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# Betterment vs. Schwab: No Hidden Costs. No Kickbacks. Complete Transparency.

## Betterment is the original and largest independent robo-advisor.

Seven years ago, Betterment invented the automated investing service, becoming the first of its kind. Don't be fooled by others' fine print, especially when it comes to Schwab's new "no advisory fee" robo-advisor offering. Betterment is built to provide customers with reliable customer support, convenience, automation, and a lower overall cost, all combined to do what's right—for you.

Features and Benefits
Betterment
Schwab Intelligent Portfolios

Minimum Investment

Betterment

No Minimum

Schwab Intelligent Portfolios

$5,000 No Cash Drag In order to generate revenue on their "free" service, Schwab allocates up to 30% of a portfolio to cash. In certain circumstances, keeping up to 30% in uninvested cash can result in up to a 0.56% annual return penalty, known as a cash drag.1 Betterment's unique technology allows us to make every penny work for our customers—without cash drag. Betterment Schwab Intelligent Portfolios 0.38% to 0.56% Potential Annual Cost (6% - 30% cash allocation)1 Low Cost: A$100,000, Moderate Portfolio

#### Looking out for investors' accounts is a legal duty.

Regulated by the SEC and a member of FINRA, our Broker-Dealer, Betterment Securities, follows a strict set of rules, designed to protect our investors' accounts.

##### Disclosures:

Sourced as of 3/23/16 from the below links and is subject to change without notice. Betterment fee accurate as of January 30, 2017.

1This illustration compares what would happen if an investor fully invested all assets in an investment portfolio in securities as opposed to leaving a portion of those investable assets in cash. A Schwab moderate model portfolio, as provided on the Schwab Intelligent Portfolio FAQ page, holds 61% stock, 5% gold and other precious metals, 23.5% bonds, and 10.5% in cash.

To calculate the potential cash drag in a Schwab portfolio, we studied expected returns for a Betterment portfolio of 74% stocks, 26% bonds. We selected that Betterment portfolio because it maintains that same proportion of stocks to bonds as in the moderate Schwab portfolio described above. In the first scenario we assumed 89.5% of an investors assets are invested in a Betterment portfolio and 10.5% is held in cash. In the second scenario we assumed all of an investor's assets are invested in the Betterment portfolio, none is held in cash. For our analysis, we assume that this 74% stock Betterment portfolio will have an annual return of 5.36% in excess of the risk-free rate (the risk-free rate is typically very close to the interest rate paid on cash in a savings account). We calculated the expected return that could be earned in the 74% stock Betterment portfolio that was instead lost to the drag of holding 10.5% of assets in cash is 0.56% on an annual basis (also above the risk-free rate). This illustration did not include Betterment's advisory fees because a Schwab portfolio does not include advisory fees.

These calculations are hypothetical and for illustrative purposes only. Investing in securities always involves risks, and there is always the potential of losing your principal when you invest in securities. Past performance does not guarantee future results, and the likelihood of investment outcomes are hypothetical in nature.