Betterment Editors

How Portfolio Rebalancing Works to Manage Risk for Your Clients Sep 19, 2023 12:00:00 AM Portfolio rebalancing, when done effectively, can help manage risk and keep your clients on track to pursue the expected returns desired to meet their goals. What is rebalancing? Over time, the value of various holdings within a diversified portfolio moves up and down, drifting away from the target weights that help achieve proper diversification. Over the long term, stocks generally rise faster than bonds, so the stock portion of your client's portfolio will likely go up relative to the bond portion—except when you rebalance the client’s portfolio to target the original allocation. Clients may also transfer in assets from outside Betterment that are not part of the target portfolio strategy and/or allocation. The difference between the target allocation for your client's portfolio and the actual weights in your client's current portfolio (e.g. their actual allocation) is called portfolio drift. Measuring Portfolio Drift Betterment and partner portfolios We broadly define ETF portfolio drift as the total deviation of each super asset class (put in positive terms) from its target allocation weight, divided by two. These super asset classes are US Bonds, International Bonds, Emerging Markets Bonds, US Stocks, International Stocks, and Emerging Markets Stocks. Here’s a simplified example, with only four assets: Target Current Deviation (±) U.S. Bonds 25% 30% 5% International Bonds 25% 20% 5% U.S. Stocks 25% 30% 5% International Stocks 25% 20% 5% Total 20% Total ÷ 2 10% A high drift may expose your client to more (or less) risk than you intended when you set the target allocation. Taking actions to reduce drift is called rebalancing, which Betterment automatically does for your client in several ways, depending on the circumstances, and with an eye on tax efficiency. If you choose to take advantage of Betterment’s tax smart transition features, we will aim to respect the drift tolerance and gains allowance that you’ve set when rebalancing your clients’ goals. Learn more. Considerations for Custom Model Portfolios Your firm may elect to construct a custom Model Portfolio on our platform. If so, drift for these portfolios is calculated on the security group level, even if the security group(s) used are pre-populated options provided by Betterment in the interface. For reference, security groups are groupings of ETFs that include a primary ticker, and may include secondary and/or IRA secondary tickers designed to help avoid wash sales and allow for tax-loss harvesting opportunities. This means that for Model Portfolios, drift is calculated as the total deviation of each security group (put in positive terms) from its target allocation weight, divided by two. Considerations for DFA Mutual Fund Portfolios Certain firms on the Betterment for Advisors platform have access to Dimensional mutual funds for their models. In a DFA mutual fund portfolio, we calculate drift on a per-asset basis. This means that for DFA portfolios, drift is calculated as the total deviation of each holding (put in positive terms) from its target allocation weight, divided by two. Cash Flow Rebalancing This method involves buying or selling when cash flows into or out of the portfolio happen. Cash flows (such as deposits, dividend reinvestments or withdrawals) can be used to rebalance your client's portfolio. Fractional shares allow us to allocate these cash flows with precision. Inflows: When a client makes a deposit or receives a dividend, we use the inflow to buy holdings that are currently underweight, reducing their drift. The result is that the need to sell in order to rebalance is reduced. Whenever client drift is higher than normal (generally 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. Outflows: Withdrawals (and other outflows) are also used to rebalance, by prioritizing selling holdings that are overweight. We employ a sophisticated ‘lot selection’ algorithm called TaxMin to minimize the tax impact in taxable accounts while reducing overall portfolio drift. 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 holdings, and use the proceeds to buy into the underweight holdings to reduce the drift to zero. Sell/Buy rebalancing is generally triggered whenever the portfolio drift reaches or exceeds 3%, unless you set a custom threshold for your client. Once an account balance is at or past the minimum threshold, our algorithms check your client's drift approximately once per market 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 of a client’s goal will show your client know how much to deposit, as described above, to rebalance via cash flow. If you’d like to turn off automated buy/sell rebalancing in a client’s account, you can do so in the Clients tab of your advisor dashboard. Please note that for advised clients on our Betterment For Advisors platform, the drift threshold is 5% for portfolios that contain mutual funds. For custom model portfolios, advisors can set a custom drift threshold. Allocation Change Rebalancing Changing your client's target allocation by moving the allocation slider and confirming the change could also cause a rebalance. When you update a client's portfolio strategy and/or asset allocation, Betterment will give you the option to select one of our three tax-aware migration strategies. Depending on which option you select, this could result in selling securities and could possibly realize capital gains. As with all sell trades, we will utilize our tax minimization algorithm to help reduce the tax impact. Additionally, before confirming the allocation change, you can review the potential tax impact of the change with Tax Impact Preview. Transaction Timelines

Switching custodians: Why Sound Financial transitioned their book to Betterment for Advisors Aug 28, 2023 10:46:33 AM A conversation with Cory Shepherd, ChFC®, CFP®, President and Partner Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Moving to a new custodian is not an easy decision. For this interview, we sat down with Cory Shepherd, President and Partner at Sound Financial Group, to learn how he navigated a decision to switch providers in 2020. Sound Financial was searching for a custodian that could offer something different than the legacy options. They needed a partner that not only met their basic pricing and operational needs, but also complemented their planning philosophy and could set their practice up to scale long term. The team ultimately landed with Betterment for Advisors, a decision that has helped the firm cut overhead costs, streamline onboarding, and invest more time in giving quality, human advice. Moreover, we discover how Sound Financial’s decision to switch to Betterment for Advisors was, in the end, a way to maintain “elegant simplicity” in their lives as independent advisors—giving their team, their clients, and their families more flexibility to pursue their goals. Read the full story below. The path to independence Cory Shepherd, ChFC®, CFP®, is the President and Partner at Sound Financial Group. The fee-based planning firm has three advisors and serves about 300 clients representing $125MM in AUM. Sound Financial’s path to independence was, in some ways, an accident. For years, co-Presidents Paul Adams and Cory Shepherd focused on expanding their team within the broker-dealer model. But a series of contract negotiations with their broker-dealer in 