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What better portfolio management looks like for high-growth RIAs
What better portfolio management looks like for high-growth RIAs One platform for custody, onboarding, portfolio management, and billing—built for advisory firms that are scaling fast. Portfolio management is entering a new phase. For years, advisors have had to choose between automation and control, stitching together different systems to get the flexibility, tax optimization, and customization they needed. What we demoed live on June 9 represents one built-in system where high-growth firms can thrive: New advisor controls, expanded portfolio construction capabilities, and deeper tax-smart automation designed to help firms personalize more without sacrificing scalability. Our goal is simple: to build the only portfolio management system high-growth advisory firms need—one that gives advisors the freedom to manage portfolios their way, with powerful tax-smart automation always within reach. We covered a lot of ground. Here's what's live, what's launching soon, and why it adds up to something advisors don’t want to miss: Onboarding is critical to lasting client relationships Automation and control aren't in conflict Direct indexing is coming, without minimums or extra fees Tax tools are already embedded—and more precise than most advisors realize Coming soon: More control, more automation, more AI If you want to see it in action, you can watch the webinar here. Onboarding is critical to lasting client relationships Most platforms treat onboarding and portfolio management as separate problems. We don't. In the demo, we walked through a new AI-powered onboarding flow. Advisors can upload a client's brokerage statement, and our document reader extracts account data, holdings, and transfer information automatically. It pre-populates the client invitation instead of requiring manual entry at every step. Asset transfers are bundled directly into that invitation, so the move from new client to assets on the way happens in one flow instead of two. The system also surfaces holdings that fall outside the target portfolio before anything is transferred. Advisors can choose to liquidate before the transfer, bring holdings over with rebalancing disabled, or let automation handle it. The platform is transparent about what is going to happen before it happens. "We want to remove friction from the advisor workflow. So that's where we're taking our first pass, improving asset transfers, because we know that the work to onboard a client can be incredibly labor-intensive and operationally expensive." —LT Hardy, Product Manager, Betterment Advisor Solutions For firms onboarding clients at scale, reducing that operational weight at the front end can really compound across every new relationship. Automation and control aren't opposites, and you shouldn't have to choose This was probably the clearest through-line of the entire demo, and it's worth saying directly: "You have things that you want to automate, and you have things that you want to control. But really, it's not about living at one end of the spectrum or the other."—Devon Klumb, Director of Sales, Betterment Advisor Solutions In practice, that means a portfolio management suite that spans from fully automated to fully manual. On the automated end, our model marketplace offers expert-built models with tax-loss harvesting, rebalancing, and tax coordination available across third-party and Betterment managed options. For advisors who prefer hands-on execution, we're expanding trading controls later this year. In between sits the unified managed account experience that will launch early this fall. Advisors will be able to blend first-party models, third-party models from the marketplace, proprietary firm models, and direct indexing sleeves into a single client portfolio. They will also be able to build around existing holdings, manage around legacy positions with embedded gains, and preview the full tax impact of a rebalance before trades execute. Crucially, the platform's tax tools—tax-loss harvesting, drift controls, fractional shares, automated rebalancing—run across the full spectrum. Your clients get the same infrastructure regardless of where their portfolio sits on it. Direct indexing is coming, without minimums or extra fees We previewed direct indexing to pull back the curtain and show you what’s coming before the solution is available later this year. Betterment's direct indexing will offer three sleeves covering the U.S. market to start, available to drop into any client portfolio in any combination. There are no minimum asset sizes for advised accounts, and direct indexing is included in the platform fee—no add-on cost. The feature that makes it genuinely useful for complex client situations: security exclusions. If a client is an officer of a public company, holds concentrated exposure elsewhere, or simply doesn't want dollars in a particular name, advisors can provide that instruction directly and the system will minimize tracking error around it. Exclusions aren't an edge case—they're built into how the offering works. The system will take a sampling-based approach, aiming to find the most efficient number of positions at a given dollar threshold. No unwieldy index replicas. No noise cluttering a client's account. Tax tools are already