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World of Finance

What is Betterment?




Betterment is a tool that helps make saving and investing easy.  Not only does Betterment take the complexity out of investing, it’s designed to be a tool for all levels of investors; this is why they have formed a community of savers and investors. They have an easy to use online platform that is very straightforward to make managing your money painless.  In addition, they strive for transparency and provide added-value services such as:

Allocation:  This platform not only allows you to select your allocation structure (based on how much risk you want to expose your portfolio to as the higher the risk, the higher the reward potential), it automatically rebalances your allocation so you don’t have to worry about keeping track of this. Goal-Based Platform:  Within your main Betterment account, it allows you to set up sub-accounts.  This way you can break-down your savings into a house fund, retirement fund, and more.  They even make it possible for you to have different allocations for each sub-account and view each account with a progress bar to make it visual for the account holder. Fractional Trading:  Are you tired of having to buy a whole number of shares instead of deciding on a set amount of money you want to invest?  Normally when you buy stock, each stock has a specific share price.  The amount you pay is the number of shares you buy times the price of one share.  Betterment offers fractional trading which means you can select the exact amount of money you want to invest to buy shares (now you don’t have to worry about having enough money to buy whole shares, this way you can be part of a share). Automatic Deposit Feature:  Betterment offers an automatic deposit feature that makes continued saving and investing easy and it allows anyone to take advantage of the dollar-cost averaging investing strategy.

NEW FEATURES:  Betterment has recently updated their platform to make it even better!

Betterment has reduced its fee from a range of 0.30% to 0.90% of your balance to 0.15% to 0.35%, and has added additional benefits to reward its customers for sound investing behaviors and investing more toward their futures. In addition to lower fees, Betterment is also offering IRAs, both Roth and Traditional, in addition to the ability to rollover an old 401(k) or IRA to Betterment All new customers will get their first 30 days of Betterment for free!  If you would like to try it out, you can sign up here.

Betterment was certainly great before these new features, but now it is a real “no-brainer” as far as where to invest.


We had the pleasure of asking CEO, Jon Stein, a few questions about Betterment.  Here’s what he had to say:

World of Finance: What’s the story behind founding Betterment? How did the idea come about?

Jon Stein:  I worked for the “enemy” for several years, learning the industry’s methods. That is, I worked for many of the country’s largest banks and saw them doing things that, though legal, were not in the best interests of their customers. I knew I wanted to start a business and shake things up, and in 2007, I left my cushy banking job and enrolled in the MBA program at Columbia (where I would be able to work on my idea as part of my classes). I knew I wanted to start a company –  I had the name “Betterment” already and wanted to build a better way to invest,  like Apple meets Vanguard – but the details had to be worked out.

Next, I brought in a few great friends and colleagues who were experienced in financial services, technology, and law. For two years, we built the core technology of Betterment and worked with industry regulators. We finished the site a day before we launched to the public at TechCrunch Disrupt (a technology conference for startups) – it was down to the wire. At TechCrunch, we were voted Best New York Startup, which was both exciting and motivating. We set out to prove that Betterment could make smart investing simple and accessible in the most efficient way possible.

Through my education and in working with large financial institutions, I learned a few things about how financial services could better serve people like you and me. One of the most important things I learned was that I was no smarter than thousands of others looking at the market, and I didn’t have better information. I was best off applying the concept of Modern Portfolio Theory – that there’s no better portfolio to own than the market portfolio – than trying to beat the market.  So the principles of Betterment were in place long before we had a product. We have taken those principles and applied them to each concept we build for the Betterment platform.

World of Finance: In your own words, what is the mission of Betterment?

Jon Stein:  Betterment’s mission is to make smarter investing accessible to hard-working, busy people like you and me – to make Wall Street work as best it can for all of us.

World of Finance: What do you see the future of Betterment to be?

Jon Stein:  I am so happy with the growth Betterment has experienced thus far. We have more and more customers every day, and in just 1.5 years we have tripled the size of our team! In 5 years we hope to see Betterment providing ideal investing solutions for tens of millions of people like you and me – whether that means they are investing some extra savings for their specific, long-term goals, or setting up IRA accounts and maxing out their contributions.

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This article originally published February 22nd, 2012 on World of Finance