2016 prompted a decision to go independent. “Breaking that relationship was one of the best, ‘bad’ things that could have happened to us. After that, we stopped trying to grow horizontally with as many advisors as possible, and started prioritizing growing vertically.” The move not only changed their business strategy, it changed their perspective on independence and the beauty of deciding for yourself what work looks like. “We have this amazing life with a lot of freedom. We work closely with clients we love and avoid the multilayered requirements of larger corporations.” An action-forward planning philosophy Sound Financial is passionate about creating financial plans that won’t end up collecting dust—both figuratively and literally. “During my early days at MetLife, I was so proud of our financial planning work. We’d create these 80-page, leather-bound, beautiful plans. And then, one day, I found out that a client had wedged one under the leg of their pool table to level it out.” That epiphany underpins Sound Financial’s Wealth Design process: The biggest challenge clients face isn’t creating a financial plan, but implementing it. “If an advisor just hands over a plan document, 9 times out of 10 there will be major breakdowns in implementation.” With an average annual household income range of $250,000 to $1.5MM, the firm’s clients are largely working professionals—physicians, tech executives, and business owners—in the wealth accumulation phase. To emphasize the importance of action for these clients, Cory compares the planning process to an architect designing a house: “An architect’s job is to provide a blueprint that ensures you’re getting the best house for you, the house that will allow you to live your best life. But the design is only worthwhile if you can act on it and actually build the house.” Repapering hurdles prompt a switch Prior to transitioning to Betterment for Advisors, Sound Financial had a positive relationship with their core TAMP. However, an acquisition by another firm in late 2019 prompted a switch. About 8 months into the transition, Sound Financial was surprised to learn they were going to need to repaper the majority of their client accounts. “We honestly weren’t looking to make a move, but, because they were going to make our clients go through the trouble of repapering accounts anyway, we felt it was our responsibility to do some due diligence and see if there was a better fit for them somewhere else.” Searching for a future-forward custodial partner In their search for a new custodian, Sound Financial prioritized price, innovation, and transparency for clients. As a smaller firm, they found it challenging to find a partner that was aligned to their pricing requirements. “Our firm was being charged 42 bps at the time,” Cory noted. “We couldn’t justify the fee, and [our TAMP] wasn’t able to customize it. They didn't want to make that custom, cut-out niche for us and, at the end of the day, we just couldn't make the pricing fit.” Sound Financial also evaluated how various platforms could help improve their back-office and client onboarding experience. At the time, tech stack fragmentation was a challenge. They were layering one-off tools on top of their core systems (TD, Fidelity, and AssetMark) to support account management and opening, which created a disruptive and paper-heavy process. “Back then, it took us an hour just to open a new household’s first account. On top of that, we then needed 20 minutes for each additional account opened, just to manage all the paperwork.” Considering Betterment for Advisors Cory admits he was apprehensive when his business partner first brought up Betterment. “I thought of it as a millennial product for DIYers.” But the custodial platform’s integrated onboarding technology alone piqued his interest. “I’d been embedded in the world I’d grown up in, so it was a little like magic the first time we had a Betterment for Advisors demo. The technology made everything so simple. Even for clients to do it themselves. Click, click, click, and you open an account, even live with a client, in about five minutes. That was huge.” The team also appreciated that the platform adds transparency to the client experience. The planning and projection tools in particular felt like something they could really give to a client. Still, Sound Financial had some reservations and risks to weigh before making the leap. Chief among them: the Betterment brand. “We wondered, Are we going to have to compete against ourselves? Will folks want to leave us and just go to Betterment solo? But that hasn’t happened. In fact, clients who had Betterment accounts already, before they met us, have brought them into our practice.” Making the switch: 90% of assets in 90 days An all-in-one, vertically-integrated custodian, Betterment for Advisors offered Sound Financial something new in their search for a custodian. “As an independent practice, we really liked the fact that Betterment for Advisors was focused on a different kind of value proposition: good technology, ease of communication and workflow, and efficient pricing.” The process of transitioning their client assets was a contrast to the demanding, piecemeal transition they’d made just a few years prior when going independent. “We moved 90% of our client assets within 90 days. It was super fast.” The Sound Financial team expertly navigated client conversations around the transition, emphasizing the improved client experience and technology. “It was an easy conversation to have because there is a lot of value for the client. We discussed the expected time savings, and how we planned to use this time to improve servicing for them. We also focused on the ease of use, the transparency, and being able to do things yourself.” Results Cutting overhead costs and client fees to Betterment for Advisors, Sound Financial noted they have been able to cut their custodial fees by more than 50%, and recapture these savings in the firm’s profitability. They’ve steadily increased growth rates year over year without increasing client fees—even during the turbulent COVID-19 market. Outsourcing investment management increased their team’s capacity, giving the firm greater operational leverage. “The efficiency of the technology is so much higher that we have not had to keep up the hiring pace that we were previously maintaining. With Betterment for Advisors, we could just about double the total number of clients we have and not have to hire another person.” Moreover, efficiencies unlocked in investment management allowed Sound Financial to improve pricing at the top end of their fee grid. “This gives us a clear advantage over competitors in attracting these higher-net-worth clients to work with us.” A boost to employee morale and retention Reducing hiring needs gave Sound Financial an additional, unexpected competitive edge: a happier workforce. “We’re unlocking time and capacity as we grow, and, with fewer hires, we can reward our team members more than our competitors can. Suddenly, employee retention becomes a big bonus—and one that was not as obvious.” Fostering strong employee retention is now a vital part of the firm’s business strategy. “We’re focused on doing what’s right for our team. Too much turnover, and having to frequently introduce clients to a new name on the phone, can start to erode clients’ confidence in your practice.” Future-proofing a practice in an AI-dominated culture Moving