Advisor Resources | Betterment for Advisors

Going independent: 4 key questions before starting your own RIA

Going independent: 4 key questions before starting your own RIA Jan 30, 2025 12:00:00 AM Thinking of breaking away to become an independent RIA? Ask yourself these four key questions first to help set your new firm up for success. The data looks promising if you’re looking to start an independent RIA… In 2024, PlanAdviser reported that the average Millennial who works with a financial advisor started looking for advice at age 29. That’s nine years younger than Generation X and 20 years younger than Baby Boomers. The great wealth transfer is now projected to be $124 trillion, and the population of Millennials in the U.S. hovers over 72 million people. There may have never been a better time to start an independent RIA looking to serve a growing high-net-worth market with demand for financial advice. But starting your own firm is a big undertaking–and a daunting one. Building your confidence starts with thinking through important facets of your plan. First, consider what success would look like for you. Many advisors who go off on their own, do so to gain more freedom and flexibility professionally—and personally. So, it’s important to think about what matters most to you. Below, we’ve laid out four key questions, as well as a business plan, to help you build a solid foundation for your firm. Question 1: Who do you need to support your firm? As you start an independent RIA, establishing strategic professional partnerships can help ensure you have the necessary resources and expertise to navigate the transition smoothly. These partnerships provide critical support in areas like compliance, technology, and operations, enabling you to set up a strong foundation for your practice from day one. You’ll likely need support from some, if not all, of the following professionals: Attorney: Throughout the transition, your legal counsel can offer valuable guidance, like reviewing your existing non-compete agreements with your current employer, helping you establish a business entity, and providing overall protection for your interests. Attorneys are a key resource, who can offer expertise on how to register a new business, for example. Online legal solutions can also be a solution if costs are a concern early on. Tax advisor: Having a tax advisor from the outset of going independent can be beneficial in addressing any tax-related questions or concerns that may arise. Thorough tax planning can help your firm remain in compliance and reduce your tax liability as you start a business. For example, your firm may qualify for tax credits available to new businesses. A tax advisor can help you claim all credits and deductions that you may not have known to be available to you. Compliance consultant: As an independent RIA, you will be required to have a Chief Compliance Officer (CCO) to oversee and ensure the firm's adherence to regulatory requirements. You can take on this role yourself, appoint an employee, or outsource the responsibility to a compliance consultant. Outsourcing the CCO function can be particularly beneficial during the registration phase, as it allows you to leverage the expertise of a seasoned professional, saving you valuable time. For example, a CCO can help with filing Form ADV and related documents, navigating SEC or state registration requirements, drafting tailored compliance policies, transition planning, and setting up necessary systems for recordkeeping and reporting. Marketing agency or freelancer: A polished brand is a key ingredient in ensuring prospective clients view you as a trusted, professional firm. A skilled marketing consultant or agency can help you develop a strong brand identity, create effective marketing strategies, and establish a differentiated brand presence. Services they provide can include website design, social media management, content creation, and lead-generation campaigns. Other RIAs: While you may not want to talk with direct competitors, seeking guidance from fellow RIAs who have successfully navigated the transition to independence can be valuable. By consulting with peers who have started their own RIAs, you can gain valuable insights and advice, which can help increase your confidence and better prepare you for potential challenges. If possible, speaking with RIAs who have made the transition from your current firm can provide particularly relevant and nuanced guidance, as they will have firsthand experience with the unique circumstances and obstacles you may face. We’re here to support you, too. At Betterment Advisor Solutions, we take pride in being a trusted guide for advisors looking to make the leap to become an independent RIA. We provide 1:1 support as you start your firm. Have questions? Talk to us today. Question 2: Where is your time best spent running your firm? When you’re first starting your firm, you’ll quickly find yourself wearing many hats. It’s important to understand your bandwidth and the key actions you need to take to build a successful independent RIA. For example, if you have few clients when you start, then business development, client experience, and business processes will likely require more of your time as you focus on growing your book. As more clients come onboard, your priorities will shift. Once you have a healthy book of clients, you’ll need to evaluate which activities are most valuable to your firm. For example, should you spend your time on investment management and portfolio construction? Or would it be better to outsource these tasks, and devote more time to clients and holistic financial planning? Review the following common activities, and prioritize those you feel are most important for your firm’s success: Business development: Attracting and acquiring new clients to grow your business Client transition and onboarding: Establishing a clear process for account setup and communication, including setting up client households and opening as many different accounts as needed Client experience: Delivering exceptional service and building strong relationships with existing clients and identifying opportunities to offer additional services, like tax or estate planning Business processes: Managing the operational aspects