients, located in the menu on the left Search for and click the name of the household whose pricing should be updated Select Settings and click the “Edit” button corresponding to “Household Billing Plan” Choose one plan from the list displayed and click Update Plan If a different pricing plan is needed, contact an admin of the firm so they may create it How is the default billing plan of the firm updated? Any admin(s) of your firm will be able to update the default billing plan of the firm by following the steps below: Log onto the advisor dashboard Click Billing, located in the menu on the left The current default billing plan will be at the top of the list, click Edit to make changes If needed, modify the name for the plan and select the billing plan type. (See below for specific billing plan types) How to create or edit Tiered Billing Plans: Once on the “Tiered billing plan” page, use the “Firm fee” column and click on “Asset based” or “Fixed” to switch between the two. Enter the number of basis points (bps) or dollars that should be charged for the first tier of invested assets. If more than one tier is needed, click “+ Add tier” then enter the high range value for the previous tier. Repeat these steps for each tier needed. If this is not a new billing plan, the next page will display the households that will be impacted. Scroll to the bottom to click “Update billing plan.” How to create or edit Fixed Billing Plans: Once on the “Fixed Billing Plan” page, use the “Firm fee” field to type in the dollar value you’d like this plan to assess on client accounts annually. No need to type in a dollar sign, only enter the digits and a decimal if you will be charging in cents as well. If this is not a new billing plan, the next page will display the households that will be impacted. Scroll to the bottom to click “Update billing plan.” How to create or edit Asset Based Billing Plans: Once on the “Edit Asset Based Billing Plan” page, use the “Spread bps” field to type in the number of basis points you’d like charged by this billing plan. For example, for a fee of %0.50 type in 50. When satisfied with the new spread, click Save changes. If this is not a new billing plan, the next page will display the households that will be impacted. Scroll to the bottom to click “Update billing plan.” How to change the Billing Plan for groups of clients: The Client Billing page, accessible to admins of your firm, will display one row per existing billing plan. The row includes an “Assigned to” column. This displays the numbers of clients on this billing plan. To adjust the billing plan applicable to this group of clients the admin of your firm will be able to follow the steps below: Click Edit to make changes If needed, modify the name for the plan and select the billing plan type then click continue. How do I update a client's fees? To edit the fee for any existing clients advisors will need to follow the steps below: Log onto the Advisor Dashboard Select "Clients", on the left side of the window Locate the client and click their name Select "Settings" Locate and click the "Edit" button corresponding to the Fee column Select the billing plan you'd like to apply then click "Update plan" The new billing plan will appear under "Household Billing Plan" Please keep in mind, if a new billing plan needs to be created, the admin(s) of the firm will need to create the plan before you are able to apply it to any clients' household. How do I get paid for the client accounts that I manage on the platform? Betterment Advisor Solutions operates a fee-only platform. Firm admins may create multiple billing plans using Asset Based Billing, Fixed Billing, or Tiered Billing. The billing plan applied to a client's household will, by default, include Betterment's platform fee. Aggregate fees are billed automatically by Betterment from the client’s account quarterly or monthly in arrears, and Betterment subsequently remits the advisor’s fee to the Firm bank account on file. Can I set custom level fees for individual households? Yes, you may utilize Billing Plans to set custom fees for a client's household. If any of the available Billing Plans do not fit your needs, an admin of your firm may create a new customized billing plan that is either Asset Based, Fixed, or Tiered. How are the fees calculated? We accrue fees beginning one day before the end of the prior quarter or month and the accrual of fees ends two days prior to the end of the current quarter or month. The fee is calculated pursuant to the formula [sum of the following for each day in the preceding billing period: (the balance in a client’s account at the end of the day) * (advisory fee applicable on that day)] and will be deducted from the account three days after the transaction date, following the settlement of the trade(s) made to fund the fee. Fees are billed in arrears and the advisor’s portion of the fee is sent to the advisory firm shortly after the end of the quarter or month via ACH. Are fee tiers supported? Yes, we do support fee tiers. Anyone with admin level access to the advisor dashboard may create new billing plan types, including Tiered Billing. Once the plan is created you may apply it at the household level. How are fees reported to my clients? Your clients see the total fee (platform fee + billing plan applied to the household) in their client portal on the “Activity” page and on their monthly statements. You are responsible for providing the fee breakdown between the Betterment platform fee and your advisory firm fee to your clients, though we do make this information viewable within the client’s portal under their “Settings” tab. Are there any trading or transacting costs associated with the Betterment Advisor Solutions platform? No, there are no trading or transaction costs associated with the Betterment Advisor Solutions platform.

Key Questions about Getting Started as an Advisor Sep 23, 2022 12:00:00 AM Explore our rundown of the most common questions asked by advisors who are new to Betterment. What are the requirements for partnering with Betterment Advisor Solutions? In order to partner with Betterment Advisor Solutions, you must be affiliated with a registered investment advisor. What does a partnership with Betterment Advisor Solutions entail? Betterment Advisor Solutions typically partners with registered investment advisors through a shared fiduciary oversight model. Betterment LLC, a registered investment advisor, acts as a sub-advisor to each advisor’s client accounts, and contracts separately with each advisor and each underlying client. How do I get started and how long does it take to implement the platform in my practice? The sign-up process for Betterment Advisor Solutions is entirely digital and typically takes a few business days to implement. So long as your firm is registered with the SEC or with a state and has a CRD number, please follow this link to get started. Once we receive your application, we will process it in approximately five to seven business days. Please note that the due diligence process may take longer for newly established firms. Once your firm has been activated on the platform, we will send you a welcome package and you can begin managing accounts on the platform. What is Betterment Advisor Solutions? Betterment Advisor Solutions is a solution for advisors and clients alike, designed to streamline the investment process and accelerate an advisor’s ability to serve its clientele via an innovative digital wealth management platform. Betterment Advisor Solutions gives firms the tools they need to help take care of front- and back-office operations. By providing advisors with automated workflows and innovative technology, Betterment Advisor Solutions allows firms to spend more time in front of their clients, so that they can win new business and strengthen existing relationships.

Webinar Recording: Financial Planning for Clients Who Are on the Mat Aug 12, 2020 12:00:00 AM " Catch our latest on-demand webinar recording on financial planning for clients who on the mat.

Training Video: Sync External Accounts Sep 18, 2019 12:00:00 AM Watch our product training video on how to assist your clients in connecting external accounts to the Betterment experience.