to Betterment for Advisors as their core custodian has changed how Cory thinks about growing and sustaining the practice. At first, they believed they could use automation to simply increase the number of clients served—taking on significantly more client accounts, and spreading the team thin across the base. Instead, the team now sees investing more time in each client relationship as their primary path to growth. “What we’ve realized over time is that the technology can give us more time to have a more customer-centric and intimate relationship with a client, and that’s how we want to grow.” Sound Financial believes creating a personal planning experience will help them stay ahead of the curve. “AI is at the forefront of almost every cultural conversation right now, and deepening the human experience for clients is a more valuable and ‘AI-insulated’ model than providing generic advice to the masses. “We don’t want to compete with a mass market, digital approach. We want to use automation to free up our time to grow organically — give clients such an amazing experience that they’re compelled to refer us to people they know. That’s harder for AI to disrupt.” What’s next for Sound Financial The Sound Financial team remains focused on scaling intentionally. They have a successful podcast that they use to reach new clients, and have tested paid mediums for lead generation. But they’re less interested in ramping up an online acquisition model. “I love meeting with someone who cares about someone that I already know and work with, and working with that new connection. A lot of our clients become just like friends and family to us.” Looking forward, Cory sees technology as a means for making daily operations more efficient. “We really value balance. And we want to continue using technology that helps give all of us back time. Time to work with clients and time with our families.” “Our goal is to quietly and intentionally grow the community of people we’re helping, and to use technology to streamline our work as much as possible. All so we can retain this elegant simplicity that we’ve found in our lives.”

Schwabitrade or switch? Aug 18, 2023 3:48:31 PM Learn how switching to Betterment for Advisors could power your practice into the future. The choice to define your firm’s future “Schwabitrade” — many RIA owners have their own experience with the ongoing integration of Schwab and TD Ameritrade, and many have shared their experiences on how rocky it has been for their firms and their clients. We’re not here to show you how your firm will be impacted. You know this. We’re here to show you how Betterment serves advisors, regardless of size, with a modern custodial platform. You deserve this. So you can make the choice: Schwabitrade or switch? Our service and technology can simplify the switch At Betterment for Advisors, we know switching custodians is a big move, so we’ve made sure that not only is the process easy, but that your experience in your first 12 months helps set you up for long-term success. We’ve designed a three-pronged approach to help you make the switch: #1 A dedicated relationship manager You're more than just a number or a customer — you're our partner. The high standard of service we hold ourselves to means that we have no minimum AUM requirement and every firm gets a dedicated single point of contact, no matter their size. Your relationship manager is your guide, ensuring you are fully trained on how to best use all our tools and features throughout your first year. Your relationship manager’s goal is to get you utilizing our platform to its maximum capability for your practice and your clients. #2 Fully digital onboarding Our digital onboarding streamlines the repapering process for you and your clients. You can easily onboard individuals and households, and complete account set up paperlessly. They’ll get a single email to sign off on everything at once. #3 Tax-smart asset transitions Our tooling enables you to granularly control how assets are moved from your current custodian to Betterment for Advisors in a tax-efficient manner. You can leverage our paperless workflows to move assets over in kind. Easily move your client’s funds into your preferred portfolio model while optimizing their tax impact. Our people and technology empower 600+ RIAs and their clients each day Once you’ve made the switch to Betterment for Advisors, we’re dedicated to seeing your practice grow. We take pride in being the modern end-to-end custodian for the modern RIA, balancing human support with future-forward technology. As our partner, we give you the tools that help simplify and streamline your practice operations while building a successful book of business. Dedicated advisor support Regardless of your firm’s size, we provide dedicated support to answer all of your questions. Our support team members are platform experts, here to resolve any issues you may face and answer questions from the most mundane to the most technical. We’re more than just chat support. You can reach out via email or phone for any type of issue or question. Your relationship manager isn’t just for onboarding. They’re your long-term partner every step of the way. “Advisors, especially small and mid-sized RIAs most affected by Schwabitrade, shouldn't sit back and accept lower-quality service. We’re here to provide you with a better option.” —Tom Moore, Senior Director, Betterment for Advisors Time-saving automation tools Our tools take care of critical-yet-time-intensive tasks so you can focus on your real value — planning, strategy, and client relations. We automate tax-optimization strategies for you including asset location and tax loss harvesting. Flexible billing gives you the freedom to use custom asset-based, fixed fee, or tiered billing plans and set the frequency your clients are charged. We collect the fees for you and pay them out automatically. Our Co-pilot dashboard aggregates urgent client needs all in one place, becoming your client command center, enabling you to streamline your high-priority work. Exceptional client experience Using our client-facing mobile app and web experience paired with our powerful advisor planning tools, your firm can provide one of the most delightful client experiences on the market. Empower your clients at home or on the go with our interactive portal, giving them convenient insights into their investments. Plus, you can sync held-away accounts so they see all of their savings and investments in one place. Better manage household accounts with a customizable account structure, using bucketing strategies to help clients work towards long-term goals. Engage with your clients on a deeper level with our portfolio analysis, retirement planning, and performance tracking tools. Build your seamless tech stack We integrate with other well-known tools giving you a better experience for you and your clients. And don’t worry, if you work with a tech provider we haven’t partnered with, your relationship manager will explore adding them to our integration options. Transparent pricing in a not-so-transparent world Schwab and other custodians may say their custody services are “free” but in the RIA space, it usually means that your client is the one paying for it. We charge a simple platform fee that allows us to improve our custody platform while providing exceptional support. This enables you to truly put your clients first and help them grow their wealth.

