Advisor Technology

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

Tax-Aware Migration Strategies Betterment for Advisors allows advisors to specify trading migration strategies to easily transition their clients’ portfolios or investment allocations. Betterment for Advisors allows advisors to specify trading migration strategies to easily transition their clients’ portfolios or investment allocations. Advisors have three options when migrating a client to a different portfolio or changing their allocation -- each with its own tax-optimization strategy. Advisors can preview the tax-impact effects of their elections before submitting the change.  Three options are available, each with its own approach to managing the transition. Minimize short-term capital gains and wash sales When this strategy is selected, the client’s goal will be migrated in a tax-optimized way. For taxable accounts, we’ll sell tax lots that are at a loss or have experienced long-term capital gains, but will continue to hold tax lots with short-term gains until they either become long-term gains or become losses. For tax-deferred accounts, we will migrate without regard to embedded capital gains. Regardless of account type, we will prioritize avoiding wash sales that could lead to permanently disallowed losses for securities held at Betterment. For this strategy, it is important to remember that the account may weather high drift in the short run, but Betterment’s algorithms will typically rebalance available losses or long-term gains as they arise, as long as the security sales involved will not cause any permanently disallowed losses. Drift goal to target portfolio For this migration strategy, the client’s goal will be gradually drifted to the target portfolio by buying underweight securities with inflows / deposits through dividend reinvestments, and selling overweight securities to fund withdrawals. No securities will be sold as a result of this change.  This election will often result in high drift, especially if the portfolio or allocation change involves a significant change in composition of the portfolio’s holdings. When “Drift goal to target portfolio” is selected, an additional election must be made to choose whether or not to turn off automated rebalancing. This is necessary because Betterment’s standard rebalancing algorithms operate independently of the migration strategy election. Choosing to disable automated rebalancing for the goals will ensure that a rebalance will not be triggered due to high drift that can be caused by selecting “Drift goal to target portfolio.” If the advisor elects to leave rebalancing on, Betterment’s automated rebalancing algorithm may take the opportunity to rebalance the goal shortly after the portfolio or allocation change is complete. The rebalancing algorithm avoids sales that realize short-term capital gains or would result in permanently disallowed losses for securities held at Betterment. Rebalance with no tax-impact constraints For this migration strategy, the client’s goal will be rebalanced as soon as possible to the target portfolio. Betterment will perform this rebalance in a tax-optimized way to the extent possible, but we will not delay selling shares even if doing so could lead to a more optimal tax outcome. Choosing this option could lead to the realization of wash sales for securities that have been recently sold. After trading is complete on the change, the account will typically be 100% in balance with the target portfolio. After any of these changes are applied, the strategy election remains active until a subsequent change is made. For each of these migration strategy options, Betterment’s Tax-Impact Preview feature is available so that the advisor may see an estimation of the effects of the selection.

