Advisor Resources | Betterment for Advisors

FAQ: Custom Portfolios for Advisors Build your own custom model portfolios of ETF funds while leveraging all of Betterment’s sophisticated portfolio management features. What are custom model portfolios? How does this program work? This program allows advisors to customize portfolios of almost any ETFs, while utilizing Betterment for Advisors’ suite of automated features including: automated rebalancing tax-loss harvesting asset location / tax coordinated portfolios tax-optimized sales for withdrawals glide path rebalancing and more. More information about this program is available here. How do I create custom model portfolios for my clients? How do I get started with the program? In this white-glove program, firms will work closely with relationship managers, trading specialists, and engineers at Betterment to set up your firm’s portfolio models. Please fill out this form to get started. How is this program different from Flexible Portfolios? Previous functionality allowed advisors to customize portfolios using ETFs that are part of the Betterment Core Portfolio Strategy. Now, advisors can use almost any ETF (as long as there is sufficient liquidity and trading volume). Also, custom model portfolios are now eligible for tax-efficient automated features like Tax Loss Harvesting (TLH+) and Tax Coordinated Portfolios (TCP). What are the program requirements? There are no asset minimums or additional fees required to build custom portfolios. I have more questions - who can I talk to and where can I learn more? Please fill out this form, and our custom portfolio specialists will follow up with you. Security Selection: What securities are supported? Only ETFs are supported at this time. Mutual funds, single stocks, and other securities are not available. What ETFs are supported? Almost all ETFs are supported, as long as there is sufficient liquidity and trading volume. How many different asset allocations can be included in one portfolio? For each custom portfolio, firms can define anywhere from 1 to 101 asset allocations. Betterment Automated Features: What is Tax Loss Harvesting (TLH+)? How does this feature work with custom model portfolios? Tax-loss harvesting is the practice of selling a security that has experienced a loss—and then buying a similar asset to replace it. The switch does two things: it allows the investor to realize, or “harvest”, a valuable loss while keeping the portfolio balanced at the desired allocation. Capital losses can lower your clients’ tax bill by offsetting gains and reducing ordinary taxable income up to $3000 per year. The custom model portfolios program allows firms to designate primary, secondary, and tertiary ETF tickers to be used for TLH+. How does Tax Coordination work? Tax Coordination is designed for investors who are saving for retirement in more than one type of account, including taxable accounts, traditional IRAs, or Roth IRAs generally with the same time horizon. Once you set it up, Betterment will look across all of the accounts grouped under retirement and automatically reorganize which assets are held in which accounts. Of these three types of accounts, each are taxed differently: (1) taxable accounts, (2) traditional IRAs or 401(k)s, and (3) Roth IRAs or 401(k)s. With Tax-Coordination, the assets are then arranged (unequally) across all coordinated accounts to maximize the after-tax performance of the overall portfolio. We do this in a way that keeps the overall allocation the same while boosting after-tax returns. We've outlined the potential benefits of Tax Coordination and some reasons you may not want to use it here. To gain a better understanding of the methodology of our algorithm, please review our white paper. For more information on our estimates and Tax Coordination generally, see full disclosure here. How does Betterment rebalance client portfolios? How does automated rebalancing work? More information about Betterment's automated rebalancing feature is available here. What capital market assumptions are used for balance and spending power projections? Firms can input their own capital market assumptions, or Betterment's team can provide assumptions.