Considering a switch from TD Ameritrade to Betterment for Advisors? Here's what you need to know. Jul 28, 2023 1:32:31 PM The custodial landscape is changing. We’ve compiled answers to the most common questions we get from RIAs who are considering making the switch to Betterment for Advisors. We've supported many RIAs considering moving their client accounts to Betterment for Advisors. Here are the most common questions we receive about making the transition. How do I know if making a move is worth it? How can small RIAs evaluate a custodian's service model? What does a transition to Betterment for Advisors look like? How does Betterment for Advisors support RIAs through a transition? What type of firm is a good fit for Betterment for Advisors? What is the experience like for my clients? How long has Betterment been around and what does the future look like? What's next for the Betterment for Advisors platform? How do I know if making a move is worth it? The decision to migrate your practice and client accounts to a new custodian can be challenging. Evaluating if, and when, a switch is worthwhile often comes down to assessing a potential partner’s technology and service. Betterment for Advisors’ custodial technology can make a big difference for small firms trying to scale efficiently. It can not only help you craft a better client experience, but it can free you up from routine, administrative tasks to focus on more high-value work. Getting a feel for technology is relatively simple—advisors can request a demo to see most platforms' features in action. A custodial partner's approach to service, though, can be more challenging to nail down. How can small RIAs evaluate a custodian's service model? When considering different service models, think about who your support team will be and how easy it is to reach them. The support channels available to you should be aligned with your preferred way of doing business—whether it's for typical day-to-day inquiries, urgent requests, or more strategic discussions about how to grow your practice. For many custodians, the definition of a "small RIA" seems to be getting bigger.* Our dedication to service for firms of all sizes sets us apart. We know that quality service makes all the difference for an independent advisor, regardless of their AUM or number of clients, so we intentionally built a support team that’s accessible for all. And because some questions are best addressed on the phone, you can reach a live person fast—our advisor servicing team aims to answer calls in under two minutes.** Betterment for Advisors also prioritizes offering comprehensive support for firms, beyond transactional questions. Every firm on the Betterment for Advisors platform will partner with a dedicated relationship manager who serves as their go-to resource for training, 1-1 consulting, practice management questions, transition support, and more. What does a transition to Betterment for Advisors look like? Our vertically integrated technology aims to make the repapering process as seamless as possible via intelligent automation. You'll also have an experienced team on your side to help make the move easy. For each transition, we start by discussing your firm's current set-up, including client service model, current custodian(s), portfolios used, and your existing tech stack. This helps us understand the key pieces of the transition and any pain points or limitations we can help address. From there, we'll work together to create an implementation plan that’s tailored to your firm. It will combine your unique situation with best practices gleaned from other transitions we’ve managed and tips about how to make the most of the Betterment for Advisors platform (so you can take full advantage of our billing tools, portfolio options, integrations, and more). The plan will also include an account migration strategy that considers your clients' current models and holdings (so they can benefit from features like our tax smart transition technology if needed). Once the plan is in place and you know exactly what to expect, we'll hit the ground running. How does Betterment for Advisors support RIAs through a transition? Betterment for Advisors is dedicated to providing hands-on support. Your relationship manager will work with you on the entire process and be your go-to liasion for our in-house team. Throughout the transition you’ll have regular check-ins to monitor progress and address any questions. White-glove transition support reduces the operational burden that typically comes with repapering, while reducing disruption to client service. Our team can help manage transitions for you from start to finish, from assistance in drafting client communications, to sending out client invites and ACATS requests on your behalf. Excellent support doesn't end with the transition. You will always have a dedicated relationship manager for practice management support and growth initiatives, as well as access to a fast, knowledgeable advisor support team for the day-to-day questions. What type of firm is a good fit for Betterment for Advisors? Betterment for Advisors works with independent RIAs of all sizes—especially those just breaking away or focused on scaling an already established practice. Because we have no AUM minimums, an efficient, scalable pricing model, and dedicated support for all firms, we are uniquely suited to partner with small-and-medium sized RIAs that are often overlooked by legacy custodians. What do all of our advisor partners have in common? They recognize the opportunity that automation can unlock for their business. Our cutting-edge technology helps planning-focused advisors create more operational efficiency, so they can cultivate stronger client relationships and take their businesses to the next level. The efficiencies unlocked with Betterment for Advisors' technology enable our advisors to serve significantly more clients than at legacy custodians. What is the experience like for my clients? Simple. An