Betterment Editors

6 Questions to Consider As You Evaluate Advisor Technology Platforms Use these six questions to help zero in on the best investment management technology for your needs—today and tomorrow. Considering adopting new technology designed to improve efficiency and enhance the client experience? Choosing the right tech for your advisory firm can be a matter of pure luck if you're not clear about what you're looking for. Use these six questions to help zero in on the best investment management technology for your needs—today and tomorrow. 1. Does this platform have the features that address my specific needs? Before you begin evaluating different technology solutions, identify the specific capabilities you need, then prioritize them based on which have potential for the greatest impact on your business. Some of the technology options available may include features you haven't identified as must-haves, but could contribute to overall efficiency improvements. Don't dismiss them offhand. It's important to involve staff members in this part of the process. Survey potential users and other stakeholders to find out their pain points so you can understand which current features they want to maintain, and where they feel gaps exist. 2. Does this platform address tomorrow's needs? Don't stop when you believe you have a solution that satisfies today's needs; look ahead to what you might need in the future. Your goal should be to adopt a platform that will serve you well today and in the years to come. The advisory industry and client needs are constantly evolving, and your technology should constantly adapt and align with the shifting landscape. 3. What technology solutions are my peers using? Another way to benchmark the technology solutions you may be considering is to check in with your financial advisor colleagues. Whether that's through informal conversations with peers during a conference, checking reviews in industry publications, or a formal question posed to an advisor mastermind group you're involved in, you'll undoubtedly get some firsthand insights that can help inform your technology selection process. 4. How long before we're up and running? Depending on the scope and functionality of the technology being implemented, it may be a few weeks before you can fully rely on it to function as intended. Many, though, take just days. While your choice of platform should be primarily about its ability to deliver long-term value to you and your clients, finding one that starts improving productivity quickly can minimize distractions and optimize staff productivity. 5. How does the platform handle account opening and transitions? Account opening and transitions can be a definite pain point given the myriad of forms and potential systems required. When evaluating a tech solution, you'll want to understand how it might, or might not, ease this process. Will it make onboarding new clients more seamless and paperless though automated workflows? Or will multiple, time-consuming manual entries still be required? 6. How easy is the tool to use? Consider not only how intuitive and painless the technology in question is for you and your staff, but also for your clients. One study shows that 62% of millennials are getting their advice online or from social media. It's no secret that this generation, poised to $68 trillion from the baby boomer generation, prefers more streamlined and intuitive user experiences. To better engage and reach clients in this younger set, you'll want to prioritize technologies that present an accessible interface and are enjoyable to use. Technology is an investment that can have significant impact on your business growth and how you serve your clients. Choose wisely, keeping in mind that you and your staff aren't the only ones who will benefit from it. Your clients' needs and experiences with your technology are equally important, and they should be top of mind as you evaluate your options.

How Behavioral Finance Can Help You Grow Your Practice Behavioral finance and financial advice are intrinsically linked—or, at least they should be, argued Betterment's Dan Egan on a recent podcast appearance with Mike Langford and John Prendergast of the Augmented Advisor. Betterment's Dan Egan recently appeared on the Augmented Advisor podcast with Mike Langford and John Prendergast. Their discussion illuminated how harnessing different strategies that are based in investors' psychology can help advisors evolve their practices—and grow their business as a result. Below, we highlight a key takeaways from the discussion. Listen to the podcast in full here. What pricing says about your service In the age of social media investing tips and democratized trading, advisors might be thinking about the impact of free financial products on the wealth management industry. But