Questions about Using Dimensional Funds through Betterment for Advisors

FAQ: Advisor Dashboard & Reporting

FAQ: Advisor Dashboard & Reporting Frequently asked questions about the Advisor Dashboard and Reporting Does each advisor have their own dashboard? Yes, each advisor within your firm has their own account and dashboard that provides access to manage their clients’ accounts. Each client that signs up for an account is linked to one advisor within your firm. Can advisors share a household or client with other advisors? Yes, an advisor can assign secondary advisors to any of their households that contain one or many accounts. Secondary advisors have full access to those households, and can be removed at anytime from a household’s sharing settings. Here are the steps you'll need to follow when adding a fellow advisor to one of your households: Log onto the Advisor Dashboard On the left, click "Clients" Select the client or household name from the list Select the "Settings" tab On the right, choose "+ Add Secondary Advisor" and enter the first or last name of the advisor you'd like to add. Click the name in the dropdown to complete. The page will load and if successful you'll see a banner with this description "Successfully added (name of advisor) as a secondary advisor to (name of client/household) " What actions can I take on behalf of my client? Advisors can securely co-browse into the client experience to manage individual client accounts. As the advisor, you can take the following actions on behalf of your clients: Add taxable goals Add joint taxable goals Access information on account balances and returns Create ad hoc deposits or withdrawals Schedule automatic deposits or withdrawals View portfolio details View portfolio performance Adjust allocations Adjust portfolio strategy Access account activity, statements, and tax forms Currently, advisors are able to invite their existing clients to open new legal accounts from within the advisor dashboard by selecting the client's name and clicking "Add account". These accounts include new IRAs, trusts, and joint accounts. Can I add a new IRA or taxable goal for a joint account on behalf of my clients? Yes, we have instructions for opening joint accounts. Follow the same steps for new IRA accounts except on #4. Here you'll need to select the IRA type desired for this client. Can I add a trust account on behalf of my client? 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. Follow the steps below to invite them to a trust account. Select the client's name from Clients Click Add Account Select the radio dial next to “ Trust” for the Account type screen and continue Confirm that this is a US domestic trust and continue The site will give you a chance to provide the trust name, information and documents. This is optional. If you do not provide either the client will have a chance to do so. Enter the account details, define the account purpose, choose the Portfolio Strategy and continue Set the portfolio allocation and continue Confirm the new account details and click send agreements when ready Be sure to review the Trust document requirements and advise the client to submit the correct items. The account will not be approved until these are provided and successfully reviewed. Note: The trust will not be visible in your advisor dashboard until your client consents to the agreements. Once required information and documents have been submitted, trust approval can take up to five business days to complete. You and the client be notified of the reviews outcome via email, please let us know if you'd like any named trustees added to the account. How do I set a portfolio strategy for my client? For a new client: To define the initial account type and portfolio strategy please choose Invite Client > Complete on client's behalf Select the account type and purpose and continue Select your preferred portfolio strategy from the dropdown then set the target allocation Confirm your client’s details and send. For an existing, funded client on the platform: On the Client page of the advisor dashboard, click into the household (or client) in which you would like to make a portfolio strategy change. Scroll down to the goal on which you'd like to change the portfolio strategy and click the Edit button that corresponds to the portfolio as shown in the image below Select the portfolio strategy and the asset allocation. You can also view a tax impact preview of the change before implementing here. Confirm the portfolio strategy change. The system will automatically execute trades in a tax minimizing manner to reach the new target allocation. Am I able to access information related to my clients’ accounts on the platform? Yes, you are able to access information related to your clients’ accounts--including, holdings, balances, and performance information--via the advisor dashboard. How do I remove a client's accounts from my firm? Please follow the steps below to remove the client from your firm's client list: Log onto the advisor dashboard Select the client from the Clients list Click Settings and scroll down to "Household Actions" Click "Remove this household" and complete the confirmation modal by checking the box and clicking "Remove Household" Reporting How do you calculate returns? We use a standard time-weighted return to calculate percentage returns for each goal on the Summary page, and to display returns over time on the Performance page. This return can be thought of as the amount one dollar would have changed if it was invested at the same time as a first deposit. The time-weighted return is unaffected by deposits to and withdrawals from an account, and allows for easy assessment of clients’ investments, and a fair comparison with other investments. Is performance data generated on the platform? Yes, performance reporting is embedded on the client interface. Performance reporting for all client portfolios on the platform is available and the user can select the period of time in question. Additionally, daily performance is also included. Advisors are able to view performance data for all client accounts through the impersonation feature on the advisor dashboard. How are statements sent to my clients? Can I access these statements as well? If so, how? Statements are automatically loaded to your clients’ portals. We also send your clients an email once their statements are ready. You can access your clients’ statements via the impersonation feature on the advisor dashboard. On the “Summary” page, select the “Log in” button next to the client that you want to view statements for. Once logged in as the client, select the “Activity” tab. A full archive of your client’s statements is available on the “Statements” sub-tab. Where do clients find tax forms if they have multiple accounts, e.g. a personal account and a trust account? Tax forms are available on the Activity page for each account a client holds. If clients have multiple accounts, they will need to visit the Activity page for each separate account in order to download their respective tax forms. Where can I find my clients’ 5498 tax forms? When will they be available? Your clients will receive a 5498 form if they had an IRA with a non-zero balance in the tax year that just concluded. This form reports all of the IRA contributions for the previous tax year, including rollovers. The information on the 5498 form will also be reported to the IRS. The 5498 tax form can be found on the Taxes page within the Advisor Dashboard. Select your client's name then click "Taxes". You may also access it via the Document page in the client portal. Generally this form will be made available each May for the prior year, after the April 15 tax filing deadline. When will clients tax forms be available? Your clients’ 1099 tax forms are automatically imported to their client portals in mid-February, in both CSV and PDF formats. We will notify them via email when these are ready. The forms are not available prior to February due to the 30-day window related to certain TLH+ requirements, which carry through the end of January. Additionally, we need final confirmations on distributions from fund providers regarding their dividend payout classifications. Betterment strives to provide tax forms well in advance of the deadline when possible. Does Betterment for Advisors generate the tax forms for my clients’ accounts? Yes, tax forms for your clients are automatically imported to their client portals. We will also notify your clients via email when these are ready. Are the quarterly statements co-branded with my firm’s brand? Yes, quarterly statements are co-branded with your firm’s brand. What information appears on my clients’ statements? Holdings, balances, and transactions related to your clients’ accounts appear on your clients’ statements. Does Betterment for Advisors generate the statements for my client’s accounts? Yes, statements are automatically loaded to your clients’ portals. We also send your clients an email once their statements are ready.

