Advisor Excellence Profile: Betterment

Estimated read time: 4 minutes

There are quite a few options out there when it comes to finding advice for building your investment portfolio. For those looking to go the robo advisor route, it's important to find one that's trusted and comes at a good price. One of the best options out there is Betterment.

Betterment Overview

Betterment is the original robo advisor. It is the industry standard and one of the most popular solutions for investing in exchange traded funds (ETFs). But rather than choosing what ETFs you invest in, you let Betterment do the decision making for you.

As a robo advisor, Betterment is driven by mathematics, data analytics, and algorithms designed to bring about ideal ROIs while staying up-to-date and ahead on market trends. This online financial advisor takes into account your financial position and uses your financial goals as a roadmap to smart investments.

Betterment allows you to adjust the amount of risk you are willing to take and will recommend appropriate ETFs. They also provide three overall portfolio strategies. They are the Betterment SRI, Goldman Sachs Smart Beta, and the BlackRock Target Income portfolios.

Getting started with Betterment is easy, too. When you initially invest, you will go through a process that takes advantage of the online financial advisor's algorithms. This will lead to recommended stocks and bonds based on your financial goals. What you have to choose is how much you would like to invest in stocks and how much you would like to invest in bonds. If you are unsure or new to investing, Betterment also provides the resources necessary to make an informed, confident decision.

Who Should Use Betterment?

Betterment is a robo advisor and online financial advisor fit for many on the investing spectrum. From those just dipping their toes into financial waters to veterans of the securities marketplace, Betterment provides a sound investing solution, but if you look at Betterment's preferred stocks and bonds and past investment strategies you can make a better decision on if it is the right advisor for you.

Betterment divides stocks and bonds into several categories. Not all are worth exploring in-depth. What is worth highlighting is the difference between investments made in developed markets compared to those in emerging markets.

Developed markets are often considered safe. They are tried and true, and thus offer a low risk play when it comes to investing. Emerging markets, however, are more volatile. They come with big rewards but also big risks. And while Betterment does diversify between both developed and emerging markets, recent trends point to a focus by this robo advisor on emerging markets. For those looking for a potential big payout, Betterment could be the option for you.

Betterment: Pros & Cons

One of the biggest advantages associated with Betterment is that it takes out much of the time spent dealing with the research necessary to make informed, responsible, and valuable investment decisions. Using trusted algorithms and mathematics, Betterment drives financial improvement. Rather than put your finances in the hands of an individual decision maker who may be prone to emotional pulls, Betterment's results-backed online financial advisor tools allow for calculated and proven investment strategies.

Other advantages tied to Betterment as a financial advisor include:

$0 account minimum balance for Betterment Digital
Low account management fees (0.25% for starter package)
Low expense ratio that average 0.13%
No account fees outside of those included in expense ratio
Ability to link other accounts with Betterment to paint a clearer, overall financial picture

For all of Betterment's benefits, there are a few negatives. These used to be attached to its fees and investment strategies. Not so anymore. The company has shifted strategy to align better with consumer needs. Nowadays Betterment suffers the same drawbacks as do many other online financial advisors. These include:

  • A suggested safety net that recommends investing an emergency fund in 40% stocks and 60% bonds.
  • Tax loss could be improved
  • Hard to transfer away from Betterment if you decide to leave

Does Betterment Beat Competitors?

When it comes to choosing a financial advisor, what much of your decision will boil down to is how that advisor compares to others, especially if you are deciding between robo advisors. You will be comparing the overall experience and performance.

As the largest robo advisor out there, Betterment outshines competitors when it comes to minimum investments, fees, promotions, and overall experience.

Compared to other robo advisors such as Wealthfront and SoFi, Betterment has a $0 minimum investment and lower fees. It also offers 401(k) Assistance and an option for human interaction should you desire a more personal experience.

Is Betterment For You?

Betterment rewards consumers and investors with results backed by proven algorithms and tested investment strategies. It is an outstanding option for those who are just getting into investing, those somewhat experienced with trading, and those who would like to easily manage and view their overall financial portfolio.

Young investors will particularly enjoy the $0 minimum investment associated with their Betterment Digital account option and low fees.

If you find yourself frustrated by complicated financial advisors or options, Betterment may be the best fit for you. It is an industry staple and the biggest robo advisor out there. As the original online financial advisor, Betterment is robust, intuitive, and built for its growing user base.