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Betterment USA Review & Rating 2021

Is Betterment Scam Or Legit?

Betterment USA is one of the largest robo-advisors in the United States, established in 2011. High-level financial authorities such as the SEC and FINRA regulate the firm. At the time of this Betterment review, the firm operates its services to only U.S. clients.

The vision of this online brokerage is that it should be easy, simple, and accessible to every trader or investor. Clients can have access to numerous special features such as portfolios with tax-optimization and objective-based investing. They also have retirement planning that offers guidance for clients before and after retirement.

Our Betterment review USA revealed a number of truths: firstly, that the firm appears to be best suited for customers in the U.S,  and those searching for the best investment portfolios with simple customization, low fees, and user-friendly investment platforms.

Betterment Pro and Con
  • The firm offers low fees and charges no deposit or withdrawal fees
  • It’s simple and entirely digital to open Betterment accounts
  • The website and app are user-friendly and intuitive
  • No minimum betterment account deposits
  • Deposit and withdrawal only possible through bank transfers
  • Only serves clients in the U.S.

Is Betterment Scam Or Legit?

Betterment USA is a lot of things but our review revealed that a scam it is not. This online brokerage makes profits from annual management fees from its clients. The charge is a percentage of the entire portfolio value, which is 0.25% of the overall account balance. Compared to human financial advisors, the firm’s robo-advisor management fees are more favorable. On average, it’s about 1% for each year; however, it can go up to 2% or more.

In terms of regulations and insurance, Betterment is registered with SEC (registration number #8-51906), with federal FDIC insurance. It’s an online broker, so there’s always the risk of capital loss, just like any other investment broker.

In addition, the firm is also a member of FINRA (registration number #47788) and SIPC. Having registration with these agencies (SEC, FINRA, and SIPC), our Betterment USA review shows their operations are regulated by the right authorities. This means these regulatory bodies ensure that they follow the rules and regulations that ensure fair play in the trading industry.

Investors only run the risk of significant losses if the Betterment brokerage goes under. In this event, the assets of the company will be liquidated. The SIPC will ensure that investors get up to $500,000, with $250,000 in cash.

Betterment USA has appeared on Forbes, Bloomberg, The New York Times, and The Wall Street Journal.

Betterment Open Account Offers And Sync Of Accounts

Many online brokers offer various promotions and bonuses when you create an account with them. If you’re a new online trader, opening an account with some traders will ensure that you get free money for trading. But most of them usually come with initial deposits. That means you get a certain amount of money depending on your initial deposit.

However, not all firms provide such bonuses. Before you open an account, you should read the terms and conditions. All bonuses are available to U.S. citizens. You may have to find other alternative reviews such as the eTrade USA Review if you’re resident in another country.

From our Betterment review USA, you can tell that you are able to get free service from Betterment for one year with an initial minimum deposit of $15,000. However, it’s obligatory to make the initial deposit within 45 days of creating a new Betterment account. The promotion is available for all their accounts and is not transferable. Again, it’s only for U.S. clients.

Adding External Accounts To Your Betterment Account

Betterment supports the synchronization of external accounts to keep track of all your investments. You can monitor all your accounts in one place, through Quovo. Most of the accounts are eligible for synchronization, but not all of them. As an alternative, you can monitor your account manually if you don’t enjoy using the Quovo method.

Through the sync, Betterment can offer you advice, for example on your retirement and life savings. If you want to sync your external accounts, sign in to a web browser and click “Sync New.” From our Betterment review USA, the firm provides top security to ensure your account is safe.

They offer high-quality browser encryption, identity verification features, secure servers, and several other securities. If you want to know more about their security features, check out their Security & Privacy promise.