Common Questions about Billing Your Clients

Common Questions about Billing Your Clients Get answers to your key questions about billing clients. What billing options are available to my firm? The Betterment for Advisors platform includes a “Billing” page visible to the admin(s) of your firm. This page offers three billing options: Asset-Based Billing, Fixed Fee Billing, Tiered Billing. Learn more about each in our article about billing. How often are my clients billed? Firm admins can select whether to bill clients on a monthly or a quarterly basis. Any changes made will take effect at the start of the next quarter, though a pending change can be cancelled or modified up until that date. All advisors of the firm will be sent a reminder that their firm’s billing frequency is about to change about one week before it goes into effect. How often does Betterment pay me the fees collected on my behalf? Betterment will remit payment to your firm on the same frequency that we collect from your clients, per your discretion. If your firm has elected to bill clients monthly, Betterment will send payment in the first two weeks of each month. If your firm has elected to bill clients quarterly, Betterment will send payment in the first two weeks of each quarter. Firm admins must supply bank account information in Firm settings to receive payments. How are billing plans created? Any admin(s) of your firm will be able to create a new billing plan by following the steps below: Log onto the advisor dashboard Click Billing, located in the menu on the left In the top right, select “Create a billing plan” Enter a unique name for the new billing plan and select the billing plan type. (See below for specific billing plan types) How are billing plans applied? The advisor of a household will be able to do this by following the steps below: Log onto the advisor dashboard Click Clients, located in the menu on the left Search for and click the name of the household whose pricing should be updated Select Settings and click the “Edit” button corresponding to “Household Billing Plan” Choose one plan from the list displayed and click Update Plan If a different pricing plan is needed contact an admin of the firm so they may create it How is the default billing plan of the firm updated? Any admin(s) of your firm will be able to update the default billing plan of the firm by following the steps below: Log onto the advisor dashboard Click Billing, located in the menu on the left The current default billing plan will be at the top of the list, click Edit to make changes If needed, modify the name for the plan and select the billing plan type. (See below for specific billing plan types) How to create or edit Tiered Billing Plans: Once on the “Tiered billing plan” page, use the “Firm fee” column and click on “Asset based” or “Fixed” to switch between the two. Enter the number of basis points (bps) or dollars that should be charged for the first tier of invested assets. If more than one tier is needed, click “+ Add tier” then enter the high range value for the previous tied. Repeat these steps for each tier needed. If this is not a new billing plan, the next page will display the households that will be impacted. Scroll to the bottom to click “Update billing plan.” How to create or edit Fixed Billing Plans: Once on the “Fixed Billing Plan” page, use the “Firm fee” field to type in the dollar value you’d like this plan to assess on client accounts annually. No need to type in a dollar sign, only enter the digits and a decimal if you will be charging in cents as well. If this is not a new billing plan, the next page will display the households that will be impacted. Scroll to the bottom to click “Update billing plan.” How to create or edit Asset Based Billing Plans: Once on the “Edit Asset Based Billing Plan” page, use the “Spread bps” field to type in number of basis points you’d like charged by this billing plan. For example, for a fee of %0.50 type in 50. When satisfied with the new spread, click Save changes. If this is not a new billing plan, the next page will display the households that will be impacted. Scroll to the bottom to click “Update billing plan.” How to change the Billing Plan for groups of clients: The Billing page, accessible to admins of your firm, will display one row per existing billing plan. The row includes an “Assigned to” column. This displays the numbers of clients on this billing plan. To adjust the billing plan applicable to this group of clients the admin of your firm will be able to follow the steps below: Click Edit to make changes If needed, modify the name for the plan and select the billing plan type then click continue. How do I update a client's fees? To edit the fee for any existing clients advisors will need to follow the steps below: Log onto the Advisor Dashboard Select "Clients", on the left side of the window Locate the client and click their name Select "Settings" Locate and click the "Edit" button corresponding to the Fee column Select the billing plan you'd like to apply then click "Update plan" The new billing plan will appear under "Household Billing Plan" Please keep in mind, if a new billing plan needs to be created the admin(s) of the firm will need to create the plan before you are able apply it to any clients' household. How do I get paid for the client accounts that I manage on the platform? Betterment for Advisors operates a fee-only platform. Firm admins may create multiple billing plans using Asset Based Billing, Fixed Billing, or Tiered Billing. The billing plan applied to a client's household will, by default, include Betterment's platform fee. Aggregate fees are billed automatically by Betterment from the client’s account quarterly or monthly in arrears, and Betterment subsequently remits the advisor’s fee. Can I set custom level fees for individual households? Yes, you may utilize Billing Plans to set custom fees for a client's household. If any of the available Billing Plans do not fit your needs, an admin of your firm may create a new customized billing plan that is either Asset Based, Fixed, or Tiered. How are the fees calculated? We accrue fees beginning one day before the end of the prior quarter and the accrual of fees ends two days prior to the end of the current quarter. The fee is calculated pursuant to the 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)] and will be deducted from the account three days after the transaction date, following the settlement of the trade(s) made to fund the fee. Fees are billed in arrears and the advisor’s portion of the fee is sent to the advisory firm shortly after the end of the quarter via ACH. Are fee tiers supported? Yes, we do support fee tiers. Anyone with admin level access to the advisor dashboard may create new billing plan types, including Tiered Billing. Once the plan is created you may apply it at the household level. How are fees reported to my clients? Your clients see the total fee (platform fee + billing plan applied to the household) in their client portal and on quarterly statements. You are responsible for providing the fee breakdown between the Betterment platform fee and your advisory firm fee to your clients. Are there any trading or transacting costs associated with the Betterment for Advisors platform? No, there are no trading or transaction costs associated with the Betterment for Advisors platform.

