Allocation management

Our allocation advice, rebalancing, and our auto-adjust feature

Getting started

How can I tell if my account is being automatically adjusted?

You can tell if your goal's allocation is being automatically adjusted by navigating to the goal's "Portfolio Analysis." Here you will find messaging that reads either "Auto adjust is on" or "Auto adjust is off." To enable or disable this feature, simply click on the word "Adjust" below your "Target Allocation" and follow the appropriate prompts.

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What’s the difference between having Betterment adjust my allocation vs. following Betterment’s allocation advice myself?

What’s the difference between having Betterment adjust my allocation vs. following Betterment’s allocation advice myself? When you enable Betterment to adjust your allocation automatically, we aim to reduce your account’s risk as tax-efficiently as possible. Thus, your taxes can be lower than if you had adjusted your allocation yourself.

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How do I turn on auto-adjust?

To automatically adjust your allocation, you must first be logged in to Betterment from a browser, not the mobile app. For existing accounts, you can edit your allocation settings from several places. Within "Advice" of a specific goal, click on “Portfolio Projections” and expand the “Target allocation” section. Clicking on the “Turn on auto-adjust” button will take you to the allocation settings page where you can switch the “auto-adjust” toggle to enable or disable automatic allocation ...

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Which Betterment accounts can be automatically adjusted?

Any accounts opened before Dec. 14, 2017 that use the Betterment Portfolio Strategy, the Betterment SRI portfolio strategy, and the Goldman Sachs Smart Beta portfolio strategy were enrolled to auto-adjust, as long as the account met the following criteria: The account is funded. Your target allocation exactly follows Betterment’s allocation advice. The account is not a Safety Net goal (as Safety Net allocation advice does not change over time). After Dec. 14, 2017, any newly opened account ...

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How does auto-adjust work?

The “Auto-adjust allocation” checkbox in any Betterment account allows you to have your allocation automatically adjusted over time, helping you maintain our recommended level of risk throughout the life of your goal. We do this by systematically gliding your portfolio(s) to a lower overall risk level as you get closer to the end date of your goal. Learn more about how we automated our allocation advice.

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How will I be notified when there are automatic adjustments to my allocation?

Any automatic adjustments to your target allocation will be recorded and stored within "Activity" under “Transactions." These adjustments will be noted as an “Automatic Allocation Change.” Automatically adjusting the target allocation, will not necessarily cause a rebalance. Rebalances will occur if the portfolio drift exceeds our 3% threshold. Additionally, we use any cash flows, including dividends, to rebalance your portfolio towards the target allocation. If your account is rebalanced, we ...

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How often will my account allocation be automatically adjusted?

If you enable the “auto-adjust” feature on an account, Betterment will check to ensure that your target allocation is in line with our recommended moderate allocation each month. If the account’s target allocation needs to be adjusted to match our recommendation, Betterment will make that adjustment automatically. Learn more about how we notify you of allocation changes. In certain cases, your target allocation may not change from month to month. This is normal. Recommended allocations on ...

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How It Works

What are the different rebalancing methods Betterment uses?

Betterment can rebalance your portfolio when it drifts beyond your target allocation threshold using several different methods. Cash Flow Rebalancing This method involves either buying or selling—but not both at the same time—and is preferable when cash flows into or out of the portfolio are happening anyway. Every cash flow (e.g. deposit, dividend reinvestment, or withdrawal) is used to rebalance your portfolio. Fractional shares allow us to allocate these cash flows with precision to the ...

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How and when will my portfolio be rebalanced?

Why Rebalancing Is Necessary Over time, the value of individual ETFs in a diversified portfolio moves up and down, drifting away from their target weights. For example, over the long term, stocks generally rise faster than bonds. The stock portion of your portfolio may go up in value faster relative to the bond portion–if you don’t rebalance. The difference between the target weights for your portfolio and the actual weights in your current portfolio is called drift. Rebalancing is what ...

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Managing my account

Can tax-coordinated rebalancing realize taxable gains for me if I include a taxable account?

Tax Coordination is designed to avoid rebalancing that would realize taxable gains as a function of its regular tax-efficient rebalancing formula. Regular rebalancing as a result of tax-coordination will occur in your taxable account without realizing taxable gains when possible (for example, when securities are trading at a loss). However, in certain circumstances, rebalancing may occur in the taxable account portion of a TCP that realizes taxable gains. For example, withdrawals or transfers ...

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Tax information

Will my taxes be higher or lower by letting Betterment automatically adjust my allocation?

Given that your recommended allocation is expected to change gradually over time, our system uses our rebalancing algorithm to help minimize the tax implications for your account. Learn more about how we adjust your allocation tax-efficiently.

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If I use auto-adjust, how does it change Betterment’s tax features?

Our allocation advice is designed to work alongside Betterment’s tax optimization tools, including Tax Loss Harvesting+ and Tax Coordination. In fact, if you allow us to automatically adjust your allocation, we can do it in a more tax-efficient way than if you adjusted your allocation yourself.

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