If you want to delete your Betterment USA account after the synchronization, you can do so by selecting “Settings” from the menu and clicking on “External Accounts.” From there, you have to only click “Delete.” The online brokerage also gives you the choice to make your account invisible to them. That way, it doesn’t show on your review or add it to your overall net worth. You can make your account invisible by heading to “External Accounts” and clicking “Edit.” Check out some other brokerages and read our Fidelity USA Review or the latest Gain Capital review to see what else is on offer.

Usability, Look & Feel

From our Betterment USA review, the firm thrives on making investing easily accessible, and its trading platform shows an example of that. The website is user-friendly, simple, and has a friendly customer approach. The user interface is straightforward, and you can easily understand it.

However, you’ll need to input lots of data for the Betterment open account. But after you finish setting up your portfolio, the interface becomes highly intuitive and provides useful information. The website’s layout is simple and appealing, which makes it easy for anyone to navigate the platform. They also have a quick loading time, and it’s compatible with various computers and mobile phones.

In terms of deposit and withdrawal, the only way to deposit your funds or withdraw them is through online transfers. Another way is through your check account that’s linked to Betterment. They plan to make mobile check deposits and withdrawals available in the future. But until then, no check writing or check deposits without online transfers. On the flip side, the deposits and withdrawals come with no charges.

The Betterment mobile app platform comes with the same desktop functionality. It’s far easier to enter your information creating your Betterment open account, but the mobile app provides a better user experience in terms of managing and monitoring your portfolios.

Betterment Open Account

From our Betterment opinions, the brokerage makes it easy for you to create a Betterment open account. You can complete your Betterment USA account sign up by answering three to four questions on ten simple screens.

Since the questions on each screen are simple to complete, you can finish the entire process in less than ten minutes. And that’s quite an achievement compared to other financial institutions such as other online broker accounts, bank accounts, or even a loan. You can begin the process from the Betterment homepage.

You can only create a Betterment open account if you’re a U.S. citizen. But there are other brokerage alternatives you can review, such as Charles Schwab USA Review.

You can invest $1 as the minimum amount, which is preferable for clients who want to begin with lower accounts. However, for the premium account, you’ll need to deposit a minimum of $100,000. Betterment provides two levels of accounts: Digital plans and premium plans, which rely on the kind of service offered and the minimum requirement for the account balance.

Digital Plan

With the digital plan, the minimum deposit is free, and the firm automatically invests your money using the algorithm of Wealtshimple. They don’t offer you a personal advisor unless you purchase one of their Betterment USA packages. However, the packages are expensive.

Premium Plan

You need to deposit a minimum of $100k, and you get your financial advisor. There are other types of accounts that vary due to the tax advantages and the ownership they provide when it comes to Betterment open accounts.

They include:

  •  Individual account – An individual maintains the account.
  • Joint account – Two or more people that own the account.
  • Trust account – A trustee (different legal body) holds the account for your benefit.
  • Roth, IRA, traditional accounts – personal retirement accounts with tax advantages

How To Open An Account

In this Betterment review, we analyzed the Personal Account.

Creating an account with Betterment USA is simple, quick, and fully digital. We signed up, and the firm verified our account in one business day, which is excellent. Check out some other alternatives such as what we found in our Ellevest USA Review.

Steps to Create A Betterment Open Account:

  • Sign up to Betterment USA by answering questions that relate to your retirement status, age, and annual income.
  • Select among the pre-set portfolios (retirement, standard investing, etc.)
  • Sign up with your email address.
  • Include your personal information, such as SSN, address, name, etc.
  •  Include other security questions and answers
  • With the additional information, you can make your goals for future personal such as retirement, purchasing a house, etc.

Betterment Accounts In Other Countries

Currently, a Betterment USA account is only available to U.S. citizens with a valid SSN or ITIN. The restriction also includes U.S. citizens working or staying abroad. However, U.S. military members who live abroad can open a Betterment account.

Those who are not legal U.S. residents but living in the U.S. can opt for the Betterment account

If you want to invest, you may have to try out other brokerage alternatives that offer similar services to Betterment. Some of them even allow you to consult real human, financial advisors for further advice.

