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Common Questions About Betterment

Learn the basics of what Betterment’s mission is. We’ll also go over fees, account eligibility, and how you can contact us.

Articles by Betterment Editors
By the Editorial Staff Betterment Resource Center Published Sep. 01, 2018 | Updated Apr. 09, 2021
Published Sep. 01, 2018 | Updated Apr. 09, 2021
12 min read

TABLE OF CONTENTS

Getting Started

Preferred Names

Other Questions


What is Betterment and how does it work?

Betterment is a smart money manager and the largest independent online financial advisor that serves one purpose: to help you make the most of your money.

When you invest with Betterment, you are invested into a globally diversified portfolio of index-tracking exchange traded funds (ETFs). Based on your desired level of risk, Betterment recommends an optimized portfolio and manages buying and selling the funds in that portfolio for you. Betterment also provides advice based on your goals and the time or amount you want to invest.

For your everyday cash, Betterment has two options: a high-yield cash account with the additional benefit of cash goals, which allow you to hold money for specific goals in cash, and a checking account provided in partnership with nbkc bank, Member FDIC.

Betterment’s high-yield cash account, Cash Reserve, has a variable rate of *, and FDIC insurance covering up to $1,000,000† once deposited at our program banks.

Betterment’s Checking account and accompanying Betterment Visa Debit Card is provided in partnership with nbkc bank. ATM fees are reimbursed worldwide and your money is FDIC-insured up to $250,000 once at nbkc bank, Member FDIC.

Retiring, buying a home, having a child—these are exciting life moments that come with many financial questions. Our goal is to help you plan and prepare financially so that you save time and have peace of mind knowing your money is working for you. Our investing team comes from some of the largest institutions in financial services and our team of licensed financial experts and live customer support are here to help guide you along the way.

What is your Mission Statement?

We are here to empower people to do what’s best for their money so they can live better.

We’re building smarter, more efficient money management for everyone. By pushing the bounds of what technology can do, by bringing together some of the best software and analytic thinking of diverse, cutting edge industries, we’re able to ensure that more people get the advice that they deserve. We have the ability to help free our customers to pursue what is most meaningful to them, to spend their time doing what makes them happy.

Our promise is to manage your money in a way that works to give you a better outcome. We advise you on what to do with your money based on your personal financial situation and the goals you’re looking to achieve—we recommend how much to invest each month, how much risk to take on in your portfolio, and what type of accounts you should have.

Then, we do it all for you. And by doing that, we have the rare opportunity to help you find something positive and intangible that can’t be bought: peace of mind.

How is Betterment different?

Traditionally, people have manually managed their money and investments, which can be a very time consuming and painful process, or they’ve paid very costly fees to have access to financial advisors and advanced investment strategies.

You may be a first-time investor just starting out, a seasoned investor wondering if you could be doing better, or a retiree thinking about ways to make your nest egg last. For those seeking an alternative to expensive advisor fees or the labor-intensive process of managing one’s own investments, Betterment offers an alternative.

  • Betterment’s portfolio is designed to help customers achieve optimal returns at each level of risk from their investments.
  • We use a variety of strategies, using technology, to help investors keep as much of those returns as possible.

We strive to offer a great user experience and design our technology to be friendly and accessible. Everyone has questions regarding financial services, but a lot of people are embarrassed to ask those questions. Through Betterment, you can ask questions and receive help from our customer support team. You can also access financial experts and receive advice through our Advice Packages or by upgrading to our Premium plan.

How is a Betterment investment account different from a traditional online brokerage account?

Betterment offers unique features, including:

  • A straightforward pricing model without transaction charges or hidden fees.
  • We focus on the only two investments which tend to matter to most investors: a great stock basket and a bond portfolio.
  • An incredibly easy user experience which makes it easy to understand your money and control your exposure to risk.
  • Automatic, seamless diversification (which often means higher returns with lower risk).
  • Automatic rebalancing of your portfolio.
  • Automatic reinvestment of your dividends.
  • Transaction in exact dollar amounts (so you don’t have to buy whole shares).

What are Betterment’s fees?