easy, paperless client onboarding workflow differentiates Betterment for Advisors from legacy custodians and helps advisors impress clients from day one. With digital client onboarding, advisors can collect household signatures from clients on all new accounts in one simple, paperless package. From there, clients need only approve ACATS requests to transfer their assets to Betterment for Advisors. Your clients will have access to Betterment for Advisors' intuitive goals-based portal, which is white-labeled for your firm. The platform is designed to be flexible for advisors, so you have the tools to manage tasks on behalf of your clients, but your clients will also have a variety of easy, self-directed tools within the portal. Tasks like updating their address or setting up an auto-deposit can be done with a few simple clicks. How long has Betterment been around and what does the future look like? Betterment launched in 2010 as a pioneer in the digital investing space. 13 years later, we are the largest independent digital advisor with over $38 billion in AUM. All client assets are protected with industry-standard insurance and rigorous account security. Like many financial services companies, we've achieved scale and sustained growth by diversifying across three complementary lines of business: direct-to-consumer, Betterment for Advisors, and Betterment at Work. Betterment for Advisors has been doing things differently from the very beginning. How? By building an RIA custodian from the ground up. Our status as an independent, vertically-integrated solution is vital. It has allowed us to create bleeding-edge automation and to own the user experience for advisors and investors from end to end. We remain committed to that independence. The desire to do things differently also underpins Betterment's pricing. Instead of the traditional custodial model, we charge a transparent platform fee based on client assets that scales as your firm grows on the platform. This model is intentional—it allows us to work with RIAs of any size and offer every firm the quality, sustained support they need for the long term. With recent consolidation in the RIA custody industry, advisors may feel their options are more limited today than in the past. We believe that there is a gap for small-and-medium sized RIAs when it comes to technology and service at legacy providers. And we're here to solve that. What's next for the Betterment for Advisors platform? Betterment for Advisors is the custodian of the future for planning-focused independent advisors. We have a culture of continuous iteration and are always looking to build tools that can make advisors’ lives easier—and help them deliver more value to clients. Your feedback matters to us. As we're building an all-in-one solution where advisors can run their whole practice, we'll keep adding products and features that enable advisors to build the business they've always envisioned. If you have input, questions, or something you'd like us to build, please let us know.

4 Ways to Wow Your Clients in their First 90 Days Feb 21, 2023 1:35:42 PM We've compiled some top practices that can help you craft a delightful experience for new clients, every time. Onboarding is a critical moment in your advisor-client relationship. It’s the time for you to ensure that your new client feels comfortable and confident in their decision to work with you. It’s also a key inflection point for ensuring long term client retention. Advisors often lose the trust of their clients by overpromising during onboarding and, over time, advisors’ communication style impacts whether clients stick around. Post-pandemic, nearly 9 out of every 10 clients consider their advisors’ communication frequency and style when deciding whether to retain their services (and when making referrals to friends and family). We've compiled some best practices for firms looking to better communicate with clients and create a delightfully smooth onboarding experience, every time. #1: Lead with your clients' values. At the very beginning of your relationship, it’s essential that you take time to understand your client’s unique financial goals. Building a goals-based financial plan is now an industry standard practice. In fact, helping “maximize a client’s potential for meeting life goals” is at the core of the CFP® Board’s definition of financial planning. It can be critical, though, to also put in extra work to understand your client’s individual values. Whether it’s prioritizing environmental sustainability, supporting extended family, or charitable giving, financial decisions can be incredibly emotional. Communicate to your client that you’re there to help guide them and to make sure their money is aligned with their core principles and beliefs. Taking the extra time necessary to discuss and nail down your client’s values—and what they hope to get out of their work with you—can help you foster a deeper relationship early on. Clients can often have a difficult time identifying their financial goals, let alone clearly defining, prioritizing, and saving towards them. Nick Holeman, Director of Financial Planning at Betterment, recommends doing a little research about your clients in advance: “Having these data points on hand will help you get your clients thinking in the right direction. It also demonstrates to your clients the personalized experience of working with you.” #2: Prioritize transparency. Committing to transparency can help you impress new customers and drive brand loyalty in the long run. According to recent consumer surveys, 88 percent of consumers say that authenticity is a key factor when deciding what brands they support, and 46 percent of consumers say that they would pay more to purchase from brands they trust. Companies may shy away from being transparent to achieve some perceived benefit in the short-term. If you hope to earn long-term client loyalty though, it’s important to pursue transparency with your clients as often and