Betterment Trading Platforms

Betterment services are done through mobile and web platforms. The layout of the trading platforms is user friendly and has a good structure. Both the mobile and web versions offer two-step authentication. The trading platforms are available in English.

Web Trading Platform

The trading platform on the web is simple to use and user-friendly. You can see the most relevant information on the landing page, which tends to be the leading portfolio for you. They designed the platform in such a way to improve transparency and the investing process.

From our Betterment review, you have the option to set up a two-step verification, which is at the left-hand sidebar at the bottom of the screen. Go to “Settings,” click on “Security,” and you’ll see the two-step authentication.

Betterment’s open account performs better in terms of the portfolio reports. It’s simple for you to see your accounts, overall earnings, balances, and your forecasted growth by clicking on the “Performance” menu on the “Home” page.

Also, you can find the performance for each value and asset separately, with a comprehensive record of your portfolio’s activities. Some of the portfolio activities include deposits, withdrawals, fees paid, and earnings of your dividends. You can change the allocation of your assets and the level of risk when you click on the active portfolio.

Mobile Platform

According to your Betterment review, the mobile platform is available on both Android and iOS. The mobile platform has a perfect resemblance to the web trading platform, and due to that, it provides two-step authentication, it’s user-friendly, and you can see the overall Betterment USA portfolio performance.

Betterment Payment And Trading Fees

The management fees for digital-only clients are 0.25% for each year, which can increase to 0.40% for each year if it’s a premium plan. For assets that are more than $2 million, Betterment provides a discount, which decreases the digital fee to 0.15% for each year. When it comes to the premium plan, there’s a charge of 0.30% if the balance is more than $2 million. The management fee for ETFs is from 0.07% to 0.15% each year.

From our Betterment review, you can use the firm’s account tools for consolidation and financial planning with no charge. However, they may prompt you to move your funds into an investment account.

Here are some trading fees at Betterment USA to note:

  •  For $5,000 in your portfolio, you’ll incur a cost of $1.04 to keep it managed monthly
  •  If you have $25,000 in your portfolio, the management cost is $5.21 for each month
  • $100,000 portfolio incurs a monthly cost of $20.83 to keep it managed.

Betterment USA accepts the following payment method. But be sure to check other alternatives such as eOption USA Review to find other quality brokers.

Where Betterment Falls Short

One of the Betterment drawbacks is on safety net goals. The suggested safety net goals of Betterment is 15% investment in stocks and bonds take 85%. However, the company changed those percentages recently to 40% in stocks and 60% in bonds.

It’s better this way because, based on traditional advice, you should not invest in short-term savings like emergency funds. That’s because you may have to get fast access to the account, and that could mean selling your investments without any option when the market decreases in value, instead of waiting for the right time when the market is good to sell those investments.

According to Betterment, their testing shows that the allocation is a sensible cash alternative, but you have to determine whether to invest your emergency fund. Some investors will be better off with some of the money in savings accounts like the Cash Reserve that Betterment USA offers.

Also, the brokerage firms acknowledge that when you move your money from the safety net account, you could incur tax consequences on your capital gains, and that includes the capital gains in the short-term. But there are no tax implications when you withdraw from your savings account.

Customer Service

According to our Betterment review, Betterment open account holders can contact their customer care through email and phone. You can get in touch with their customer support from Monday-Friday, 9 am to 6 pm ET on the phone. Contacting Betterment through email is on Saturday and Sunday from 11 am to 6 pm, ET.

Betterment USA stopped using live chat for potential clients, but clients can have a live chat with customer support after signing in. With a premium account, you can get assistance from financial planners at any moment.

If you have a standard account, you’ll incur a fee of $199 to $299 to have a one-on-one with a financial planner. Usually, the consultation is carried out through Zoom, and you can make a video call if you so choose.