this sends a message to potential clients, says Egan. "One obvious piece [to consider] is being aware of where consumer expectations are and leaning in," he said. "People understand that when they don't pay for something, it's not a premium product." He continued by saying that retail investors, "can get a free product without a doubt," but he encourages advisors to "lean into the notion that your client and your client's time are worth more than that." The human element of advice Relatedly, the discussion turns to considering what distinguishes advice from trigger-based recommendations. Egan reflects on the element of heightened liability with financial advice. "At some level, there's a piece of accountability, liability, and responsibility of saying this is the right thing for you to do. It's not just the calculations that matter exactly, but who is bearing the responsibility for a good or bad outcome."  Further, Prendergast adds that human empathy, in addition to this accountability engine, is the dividing line. What distinguishes advice, he says, can often be the "empathy and understanding that a human delivers." This human interaction, he goes on to say, is critical for helping many investors feel understood—and therefore more confident in their financial decisions. Pushing yourself up the value chain Increasing your value as an advisor can also come from a practice of frequent communication and "context building."  For many, pivotal life events trigger demand for heightened guidance. Building a strong connection with clients over time goes a long way in instilling confidence in clients during those critical decision-making moments. To truly avoid staying stagnant or complacent in this industry, the team asserts that advisors must start actively pursuing client feedback. Advisors can self-reflect: Have I set up feedback loops? How do I start hearing about things that are not going well, even when it's uncomfortable? Opening the door for hearing negative, but often silent feedback—not just noisy, positive feedback—is crucial to advancing a practice. There are also ways that an advisor can utilize technology to free up their time to really focus on elevating client service and evolving their careers. The experts discussed "learning to let go" and moving away from tasks that a computer excels at, like routine ongoing maintenance. "By pursuing automation of this rote work, advisors will have more time for higher value-added interactions."  A key marker of practice maturity The group wraps up the pod debating an ongoing pursuit: how to craft a book of high quality clients. While firms often find success refining service offerings and narrowing down a target niche, Egan reflects on an interesting duality here: "The more that an advisor doesn't take into account how their clients are different [from] them, the bigger the gap created… There's a duality of growing small and being high quality in your space, but also thinking about the next segment of your career and how what you're working on today is going to allow you to have grown into something better five years from now." Moreover, attracting the right clients requires being able to reject clients well. Being able to have a comfortable conversation, and identify reasons to not work together, is a skill mastered by advisors who grow their books efficiently. "Getting comfortable with the idea of why we should not be involved saves so much time and heartache, rather than attempting to work together and change someone's mind about core held beliefs later on."  This is, perhaps, a crucial marker of practice growth—with time, the best advisors figure out they can't take on everybody, and the very best can articulate why. "It does take courage to look someone in the eye and say, 'I just don't think I’m a very good fit for you,' and it can be uncomfortable, but I think it's the marked maturity of a practice." Listen to the full episode of the Augmented Advisor here.

Webinar Recording: How Custom Portfolios for Advisors Can Help Scale Your Business Custom portfolios for advisors can help growing firms set a new standard for business efficiency.   Introducing custom portfolios for advisors: the latest tooling from Betterment for Advisors that can help growing firms set a new standard for business efficiency. Betterment for Advisors’ powerful automation tools make it simple to onboard and service your clients. With custom portfolios, you can leverage automation for back-office tasks and personalize client portfolios to showcase your investment philosophy—all in one unified tech solution. Watch experts from Betterment for Advisors discuss the advantages of using custom portfolios, from tax-loss harvesting to streamlined account transfers and more. Ready to learn more about using custom portfolios at your firm? Get in touch today.

