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Investing Basics

Take on More Control with Flexible Portfolios

You may be an experienced investor who enjoys Betterment but would like to change aspects of our recommended portfolios. Enter Flexible Portfolios.

Articles by Nick Holeman, CFP®

By Nick Holeman, CFP®
Financial Planning Expert, Betterment  |  Published: March 28, 2018

A Flexible Portfolio enables experienced investors to adjust the individual asset class weights in the Betterment Portfolio Strategy.

If you have views on your investments that differ from Betterment’s advice, you can use a Flexible Portfolio to deviate from our recommended portfolios, while enjoying other elements of our advice.

Do you ever find yourself thinking…

  • “I like the Betterment Portfolio in general, but I wish I could make some adjustments.”
  • “I hold a lot of large-cap stocks outside of Betterment. Can I adjust the weight of my small- and mid-cap holdings to accommodate this?”

Some Betterment customers do. That’s why we’ve developed a new feature for adjusting any Betterment goal’s recommended portfolio. We call it Flexible Portfolios. A Flexible Portfolio enables experienced investors with $100,000 or more in investable assets at Betterment to adjust the individual asset class weights in the Betterment Portfolio Strategy.

At Betterment, our investment philosophy says that any investor should be aligned to their investments through a personalized financial plan. If you have views on your investments that differ from Betterment’s advice, we know it will be challenging for you to pursue that plan effectively. Just as we give you personalized control to follow our allocation advice or not, Flexible Portfolios helps investors follow Betterment’s broad array of financial advice without being limited to the specific individual asset class weights we recommend.

How do Betterment Flexible Portfolios work?

Start with the Betterment Portfolio Strategy.

Betterment’s financial advice has several layers, and the portfolio we recommend to you (specifically, our stock allocation advice) is just one of them. At the core is Betterment’s evidence-based approach to building a diversified, risk-efficient portfolio strategy and our cost-aware selection of ETFs. Flexible Portfolios lets you benefit from this evidence-rich approach to building portfolios, but turns the control over to you for the weight of each asset class.

flexible portfolios betterment

Adjust portfolios based on each of your investment goals.

At Betterment, a portfolio’s allocation is recommended to pursue a specific goal. A Flexible Portfolio enables you to take control of the portfolio for any given goal. If you have two different investment goals, you can use a Flexible Portfolio for one, and Betterment’s recommended portfolio for the other. Or different Flexible Portfolios for each goal.

Take advantage of automation and tax optimization recommendations.

Although use of a Flexible Portfolio means you’re not following Betterment’s portfolio recommendation, you still enjoy the same automation and tax features that help you save time and taxes while reaching your financial goals. The features include Tax Loss Harvesting+™, Tax Coordination™, and Tax Impact Preview, as well as features that help you automate your financial planning: auto-deposit, SmartDeposit, automatic rebalancing, and no manual trading.

Get principled feedback on your Flexible Portfolio.

For those who want the control offered by Flexible Portfolios, Betterment still provides immediate feedback on your adjustments. If you review Betterment’s principles for investing success, you’ll see that we believe maintaining diversification to manage risk is paramount. That’s why for any Flexible Portfolio you create, we’ll rate the resulting diversification and your relative risk before you make any investment switches. We want any customer with a Flexible Portfolio to understand the risks of a portfolio that is outside our recommendation.

portfolio risk rating

You can get started using a Flexible Portfolio by editing the portfolio strategy on an existing goal—then choosing “Design a Flexible Portfolio.” Or, if you’re starting a new goal, choose “See other portfolios” when viewing our recommended portfolio to start a Flexible Portfolio.

When does a Flexible Portfolio make sense?

You can think of a Flexible Portfolio as a decision to take personalized control of your portfolio and deviate from Betterment’s recommendation. So, while small changes should not cause dramatic shifts in your expected investment outcomes, this feature is intended for experienced investors, and only those who have acceptable reasons for building a Flexible Portfolio.

Our intention in offering Flexible Portfolios is to give you the option of control to tailor your portfolio while benefiting from the rest of Betterment’s advice. It’s part of our broader methodology of personalizing investment management: We offer guidance personalized to you for the aspects of your life we can reasonably help with, but we also give you a degree of control. Flexible Portfolios is one more way we offer you that control.

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