Betterment Aims to Save Consumers $1 Billion Per Year in Fees

Media Contact:
Johanna Scott
Betterment
212.219.1239

The Next Generation of Investing Introduces Individual Retirement Accounts and Announces Lower Fees

(New York, NY – February 22, 2012) Betterment (www.betterment.com), the smart way to invest online, now offers Traditional and Roth Individual Retirement Accounts (IRAs), as well as a lower fee structure for all accounts. With the new offering, Betterment aims to save consumers $1 billion annually with lower fees than high priced IRAs, 401(k)s, and personal investment accounts*. With Betterment’s lower fees, customers will pay just 0.15% to 0.35% per year, depending on their balance. The average money manager charges upwards of 1.50% annually. Betterment is noteworthy for its unmatched simplicity – in less than 5 minutes, a customer can invest in a diversified portfolio. Rolling over an IRA or 401k from a previous employer is just as simple.

“All things considered – returns, simplicity, cost – Betterment is undoubtedly the smartest way to invest,” said Jon Stein, Founder & CEO of Betterment.com. “Fees eat up many investors’ returns. Betterment’s unrivaled technology enables us to provide the lowest possible fee along with the best investing product on the market.”

IRAs The Better Way

Just like a Betterment Investing account, the Betterment IRA is easy to set up and effortless to manage. It’s everything users have come to expect from Betterment, with an added tax advantage. Customers can open a new IRA, or rollover an existing IRA or 401(k) into a Betterment account.

“Americans who change jobs and don’t rollover their 401(k) are really losing out over the long term,” added Stein. “30% of Americans who change jobs don’t move their 401(k) because of how complicated the process is. As a result, these investors end up paying outrageous fees that significantly impact retirement savings. We designed the Betterment IRA so that a rollover would be simple – a real no-brainer.”

The only decision an investor makes for a Betterment IRA is the asset allocation between a diversified portfolio of stocks and bonds. Betterment’s custom advice tool recommends an allocation to the user, based on his goals. All of the complexities and time-consuming tasks of a well-managed investment account – such as selecting a diversified portfolio, re-balancing, auto-deposit, and dollar cost averaging – are automated with Betterment’s sophisticated platform. This suite of online services is unavailable anywhere else, and would cost 10x more at traditional investment firms.

New Fee Structure for All Accounts

Betterment’s lower fees are effective immediately and apply to both IRAs and regular investing accounts. Customers will fall into one of three fee buckets:
 

Builder Better Best
Annual Fee 0.35% 0.25% 0.15%
Minimum Balance $0.00 $10,000 $100,000
Monthly Deposit $100/month Optional Optional
Betterment Portfolio Yes Yes Yes
Next Day Transfers Yes Yes
Custom Portfolio Yes

Betterment integrates the simplicity of an online bank account with the higher long-term returns associated with investing in a diverse portfolio of stocks and bonds. Users fund their Betterment account by electronically linking to their checking account, allowing for quick and easy transfers between accounts.

For more information on Betterment, visit: www.betterment.com

About Betterment:

Betterment is a groundbreaking online investment advisor and brokerage dedicated to helping everyone save for their long-term goals with ease. Betterment achieves this through low-cost, well-grounded, and automatically implemented financial advice designed for smart, busy people. Set-and-forget accounts are optimized for each user, broadly diversified, regularly rebalanced — and still provide the liquidity and simplicity of an online bank account. This suite of services is unavailable anywhere else, including the large investment firms. Voted “Best of Show” at Finovate and honored as “New York’s Best Startup” by TechCrunch, Betterment is smart investing without hassles. For more information, please visit www.betterment.com.  Follow Betterment on Facebook: facebook.com/betterment, Twitter: @betterment, and Google+: http://gplus.to/betterment.

About Jon Stein, co founder & CEO Betterment:

Jon Stein is reinventing the investing industry. After seeing product after product that made the investing process more complicated than it ought to be, he set out to create a broadly accessible investment company that would help investors achieve the best return (factoring in costs) for the least risk. Passionate about helping people make smart decisions with their money, he founded Betterment.com in 2008.

Previously, Jon spent his career developing financial products, platforms, and investment strategies for international banks, brokers and other financial institutions, and advising them on strategies to mitigate the risks inherent in their products. Most recently, Jon held the position of senior consultant at First Manhattan Consulting Group, where he counseled a number of the world’s most prominent financial institutions. Jon has in-depth knowledge of retail banking and investing and is a Chartered Financial Analyst (CFA). Jon is a graduate of Harvard University and Columbia Business School.

Media Contact:

For more information on Betterment and to arrange an interview with CEO, Jon Stein, please contact Johanna Scott: johanna@betterment.com or 212.228.1328.

*Betterment aims to save consumers $1 billion in fees on 401(k) rollovers alone:

  • 30% of Americans changing jobs leave a retirement account behind rather than rolling it over. This accounts for nearly 3 million 401(k) accounts per year. [Harris Interactive survey commissioned by ING DIRECT]
  • For 2011, the average fee on a 401(k) plan was 0.78%.  [Deloitte Consulting survey commissioned by Investment Company Institute ] The average Betterment fee is 0.25%.
  • The average 401(k) account balance was $60,329 at the end of 2010. [Deloitte Consulting survey commissioned by Investment Company Institute ]
  • 3,000,000 401(k)s left behind X $60,329 average balance X (0.78%-0.25%) Fee Savings with Betterment = $959,231,100.

 For more information on calculations and sources please contact Johanna Scott: johanna@betterment.com.