Getting started with Betterment for Advisors 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 for Advisors. Our solution is here to save you time so you can serve more clients, more efficiently. With technology designed to streamline investment management and accelerate your ability to serve your clientele, Betterment for Advisors is the leading digital platform for you and your practice. 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). We then upload these documents to your firm’s account 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 decided 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 for Advisors platform. Logos When you sign-up for the platform, you upload your firm’s logo 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. If logo files are not uploaded during sign up, 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 for Advisors 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 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 quarter and ending two days prior to the end of the current quarter. Fees are calculated pursuant to this formula: [sum of the following for each day in the preceding 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 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 a check is sent to the advisory firm 2-3 weeks after the end of the quarter.   Part 3: Client signup and reviewing your clients’ accounts On-boarding a Client The on-boarding 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 at the individual client level. This page will also provide you with a bit more detail on each client’s goal, their specific allocation 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 once they are in their account will see the option on the front page to link an account. They will then be guided to select a bank account. If they do not have an account at the banks on the list, they can select the manual option (which we verify by having the client confirm the amounts of two small deposits made in the account). 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, they may select the manual option and enter in the routing and account number for their bank account. Wiring cash Instructions can also be generated by the advisor and the clients from the “Transfer” tab. 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 must be initiated by the client. We use the Direct Transfer method, which has no negative tax consequences. The client will login to their account, and once logged on they will click on the “Rollover” button on the right hand side of the “Transfer” page.  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: Betterment generates an IRA transfer form that will be emailed to the client, they will also have access to this PDF from their 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 nearly all ETFs, many mutual funds, some 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 advisors clients, prospects 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 clients 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 advisors book value over the last several months and is reflective of the previous market days close. Pending Actions:  Here you’ll find a list of the most recent actions taken on a client or prospects behalf and its current status. These actions include, but are not limited to, custom invites, rollovers initiated by advisor, and invites to establish Joint Account for existing clients. Before any of these actions expire, the advisor will have access to a “Send Reminder” button which will resend the email requesting client authorization. Clients Tab This page is where you can invite clients, and track new client sign-ups and invitations sent. 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 at the bottom of 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 tagged on your advisor dashboard, so you can manage the account. You will also collect an advisory fee for this account (if this feature is already set-up). Impersonation Feature: Across from a client’s name, you will see a “Login” button to the right hand side, which will allow you to login 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 pagepage, 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 their asset allocation (stocks/bonds). Agreements Page This page will display each client you have onboard via the agreement automation feature. It will also allow you to view the version of the agreement your client electronically signed. If you sent us updated documentation, please note that Betterment does not send these to existing clients. You will have to send the updated documentation to clients outside of the Betterment for Advisors environment. Support Tab This will provide you with contact information for our Betterment for Advisors support team for both you and your clients. Part 6: Resources  We have a great FAQ section with more information and basic questions

Advisor Insights from Lewer Financial We recently sat down with the VP and Partner at Lewer Financial Advisors to understand more about his firm, his 401(k) practice, and how he came to work with Betterment. Nick Jenkins, VP & Partner at Lewer Financial Advisors, partners with Betterment for Business to provide high-tech, low-cost 401(k) solutions to his clients. Can you briefly describe your advisory practice and the kinds of clients you serve? Nick: Lewer Financial Advisors is a part of Lewer Companies, a group of companies serving business owners, families, and individuals. We’re located in the Kansas City area, but we’re licensed in every state and do business across the country and in Canada. We aim to be a full-service, one-stop shop advisor for business owners often associated with franchise organizations, building relationships at the corporate level and becoming a preferred business services advisor to franchise owners—as individuals as well as employers. The services we provide can include individual wealth management, life insurance (both individual and employer-provided), estate planning, business succession planning, and health and wealth employee benefits. Lewer Benefits Group, LBG, focuses on the medical, dental, vision, and wellness benefits while Lewer Financial Advisors, LFA, focuses on the wealth side of the house, primarily retirement plans with an emphasis on 401(k)s. What motivated you to enter the 401(k) space? Nick: From the business standpoint, 401(k)s complement the other services that we're already providing to the franchise or business owner. Within our health and wealth benefit offering, the 401(k) plan is the largest component. We’re focused on business owners that are determined to grow their businesses and recognize the importance of recruiting and retaining their key employees.  