Key Questions about Getting Started as an Advisor

FAQ: Security & Privacy

FAQ: Security & Privacy Learn more about Betterment's security and privacy policies. How does Betterment’s data aggregation functionality relate to the SEC’s custody rule? Advisers may have access to clients’ financial account login and password information for various reasons, including to rebalance the holdings in those accounts, to pay bills for the client, or to facilitate the aggregation of financial information from multiple accounts. Betterment for Advisors provides the ability for advisers to aggregate client financial accounts on the Betterment platform by entering client login and password information via the impersonation function. Advisers, however, should be aware that possessing client login and password information can, under certain circumstances, be deemed to trigger custody over the assets in those accounts. One way a registered investment adviser could be deemed to have custody of a client’s assets is when the adviser has any authority to obtain possession of those assets. An adviser may decide that it is appropriate to have custody over client assets, but doing so gives rise to additional SEC oversight, including a requirement for an annual surprise audit by an independent accountant at the adviser’s expense. Advisers wishing to help avoid triggering inadvertent custody by using impersonation to aggregate client accounts might wish to consider asking clients to sign written instructions limiting the adviser’s authority to make withdrawals from the accounts before the client provides the adviser with login and password information. There may be other ways to avoid triggering inadvertent custody as well. *Note: No information above is, or should be considered, legal advice. If you believe you need legal advice on the subject above, please consult a lawyer. Can my client add a 'trusted contact' for their account? Your client may want to designate a close friend, family member, or other party 18 years or older who we can contact in the unlikely scenario that we suspect your client is a victim of financial exploitation. If your client chooses to designate a trusted contact, they authorize Betterment Securities to contact the individual to disclose information about their account to address possible financial exploitation, to confirm the specifics of their contact information, health status, or identity of any legal guardian, executor, trustee or holder of a power of attorney, or as otherwise permitted by FINRA Rules 2165 & 4512. Your clients can add this information by clicking on their name in the top right hand corner of their account and selecting "Settings" from the drop down. Once on this page, they will be able to scroll down to the bottom of the Trusted Contacts section and input the information. Betterment Securities, as a FINRA registered broker-dealer, is required to provide customers this opportunity" How do you maintain security and privacy? We use industry-standard encryption, store all of our data on servers in secure off-site facilities, and implement systematic processes and procedures for securing and storing data. And because we value your trust, we will protect the privacy of information and will never rent or sell your data or your client’s data with any third party for any purpose without your client’s permission.