of your firm, such as compliance, marketing, and technology Wealth management: Providing holistic financial guidance tailored to clients' goals, such as retirement, education, and charitable giving Portfolio management: Developing and implementing investment strategies tailored to each client's unique needs and goals In our 2024 Advisor Survey, we found most advisors spend the majority of their time on financial planning. You can use the data below as a benchmark to compare how you spend time, but keep in mind the additional needs of your firm as you start the process of going independent. Question 3: What will your RIA tech stack look like? The term “tech stack” simply refers to the collection of software platforms and tools that you use to do business—and deciding what it looks like is one of the most important decisions for your new firm. Your tech stack can make or break your firm’s efficiency and the quality of service you provide to clients. It will include many different and often integrated software, but at the end of the day, it should be driven by this question: “How do I need to spend my time?” For example, you’ll likely want CRM (customer relationship management) software to track and manage all of your client data and interactions in one place. Without CRM, you’ll spend time manually tracking client engagements in spreadsheets, taking away time from serving clients. The four essential components of an RIA tech stack A comprehensive tech stack for independent RIAs should include the following four essential pieces of software. Custodial solution: Selecting a custodian is one of the most significant decisions for your firm. Your custodian is responsible for the safekeeping of the assets, processing transactions, and providing administrative support. Look for a custodian with strong tech capabilities for you and your clients—and the ability to integrate with your broader tech stack. Portfolio management: These technologies enable you to efficiently and effectively manage your clients' investments. The right portfolio management platform can range from providing simple model marketplaces to full-end-to-end tooling, including tax-optimization technologies, portfolio customization options, and more. Some custodians offer built-in portfolio management software, which can help your firm cut costs and streamline your operations. Financial planning: Financial planning technologies allow you to create comprehensive, customized financial plans to help clients budget, set goals, and plan for taxes. Many financial planning platforms integrate with custody software and customer relationship management (CRM) software, enabling a seamless and holistic approach to client service. CRM: CRM software is essential for managing client communications, collaborating with your team, and building long-term relationships with clients. A good CRM should be able to integrate client data from multiple systems and integrate with marketing automation technologies to track your client information and potentially send, or at least enable, personalized communications. Additional tools to support your firm's operations To run an efficient and effective firm, you may also require other tools, which can range from free platforms to robust solutions. Some of these tools you may wish to consider include: Compliance software: Compliance software covers a range of solutions, from simple archiving of firm communications to advanced cybersecurity strategies. In addition to software, your firm may require compliance consulting services, which can be provided by the software vendor or a separate third party. Accounting software: Manages your firm's finances, tracks expenses, and generates invoices. Billing software: As you sign clients, you’ll want to make sure you have billing software that integrates with your tech stack. Betterment’s fully integrated billing solution lets you set a fee schedule for each household during onboarding and automate collection and reporting. Marketing software: Automates marketing campaigns, manages social media, and tracks lead generation. Scheduling software: Streamlines client meetings, appointments, and communications. Video conferencing software: Facilitates remote meetings and collaborations with clients and team members. File management software: Securely stores and manages client documents, contracts, and other sensitive information. AI notetaking software: Automates note-taking, transcription, and data entry, freeing up more time for high-value tasks. As you review different software solutions, we can’t stress enough the need to look for platforms that integrate with each other. By carefully selecting and integrating these tools, you can build a robust tech stack that supports your firm's growth, efficiency, and ability to deliver exceptional services to clients. With Betterment Advisor Solutions, you’ll get a vertically-integrated product that combines custody with your most critical practice software, including onboarding, trading (or portfolio management), reporting, and billing. We recommend reviewing your tech stack on an annual basis to ensure it remains aligned with your firm's evolving needs and goals. Question 4: How will I transition my current clients to my new firm? Your current clients will be your most valuable ones as you start your independent firm. Client onboarding is a crucial phase of going independent. Although you may not be able to discuss your plans to start your own firm just yet, you can begin laying the groundwork for a successful transition. Talk to an attorney: Consulting with your attorney can be a smart move to ensure you're not violating any existing company policies or agreements. If permissible, start compiling a list of clients you'd like to invite to join your new firm. This may include gathering their contact information, such as names, addresses, phone numbers, email addresses, and account titles. Select your clients strategically: As you consider which clients to bring on board, take a strategic approach. Starting your own firm presents an opportunity to specialize in a specific niche or target market. Think carefully about the types of clients you'd like to serve and the services you want to offer. By defining your ideal client profile and target market