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Who’s Managing My Money—People Or Robots?

We manage your money with the help of both human experts and technology—here’s why.

Articles by Sebastian Rollén
By Sebastian Rollén Quantitative Investing Associate, Betterment Published Mar. 24, 2020
Published Mar. 24, 2020
3 min read

Betterment receives thousands of questions per day from both current customers and future customers. Recently, we got a very interesting question: “I’m curious if my portfolio is managed by people or algorithms?”

This question is particularly interesting because it hints at the goal we set out to accomplish when we launched in 2010: to democratize finance for as many people as possible.

We bring the tech

People or algorithms? It’s both!

Our portfolios are designed by people and managed by algorithms. Our team of experts that shape the advice that we automate includes traders, quantitative researchers, tax experts, CFP® professionals, behavioral scientists, and many more.

All the advice and activity that you see in your account was researched, prototyped, and implemented by people. On top of that, we look for potential improvements or new features—every day.

We use technology to help accurately and consistently execute your investment strategy. There are some things that computers are just better at than us humans—monitoring every price change in the market, doing millions of calculations quickly—and we harness those comparative advantages to help do what’s best for your money.

Day to day, our automated processes monitor and manage your portfolio. They rebalance your portfolio if it drifts too far away from your target allocation, and execute any tax strategies that you may have enabled.

Technology is our force multiplier.

A force multiplier is when a combination of factors come together to make something more powerful and successful than the individual factors would have been on their own. You’ve heard the phrase, “greater than the sum of its parts,” right? The combination of human talent with automated technology is the force multiplier that allows our company to help our customers make the most of their money.

For example, while our tax-loss harvesting algorithm was developed by the experts who work on our investing and trading teams, it would be impossible for us to manually harvest losses for our customers. We’d have to monitor the daily balances of hundreds of thousands of accounts simultaneously.

By converting our human-derived logic into instructions that machines can analyze and respond to, we are able to execute tax and investment strategies in ways that are likely faster and more accurate than doing it ourselves. Technology also allows us to scale our advice and offer it to more customers than we would have been able to otherwise.

Automation is great—but we’ll never take it to 100%.

We firmly believe that the best way to provide financial advice to our customers is to leave things that are easy to automate to the machines, and leave the rest to the humans.

Machines are generally better than people at rule-based decisions, calculations at scale, and data-aggregation. People are usually better at complex decisions, abstract thoughts, and flexibility in logic and inputs.

Today, we still believe that people are better suited than machines to deal with behavioral coaching, building advice models, and dealing with complex financial situations. To reflect this belief, we complement our automated advice with access to our financial planning experts through Advice Packages and our Premium service. These allow you to discuss your unique financial situations with one of our licensed financial professionals if the need arises.

We also have a Support Team of dedicated professionals who are ready to answer any questions you may have about your account.

Our mission is to do what’s best for your money.

The line between the two realms of responsibility can shift and blur as computing power and algorithmic research marches on, but you can trust that all decisions that machines make on your behalf at Betterment have ultimately been vetted by a human. In short, the buck stops with people.

Our mission is to empower people to do what’s best for their money, so they can live better. We aim to achieve that purpose every day, whether through human creativity and critical thought, or machine automation and precision—and most often a healthy dose of both.


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