FAQ: Custom Portfolios for Advisors
Build your own custom model portfolios of ETFs while leveraging all of Betterment’s sophisticated portfolio management features.
What are custom portfolios for advisors?
Custom portfolios for advisors is an in-app flow that allows advisors to build model portfolios with up to 10 risk levels from a broad suite of ETFs, in real time, while utilizing Betterment for Advisors’ suite of automated features:
- automated rebalancing
- tax-loss harvesting
- asset location / tax coordinated portfolios
- tax-optimized sales for withdrawals
More information about this program is available here.
How can I create custom portfolios for my firm?
Firm admins can log in to the advisor dashboard and select Portfolios > Create a Portfolio > Custom Portfolio.
Only firm admins are able to create custom model portfolios. Once the firm admin creates a custom portfolio, it will be available to all advisors at the firm.
How can I edit or delete an existing model portfolio?
Currently, there is no option to edit custom portfolios once they have been created, but advisors can always create a new portfolio. Advisors can also save any model as a draft to return to later.
To delete a portfolio model, please first ensure that there are no client accounts assigned to the model. Then, contact our support team at firstname.lastname@example.org.
How can I update the portfolio model on my client’s account?
From the advisor dashboard, select Clients > Desired client > Edit. This is located next to each account’s portfolio strategy and asset allocation/risk level.
How do transfers into custom model portfolios work?
Advisors can specify trading migration strategies to transition their clients’ portfolios or investment allocations into a custom portfolio.
More information is available here.
What is a “security group”?
Security groups (or asset classes) are the building blocks of custom portfolios.
A security group can consist of up to 3 ETFs: primary, secondary, and secondary IRA tickers. The addition of secondary tickers allows for tax-loss harvesting (TLH+).
What are “secondary tickers” and are they required?
Secondary tickers are used for tax-loss harvesting. When a primary ticker is sold to “harvest” losses, the secondary ticker is purchased in its place.
When TLH+ is elected, including a secondary taxable and IRA ticker ensures that TLH+ works effectively for clients with both taxable and IRA accounts on the platform. Providing fewer secondary and secondary IRA tickers may reduce opportunities to harvest tax losses.
What is a “risk level” and how many can each portfolio have?
A risk level defines how each security group is allocated in your client’s portfolio. Advisors can use risk levels to account for varied client needs, such as different time horizons, investment goals, and risk tolerances.
Custom portfolios support up to 10 different risk levels within a model. If you would like to include more than 10 risk levels, please contact our support team at email@example.com.
Betterment Automated Features:
How does Betterment project future portfolio performance?
Details about Betterment’s projection methodology are available here.
What can I do if the ETF I want to use in my portfolio model is unavailable?
Betterment for Advisors supports a selection of over 1500 ETFs for inclusion in custom portfolios. If an ETF does not appear in the in-app search, it may not be supported.
If you would like to include an ETF in your custom portfolio that is not currently available, please contact our support team at firstname.lastname@example.org.
Can advisors include mutual funds or single stocks in custom model portfolios?
Custom portfolios only support ETFs at this time. Mutual funds, single stocks, and other securities are not available.
What is Tax Loss Harvesting (TLH+)? How does this feature work with custom model portfolios?
Tax-loss harvesting is the practice of selling a security that has experienced a loss—and then buying a similar asset to replace it. The switch does two things: it allows the investor to realize, or “harvest” a valuable loss while keeping the portfolio balanced at the desired allocation.
Capital losses can lower your clients’ tax bill by offsetting gains and reducing ordinary taxable income up to $3000 per year. The custom portfolios program allows firms to designate primary, secondary, and secondary IRA ETF tickers to be used for TLH+.
How does a Tax Coordinated Portfolio (TCP) work?
Tax-Coordinated Portfolio is designed for investors who are saving for retirement in more than one type of account, including taxable accounts, traditional IRAs, or Roth IRAs generally with the same time horizon.
Once you set it up, Betterment will look across all of the accounts grouped under retirement and automatically reorganize which assets are held in which accounts.
Of these three types of accounts, each are taxed differently: (1) taxable accounts, (2) traditional IRAs or 401(k)s, and (3) Roth IRAs or 401(k)s. With Tax-Coordination, the assets are then arranged (unequally) across all coordinated accounts to maximize the after-tax performance of the overall portfolio. We do this in a way that keeps the overall allocation the same while boosting after-tax returns.
How does Betterment rebalance client portfolios? How does automated rebalancing work?
More information about Betterment’s automated rebalancing feature is available here.
I have other questions – where can I learn more?
If you have more questions, please get in touch with our support team. You can reach our support team at 1-888-646-2581, Monday through Friday from 10am to 6pm (ET), or via email at email@example.com.
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