early as possible. Of course, as a business offering paid services, you should make sure the following information is clear and readily accessible: Your fees (What you charge): Whether you leverage an asset-based, tiered, or fixed fee pricing model, your client should have a solid understanding of your service fees. In any conversation around fees, it’s important to first make sure your value proposition is clear and that your clients understand what you bring to the table. Your billing cadence: Communicate what payment schedule your client can expect (monthly, quarterly, etc.). But don't overlook these other key questions: How often will you meet or check in with your client? What communication methods do you and your clients prefer? Between video calls, text, and email, define what works best for this relationship. What services will you offer (and what will you not offer)? It’s important to provide an accurate summary of the scope of your services upfront. Outline areas where you and your team might not be spending time to avoid creating false service expectations. By setting clear expectations from the start, you can ease client skepticism and start to build credibility. #3: Cut out paper and manual workflows. It’s 2023 and clients expect seamless experiences across digital channels. (In fact, 40% of investors say digital access has become a greater priority following COVID-19.) Paper-heavy processes requiring wet ink, multiple rounds of back-and-forth, and hand-carried mail no longer cut it. Going paperless becomes particularly relevant at the onboarding moment. If your firm is taking advantage of software to handle sending and collecting electronic agreements during the account opening process, that’s a great first step. Too often, though, these services still involve multiple email touchpoints that can feel disjointed and overwhelming to a new client. Explore solutions that can help you open new accounts across channels as possible. At Betterment, our technology offers built-in digital client onboarding to help advisors open accounts completely online, with minimal lift required from your client. At account opening, clients receive one email touchpoint with all information they need to approve your firm’s set up—a process that takes just minutes. Firms can leverage digital onboarding to impress clients who otherwise may be used to clunky or paper-heavy experiences with other wealth managers. Digital, minimal effort account opening can even help firms reach entirely new client segments. Matt Lohrius, lead advisor at Ritholz’s Liftoff Invest business, believes going paperless is critical to meeting demand from accumulation phase investors: “For Liftoff, it’s just huge from a technology standpoint: opening accounts, transferring money from other custodians, depositing money, linking a bank account. Everything is so easy and intuitive for the client.” Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. The bottom line: Replacing manual onboarding tasks can help you spend less time on routine logistics and more time personalizing advice. When you free up more mental energy to focus on better service, your clients will take note. #4: Over communicate. Onboarding a client is more than a one-and-done touchpoint. For many clients, onboarding presents a lot of change and uncertainty—especially if this is their first time working with an advisor. Over the course of your client’s first 90 days, consider setting up a series of onboarding meetings. A schedule can help create structure, demonstrate your confidence, and convey to your client that you value their input. (Tip: As you hire and expand your team, it can be helpful to standardize this client onboarding meeting framework across your firm). The series might look like: Initial get to know you: Time for you to learn about your client and their family, likes/dislikes, values, and ambitions. The end of this introductory meeting is a great time to send a client questionnaire. A deeper evaluation of their financial state: Time for you to collect more detailed information on the clients savings, current investments, debts, income, risk tolerance. The financial plan: A meeting to present your proposal for your client’s unique financial plan. Follow up meeting: Check in with your client 30 to 45 days after the initial plan conversation. Progress meetings: After the initial follow-up, set a couple future dates to discuss progress made toward goals. The importance of the fifth step above cannot be overstated. In fact, the key to growing a loyal client base is consistent communication. Staying connected regularly can help you gain a more thorough understanding of how your client’s objectives may have shifted over time. Conversely, lack of communication sends the wrong signal to clients—and, overtime, might lead to losing the client relationship as their perception of your service value declines. When it comes to effective communication, attitude is everything. Make sure you bring positivity to each interaction and illustrate why you love what you do. Being genuine and ready to engage in small talk beyond finances (and, of course, listening more than you speak) can help you and your client get the most out of these meetings. Frequent communication is not limited to in-person interactions. Your firm’s online presence and branding are also an important arena for exceeding customer expectations and rivaling your competitors. Some steps to consider taking: Connect with new clients on social media. If you have a newsletter program, set up a system to routinely add new customers to the list. Invest in a website that speaks to both prospective and existing clients. Writing a weekly blog is a great way to distribute updates and market commentary regularly. Consider hosting webinars or an annual virtual event. Come holiday time, make sure you have a budget for a client gift or handwritten happy new year card—it’ll be a great cue to get them thinking about the year to come and your goals together.