When you get in front of the right business owners, a 401(k) plan can represent significant assets, and the plan participants can represent dozens of prospective clients for insurance or other advisory services. We see the 401(k) as a great foundation to building a longer-term, multifaceted relationship. So do you actively prospect for 401(k) clients? Nick: No. We build the relationship first, then broach the topic of a 401(k) if and when it’s right for the client. We’ve had more success with this approach than by trying to peel clients away from someone else. How would you describe your role with respect to the employer and employees? Nick: It’s critical for us to maintain that relationship, so we are the main point of contact for employers and employees. We tell them we are their one-stop shop, their go-to expert on any topic related to their 401(k) plan. We want them to call us first, whether it’s the employee who needs help signing up online or downloading the app, choosing an investment, using the platform; or the business owner who needs help on plan design decisions such as which type of 401(k) plan to create, what vesting schedule to adopt, whether they should make matching or profit-sharing contributions. Anything like that.  And of course we help employers understand compliance and regulatory requirements, including how to remedy any violations that may occur. Actually, many of those conversations start with the very first meeting once they express interest in offering a 401(k) plan. In just 30 minutes, we go over different plan types, matching, vesting, non-discriminatory testing, etc. We do this early in the process for two reasons: to demonstrate that we are experts in this area and to really expedite the process later on. And because of our relationship with them, we’re able to help guide them through these decisions. We already know a lot about their company, their culture, and their business objectives. So turning now to how you came upon Betterment, can you talk about that for a bit? Nick: I believe that we were one of the early Advisors working with Betterment through our growing list of individual clients on the Betterment for Advisors platform, but we’re fairly new to offering the Betterment 401(k). We looked at several providers before determining Betterment was the right 401(k) solution for our clients based on two main factors: the tech-forward platform and competitive pricing. When talking to business owners, I essentially tell them what Betterment for Business tells everyone: “We use the Betterment 401(k) platform to give you a tech-forward product at a good price — lower than what you’re going to find out there in the traditional market. Lower fees mean that employees get to keep more of their investment return. Oh, and by the way, Betterment’s other tools, such as the financial aggregation feature, lets you link all of your financial accounts to a single platform.” We let clients know that they may “just” be looking to provide a 401(k) to their employees, but that a 401(k) platform can be   so much more in terms of total financial planning and having everything in an app on their phone. Advanced technology and accessibility are really cool. We haven’t looked back since starting to work with Betterment. Disclaimer: This case study was conducted as a Q&A in 2021 and is not reflective of all client experience, which may vary depending on individual circumstances not considered herein, and is not indicative of future or similar outcomes.

Client Agreement Automation Everything you need to know about this great feature. Scroll down to learn more and read our legal disclosures. The Betterment for Advisors Client Agreement Automation function will make onboarding your new clients fast, easy, and completely paperless. By permitting your clients to execute your firm’s advisory agreement as part of the white-labeled Betterment for Advisors signup experience, you automate a manual process, giving you more time to focus on your business while providing your clients with a better experience. How to Get Started To get started, have a firm admin navigate to the Agreements page to upload the following documents: a PDF of the advisory agreement between your firm and your clients, signed by an authorized party at your firm a PDF of your firm’s Form ADV Part 2A a PDF of the advisor’s relevant Form ADV Part 2B, if applicable (see below) a PDF of your firm’s Form CRS a PDF of your firm’s privacy policy Note that an executed advisory agreement is required to use the Client Agreement Automation function, but the Form ADV Part 2A, Form CRS, and Privacy Policy are all optional. Any advisor may upload their ADV Part 2B, independent of the presence of firm-level documents. About the Client Agreement Automation Function The Client Agreement Automation function gives you the option to have your clients electronically execute your firm’s advisory agreement as part of the white-labelled onboarding experience. It also will permit you to provide your Form ADV Part 2A, Form CRS, and privacy policy to your clients at the time of onboarding. Additionally, each advisor on the platform may supply their Form ADV Part 2B if they choose to do so.  This will be presented to their clients at the time of onboarding alongside the other documents that may be supplied at the firm level. Provision of the Form ADV Part 2B is optional, and can be implemented even if your firm does not supply any of the other agreements or disclosures. Use of the Client Agreement Automation function is optional. If you choose not to use the function or to provide only a subset of your firm documents, you will need to separately execute your agreements between your firm and your clients and deliver firm disclosures in a manner determined by you outside of the Betterment for Advisors platform. The Client Agreement Automation function is only intended to assist firms in presenting agreements and disclosures associated with account openings. Subsequent updates to these documents are not re-delivered to existing clients; the firm must make their own arrangements to deliver any such updates. Contact us with questions at support@bettermentforadvisors.com. How It Works Overview: The Client Agreement Automation allows your firm to provide a form advisor agreement, Form ADV Part 2A, Form ADV Part 2B, Form CRS and privacy policy to Betterment, which Betterment will then host. As part of the Betterment for Advisors client signup, Betterment will electronically deliver these documents to your clients and permit your clients to execute your firm’s form advisory agreement.  