Regulation And Deposit Insurance

Betterment USA is regulated by SEC and FINRA. This means that they are legit and that they don’t go against any rules and regulations, as top-tier financial authorities monitor their activities to ensure fairness.

The SIPC covers the Betterment, which means the SIPC protects your capital in case Betterment goes out of business. The limit for the protection is $500,000, with $250,000 being cash. The amount is high compared to that which other investor protection schemes provide.

The firm does not carry any excess SIPC, which means all its trades clear through Apex Clearing. The Apex Clearing has risk management tools in place to ensure your deposits are insured. From our Betterment opinions, clients who have signed up with Betterment are not risk trading, and the firm does not offer margin lending. So it’s not likely that they would need extra SIPC coverage.

Even still, if you have over $500,000 in your Betterment USA account or the account exceeds $250,000, it would be best to move the excess to other firms that offer additional insurance. The firm also has FDIC insuring it, which acts the same way as SIPC. However, they insure up to $250,000.

Additional Offers

Having a Betterment open account means that users have access to numerous educational content and high-quality guides about retirement and how to decrease your substantial tax debts. They also provide videos on how to navigate the platform without facing any difficulties. Also, the firm has numerous articles that deal extensively with portfolio compositions.

They also have referral programs with which you can earn free time on your Betterment account if you invite other people to the brokerage firm. There are more details when you log into your account. You can earn pretty good commissions if you promote their services.

The affiliate program is done through Viglink, CJ Affiliate, and Impact Radius. But you can join the referral program through the app. You can earn from $25 to $1,250 for each client you bring on board. Most bloggers are now using the affiliate program to make a good commission.

Betterment ETF

Betterment ETFs

There are five types of portfolios that Betterment offers:

  • The standard portfolio that includes a diversified bond ETFs and stock (iShares, Vanguard)
  • The socially responsible portfolio that refines its management for stocks that are adequately governed and performs well on social and environmental impact.
  • The Goldman Sachs Smart Beta portfolio, whose sole purpose is to perform better than the financial market.
  • The income-based all-bond portfolio that comprises BlackRock ETFs
  • The Flexible Portfolio formed from the same general portfolio but used according to the client’s preferences.

The socially responsible portfolios hold ETFs that are invested in large-capitalization firms, such as iShares. They then replace upcoming stock exposure in the market with an emerging market ESG fund. Apart from the large-capitalization firms and rising markets, a small portion of the portfolio known as “socially responsible” gets invested into eligible companies.

Portfolio Management

The firm evaluates the portfolio once every month, and if it has shifted, they rebalance it. As the target date gets closer, your portfolio becomes more stable with the prospect of gaining and limiting huge losses. Due to the risk of reallocation automation, the robo-advisors are more well-known nowadays.

These are standard portfolios that clients don’t have the time to perform themselves. You are qualified for tax-loss harvesting on all the accounts that are taxable, no matter the account you have. That’s an advantage Betterment has over other robo-advisors. Usually, other robo-advisors need a specific balance that is generally more than $25,000 or more to switch on this function.

You can set the tax-loss harvesting at the account level. In that case, if you switch it on, it will apply to all your portfolios that are in your Betterment USA account.

Overall Conclusion

From our Betterment review, the human, financial advisor is cost-effective compared to other hybrid financial advisors. Betterment introducing human advisors was a game-changer, and they are now formidable competitors.

However, even with robo-advisors, it would be better for online traders to invest themselves by choosing various asset allocations and saving money in the process. The whole idea of Betterment is to offer a plan to help clients increase their portfolios and meet their investment objectives. If you’re searching for strategies to help you enhance your investment portfolios, Betterment is the best choice.

SIPC protects your account with Betterment up to $500,000 with $250,000 in cash. And also FDIC secures your account balances. Remember that the SIPC does not prevent you from losing money due to less value in securities.

However, it can shield you from the cash reserve account should anything go wrong, and Betterment USA goes out of business.

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