FAQ: White-labeled ETF Model Portfolios

FAQ: White-labeled ETF Model Portfolios Build your own customized portfolios by selecting from funds in the Betterment Core Strategy. What are Model Portfolios with Betterment for Advisors? Model Portfolios allow advisors to create white-labeled portfolios, which gives you even more control in personalizing your clients’ investments. It allows you to further modify the Betterment portfolio strategy by adjusting the individual asset class weights and accessing additional asset classes. We’ll give you a risk and diversification assessment of your changes, and as with all of our portfolios, your clients will continue to have access to the same automated features available on the Betterment portfolios. How do I create my own portfolios? Firm admins can create portfolios for your clients via the advisor dashboard. You can go to the dashboard and select the Portfolios tab on the left. From there, you'll see both the Betterment Portfolios as well as your Firm's own portfolios. Firm Admins will find "Create Portfolio" on the Firm's portfolios page. If additional members of your team need admin level access on the platform, please have your firm's primary contact on file notify us via support@bettermentforadvisors.com. Can the name for each Model Portfolio be customized? Yes, the model portfolios can be completely white-labeled and named whatever the firm admin deems appropriate. How do I assign my firm’s Model Portfolios to clients? To use one of your firm’s model portfolios for an existing goal, you can select the client’s goal and click edit on the current portfolio strategy. From there, select your custom portfolio from the dropdown. How do I update my firm’s Model Portfolios? Firm admins can update model portfolios on the Portfolios tab located in the left sidebar. How will adjusting my clients’ portfolios impact their fees? The fees Betterment collects from the client do not change based on the portfolio strategy assigned to each client’s goal(s). The average expense ratio associated with a Model Portfolio depends on the portfolio’s underlying ETFs. Any saved adjustments could impact your client’s average fund fees. Will rebalancing and auto-adjust work the same? Rebalancing will operate in the same fashion as the other Betterment model portfolios, but auto-adjust will not be available on Model Portfolios. What other impacts should my clients and I expect when adjusting their funded goal to a Model Portfolio strategy created by my firm? Changing portfolio strategies will bring the goal to a new target allocation based on the Model Portfolio. This sells securities and could possibly realize capital gains. Moreover, the goal will be rebalanced entirely to match the new desired target allocation, regardless of tax consequences. As with all sell trades, we will utilize TaxMin to reduce the tax impact as much as possible. Once the portfolio change is submitted, please allow 2-3 business days for the change to execute. This allows for the 2-day settlement required on ETF sale transactions. Will Tax Loss Harvesting + (TLH+) and Tax Coordination work with these new Model Portfolios holding ETFs? Yes, the TLH+ feature will be available on Model Portfolios holding ETFs in taxable accounts. TCP is not yet available on goals with a Model Portfolio holding ETFs. The availability of a model portfolio offered by an independent third party on the Betterment for Advisors platform should not be construed as, and is not, a recommendation as to the advisability of utilizing such a model portfolio strategy. In addition, advisors should conduct their own due diligence on the underlying exchange-traded funds for any particular model portfolio. No third-party provider of a model portfolio strategy is providing investment advice to any advisor or client.