ahead of time, you'll be better equipped to develop effective marketing and business development strategies when you launch your firm. This clarity will help you hit the ground running, allowing you to focus on building strong relationships with your new clients and growing your business from day one. Bonus: Building your business plan A business plan is not only helpful for you, as you start and manage your own firm, but it’s helpful for any key employees and partners of your firm. For example, a marketing agency or outsourced Chief Compliance Officer can use the information in your business plan to better serve your needs as they provide tailored advice and strategies to help grow your firm. Below is an outline to follow along with some tips for completing each section. Independent RIA business plan outline Executive summary: A brief overview of your RIA firm, its mission, goals, and objectives. Try to clearly explain why your firm exists in two to three sentences. The information in your executive summary can serve as a guiding light for many important stakeholders. For example, for you and your employees, it explains clearly why your firm exists. And for clients and potential clients, the language in this section can be used on your website and in other client communications focused on highlighting your firm’s mission. Company description: A detailed description of your RIA firm, including your history and details on any key employees, the business entity structure, and ownership structure. Writing this section ahead of starting your firm can help you have a clear understanding of steps you may need to take, such as creating an LLC and planning who will serve in key roles at your firm. For example, this section should detail who (internal employees or outsourced consultants) will oversee investment management, technology operations, compliance, and day-to-day operations. Market analysis: An analysis of your firm’s target market, including demographics, financial needs, and trends, as well as a competitive analysis of other RIAs in your market. You can conduct a market analysis yourself or work with a market research agency to assist with more in-depth analysis. If conducting market research yourself, you can leverage free data from the United States Census Bureau or Data Commons and then add paid data sources as needed. Services and products: A description of the investment services and products offered by your firm, including but not limited to portfolio management, financial planning, and other advisory services. Your services and how you price them should align with the needs of your target market defined in your market analysis. For services like financial planning, list out exactly what that will entail for your clients, including services like cash flow management, tax planning, retirement planning, estate planning, and risk management. Being very detailed in this section will allow you and your clients to understand what they are getting from your services. Marketing and sales strategy: A description of your firm’s marketing and sales strategy, including how it will attract and retain clients. One common approach to outlining a marketing strategy is using the “4 Ps” for your firm. The 4Ps help you document Product, Price, Place, and Promotion to help you build a strategy for promoting and distributing your services to the right audience. See our guide for creating a marketing plan using the 4Ps. If you have larger growth plans, this section can also describe your firm’s growth and expansion plans, including its strategies for increasing revenue, expanding its client base, and entering new markets. Operations and management: A description of your firm’s operational structure, including its management team, staff, and technology infrastructure. This section should cover the hardware, software, and network systems needed to run your firm and clearly explain how you plan to integrate your tech stack to run your firm efficiently. Financial projections: Financial projections, including revenue, expenses, and profit projections, as well as a breakdown of your pricing and fee structure. More formally, these projections should be used to create a three-year income, balance, and cash flow statement forecast to help with planning and goal setting. Also, as you transition from your current job to your independent firm, consider the funds you may need to set aside for personal expenses as you start your firm without much or any income. Compliance and risk management: A description of your firm’s compliance and risk management procedures, including its regulatory requirements and internal controls. Risk assessments should be conducted for regulatory compliance, market volatility risk, cybersecurity risk, and other practice areas such as marketing, advisor compensation, and trade execution. Human resources and staffing: A description of your firm’s human resources and staffing plan, including its staffing needs, training programs, and employee benefits. This section will be more straightforward if you’re a solo advisor, but it's important to clearly define staffing needs and roles if you have additional team members. Betterment Advisor Solutions is your partner for going independent Going independent means wearing a lot of hats as you grow your own firm. With Betterment Advisor Solutions, you get an all-in-one custodial platform that integrates and automates your most essential practice management and portfolio management tasks. From onboarding new clients to performing operational tasks and ongoing portfolio management, our team and technology will help advisors like you get set up with tooling to ensure you can cover many of your bases early on. We support hundreds of RIAs, helping them streamline their practices’ operations and technology. Take Eric, for example… “I run a solo practice — having a solid tech stack is essential to running my business successfully, especially with back office responsibilities. Having a partner like Betterment helps me streamline client onboarding and ongoing investment support so I can focus on other aspects of my business.” —Eric Rodriguez, WealthBuilders We’re here to answer your questions and be your guide as you set out on your independent RIA journey. Ready to talk?