You have the option of providing only a subset of the documents listed above, though you must provide an advisory agreement to use this function.  Only those documents which you upload to your firm dashboard will be provided to clients. Signup: As part of the Betterment for Advisors electronic signup process, your clients are presented with agreements between them and Betterment, and acknowledge receipt of Betterment’s disclosure documents. If you elect to use the Client Agreement Automation function, your clients are also presented with your firm’s advisory agreement and any disclosure documents you have uploaded as of the date each client signs up. This allows the client to execute and/or acknowledge these documents all at once, rather than separately. Your client electronically consents to the terms of these agreements by checking a checkbox and clicking a button to agree to create their account.  Please note that Betterment does not collect traditional handwritten signatures for either your agreement or the Betterment for Advisors agreements. Instead, consent is indicated via mouse click or other electronic method of input, and the date and time of such consent is recorded and stored. Records: In the advisor dashboard, under the “Agreements” tab, each advisor can view which of their clients executed the firm’s agreement electronically, the date and time at which they executed the agreement, and a digital copy of the version they executed (along with the versions of the firm’s Form ADV Part 2A, Form CRS and privacy policy, and the advisor’s Form ADV Part 2B, provided these documents were uploaded at the time the client was onboarded). This table is your record that your client executed your agreement electronically. Note that you can view and download the agreement by clicking the “Agreements Package” button on the right of the table. Copies of Form ADV Part 2B will appear alongside the agreements package if one was present at time of signup. A similar page is provided to Compliance users in the Compliance page in the Betterment for Advisors platform, allowing those with the Compliance permissions to view all of the firm’s clients and their agreements. Important Considerations for Your Firm Please review these items carefully before deciding whether or not to use the Client Agreement Automation function. One of each type of document per firm: The Client Agreement Automation function only supports one of each type of document per firm at a time, meaning one advisory agreement, one Form ADV Part 2A, one Form CRS, and one privacy policy at a time. You may change that agreement by having a firm admin upload a new copy of the agreement via the Agreements section of the Betterment for Advisors web portal. Once a new form of agreement is uploaded, this new form will be presented to all new clients who sign up in the future, but it will not be presented or distributed to existing clients. Form ADV Part 2B: Each individual advisor on the platform may upload their own ADV Part 2B if they choose or if their firm directs them to do so. If a Form ADV Part 2B is present when a client signs up, a record of the acknowledgement of receipt of the Form ADV Part 2B and a copy thereof will be presented on the Agreements page as well as in the Compliance view, alongside firm-level agreements (if supplied). Form CRS: When present, the Firm’s Form CRS will be shown as the first disclosure alongside the other documents and disclosures during client onboarding that are a part of the Agreements Automation Service. In addition to client onboarding, the Firm’s Form CRS is presented to clients when adding additional services. Additional services when the Firm’s Form CRS will be presented include when the client opens a new type of account, on the client consent form when the advisor initiates the opening of a new type of account, when a rollover is initiated by a client, on the client consent form when the advisor initiates a rollover, on quarterly statement notifications, and when a user logs in for the first time since the Firm has uploaded or updated their Form CRS. Examples of opening a new type of account include, when a client with a taxable investing account opens an individual retirement account or when a client with an individual retirement account opens a joint account. Fee changes: When considering whether to use the Client Agreement Automation function, you should take into account that advisors have the ability to change the fees they charge specific clients in the advisor dashboard (subject to available Billing Plans, which can only be created by firm admins.) Before using the function, you should determine how, if at all, this impacts the structure of your agreements. Always on: If you decide to use the Client Agreement Automation function, it will be turned on for all of the clients that you bring to Betterment for Advisors. This means that all clients you bring to Betterment for Advisors will have to execute the agreement you provided to Betterment as part of the signup process. Multiple signatories: Currently, the Client Agreement Automation function does not support accounts with multiple signatories, such as trusts with multiple trustees and joint accounts. Agreement amendments: While agreements can be updated and will go live for future client onboarding, we do not support amendments to your agreements with existing clients on our system. If you would like to amend your agreement with some of your clients, you will need to do so yourself, using whatever non-Betterment mechanism and recordkeeping system you deem appropriate. Form ADV Part 2A, Form CRS and privacy disclosure updates: While Form ADV Part 2A and Form CRS can be updated and will go live for subsequent client onboarding, we will not send any updates to your Form ADV Part 2A, Form CRS, or privacy disclosures to your existing clients. You are responsible for complying with SEC rules governing when and how to deliver any required disclosures and amendments to these documents to your clients.