Client Agreement Automation

FAQ: Agreement Automation Process

FAQ: Agreement Automation Process The Betterment for Advisors Client Agreement Automation function will make onboarding your new clients fast, easy, and completely paperless. Will my firm need to update our ADV and/or Customer Agreement to reflect the incorporation of Betterment for Advisors into my practice? Yes, you will need to update your Form ADV Part 2A and most likely your Customer Agreement to reflect the incorporation of Betterment for Advisors into your practice. Since each situation is unique, please consult with your attorney or compliance officer. Can Betterment for Advisors automate the signing of my agreement with my client? Yes, you can provide PDF versions of your client agreement, Form ADV Part 2, and privacy statement to include as part of the electronic signup process a client undergoes with betterment. We also provide reporting in your dashboard about which versions your clients have agreed to, and when. You can read more about our agreement automation feature, including legal disclosures, here. What relationship does the client have with Betterment? Betterment acts as the sub-advisor to your client. You still remain the primary advisor to your client. When your client goes through the new account opening process, they will sign an agreement with Betterment directly as the sub-advisor, and, if you wish, an agreement with your firm directly as the primary advisor. Describe the process your product uses to convert information provided by the client into a risk profile in the interview process. The platform automatically recommends investment goals and associated recommended allocations for each such goal for new accounts established on the platform using the client’s age, information provided by the client during account creation regarding a particular financial goal, and the type of legal account. Am I able to see an archive of electronically executed client agreements? If so, what does this look like? If you enable the agreement automation feature to deliver a paperless account opening process for your clients, an archive of the date/time stamp and the version of the agreement that each client electronically signed is housed on the “Agreements” tab of the advisor dashboard. To learn more about our agreement automation feature, please see here.

Webinar Recording: Goal-Based Investing

Betterment for Advisors Goal Projection and Advice Methodology

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

More Billing Flexibility For Advisors

More Billing Flexibility For Advisors Betterment For Advisors has listened to advisor feedback and is now offering new Billing Plans that will provide more flexibility for how advisors can charge their clients. We value the feedback our advisors provide, and one thing we’ve heard is that they want more flexibility over client billing. Our three new Billing Plans will allow advisors to set fee structures that fit the needs of both their advisory firm and their clients. Under each plan, advisory fees will accrue daily and be assessed quarterly as usual. Advisors who have admin privileges can create new Billing Plans and set the default Plan for their firm, which will be used for new households moving forward. Any advisor can choose from the list of available Billing Plans—which are created by admin advisors—and assign any Plan to their clients. Below, we’ll outline how each Billing Plan works and give examples of how fees might look for households of varying asset ownership levels. Asset-Based Billing Fixed Fee Billing Tiered Billing Note that regardless of which Billing Plan is chosen, each advised client pays a percentage fee directly to Betterment for portfolio management. The fees represented in each Billing Plan below are additional fees (on top of Betterment's wrap fee) that are collected by Betterment on behalf of the advisor and sent to each advisory firm on a quarterly basis. Asset-Based Billing In the past, the only billing option for advisors was to charge basis points (bps) on a client’s assets, regardless of account balance. We’ll still be offering this asset-based billing option, however, it must now be applied to a total household rather than separately across a household’s legal accounts. As a reminder, legal accounts include individual taxable, joint taxable, trusts, and each type of IRA. A household consists of all legal accounts owned by one person, as well as all the accounts owned by anyone that person shares a joint account or trust with. Households can also be created by explicitly associating two or more people. Example of Asset-Based Billing Plan at 50 bps Balance Annual Fee Approx. Quarterly Fee Household 1 $50,000 $250 $62.50 Household 2 $500,000 $2,500 $625 Household 3 $3,000,000 $15,000 $3,750 For an advisor's existing households, we will automatically carry over their existing asset-based billing plan. The advisor will be able to make changes if they would like, but otherwise, there is nothing further they'll need to do. Fixed Fee Billing The ability to charge a flat annual fee is something advisors have asked for—so we’ve added it to our Billing Plan options. Advisors can now choose a fixed annual fee for their services, and apply it to households regardless of balance. The most important thing to know about this plan is that a household’s balance must be above the fixed fee amount in order for fees to accrue. For example, if the fixed fee is $5,000, a balance of $4,999 would not accrue fees. Because fees accrue daily, if a household’s balance is below the set fixed fee amount at the close of market on any given day, no fee will accrue on that day. Since fees are assessed quarterly, the annual fee will be prorated across each calendar quarter. Tiered Billing Tiered billing allows for ranges to be set for both asset-based fees and fixed fees. The tiers work similar to tax brackets, in that only the assets held within each tier’s range are charged with that tier’s rate. Below is an example of what an asset-based tiered structure might look like. Example Tiered Billing Structure: Asset-Based Asset Range Rate $0 to $100,000 100 bps $100,001 to $500,000 75 bps Over $500,001 50 bps Households under the above tiered billing structure would be charged as follows: Balance Annual Fee Approx. Quarterly Fee Household 1 $50,000 $500 $125 Household 2 $225,000 $1,937.50 $484 Household 3 $2,600,000 $14,500 $3,625 Setting A Minimum Fee Advisors can utilize the tiered structure to set a minimum fee by setting a fixed fee for the lowest asset tier, and then applying an asset-based fee for the higher subsequent tiers. Just like under the fixed fee plan, a household’s assets must be higher than the lowest fixed fee rate in order for fees to start accruing. Example Tiered Billing Structure: Fixed Fee + Asset-Based Asset Range Rate $0 to $100,000 $1,000 per year $100,001 to $500,000 75 bps Over $500,001 50 bps If you have any questions about how Billing Plans work, head to our FAQs to find answers to the most commonly asked questions. If you still need help, our Advisor Support Associates can help you find the right billing solution that works for your firm. Lastly, keep the feedback coming—we value the voices of our advisors and we will continue to make improvements to meet their dynamic needs.