How to set up the Elements integration

Betterment for Advisors Case Study Q&A: How Truepoint lowered the cost of serving more clients

Betterment for Advisors Case Study Q&A: How Truepoint lowered the cost of serving more clients Jan 23, 2025 12:00:00 AM Founded in 1990, Truepoint Wealth Counsel is an independent and nationally-recognized RIA based in Cincinnati, managing over $4BN in AUM and voted among the 2020 Top Workplaces by the Cincinnati Enquirer. Since the publication of this article, Brad Felix is no longer a client of Betterment Advisor Solutions. Commas remains a client. Brad Felix was not compensated. Views may not be representative, see more reviews at the App Store and Google Play Store. Betterment’s Alex Choi recently sat down with Brad Felix, portfolio manager at Commas (formerly RhineVest), a subsidiary of Truepoint Wealth Counsel, to hear about how the firm has successfully leveraged the Betterment platform to grow the practice. Alex: Tell us a little bit about your practice and the factors that have contributed to your success. Brad: When Commas started in 2015, I realized how technology was changing the wealth management industry. Betterment was one of the disruptors driving that change, and we saw how the Betterment for Advisors (B4A) platform could lower an advisor’s operating costs. We wanted to leverage those cost savings to serve those who don’t necessarily have a million dollars (and that’s a lot of people). We've grown from 0 to 338 households since 2015. Growth was supercharged when Truepoint Wealth Counsel acquired our firm in 2016 and there’s been no looking back. Alex: How does Truepoint think about segmentation and where does Commas fit in? Brad: Today, Truepoint’s True Wealth service offering represents our firm’s bread and butter where we provide tax and estate services. But we still want to serve other clients well and do right by them. So segmentation just makes sense, and the Commas/B4A combination offers a great solution. B4A and Commas started by serving clients with less than $1 million but are now starting to serve clients in the $1 to $3 million tier as well. Alex: What were some of the biggest hurdles you encountered while you were initially growing your business and how did you navigate those? Brad: I think the hardest thing for every new firm is distribution; and with the less than $1 million client segment, it can be a challenge to convince people that they need a financial planner. A lot of people feel like they don't qualify. So the first marketing push was letting people know that they had options beyond an insurance company or a bank, and that fee-only fiduciary advice was available regardless of how much money you have in your investment accounts. We tried to do that in a number of ways: a kind of radical, very transparent website that clearly showed pricing and the fact that we had no minimums. We created an edgy brand to show that we don't take ourselves too seriously and that everyone needs and deserves access to financial advice. We've also done some work around search engine optimization (SEO), focusing on keywords like “financial planner” and local searches in our Cincinnati geographic area. We like to rank well in those local searches and believe that our memorable brand and website helps us attract new clients. I think there's an advantage to being different when compared to lots of financial planners that kind of look the same. I would encourage others to define a unique message and lead with that because it does help you stand out. Although things were slow at first, at some point it just clicked. Delivering on your promises and serving clients well will get that flywheel going where they're telling their friends about the good experience they've had at your firm. Alex: I have always been a big fan of your firm’s website. Can you talk a little more about your process for building that out and why you chose to include what you did? I think a lot of our clients aspire to build similar type sites and would appreciate how you went about it. Brad: I appreciate that. We worked with a really good local designer who pushed us to come up with a very simple message about why we were unique, why we were different. Our biggest goal for building out our site was transparency. We know that consumers are tired of landing on websites and still not being able to understand how much they would pay for something. We’re very clear, very upfront because in our minds this is the first stage of trust. We want people to talk to us, so our “let's talk''' button is all over our website. If the website conveys enough trust to get them to have a conversation, then we can be successful in moving them to the next stage to be a client. We felt that Betterment had an attractive product so any chance we had to note our decision to utilize Betterment’s B4A offering and also to highlight how we're providing value to the client seemed to resonate with people. Alex: So how does Commas position Betterment for Advisors to its clients? Brad: We describe Betterment as our technology partner. Given Betterment’s increasing brand awareness, we talk about Betterment alongside Fidelity and Schwab, and people are comfortable. It’s part of our tech stack just like anything else. In addition, we're in the business of financial planning. It's what we do. In that vein, we've always viewed Betterment as a complementary partner, not a competitor. Alex: How do you price your offering, and how do you communicate your firm's pricing to clients? Brad: Our financial planning fee is $65 a month, but we also believe investment management is an essential part of the whole package. Our investment management fee is 80 basis points, which includes the