Betterment’s investment advice is available for 0.25% per year with no minimum balance. We call this our Digital plan because you receive our advice online. For 0.40% per year, you can also gain over-the-phone and/or email access to our team of CFP® professionals and licensed financial experts who can provide in-depth advice on investments outside of Betterment. This Premium plan requires a minimum balance of $100,000. Learn more about our pricing.

For balances in excess of $2 million (excluding 401(k) balances through Betterment for Business), the Digital plan charges 0.15% per year and the Premium plan charges 0.30% on the portion of your balance above $2 million. Balances are calculated based on household. If you qualify for part of your balance to be managed free and have a balance above $2 million, the dollars managed free will be those with the higher fee.

For either plan, we calculate your fee daily so we can accurately account for deposits, withdrawals and market fluctuations that occur. We then total the fees from those daily calculations each month, billing you a fraction of the total annual fee. This means that if you withdraw your balance before the end of the month, you’re only charged the fee for the days your money was managed by Betterment.

What does the fee get you? It covers the advice you receive, the transactions, trades, transfers, and rebalancing we manage for you, and all other account administration. We do not charge you additional transaction fees to buy and sell securities.

Any fund held in your portfolio at Betterment will assess fund-level fees, called expense ratios, but Betterment aims to keep these costs low, and we receive no part of these fees.

Finally, Cash Reserve does not charge any fees on your account. Betterment LLC only receives compensation from our program banks.

What accounts can I open with Betterment?

To create an additional account, click “Add New” from the menu after logging in from a web browser. Or, on the mobile app, log in and click on “Add goal/account.”

There you’ll find a list of available account types to choose from. There are no fees or minimums required for most of our additional accounts.

Betterment supports the following account types:

  • Roth IRA
  • Traditional IRA
  • SEP IRA (single participant only)
  • Inherited IRA
    • To set up an inherited IRA, please email support@betterment.com.
  • Individual taxable accounts
  • Joint taxable accounts with rights of survivorship
  • Trust accounts
    • Note that you must log in from a web browser, not the mobile app, to open a trust.
  • Cash Reserve- a high-yield cash account
    • Minimum deposit of $10.
    • You can also hold funds for specific goals in cash held in Cash Reserve.
  • Checking account provided by nbkc bank, Member FDIC.

Betterment does not support the following account types:

  • 529 accounts
  • Custodial or minor accounts
  • Solo 401(k)s (for more information about our 401(k) plans, see Betterment for Business)
  • Self-directed accounts (you cannot select your own funds or specific stocks)

All customers must be at least 18 years of age.

See Betterment’s approach to setting up goals and accounts.

What investments are in the Betterment core portfolio?

Here at Betterment, we have already done the research on how to help make the most of your money, and our experts have put together a portfolio so that you don’t have to. You won’t be picking and choosing your own investments. You also won’t be able to buy stocks in specific companies or industries.

Our Core portfolio is comprised of a combination of stock ETFs and bond ETFs, which are globally diversified and personalized for each goal and time horizon. An exchange-traded fund (ETF) is a security that tracks an index, a commodity, or a basket of assets—just like an index fund—but trades like a stock on an exchange. We chose each ETF we invest your money in because of liquidity, diversification, and low management fees.

We also offer additional strategies for those interested in socially responsible investing (SRI), targeting income-generation, and quantitative factor investing. Each portfolio is available at the individual goal level, and adjusts its recommended allocation or target income based on your preferences and time horizon. You can have multiple portfolio strategies within your Betterment account, tailored for different financial goals.

Our chosen stock ETFs aim to efficiently capture the broad U.S. stock market, and international developed and emerging markets. Your money is invested in thousands of companies through fractional shares. Exactly how much of your portfolio is made up of which stocks depends on the exact target allocation.

For our advanced investors, we offer flexible portfolios, which allow you to adjust the weighting of each asset class with your portfolio—if you choose to do so.

Learn more about our portfolios and historical returns.

What mobile platforms does Betterment support?

Betterment supports apps on iOS and Android.

You can download them below:

iOS

Android

Does Betterment do a credit check?