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Advisor Guide to Betterment Transfers

Advisor Guide to Betterment Transfers At Betterment for Advisors, our goal is to make transferring assets on behalf of your clients easy and automatic. Not every account is eligible to be moved using the same transfer method. We’ll break down each transfer scenario and walk you through how to get started. Transferring Qualified Accounts To get started, you’ll first need to ensure your client has opened the appropriate receiving Betterment IRA. If they have not done so already, you can log into your advisor dashboard, select the specific client’s “Overview” page, and then click “Add Account.” From there, you’ll be guided through the automated account opening flow. Once done, you’ll be able to move forward with the actual direct IRA transfer request by clicking “Start a Transfer” from your advisor dashboard. At the end of the flow, your client will be emailed further instructions. As their advisor, you will be CC’d on this email to retain oversight and provide any needed guidance. Not every retirement account is eligible to be moved using the same transfer method. Our rollover flow is designed to analyze and select the most appropriate option available, given the specific account information provided by you and your client. Important note: The questions we prompt you to answer within the automated transfer flow will be used to pre-fill your client’s actual transfer request form. It’s critical that you enter accurate and up to date information on behalf of your client. Generally, when a transfer request fails or is rejected by a contra-firm, it's due to incomplete or mismatching information provided. Having a recent client statement on hand is a good best practice. We suggest confirming the following pieces of information before you get started: Client’s current account type: Legal account type and brokerage status. Client’s current account number Client’s current clearing broker: Enter the clearing broker’s name in the “Current Provider” field when prompted. Direct IRA Transfers At a high level, the possible direct IRA transfer options at Betterment are: Full or partial ACATS transfer of supported investments plus any cash. Generally, this takes 5-6 business days to complete. When adding your client’s specific tickers, if any search returns a “No match” or you receive a notice that says the ticker is not supported, you’ll only be able to submit a PARTIAL TRANSFER REQUEST on behalf of your client. Any requests submitted for a full transfer will be rejected. Supported investments will be moved in-kind to Betterment. Once received, we will liquidate any investments to cash and reinvest all the proceeds into their IRA portfolio here. Electronic fax of the client’s direct IRA transfer form to their contra firm. Generally, this takes 7-10 business days to complete. There is no physical paperwork required. Client will consent to the transfer by e-signing the transfer form and then the fax will be automatically sent by Betterment. IRA proceeds will be sent to Betterment via a mailed check and automatically reinvested into your client’s IRA portfolio here. Pre-filled direct IRA transfer form and instructions, which must be printed, signed, and mailed to the contra firm by the client. Generally, this takes 14-21 business days to complete. The client must take action from their side for the transfer to complete. In some cases, the contra firm may also require a notary or a medallion signature guarantee. IRA proceeds will be sent to Betterment via a mailed check and automatically reinvested into your client’s IRA portfolio here. If your client is attempting to transfer an inherited IRA, refer to our Inherited IRA FAQ. 401(k) and Employer-Sponsored Plan Rollovers Moving retirement money from an employer-sponsored account—such as a 401(k) or 403(b)—into an IRA is usually not an option via ACATS. We still attempt to automate this rollover process as much as possible. We generally do not need any paperwork from you or the client. You can simply get started by clicking “Transfer or Rollover” from your client’s Overview page. The rollover flow will guide you through a series of questions and then we’ll email your client a full set of personalized instructions for how to proceed. The instructions will lay out the exact next steps to take and will contain the information your client needs to complete their rollover. This includes their unique Betterment IRA account number, how their provider should make their rollover check payable, and where they can mail the rollover check. Many providers will accept employer-sponsored rollover requests from a client verbally, effectively avoiding any paperwork requirements from their side. We encourage advisors to call the current provider—with the client on the line—to verbally request any high-value rollovers. We’ve seen a stronger completion rate when this approach is taken. It’s worth noting that some providers may still require your client to fill out special