embedded—and more precise than most advisors realize Tax efficiency has always been central to how Betterment's platform works. What the team walked through is how much granular control advisors already have over it, and how many of those tools are already running for their clients today. The gains allowance feature lets advisors set a per-household or per-account cap on realized gains for the calendar year. Every automated rebalancing decision the platform makes gets evaluated against that number. Before any trade executes, advisors will soon be able to see exactly what will be sold, what will be purchased, what the after-trade drift will look like, and how the transaction tracks against the gains budget—with the ability to switch lot selection methodology and watch the numbers update in real time. For advisors managing a long tail of clients who deserve sophisticated tax management but can't justify fully custom treatment for every account, this is what scalable personalization actually looks like in practice. The platform applies the same rigor at $50,000 that it applies at $5 million. Coming soon: More control, more automation, more AI In the webinar, we focused on what's available today, but several meaningful additions are on the way. Direct indexing is launching later this year, with three sleeves covering the U.S. market. Advisors will be able to drop any combination into a client portfolio, with no minimum asset sizes and no add-on cost. Security exclusions are built in from the start, so advisors can account for concentrated positions, restricted securities, or client preferences — and the system is built to minimize tracking error around those instructions automatically. Manual mode is also coming, giving advisors direct trade control for situations where automation should step aside. Buy or sell specific positions, choose a tax lot strategy, and route proceeds to cash or a linked bank account. Beyond onboarding, AI is being built into more of the advisor workflow. Performance reporting, meeting prep, and client proposals tools are all areas where AI features are in development — with the goal of putting more of the platform's data to work for advisors before, during, and after client meetings. And in the second half of this year, new advisor-facing controls over money movement are coming. Deposits, withdrawals, and transfers between accounts are all getting new tooling. The "sell directly to withdraw" flow shown in the demo is the first among other updates in our ambitious product roadmap to meet the needs of advisors. Watch the full recording to learn more, or explore the platform.
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2026's IPO pipeline: What it means for portfolios
2026's IPO pipeline: What it means for portfolios The mechanics behind mega-cap IPO inclusion—and what advisors and plan sponsors should know before these companies hit the indexes. A wave of high-profile IPOs is coming to market in 2026, and the names involved are unlike anything the market has seen in years. SpaceX, OpenAI, and Anthropic are all targeting public listings this year, with a combined estimated valuation exceeding $3 trillion, though only a portion of that value will initially come to market. How much comes to market, and when, is something each company and its underwriters are managing deliberately. The relevant question isn't whether these companies will dominate headlines. It's how they'll enter the indexes, how much exposure your clients and participants will actually have, and what that means for portfolio construction going forward. How these companies enter the indexes and when When a company goes public, its shares don't automatically land in broad market indexes. There's typically a seasoning period that gives markets time to establish pricing, assess financials, and let float develop. But the scale of the 2026 IPO pipeline has prompted several major index providers to revisit those timelines. The changes vary, and the differences matter. The NASDAQ-100 Index moved first. On May 1, 2026, it introduced a fast-track entry process for mega-cap IPOs, reducing the required trading period from three months to 15 days when certain criteria are met. It also replaced the minimum float requirement with a modified market capitalization test. The practical result: a company like SpaceX could be eligible for inclusion in the NASDAQ-100—and by extension the $500B QQQ ETF—within two weeks of its IPO. CRSP, which powers the Vanguard Total Stock Market ETF (VTI, ~$1.8T AUM), already had a five-day fast-track in place and is keeping it. What changed is the addition of a float-adjusted market cap test that gives large IPOs a clearer path to qualifying even when their public float is limited. SpaceX could appear in VTI within five trading days of going public. FTSE Russell has proposed a fast-entry framework for IPOs expected to rank among the top 500 U.S. companies by market cap, with potential inclusion around five trading days post-listing. Those changes are still subject to final consultation. MSCI has proposed simplifying its early inclusion criteria by introducing transparent size thresholds anchored to its existing Mid Cap market cap levels. Under the proposal, large IPOs would typically be added after the tenth trading day. Also still subject to final consultation. The S&P 500 is the notable exception. Following