How Portfolio Rebalancing Works to Manage Risk for Your Clients 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? Over time, the value of individual ETFs in a diversified portfolio move 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 client's rebalance the portfolio to target the original 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. Measuring Portfolio Drift At Betterment, we define portfolio drift as the total deviation of each asset class (put in positive terms) from its target allocation weight, divided by two. 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, and much of that risk may be uncompensated—meaning that the portfolio isn’t targeted higher expected returns by taking on the additional risk. Taking actions to reduce this drift is called rebalancing, which Betterment automatically does for your client in several ways, depending on the circumstances, and always with an eye on tax efficiency. Cash Flow Rebalancing This method involves either buying or selling, but not both, and generally occurs when cash flows into or out of the portfolio are happening anyway. Cash flows (deposit, dividend reinvestment or withdrawal) can be used to rebalance your client's portfolio.  Fractional shares allow us to allocate these cash flows with precision to the penny. Inflows: Your client may be rebalanced if they make a deposit, including when they auto-deposit or receive dividends in their account. We use the inflow to buy the asset classes your clients are currently under-weight, reducing their drift. The result is that the need to sell in order to rebalance is reduced (and with sufficient inflows, eliminated completely). No sales means no capital gains, which means no taxes will be owed. This method is so desirable that we’ve built it directly into our application. Whenever client drift is higher than normal (approximately 2% or higher), 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. In fact, the first dollars deposited have the largest impact on reducing drift. This means, for example, that depositing half the amount recommended to reduce drift to 0% will generally reduce drift by more than half. Portfolio Drift vs. Deposit Size The chart above is a hypothetical, illustrative example of the relationship between portfolio drift and deposits needed to rebalance without selling any assets. The blue line in the chart demonstrates the general relationship between deposit size and drift. As you can see, the first dollars of a deposit reduce drift by more than the last dollars. The dotted grey line shows what a linear relationship between drift and deposits would look like. Withdrawals (and other outflows) are likewise used to rebalance, by first selling asset classes that are overweight. (Once that is achieved, we sell all asset classes equally to keep you in balance.) We employ a sophisticated ‘lot selection’ algorithm called TaxMin within asset classes to minimize the tax impact as much as possible in taxable accounts. Sell/Buy Rebalancing In the absence of cash flows, we rebalance by selling and buying, reshuffling assets that are already in the portfolio. When cash flows are not sufficient to keep your client's portfolio’s drift within a certain tolerance, we sell just enough of the overweight asset classes, and use the proceeds to buy into the underweight asset classes to reduce the drift to zero. Sell/Buy rebalancing is triggered whenever the portfolio drift reaches or exceeds 3%. Our algorithms check your client's drift approximately once per day, and rebalance if necessary. Note: In addition to the higher threshold, we built in another restriction into the rebalancing algorithm for taxable accounts. As with any sell trade, our tax minimization algorithm seeks to select the lowest tax impact lots, and stops before selling any lots that would realize short-term capital gains when possible. 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 stay above the 3% drift if we have no long-term lots to sell. Almost always, it’s because the account is less than a year old. In this case, we recommend rebalancing via a deposit to avoid taxes. The Portfolio Tab will let your client know how much to deposit, as described above. Please note that for advised clients on our Betterment For Advisors platform, the drift threshold is 5% for portfolios that contain mutual funds. Allocation Change Rebalancing Changing your client's target allocation by moving the allocation slider and confirming the change will also cause a rebalance. Because you have chosen a new target allocation, Betterment will rebalance to the new target with 0% drift.  This sells securities and could possibly realize capital gains. Moreover, if you change your client's allocation even by 1%, the portfolio will be rebalanced entirely to match your new desired target allocation, regardless of tax consequences. As with all sell trades, we will utilize our tax minimization algorithm to help reduce the tax impact. Additionally, before your client confirms the allocation change, we will let them know the potential tax impact of the change with Tax Impact Preview. Transaction Timelines If you’d like to turn off your client's automated rebalancing so that Betterment only rebalances your client's portfolio in response to cash flows (i.e., deposits, withdrawals, or dividend reinvestments) and not by reshuffling assets already in the portfolio, please contact us.