Betterment fee. Alex: Does Commas leverage some of the client behavior functionality like goals-based planning modules and behavioral guardrails? Brad: Well, to be honest, the advantage of partnering with Betterment is that it also has a retail product and you put in the research to know what's a good feature, what's a good design choice, how do you get a better outcome, better behavior, etc. We honestly try not to interfere with the work you all do there and really just let the platform guide our clients and focus them on what we do best. We really spend most of our time on financial planning and just working through all the goals a client has set up in the Betterment system. Alex: Can you tell me some ways your practice has become more efficient? Brad: Very simply, the Betterment platform significantly lowers our cost of doing business. So account sign up, trading, cash management, those are all ways that we're not spending money on labor. We’re maybe unique among the firms that are using your platform in that we never intended to use Betterment as a solution only for children of our clients, but we now find that we can serve as many people as possible. Automation and efficiency are key to our profitability, because we provide great service at a higher client to advisor ratio vs. the industry. Alex: Could you just kind of take us through what the experience would be for a new client from when they hit your website to you guys actually opening and transferring their assets and where Betterment may fit into an onboarding workflow? Brad: The Betterment technology helps us to compress our onboarding cycle considerably, sometimes to as little as a day. At the end of an introductory client meeting, we send a welcome email that has a link to the questionnaire that helps us learn more about them, a link to open a Betterment account, and a link for our financial planning fee. The client signs our agreement as part of the automated Betterment signup process. Depending on what they fill out in the questionnaire, there may be additional automated follow-up. For instance, if they have certain held away assets, another email asks for more information. Once all the information is received, the advisor can then get a good look at their entire financial picture so that at the first financial planning meeting the conversation can focus on what's important to the client, rather than all the administrative details. Alex: What additional tools and automation do you employ along with Betterment? Brad: We subscribe to the “low code” or “no code” technology trend. The whole idea is that you don't have to be a developer to create automation between different systems. And that's really the whole premise of what we started experimenting with three or four years ago. We started using Zapier to tie together different pieces of our software. We use Typeform for our initial client questionnaire that we send out and that questionnaire is delivered by Mailchimp, which is a common email service. We also had a CRM at the time, so linking all those together. The basic discovery workflow started when a client booked a meeting through Calendly and then received the questionnaire. Ultimately that information would flow back into our CRM without our advisors doing anything. We were focused on determining how we can spend more time talking with clients and thinking critically while automating everything where human interaction doesn't add value. Alex: So it sounds like you’ve compiled a pretty big tech stack. Do you still find from a unit economics perspective that all those monthly subscriptions are saving you money? Brad: Yes. Our tech stack is not your typical financial industry tech stack. We're bucking the trend on what people say we should use and looking at other industries to find different, innovative tools. We’ve found that pricing for these non-industry tools is dramatically lower. We got rid of our CRM and now use Airtable, which I think everyone should check out. We use a client-to-advisor ratio to help us guide profitability. In a standard firm, this ratio is roughly 100 to 1. Even at 200 to 1, we would have profitable outcomes, but at 300 to 1, we’d feel really confident that creating business in this segment can deliver industry-like margins. It's just a different type of model. It's higher volume, perhaps less complexity, but requires a lot of efficiency to get there. The other metric of course is average account size, but the more efficiency you can create, the lower your average accounts can be. In full transparency, our first business plan assumed an average client balance of $100K. Over time we have far surpassed that. And I think it's only going up from here as we've realized this platform can be used to serve not only clients below a million, but in the $1 to $3 million range. Our average balance is only going up and we're only getting more efficient. Alex: What recommendations do you have for others thinking about how to build out their tech stack? Any resources you’d recommend? Brad: I typically recommend that before people look at available technology solutions, that they start with a whiteboard and draw what they need the technology to do. Then find the tools that fill that need. As far as resources, I’ve scooped up tons of information from #fintwit on Twitter. I think in this new economy that you don’t have to be a developer. For instance, you can build a website yourself much more cheaply than you could 10 years ago. And with subscription-based tech, you can find solutions that allow you to connect everything together yourself. The reality is the operating cost of running a business like ours over the last decade has declined substantially. But not everyone knows