How Advisors Should Choose a Digital Partner Now more than ever, advisors rely on technology to serve their clients. Choosing the right digital partner is a challenge, but it shouldn’t be a headache. Follow our four-step evaluation process to help effectively vet your digital solutions. If choosing a technology platform for your advisory feels overwhelming, you’re not alone. According to the annual Brother Survey on small business technology (500 employees and less), 64% of business owners feel overwhelmed when it comes to shopping for technology solutions. And yet, technology has become a vital part of how every advisor does business. You use technology. Whether you're focused on improving client relationship management, back-office operations, client acquisition, tax optimization, or any other part of being an investment advisor, choosing the right technology is an important part of scaling how you operate. So, while vetting digital platforms may not be your favorite use of time, it’s at least important enough that you develop the confidence to choose a technology platform that will serve you well. In this guide, we aim to provide a step-by-step process of how to get from having a technology need to choosing a technology solution with as little pain and as much inspiration as possible. At Betterment, we are constantly vetting technology platforms and partnerships in the financial space. Think of this article as a collection of that wisdom—the best ideas from across the business as users and builders of technology. In the At Betterment, we are constantly vetting technology platforms and partnerships in the financial space. Think of this article as a collection of that wisdom—the best ideas from across the business as users and builders of technology. In the follow sections, we’ll explore: What you should consider before exploring for digital solutions How to settle on your business’ key priorities and objectives for a tech initiative How to sort through various digital tools available Why any tool should be measured by customer experience How to measure your digital partnership’s success in the future Advisor Prep Work Before Searching for a Digital Partner Before getting started searching for your technology needs, it’s important to get a lay of the land. One of the reasons we started Betterment for Advisors was that we saw a gap in the variety of tech available to advisors today. In particular, we felt that there was no digital platform that could simplify the rote, complicated tasks associated with custody and tax optimization while at the same time giving clients a top-notch digital experience. What immediately became clear as we developed our platform was that there are many providers selling a set of products that profess to help advisors “manage it all,” when in fact, they’ve only conquered a slice of what advisors could use to grow their business. In the advisory space, there is no all-in-one solution for every business need: custody, back-office management, tax efficiency tools, client portal, CRM, fee management, and marketing. Executing all of this well would be a lot for any one company. Right now, the landscape is limited, and while solutions like Betterment are working at growing the suite of features we offer, no one provider can offer everything. Knowing this can help you refine your search for a digital partner. If you can’t solve for all your needs at once, then that helps you make smarter choices about which needs to prioritize. For instance, is your biggest pain point today helping customers with fewer assets manage their money without occupying too much time, or does client acquisition and marketing keep you up at night? Do you need a great online client experience, or is your challenge in revenue management and fees? These questions are the key thoughts to discuss with your team before starting a search. From there, you’ll want to prioritize all these challenges and create key objectives for what your technology partnerships should achieve. That’s our first step. 1. Identify your priorities and key objectives. When you start by asking yourself which challenges have the most impact on your business, you begin to develop a framework for your technology priorities. From our perspective, the best way to prioritize the technology features you need is to write out your key objectives for meeting current challenges. Define what outcomes you want to achieve by adding in a digital platform. Once you have a well-articulated list, you can put them in rank order, prioritizing from top to bottom. This process forces you to assess which challenges will have the biggest business impact, setting up a list of criteria, against which you can evaluate various solutions. 2. Differentiate overall business technology needs from advisor-specific needs. Once you’ve identified your list of priorities, we recommend taking a step back to evaluate the range of tools at your disposal. In surveying the tools used most by advisors, we’ve found that there’s a fairly prominent divide in the products offered today. In some cases, advisors use general business administration products—CRM, marketing automation, accounting software, etc. In other cases, advisors use a range of solutions specifically designed for financial advisors: products and services for custodianship, portfolio management, client access, and handling transactions. There are also platforms that combine functionalities—for instance, one advisory tool might offer a core service for servicing client accounts while featuring some CRM capabilities. It’s important to vet whether these multi-functional platforms constitute a robust, fully-baked set of tools or whether each tool included is a limited version of what you could buy as a standalone product. For core financial functions, such as portfolio management, you likely want the expertise of a tool built specifically for your industry. However, for other business functions, such as marketing or website management, it can be to your advantage to vet advisor-specific tools against broader, mass-market platforms. 3. Solve for your clients first. Too many advisors try to solve their business needs at the expense of their clients’ experience. Whether you're considering a subscription service, a one-off software purchase, or a business partnership (such as Betterment for Advisors), always put your ability to service clients first. If you consider the state of most small-to-medium advisors, most advisors do not have the large marketing or customer service teams characteristic of their larger competitors. And yet, through digital solutions, advisors can often greatly enhance their client service capabilities. The key is to prioritize client experience as a major criterion for evaluating digital solutions. For instance, when choosing between a robust customer portal and a best-in-class CRM tool, it might be worthwhile to weight the direct impact on customers more heavily than solving internal process needs. In general, elements of customer experience like a digital log-in are becoming increasingly important to customers. Advisory consultant Michael Kitces asks the challenging question of whether client portals should be built around client vaults, planning software, or portfolio reporting—what he calls the “big three” advisor software categories. Our approach to answering this question begins with centering client experience as the main criterium for any of the tools you consider for your advisory business. If you solve for your clients’ needs first, you’re likely to find that other issues, such as the need for additional client acquisition tools, become less pertinent over time. 4. Buy for future scale and business needs As you assess digital partnerships, it’s important to make your investment in a solution that promises scale and adaptability as the future changes. Consider what the digital partner offers in terms of ongoing development or integration with other platforms. Also, evaluate how your business needs will change as you grow. For advisors especially, a digital partnership should be understood as a five-year (or more) arrangement; the solution should be adaptable for all the change that could occur in a long-term period. For instance, if you double the number of advisors on staff, how effective will the platform continue to be? If new investment vehicles enter the market, how will the platform handle the change? While it’s important to use appropriate software for the scale and shape of your business, it’s important to have enough flexibility to grow. Businesses face enough challenges when taking on new client loads and growing rapidly; you don’t want your digital partnership to hold you back. What are your options as a financial advisor today? The four points above should help you carefully evaluate and select the right digital partners and software solutions for your advisory business. Start by surveying the field, understanding what the options are like and identifying your key priorities and objectives. Then, differentiate the business needs you’re trying to solve for. The key to any digital partner search is keeping your focus on client service. And if you buy for future scale and business adaptability, you’ll likely make a great choice. To get started with your search of great digital partners, we encourage you to do a broad sweep of the field. But as a first glance, take a look at our offering at Betterment for Advisors. While we aren’t your CRM or accounting software, we do offer a robust, white-labeled platform for portfolio management, automatic tax optimization, and other back-office operations—with a goal of having the best client portal experience on the market.