its own consultation in early June 2026, S&P Dow Jones Indices opted to maintain existing eligibility requirements for the S&P 500, S&P MidCap 400, and S&P SmallCap 600, including the 12-month seasoning requirement and the positive GAAP earnings screen. S&P did introduce a fast-track for its broader Total Market Index and Dow Jones U.S. Total Stock Market Index, allowing eligible mega-cap IPOs to enter within five business days. But the flagship S&P 500 is holding the line. Float-adjusted weighting: Why the headline valuation isn't the portfolio weight Even for indexes that fast-track these IPOs, the exposure your clients or plan participants will have is likely much smaller than the companies' total valuations suggest. That's because most major indexes weight constituents by float-adjusted market cap, not total market cap, and the 2026 mega-cap IPOs are expected to launch with very limited public float. Take SpaceX: With a targeted valuation approaching $2 trillion and a planned raise of up to $75 billion, only roughly 3–4% of total shares would be publicly trade-able at IPO. The remaining ~96% stays locked up with Musk, employees, and private investors. The NASDAQ-100's updated rules add a 3x float multiplier for weighting purposes, so a 4% float is treated as a 12% adjusted float. Applied to SpaceX at its expected IPO size, that translates to an adjusted market cap of roughly $225 billion rather than the full $2 trillion. The result is an estimated index weight likely in the 0.5–1% range for the QQQ. That's still meaningful, but a far cry from what the headline valuation alone would imply. Across indexes, some analysts estimate cumulative passive demand for SpaceX could reach $20 billion in the weeks immediately following its IPO, representing roughly a quarter of its targeted raise absorbed by index funds mechanically, independent of fundamental valuation. That demand dynamic is worth understanding when evaluating post-IPO pricing. What this means for Betterment portfolios For those invested in Betterment's managed portfolios, exposure to these companies will depend on which portfolio they're in—and which underlying ETFs that portfolio uses. The Betterment Core portfolio primarily accesses U.S. large-cap equities through State Street ETFs that track the S&P indexes (including SPYM, which tracks the S&P 500). Given S&P's decision to maintain its 12-month seasoning requirement, Core portfolio investors are unlikely to see SpaceX, OpenAI, or Anthropic appear in their holdings anytime soon following IPO. That eligibility clock starts at listing. Other Betterment managed portfolios, including Value Tilt, Innovative Tech, SRI (Broad, Climate, and Social), and GS SmartBeta, use total market ETFs such as VTI, or actively managed ETFs. Clients and participants in these portfolios have a meaningfully higher likelihood of gaining exposure to these companies shortly after listing, given the faster inclusion timelines at CRSP and other providers. This is a distinction worth surfacing in client and participant conversations, particularly for advisors whose clients hold multiple Betterment portfolios or for plan sponsors whose participants are distributed across portfolio options. Concentration: A broader portfolio consideration Beyond the mechanics of index inclusion, the addition of $3 trillion in primarily tech and tech-adjacent companies has the potential to accelerate an existing trend. Technology and tech-adjacent sectors like Communication Services account for over 40% of the S&P 500. For investors relying on broad market index funds for diversification, it's worth framing this clearly: The indexes will continue to reflect the market as it is—that's the point. But as the market itself becomes more concentrated in a small number of mega-cap names, the diversification benefit of any single broad index fund can erode. This isn't new. The 2026 pipeline would meaningfully accelerate a trend that's been building for years. For advisors, this is a natural conversation to have around asset allocation, particularly for clients who may not realize that their "diversified" index exposure has grown more concentrated over time. For plan sponsors, it's worth considering how participants are distributed across portfolio options and whether the default investment mix reflects the risk profile appropriate for your workforce. For clients who want more customization without giving up automation and tax efficiency, Custom Portfolios will offer a new way to build a portfolio using both ETFs and individual stocks. One important note for clients considering direct IPO positions: The concentration of price-insensitive demand from index funds and retail buyers may temporarily support post-IPO prices in the immediate weeks. As lockup periods expire and float expands, those dynamics can shift materially. Sizing and timing relative to the broader portfolio matters. The bottom line The 2026 IPO pipeline is significant, but the implications for managed portfolios are more nuanced than the headlines suggest. Exposure will vary by portfolio, float dynamics will limit initial index weights, and concentration risk is real but manageable with the right asset allocation. For advisors and plan sponsors, the value is in understanding the mechanics well enough to have clear, confident conversations with the people who are counting on you.