or realizes that yet. Alex: What would you tell advisors who might be skeptical of using a platform like a Betterment or someone else's? I think there's always skepticism around whether an algorithm can perform certain activities such as trading, rebalancing, and asset location. However, the contributions of an automated platform with impressive technology and execution can really shine during a situation like COVID, which came upon us so fast, but was met with industry high records of near-daily rebalancing of client accounts on certain high volatility days. Most human trading teams probably couldn't keep up with that pace. The other concern that advisors may have would be working with a lesser-known custodian. In my mind, custodians are more of a commodity at this point. It becomes a non-issue for most people once you educate them on what a custodian does, what they don't do, and what it really means to be somewhere else, while also articulating the advantages that they can give you. Finally, the Betterment UX provides people a clear, visual representation of their whole financial picture in a way that I don't think anyone's ever gotten with other online platforms or traditional custodians. Alex: Any parting comments? Brad: The one message I would like to tell everyone is don't just think about Betterment as a way to serve one segment of your existing high net worth business. Go out and build a business to serve the broader population because the market opportunity there is huge, there's no competition, and millions of people need financial advice. We hope that other advisors can learn from our experience in their consideration to utilize automated platforms and other tools.

2025 portfolio updates: What financial advisors need to know

2025 portfolio updates: What financial advisors need to know Jan 21, 2025 12:05:59 PM Updates to Core, Value Tilt, SRI, and Innovative Tech are coming soon. As part of Betterment’s investment oversight, our Investing team regularly reviews and updates our portfolio strategies to align with changing market conditions. For 2025, we are implementing strategic adjustments across multiple portfolios that are guided by updated capital market assumptions and asset class expectations. These are the portfolios that will be impacted: Core portfolio Value Tilt portfolio Innovative Technology portfolio Socially Responsible Investing portfolios (Broad, Social, and Climate Impact) Key changes for 2025 Equities: We are modestly increasing our exposure to the U.S., while reducing exposure to emerging markets, for nearly all portfolios. Fixed Income: The biggest change this year will be felt by portfolios with larger bond allocations. We expect U.S. short-term, high-grade corporate bonds to offer higher yields without undue increases in long-term risk, so we’re increasing the exposure to them while decreasing the weight of short-term U.S. Treasuries. The yields on these types of treasury bonds, which mature in a year or less, tend to fall right along with interest rates, and a lower interest rate environment is still expected in the long run. Innovative Technology portfolio: We’re diversifying the Innovative Technology portfolio by adding a new actively managed fund. This new ETF builds on themes like AI and biotech, while adding more exposure to large-cap stocks and the Information Technology sector (hardware, software, etc.) as a whole. More information is available in the Innovative Tech portfolio disclosure. What this means for your clients We plan to update allocations for newly funded portfolios starting in February 2025. For existing goals, our automated rebalancing feature will transition client portfolios to the new target portfolio weights—using clients’ dividends, deposits, and withdrawals and sell/buy rebalancing to manage the transition tax-efficiently. Rebalancing will respect any gains allowance, or other rebalancing settings that you’ve set for your clients’ goals. You can log into the Advisor Dashboard to review and update your client gains allowances, or disable system rebalancing if you prefer to rely on only cash flows to reduce drift in your client accounts. These settings adjustments should be in place by early February to ensure that adjustments are in effect before portfolio updates are made. Additional resources If you’d like to learn more about our approach to investing, you can check out these articles: Portfolio Construction Process: Core, Value, Innovative Technology ETF Selection Methodology SRI Methodology Innovative Technology Article and disclosures

RIA software: How to select custodians and tech providers

RIA software: How to select custodians and tech providers Jan 17, 2025 1:30:39 PM See what software is most important to other financial advisors and get tips (and a free tool) to help your RIA firm navigate tech decisions. In 2024, Betterment Advisor Solutions wanted to explore trends we saw emerging in the RIA space from the next generation of advisors. We surveyed 500 independent RIAs, of which 72% were Millennials (Download the survey). Below are our key takeaways on RIA software, along with tips and tools to help your firm implement new tech strategies. Table of contents: The top-ranked RIA software features Common challenges RIAs face when buying software Three tips for minimizing RIA software buying challenges RIA software ranking tool The top-ranked RIA software features We found that advisors generally find all features at least somewhat important to their daily operations. This stresses the important role that technology plays in the success of independent RIAs. The Top 3 most important features that an RIA software provider could offer for advisors were billing (52%), financial planning