No. Since Betterment does not lend out money, the only check we do is an identification (ID) verification as required by law. We do not pull your credit score or act in any way which would impact your credit rating.

Who is eligible to use Betterment?

Betterment currently only operates in the United States*, and for regulatory reasons cannot accept international customers residing outside the United States. This includes U.S. citizens residing and/or working abroad.**

All customers must be at least 18 years of age in order to consent to all our agreements. Customers must have a permanent U.S. address, a U.S. Social Security Number or an ITIN, and a checking account from a U.S. bank.

*Betterment supports residents in Puerto Rico and the Virgin Islands. We currently do not support residents in Guam.

**Betterment supports U.S. military personnel residing abroad with a valid U.S. address on file, including Army Post Office box.

Does Betterment support accounts for minors?

We do not offer custodial accounts for minors. All customers must be at least 18 years of age in order to consent to all our agreements.

You may, however, create separate savings goals for minors and then make deposits and withdrawals on their behalf. This works great if you’re using Betterment as a tool to show them the benefits of saving. You can even select just their goal in the Performance section of your account to show them performance data.

Additionally, if you have a trust set up for the benefit of your children, of which you are the trustee, you can create a Betterment Trust account through this link.

How do I update my first name?

  1. Log in to Betterment on a web browser.
  2. Navigate to your “Settings” page.
  3. Near where your Legal name is displayed in bold type, you’ll see a link that invites you to “Change first name.” Select it.
  4. Once we quickly verify your identity, you’ll see a screen that asks, “How should we address you?” In the field below, enter the name you go by. Select “Update.”

It may take a few days for this change to be updated throughout our system. We apologize for any stray emails or mailers that might misname you. Please reach out to us if we use your name incorrectly or if you have any questions.

Just a note: Because of regulations, we’re required to keep a record of your legal name. Your legal name will still appear on things like tax documents. Also, Betterment reserves the right to remove access to this feature if it is used inappropriately.

Will my newly updated name be shared with anyone outside of Betterment?

Your updated name will be visible to anyone with whom you co-own a joint account and anyone you refer to Betterment (but only if you opt for us to send the invitation for you). We also may share your name with third-parties for non-regulatory purposes, like marketing emails.

Where will my newly updated name appear?

Your newly updated name will display wherever we greet you in your Betterment account’s mobile and web experiences. Any updates about your account or marketing emails will address you using your newly updated name. This name will also be visible to our Customer Experience team so they can address you correctly when they speak with you via email or phone. This list will expand as we continue working hard to make sure your newly updated name appears everywhere it can.

How do I update my legal name?

Please reach out to us at support@betterment.com and we’ll help you make changes to your account.

Will Betterment still use my legal name? Where will my legal name appear?

Yes. We’ll need your legal name for things like tax documents, account snapshots, your Checking debit card (if applicable), and any documents used to verify your identity with a government agency or another financial institution.

Is Betterment a regulated financial institution?

Betterment LLC is an SEC-registered Investment Advisor, and brokerage services provided to clients of Betterment LLC is done by Betterment Securities, an SEC-registered broker-dealer and member of FINRA /SIPC.

What happens to my money if Betterment goes public, is acquired, or closes?

Betterment Securities is a member of the Securities Investor Protection Corporation (SIPC).  At a high level, you can think of SIPC as providing protection for funds held in a brokerage account in the event that the brokerage fails.

The Securities Investor Protection Corporation (SIPC) provides insurance that protects your investments, including those held by our broker, Betterment Securities. It covers up to $500,000 of missing assets, including a maximum of $250,000 for cash claims.

The limit applies only to the value of missing securities, not losses due to market volatility. If there are securities identified as belonging to the customer, these (or their equivalent value) will be returned regardless of account size, and the $500,000 limit will apply only to the difference.

Types of accounts and investments generally protected by SIPC include stocks, bonds, mutual funds, money market mutual funds (MMMFs), certificates of deposit (CDs), annuities, government securities, municipal securities, and U.S. Treasury securities (Treasuries).