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How portfolio rebalancing works to manage risk for your clients
How portfolio rebalancing works to manage risk for your clients Portfolio rebalancing, when done effectively, can help manage risk and keep your clients on track to pursue the expected returns desired to meet their goals. What is rebalancing? Rebalancing is a Betterment feature that seeks to reduce drift in your client portfolios. Betterment performs two types of rebalancing on your clients’ behalf. First, in response to cash flows such as deposits, withdrawals, and dividend reinvestments, Betterment buys underweight holdings and sells overweight holdings. Second, if cash flows are not sufficient to keep a client’s portfolio within its applicable drift tolerance, automated rebalancing sells overweight holdings in order to buy underweight ones, aligning the portfolio more closely with its target allocation. Measuring portfolio drift Over time, the value of various holdings within a diversified portfolio moves up and down, drifting away from the target weights that help achieve proper diversification. Over the long term, stocks generally rise faster than bonds, so the stock portion of your client's portfolio will likely go up relative to the bond portion—except when you rebalance the client’s portfolio to target the original allocation. Clients may also transfer in assets from outside Betterment that are not part of the target portfolio strategy and/or allocation. The difference between the target allocation for your client's portfolio and the actual weights in your client's current portfolio (e.g. their actual allocation) is called portfolio drift. Betterment and partner portfolios For Betterment constructed portfolios (excluding Betterment’s Crypto ETF portfolio*), we broadly define portfolio drift as the total deviation of each “super” asset class (put in positive terms) from its target allocation weight, divided by two. These six super asset classes are US Bonds, International Bonds, Emerging Markets Bonds, US Stocks, International Stocks, and Emerging Markets Stocks. For portfolios that include a cash allocation, drift in the cash allocation is measured alongside super asset class drift. Here’s a simplified example, with only four assets: Target Current Deviation (±) U.S. Bonds 25% 30% 5% International Bonds 25% 20% 5% U.S. Stocks 25% 30% 5% International Stocks 25% 20% 5% Total 20% Total ÷ 2 10% A high drift may expose your client to more (or less) risk than you intended when you set the target allocation. Drift for advisor-built custom model portfolios Your firm may elect to construct a custom Model Portfolio on our platform. If so, drift for these portfolios is evaluated on the security group level, rather than at the super asset class level as described above for Betterment constructed portfolios. Betterment will calculate drift at the security group level for custom model portfolios even if the security group(s) used are pre-populated options provided by Betterment in the interface. Advisors can also set customized drift tolerance thresholds for their client’s portfolio. For reference, security groups are groupings of ETFs that include a primary ticker, and may include secondary and/or IRA secondary tickers designed to help reduce wash sales and allow for tax-loss harvesting opportunities. This means that for custom model portfolios, drift is calculated as the total deviation of each security group (put in positive terms) from its target allocation weight, divided by two. *Please note: As of the date of the publication of this article, Betterment’s default drift tolerance threshold is generally 3% for stock and bond ETF portfolios, as well as portfolios containing mutual funds, and 7% for Crypto ETF portfolios. For custom Model Portfolios that include a cash allocation, drift in the cash allocation is also measured alongside security group drift. *Please note: As of the date of the publication of this article, Betterment’s default drift tolerance threshold is generally 3% for managed portfolios, except for the Crypto ETF portfolio, which uses 7%, and its Betterment-managed custom portfolios on the retail platform, which use a 7% threshold and monitors drift at the security group level. For advisor-constructed custom model portfolios, advisors can set a custom drift tolerance threshold. Betterment may change the default drift thresholds without notice. Rebalancing Betterment automatically takes actions to reduce drift for your client through reactive-flow rebalancing and proactive rebalancing, depending on the circumstances, and with an eye on tax efficiency. If you choose to take advantage of Betterment’s tax-smart transition features, we will aim to respect the customized drift tolerance and gains allowance that you’ve set when rebalancing your clients’ goals. A