software (51%), and performance reporting software (51%) In our RIA survey, we asked the question, “How important are each of the following types of technology/software to your daily operations?” Respondents ranked their selections on a five-point scale, from “Not important at all” to “Very important.” Billing Financial planning software RIA Performance reporting software Tax management tools Cash management solution CRM Model marketplace Risk analytics Digital account opening software Portfolio management software Common challenges RIAs face when buying software Many advisors know the value of technology but are unable to implement new tools effectively for various reasons. When asked about their biggest challenges in implementing technology at their firms, advisors highlighted poor customer service and time spent training their team on new tools. Three tips for minimizing RIA software buying challenges If your firm is in the market for new technology, keep the following tips in mind during your buying process. 1. Assess the strengths and weaknesses of your current tech stack Before you start implementing any new technology, it’s important to first make sure that you understand the ins and outs of your current system so that you know what to look for in the future. There are two important reasons for this: Setting expectations: Knowing details about your current tech stack will help you understand how easy (or difficult) system migrations could be. Depending on your current tech stack, certain tech vendors may be more challenging to migrate to or integrate with. Knowing this will help you map out realistic timelines and costs for your project. Finding unused features: A firm may think they need to migrate off of a certain piece of technology, but in reality, they simply are not aware of all the features that a tech platform offers. This could be the case if you have been using a tech vendor for years and have not explored their updated features. If you are considering changing tech providers because of feature limitations or issues, contact your current vendor and see if they have a solution. Once you have a solid understanding of your tech stack, you can map out a forward-looking strategy involving migrating to new vendors where needed. 2. Map out your firm’s tech strategy Before you start browsing new tech providers, you’ll want to document the strategy and goals you expect to achieve. Ask yourself questions like: Is a simple, easy-to-use interface most important to you? Or maybe, it’s having customizable features? Are you looking to consolidate vendors for ease of management or leverage multiple vendors for best-of-breed tech? Work backward from your strategy and goals to help understand what needs to be done and what type of tech provider you should partner with. There are usually tradeoffs with technology. For example, the easiest tech to implement and provide training on may not offer the most customizable solution. On the other hand, highly customizable tech may be more complex to manage and take longer to get up and running. 3. Create a change management plan Regardless of your tech strategy, having a change management plan will help your team transition to new technology. A strong change management plan will incorporate the following areas: Change management team: Establish a dedicated change management team, or at the very least one leader, who will oversee the implementation process and manage stakeholder engagement, communication, and training. Project plan: Develop a detailed project plan outlining key milestones, timelines, and resource allocations. This should include both technical and non-technical tasks, such as software installation, user testing, and change management activities. Risk assessment: Conduct a risk assessment to identify potential issues that may arise during the implementation process. Develop mitigation strategies to address these risks and ensure the successful adoption of the new technology. Stakeholder analysis: Identify key stakeholders who will be impacted by the new technology, such as employees, clients, and partners. Assess their interests, concerns, and potential resistance to the change. Communication plan: Develop a comprehensive communication strategy to inform and engage stakeholders throughout the implementation process. This may include emails, regular meetings, training sessions, and one-on-one discussions. Training and support: Provide training and support to employees (and clients if impacted) to ensure they understand the new technology and how touse it. This may include online tutorials, in-person training sessions, and ongoing support from technical experts. Monitoring and evaluation: Establish a system to monitor and evaluate the implementation process, including progress against milestones, stakeholder feedback, and performance metrics. Use this information to make adjustments and improvements as needed. RIA software ranking tool Creating a strategic plan of action for your tech stack doesn’t have to be complex. Using the ranking tool below, you can help guide your firm’s strategy in as little as 30 minutes. How to use the tool? As you think through your tech strategy, use the table below to rank each type of RIA software based on its importance to your firm’s goals and level of satisfaction with your current software. You can compare the level of importance to the level of satisfaction to help identify software that you may need to replace with an improved solution, or software that your firm wants to keep and invest in continuous improvements. Complete this ranking tool once or twice a year to help monitor your tech stack’s performance. Pro tip: Print out this chart to manually fill it out.