rollover paperwork. If so, there’s no way around that. If any additional paperwork is required, please send all requests to support@bettermentforadvisors.com. Lastly, we will notify you and your client via email as soon as their rollover funds are invested into their IRA and everything is complete. Click here to get started. Indirect IRA Transfers In some cases, an indirect IRA transfer or rollover may be the only option available to your client. The good news is that this can be the fastest process of all and it could prevent delays due to contra firm requirements. Any cash proceeds from an early distribution out of your client’s qualified account which meets the requirements related to indirect rollovers can be re-deposited into Betterment by instructing your client to make a cash ACH deposit from their linked bank account into their Betterment IRA. If your client has not already done so, they can use these instructions to link their primary bank account. When your client is ready to make their deposit, please be sure they complete the following: Direct your client to log into their account and select “Deposit” from their Home page. The client will be prompted to choose which account to make their deposit into. If they have more than one IRA open, please be sure your client knows which one to choose specifically. Once the IRA has been selected, they will be asked to select a deposit type. Please be sure your client chooses “Indirect IRA Rollover.” Inherited IRA Transfers If your client is attempting to transfer an inherited IRA, refer to our Inherited IRA FAQ. Please CC your client and email support@bettermentforadvisors.com with the following information: Name of current provider. Type of IRA (Traditional or Roth). The IRA account number at the current provider. Indicate “full” or partial transfer. Provide the exact dollar amount to transfer if partial. Name of original IRA account holder. Since we will need to open a new legal account type, please have the client review our Customer Agreement and send us the statement, “I agree to the terms and conditions of the Customer Agreement, and I give Betterment permission to open an inherited IRA account on my behalf.” Your email will be directed to one of our rollover specialists, who will set up the inherited account at Betterment and guide you and your client through the next steps. Transferring Taxable Accounts Taxable ACATS Transfers When possible, Betterment recommends using the ACATS method to move taxable brokerage accounts to Betterment. Generally, an ACATS transfer is faster and more convenient than other types of transfers. Betterment supports ACATS transfers of nearly all ETFs, many mutual funds, some single stocks, and cash positions. We’ve created an automated taxable 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. Click here to get started. Important note: The questions we prompt you to answer within the automated transfer flow will be used to pre-fill your client’s actual transfer request form. It’s critical that you enter accurate and up to date information on behalf of your client. Generally, when a transfer request fails or is rejected by a contra-firm, it’s due to user error. Having a recent client statement on hand is a good best practice. We suggest confirming the following pieces of information before getting started: Client’s current account type: Legal account type and brokerage status. Client’s current account number Client’s current clearing broker: Enter the clearing broker’s name in the “Current Provider” field when prompted. Please email support@bettermentforadvisors.com for any questions regarding your client’s taxable account requirements or ACATS eligibility. Non-ACATS ACH Bank Deposits Your client can initiate a cash deposit into a taxable Betterment account at any time, as long as they have successfully linked their bank account. For any taxable money they wish to move to Betterment that cannot be moved via ACATS, you can instruct your client to liquidate to cash and then move the cash proceeds to their linked bank account for funding. Any related tax implications should be discussed prior to making this recommendation to your client. To initiate the ACH deposit, instruct your client to click “Deposit” from their Home page. Note: We only allow electronic transfers from your client’s checking account via the ACH network and do not accept personal checks. For transfers greater than $300,000, wire instructions may be generated. There is no fee from Betterment for wires, but please have your client check with their bank for any fees they may be charged. To access a client’s specific wire instructions, log in as the client, select “Transfers”, then “Wire Transfers”, and follow the prompts. Get Support As always, our support team is available to assist with any questions related to moving your client’s assets. Please email support@bettermentforadvisors.com and copy your relationship manager. For more immediate assistance, call 888-646-2581.

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