Betterment for Advisors Goal Projection and Advice Methodology Details on how projections work within Betterment for Advisors' client accounts. Betterment provides allocation, savings and withdrawal advice alongside a projection graph when customers view their goal projection under “Plan.” The graph is intended to show the possible future investment values in order to illustrate the impact of different contribution and withdrawal choices, investment time horizons, and portfolio allocations. Actual individual investor performance has varied and will continue to vary depending on market performance, the time of the initial investment, amount and frequency of contributions or withdrawals, intra-period allocation changes, and taxes. An indication of “On Track” is not a guarantee of achieving a goal in the future. Acting on savings and withdrawal advice is not a guarantee that goals will be met or that the investment will meet cost-of-living needs throughout one’s life. See our Terms and Conditions. In the following sections, we’ll provide an overview of our methodology and assumptions for each component under “Plan” in a Betterment goal. Projection Methodology and Assumptions The expected portfolio returns used in the portfolio value projection results are based on the expected returns and risk-free rate assumptions for your target Betterment portfolio allocation. (See more about how the expected returns are derived). This portfolio is set by the user-selected allocation to “stocks” and “bonds”. The allocation choice corresponds to weights of the underlying Exchange Traded Funds (ETFs), as defined in our Portfolio. The recommended allocation mix is based on user investment profile including age, the goal type, and time horizon. Monthly Contributions or Withdrawals, if specified, are assumed to be made at the end of the month. We project your balance in monthly increments, never going below twelve months. We project allocation changes on a monthly basis. For users with remaining goal terms of less than one year, our projection assumes that you maintain the allocation at the end of the goal term rather than liquidate. We sometimes map external assets to proxy assets. For investments with available data, we map holdings to our asset classes to make approximate projections of their expected risk and return. In some cases we do not have data for a specific investment, usually because the holding is a non-publicly-listed vehicle, such as a private 401(k) plan. In those cases, we use proxy tickers to determine the appropriate asset class exposures. Proxy tickers are provided by Quovo, our third-party data provider for synced external accounts. Quovo uses a proprietary process to identify similar public securities to the unknown ticker using structural information (including security type and fund name) and to qualify the confidence level of the similarity. Betterment uses Quovo’s proxy tickers only for securities that pass a threshold confidence level of similarity. Quovo’s methodology may change over time, and Betterment will continuously evaluate any such changes. Fee Assumptions There are two relevant fees for projections: (1) the Betterment platform fee (“Betterment fee”); and (2) the Advisor’s fee. Both the Betterment fee and Advisor’s fee can be found on the Settings page, under the Account tab. Betterment assumes that both fees applicable on the date the projection is displayed will remain the same through the entire projection term. For projections, Betterment calculates an effective fee that is a sum of the Betterment fee and the Advisor’s fee. For projection purposes, Betterment converts each Advisor’s fee into an effective fee rate expressed as a percentage of client assets. This Advisor’s effective fee rate is calculated using one of the following methods, depending on how the Advisor’s fees are structured: If the Advisor uses a constant asset based rate as their fee (e.g., 0.25% / year), Betterment uses that rate as the effective fee rate in its projections. If the Advisor uses a flat fee, Betterment calculates the effective fee rate as the flat fee divided by the balance of the household assets held with the Advisor at Betterment. For example, if a client has $50,000 of advised assets with an Advisor, and that Advisor charges a flat fee of $100 per year, Betterment calculates the effective fee as ($100 / year) / ($50,000) = 0.2% / year. If the Advisor uses a tiered fee system with a series of asset-brackets and marginal rates, Betterment calculates the effective fee rate by multiplying the amount of advised dollars in each bracket by the marginal rate, summing those values and dividing by the total advised dollars. For example, if an Advisor charges a tiered rate of 0.25% / year for the first $100,000 of advised dollars and 0.15% / year thereafter, and an advised client holds $150,000 with that Advisor at Betterment, Betterment calculates the effective fee as ((0.25% / year * $100,000) + (0.15% / year * $50,000)) / $150,000 = 0.217% / year. As a unified example, let’s assume that the Betterment fee is 0.25% per year. Further assume that an Advisor charges a flat fee of $500 / year and that the advised client has $100,000 of assets held with the Advisor on Betterment’s platform. The overall effective fee assumed for projections is then 0.25% / year + ($500 / year) / ($100,000) = 0.75% / year. Savings Advice Methodology and Assumptions The monthly contributions estimate is based on a 60% likelihood of the portfolio value reaching the goal target at the end of the investment term. Calculations assume the current portfolio. If the portfolio changes over time or has different expected returns, outcomes may be adjusted. Calculations will be updated based on the current portfolio held. Savings advice and graphs are in nominal terms. Withdrawal Advice Methodology and Assumptions The monthly safe withdrawal is based on a 96% likelihood of having $0 or more at the end of the time horizon, assuming the following assumptions hold true. The safe withdrawal amount assumes the user adjusts the withdrawal rate and allocation according to our advice at least once per month. The safe withdrawal amount assumes the user does not live past the specified time horizon (“plan-to-age”). Calculations assume the current portfolio. If the portfolio changes over time or has different expected returns, outcomes may be adjusted. Calculations will be updated based on the current portfolio held. Withdrawal advice and graphs are in real terms, using an inflation rate of 2%. The default time horizon (“plan-to age”) is 90 years of age, or age + 50 years if younger than 40, or age + 10 if older than 80. The model will use this value or the value entered by the user. Graph Explanation The Graph exhibits the possible range of projected portfolio values using color. The dark line indicates the projected portfolio value under average market conditions. This means that there is a 50% likelihood of portfolio values greater than this and a 50% likelihood of portfolio values less than this. The lighter, shaded region indicates the range within which there is 80% likelihood of the projected portfolio value. This means that there is a 10% likelihood of portfolio values greater than the top of this region, and a 90% likelihood of portfolio values at least as high as the bottom of this region. Goal Status (Savings Goals) – On Track or Off Track The Betterment Savings Advice tool constantly tracks the portfolio performance and indicates the ability of the portfolio to reach the Goal target, assuming average market performance. The portfolio performance is categorized as “On Track” or “Off Track”, and Betterment makes recommendations to increase the likelihood of reaching the Goal target. The portfolio performance is “On Track” when the total projected portfolio value exceeds the Goal target assuming average market performance. This is equivalent to a likelihood of 50% and above of reaching the Goal target. The portfolio performance is “Off Track” when the future projected portfolio value (i.e. current balance plus future contributions, plus investment growth) is not sufficient to reach the Goal target assuming average market performance. This is equivalent to having less than 50% likelihood of reaching the Goal target. Betterment provides advice for bringing the goal back on track in three areas – either increasing the amount of future monthly contributions, or increasing the term of the investment or increasing the current balance in the account by making a one-time deposit. These recommendations are based on a relatively conservative stance, e.g. a 60% likelihood of projected portfolio value to reach the Goal target, compared to the 50% chance used by other models. Limitations The Goal target is a user input and may not be sufficient to provide income for actual spending or retirement income needs. The model does not account for any taxes, except for retirement goals. All non-retirement goal values are assumed to be pre-tax. The model does not account for forced withdrawals such as Required Minimum Distributions that must be taken from pre-tax qualified retirement accounts after a certain age. The model does not account for auto-deposits that are skipped. The savings model is in nominal terms and therefore does not have a direct inflation assumption. (The withdrawal model is in real terms, and uses a 2% inflation assumption). The withdrawal model does not take into account other sources of income outside the Betterment account. A full income plan should include all sources of income and a spending needs analysis. Past performance is not indicative of future results. These projections do not guarantee investment performance. Extreme market conditions, sustained high inflation, or other unforeseen events may reduce portfolio value and withdrawals. Income is not guaranteed.