gains allowance can reduce eligible opportunities to reduce drift through rebalancing, because Betterment will not initiate rebalancing transactions (or will only initiate partial rebalancing transactions) in a client goal with gains in overweight securities above the gains allowance. Learn more. When Betterment rebalances a portfolio with a cash allocation, its rebalancing algorithm will first seek to bring the portfolio's cash allocation back to its target before investing in securities. If cash is below its target allocation, rebalancing will first use available funds (e.g., deposits, dividends, and/or proceeds from selling overweight holdings) to increase cash up to target, and only any remaining available cash is invested in securities; conversely, if cash is above its target allocation, the excess cash above target will be invested in securities as a part of the rebalancing transaction. Reactive rebalancing This method involves buying or selling when cash flows into or out of the portfolio happen. Cash flows (such as deposits, dividend reinvestments or withdrawals) can be used to rebalance your client's portfolio. Fractional shares allow us to allocate these cash flows with precision. Inflows: When a client makes a deposit or receives a dividend, we use the inflow to buy holdings that are currently underweight, reducing their drift. The result is that the need to sell in order to rebalance is reduced. Whenever client drift is higher than normal, we calculate the deposit required to reduce the client's drift to zero, and make it easy for them to make the deposit. Although we show the deposit amount needed to bring drift back to 0%, smaller deposits also help reduce drift. Outflows: Withdrawals (and other outflows) are also used to rebalance, by prioritizing selling holdings that are overweight. Proactive rebalancing When cash flows are not sufficient to keep your client's portfolio’s drift within its applicable drift tolerance (such parameters as disclosed in Betterment’s Form ADV), Betterment seeks to rebalance client portfolios by selling and buying assets, aligning the portfolio more closely with its target allocation. Rebalancing requires a minimum portfolio balance (advisors can review the estimated balance at www.betterment.com/legal/portfolio-minimum). The rebalancing algorithm is also calibrated to avoid frequent small rebalance transactions and to seek tax efficient outcomes, such as reducing wash sales and minimizing short-term capital gains. As with any sell trade, our tax minimization algorithm seeks to select the lowest tax impact lots for rebalancing transactions. Since short-term capital gains are taxed at a higher rate than long-term capital gains, we can achieve higher after-tax outcomes by simply waiting for those lots to become long-term before rebalancing, if it's still necessary at that point. As a result, it’s possible for your client's portfolio to experience higher levels of drift without rebalancing if we have no long-term lots to sell. Generally this is because the account is less than a year old, or a substantial portion of the account’s holdings have been purchased within a year. A client account with a gains allowance can also experience higher drift, since rebalancing will not recognize any gains above the gains allowance. And large positions transferred in via ACATs with embedded gains can also lead to higher drift and delay proactive rebalancing. If you’d like to turn off automated proactive rebalancing in a client’s account (so that Betterment only rebalances client’s accounts in response to cash flows), you can do so in the clients tab of your advisor dashboard. Betterment has discretion to limit or postpone rebalancing in order to prioritize other trading activity on any given day, including days where extreme market conditions produce a higher volume of trading. To learn more about rebalancing, see our rebalancing disclosures. Allocation-change rebalancing Changing your client's target allocation by moving the allocation slider and confirming the change could also cause a rebalance. When you update a client's portfolio strategy and/or asset allocation, Betterment will give you the option to select one of our three tax-aware migration strategies. Depending on which option you select, this could result in selling securities and could possibly realize capital gains. As with all sell trades, we will utilize our tax minimization algorithm to help reduce the tax impact. Additionally, before confirming the allocation change, you can review the potential tax impact of the change with Tax Impact Preview. *The Betterment Crypto ETF portfolio is primarily composed of two ETFs that are market weighted in the portfolio, and as such, do not have geographic and stock to bond super asset classifications. See disclosures for more information. Transaction Timelines
