Advisor Technology

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.