Read more in-depth about the safety and security of your account in the following article: Your Security and Trust Come First.

Cash Reserve

Deposits into Betterment’s high-yield cash account, Cash Reserve, are covered by Federal Deposit Insurance Corporation (“FDIC”) insurance up to $1mm per individual account and $2mm per joint account, once deposited into interest-bearing deposit accounts at one or more program banks†.

Each interest-bearing deposit account will be eligible for FDIC insurance up to $250,000 for each insurable account type (e.g., individual, joint, etc.), including principal and accrued interest.

Checking

For deposits into Betterment Checking—a checking account and Visa debit card provided by nbkc bank, Member FDIC—each account will be eligible for FDIC insurance up to $250,000 for each insurable account type (e.g., individual, joint, etc.), when combined with all other deposits held in the same insurable capacity at nbkc.

In the unlikely event of a bank failure, and FDIC deposit insurance payments become necessary, there is no specific time period during which the FDIC must make insurance payments available, and you may not earn interest on your deposits from the time a program bank is closed. You may also be required to provide certain documentation to the FDIC before insurance payments are made.

How do I contact Betterment?

Contact our support team.


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Betterment Cash Reserve
*The annual percentage yield (“APY”) on the deposit balances in Betterment Cash Reserve (“Cash Reserve”) is and represents the weighted average of the APY on deposit balances at the banks participating in Cash Reserve (the “Program Banks”) and is current as of . This APY is variable and subject to change daily. Deposit balances are not allocated equally among the participating Program Banks. A minimum deposit of $10 is required, but there is no minimum balance required to be maintained. The APY available to a customer may be lower if that customer designates a bank or banks as ineligible to receive deposits. APY applies only to Cash Reserve and does not apply to checking accounts held through Betterment Checking. Cash Reserve and Betterment Checking are separate offerings and are not linked accounts.†Betterment Cash Reserve (“Cash Reserve”) is offered by Betterment LLC. Clients of Betterment LLC may participate in Cash Reserve through their brokerage account held at Betterment Securities. Neither Betterment LLC nor any of its affiliates is a bank. Through Cash Reserve, clients’ funds are deposited into one or more banks (“Program Banks“) where the funds earn a variable interest rate and are eligible for FDIC insurance. Cash Reserve provides Betterment clients with the opportunity to earn interest on cash intended to purchase securities through Betterment LLC and Betterment Securities. Cash Reserve should not be viewed as a long-term investment option.Funds held in your brokerage accounts are not FDIC‐insured but are protected by SIPC. Funds in transit to or from Program Banks are generally not FDIC‐insured but are protected by SIPC, except when those funds are held in a sweep account following a deposit or prior to a withdrawal, at which time funds are eligible for FDIC insurance but are not protected by SIPC. See Betterment Client Agreements for further details. Funds deposited into Cash Reserve are eligible for up to $1,000,000.00 (or $2,000,000.00 for joint accounts) of FDIC insurance once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity—e.g., individual or joint—at up to four Program Banks). Even if there are more than four Program Banks, clients will not necessarily have deposits allocated in a manner that will provide FDIC insurance above $1,000,000.00 (or $2,000,000.00 for joint accounts). The FDIC calculates the insurance limits based on all accounts held in the same insurable capacity at a bank, not just cash in Cash Reserve. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through Cash Reserve may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Cash Reserve, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see the full terms and conditions and Betterment LLC’s Form ADV Part II.
Betterment Checking
Checking accounts and the Betterment Visa Debit Card provided by and issued by nbkc bank, Member FDIC. Funds deposited into Checking are FDIC-insured up to $250k for individual accounts and up to $250k per depositor for joint accounts. Betterment Checking made available through Betterment Financial LLC. Neither Betterment Financial LLC, nor any of their affiliates, is a bank. Betterment Financial LLC reimburses ATM fees and the Visa® 1% foreign transaction fee worldwide, everywhere Visa is accepted. Checking accounts do not earn APY (annual percentage yield). Betterment Cash Reserve and Betterment Checking are separate offerings and are not linked accounts.
This article is part of
Betterment's Customer Help Center

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