Helping Millennials Match Their Money with Their Values Feb 9, 2023 4:57:23 PM A conversation between Sophia Bera Daigle and the Betterment for Advisors team about building a goals-driven practice for millennial clients. Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Advisor: Sophia Bera Daigle, CFP® After working in traditional financial planning firms since 2007, I quit my job at a NY start-up to launch my own firm, Gen Y Planning. I now live in Austin, Texas with my husband, Bryan, and our son, Theo, who was born in the fall of 2020. After spending several months living abroad in 2019, we’re excited to share our love of travel with Theo! Firm: Gen Y Planning Gen Y Planning brings financial planning to millennials. We now work with a variety of clients in their 20s, 30s, and 40s who are in the middle of making huge life decisions: navigating a new job, buying a home, merging finances, starting a family, relocating, and pursuing advanced degrees. The Gen Y Planning team believes that the earlier you work with a CFP®, the faster you can build a secure financial foundation for the future. Why did you decide to become a financial advisor? I like to help people use their money to match their values. My clients range from creatives to small business owners to Silicon Valley employees. Whether you plan to retire early, take a sabbatical, or build a career you love, I’m excited to help! What is the least understood aspect of your job? I would have to say the least understood aspect of my job is that financial planning does not just mean managing investments. I offer comprehensive financial planning, which includes all areas of your financial life: paying down debt, protecting assets that have been accumulated, purchasing a home, refinancing a mortgage, reviewing job offers and company benefit packages, reviewing tax returns, and proactively tax planning. My approach is goal-driven with my clients in the driver's seat. I work with clients to co-create their recommendations so that they’re more likely to implement the recommendations. Then my team and I act as their accountability partners to see that they are following through on the recommendations so that they can reach their goals. Why did you choose to partner with Betterment for Advisors? I like that Betterment offers robo-advising, which includes automatic rebalancing, at a low, flat platform fee, and doesn’t charge more for trades. In addition, Betterment has a simple, user-friendly interface that makes it easy for clients to navigate. Betterment also has great features like effortless Roth conversions and tax-loss harvesting. Something small that I love is the ability to set up an automatic investment weekly instead of monthly. It’s a great way to dollar cost average into the market while also smoothing out cash flow. How have you set up your firm's tech stack? And how has leveraging automation impacted your practice? We utilize a handful of low cost tech tools (Trello, Dropbox, Zoom, TextExpander, Gmail, etc.). We have found that our philosophy of “simple over sexy” has a greater impact on our clients than fancy software with charts and graphs. We don’t pay for expensive financial planning softwares that produce twenty-page reports our clients will never look at. The benefit for us and our clients just isn’t there. We like using Trello to track our clients’ financial goals and life changes and to take notes. We have a board for each client so we can easily prepare for our client meetings. We have a Google form we send to clients before their check in meeting and they update their net worth in Excel. We send them a one-page meeting recap after their meeting in a PowerPoint that we print to PDF. It’s efficient, simple, and the action items that came from the meeting are clear. Can you walk us through what the onboarding experience might look like for a new client at your firm – from when they land on your website to your team actually opening and transferring their assets – and how Betterment may fit into the onboarding workflow? An interested potential client starts by scheduling a 30-minute introductory meeting. They would fill out an intake form prior to our meeting. During the meeting we learn more about them, dive into the services we provide, and end with a quote for our services given their financial situation. After, if they decide they want to become a client, they sign a contract, pay their upfront client fee, and schedule their first client meeting. Prior to this meeting they are given a list of documents to gather and upload to a Dropbox folder for us to review. What is one critical lesson you have learned from your clients? My values and priorities are not necessarily the same as my clients. I need to keep this in mind when a client is making a decision that might not be the best financial decision, but may be a really important life decision that deeply affects other areas of their life. In that case, I want to help them figure out the best way to financially navigate through that choice so that they can continue to reach their goals. How has a remote or hybrid work environment changed your relationship with clients and prospects? I have always run my business remotely, which has a plethora of benefits for clients, the business, and my employees. Clients can meet in the comfort of their home or office and don’t need to worry about commuting to our meeting. It also allows me to work with people across the country and travel myself. It opens my workforce options up to the whole country as well since I don’t require my employees to be in one location and come into an office. I can’t imagine having in-person client meetings again. Now, when I get to see my clients in person, it’s only social! It’s way more fun that way! What do you think is the biggest opportunity for advisors today? I think the biggest opportunity for advisors is in working with the millionaires of tomorrow—young professionals who are making good money but maybe haven’t accumulated much wealth yet. They still need planning in many areas of their lives: paying down student loans, purchasing their first home, negotiating job offers, navigating company benefits and company stock options, starting a family, and saving for retirement. If you could only give one piece of financial advice, what would it be? Don’t wait to start. Small steps have a dramatic impact on your overall financial situation. You don’t want to be shoulders deep in a complex financial situation before you seek help. Find a planner who will be your financial partner to navigate finances with you so you can reach your goals and achieve your dreams.

From $0 to $40MM AUM: Jason Hamilton on Improving Client Service with Technology Dec 12, 2022 5:47:28 PM We sat down with Jason Hamilton to learn about his personal journey to becoming a financial advisor and launching his own practice—and how Betterment's technology has helped him build a $40 million firm. Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Advisor: Jason Hamilton Jason J. Hamilton, CFP®, CRPC® is a Certified Financial Planner™ and Chartered Retirement Planning Counselor® who helps high-performance professionals and high-net-worth investors create alignment with their abundance so they can live in flow with their wealth and serve their purpose. After coaching clients on their finances for over a decade and over six years as a registered investment advisor, he knows what helps clients go from chaos to serenity with their finances. As a Certified Financial Planner™, he also brings the technical expertise, education, experience, and ethics requirements investors are looking for to help them achieve their goals, lower their taxes, and optimize their income and investment returns. Jason is the founder of Keep It Simple Financial Planning, a fee-only registered investment advisor, managing over $40 million in assets for his clients. He is also the Head of Family Financial Coaching at his family's nonprofit IDEAL, a community development corporation, located in East Los Angeles. Firm: Keep It Simple Financial Planning Keep It Simple Financial Planning (KISFP) was founded in 2016 to help underserved investors receive technical financial advice in a simple and understandable way. Read more about why we believe “Keep It Simple” is the best philosophy. Why did you decide to become a financial advisor? My story originates just before the 2008 financial crisis. Before this, my family owned a small business: An Italian restaurant in a suburb of San Jose. The restaurant's name was Mio Vicino which means "my neighbor." Prior to the financial crisis, my family hired an advisor to help them with their financial and retirement planning. Unfortunately, instead of comprehensive fiduciary financial advice, my family was sold a myriad of insurance products. I believe with better planning, we would have had a much better response and outcome to the economic situation. Before the end of the crisis, we were forced to close the restaurant due to insufficient financial resources. On the bright side of this journey, I saw what my family went through and became determined to not have the same fate for myself. This led me on my journey of financial self-discovery to learn everything I could about financial planning and wealth management. What started as a Google search for "how do people become wealthy?" became an obsession and now a career. Helping clients get into alignment with their wealth has been rewarding in many ways. For years prior to becoming an advisor, I would read online forums, where I found out about advanced financial planning education to become a CERTIFIED FINANCIAL PLANNER™. At the time, I had no knowledge of the financial planning industry. Since my company offered education reimbursement, I decided to sign up for a course at UCLA extensions. This was the beginning of my journey to become a CFP®. I enjoyed the courses. They filled in the gaps from my prior reading and gave me structure to the process of proper financial planning. It was actually fun! In my search to change careers, I found a group called XY Planning Network that was providing the tools and education to help advisors launch their firms, and the rest is history. I hired coaches and consultants to help me start up and learn the business and the compliance aspects of running a registered investment advisor and, in 2016, I launched Keep It Simple Financial Planning. Over time, I have obtained the Chartered Retirement Planning Counselor® and CERTIFIED FINANCIAL PLANNER™ designations. More recently, with the popularity of investing in cryptocurrencies and other digital assets, I completed my Certificate in Blockchain and Digital Assets and became a member of the Digital Assets Council of Financial Professionals. Today, we help clients with flat-fee financial planning advice in nearly 40 states and manage over $40 million in assets under management for our clients. Coming from a lower-middle-class family, we knew how to work but I was never taught HOW to build wealth outside of one day buying a home. Investing was not part of the culture of my family. We all knew how to work hard and sacrifice. But, one thing that I teach now that I didn’t get growing up is how to turn my labor into capital that will work for me. Books also had a significant impact on my journey. Dave Ramsey, Warren Buffet, Suze Orman, and Jack Bogle are a few of the authors from whom I absorbed great insight and knowledge. But the most impactful for me were two books by Thomas J. Stanley: The Millionaire Next Door and The Millionaire Mind. The Millionaire Next Door showed me the path for how to become a first generation millionaire (and that over 80% of millionaires are first generation!). And The Millionaire Mind showed me what it takes to achieve multimillionaire status. Reading these books changed my perspective significantly about what it takes to be successful financially. What is the least understood aspect of your job? The least understood aspect of my job is that many times there is more psychology than technical financial planning in what we do. We are dealing with humans and not machines. Within a number of hours I can tell a client exactly how to optimize their financial situation. The challenge is, what may be optimal financially may not be optimal emotionally. As advisors, the better we are at understanding humans, the more likely our advice is likely to be implemented. What does your firm's current tech stack look like? I am a self-admitted technology addict. While we don't use all of our tools with all clients, there are some great applications for advisors to use when appropriate. We use: Asset Map, RightCapital, Income Conductor, Income Laboratory, Holistiplan, Cash Flow Mapping, Kwanti, AdvicePay, and, of course, Betterment for Advisors. Why did you choose Betterment for Advisors? And how has our technology impacted your business? I have tried multiple custodians since starting my firm but the efficiency, beautiful client portal and app, and the support team I get with Betterment for Advisors is second to none. Because of the digital onboarding and easy digital account transfer process I have been able to scale much faster and serve a more financially diverse client base than I could with a traditional custodian. What is one critical lesson you have learned from your clients? One critical lesson I have learned from my clients is that if you help people get into alignment with their wealth, other parts of their lives will flourish as well. Finances are such an important aspect of living in the United States and, if you can get into flow with your financial wealth interactions, you will experience harmony in other areas of your life typically. How has a remote or hybrid work environment changed how your team works? Our firm has been primarily virtual since our founding over 6 years ago and, since the pandemic, it has tripled in size as many more investors have become comfortable with virtual meetings. In our case, the remote work environment has improved our ability to grow and serve clients. We were ready as more and more clients become comfortable with using virtual communication tools to stay connected to friends and family. Now, it has become the overwhelmingly preferred meeting method and has allowed us to help clients solve the specific challenges they face from nearly anywhere in the nation. What do you think is the biggest opportunity for advisors today? To put themselves out there on social media to discuss and share their expertise. I see so many advisors wasting time and money on paid lead gen services, which if you knew how they worked, are typically a huge waste of money. Maybe not waste but for sure not fully optimized. People in general are desperate for a great advisor that aligns with their personality type. I think if advisors would just put out one educational video per week in their niche, or even general good financial advice, they would never have to struggle for business. If you won the lottery, what would you do with the money? Pay off mom's house and travel a lot. If you could only give one piece of financial advice, what would it be? That if your financial situation is not ideal, DO NOT blame or put any responsibility on anyone outside yourself. If you do not take 100% ownership of your situation you will never be successful. Literally anything you need to know about finances, you can find online in a blog or on YouTube. The challenge is people are typically their own worst enemy when it comes to finances. For this reason, hiring a trusted fiduciary advisor may be the best decision individuals make for themselves.

6 Questions to Consider As You Evaluate Advisor Technology Platforms Sep 27, 2022 10:07:00 AM 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. 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 forum question posed to an advisors-onlygroup 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 inherit $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. To learn more about Betterment for Advisors, get in touch with a member of our team.