What’s new from Betterment Advisor Solutions

What’s new from Betterment Advisor Solutions Jan 6, 2025 10:49:41 AM Discover the latest products and features launched in Q4 2024, designed to enhance user experience, drive innovation, and meet the needs of financial advisors. From an expanded model marketplace and a new donor-advised fund to seamless integration management and improved user access, explore all the latest platform upgrades in Q4 2024. Read on for the highlights and more of what’s in store this year. Table of contents Expanded model marketplace Dimensional's Core Plus ETF Wealth Models Crypto ETF model Donor-advised fund (DAF) A new donor-advised fund New integrations Manage integrations in your dashboard Billing New 401(k) plan fee statements Advisor experience Enhanced controls for secondary users Manage beneficiaries Two-factor authentication Dimensional Fund Advisors: Core Plus Wealth We added new models from leading asset manager, Dimensional Fund Advisors, to our marketplace. Dimensional's Core Plus ETF Wealth Models are designed to pursue higher expected returns for clients, while maintaining broad diversification and managing costs. By combining Betterment’s technology with Dimensional’s consistent, process-driven investment approach, advisors can streamline investment management without sacrificing performance. This launch underlines our continued commitment to expanding our off-the-shelf offerings, which are designed to save time, compress costs, and help you do more for your clients. Take a closer look at Dimensional’s Core Plus Wealth Models. Crypto ETF portfolio Check out our new Crypto ETF portfolio, a new way to help your clients interested in crypto gain exposure to two of the largest and widely traded cryptocurrencies, Bitcoin and Ethereum. Unlike traditional exchange trading, Betterment provides clients with diversified market exposure that’s carefully vetted by our in-house investment analysts. With this automated portfolio, crypto can now serve as a diversified component of your clients’ broader investing strategy at Betterment. –Learn more– Help your clients make a donation—and an impact—with our first donor-advised fund provider, Daffy. This cost-effective, subscription-based DAF lets clients: Donate appreciated assets for immediate tax deductions. Avoid capital gains taxes and costly processing fees. Set annual, automated giving goals to support over 1.5 million charities. Advisors can manage donations, recommend charities, and easily access tax receipts through Daffy’s advisor portal. With this new DAF, you can help your clients maximize their impact and achieve their philanthropic goals, starting at just $3/month. –Learn more– Unify your tech stack We’ve made it even easier to manage your custodial feeds in one place. Connect, disconnect, and oversee all third-party integrations directly in the advisor dashboard. Our latest unlock helps you: Set up integrations with the rest of your tech stack even faster. Synchronize data and reduce workflow inefficiencies. Improve client planning decisions with better insights into client behaviors, market trends, and portfolio performance. Explore and subscribe to any of our existing feeds under dashboard Settings. You can also learn more about our full integration ecosystem and request new solutions here. You asked, we listened: Betterment will send fee statements for all 401(k) plans going forward. The revamped process will mirror how we manage fees for your wealth clients. Here’s what you can expect: A PDF statement and CSV report, detailing fees accrued during the billing period. Email notification to firm admins confirming when statements are available and how to access them in the advisor dashboard. This year, we will continue to improve our billing solution to give advisors more fee flexibility while staying compliant and building client trust. Stay tuned for future updates. Enhanced permissions for secondary advisors Secondary advisors now enjoy the same access to client activity as primary advisors. With the new and improved functionality: Secondary advisors can now be assigned to an account during onboarding to help manage the client or household. Advisors can filter client data based on whether they are the household’s primary or secondary relationship. Primary and secondary advisors can toggle between personal client and firm-wide client account data. –Explore your dashboard– Manage beneficiaries Advisors can now assign primary and contingent beneficiaries to all legal accounts in their clients’ portfolios. Clients can conveniently review and verify the designated beneficiaries as part of their onboarding experience. This new functionality streamlines the account setup process and helps advisors to support their clients in planning for effective wealth transfer. Increased security We’ve elevated platform security by introducing mandatory two-factor authentication (2FA) for advisor profiles. While 2FA has long been required on client profiles, advisors can now add 2FA to better protect client data and reduce risks of unauthorized access—adding an extra layer of security. Your clients trust you with their most sensitive information, and you can trust us to keep it safe. As always, we welcome your feedback. Read up on other updates you might have missed, and keep an eye on your inbox for more quarterly updates. We’ve got a busy roadmap for 2025 and will be sure to alert you to new products and features to come! If you’d like to take a look around with someone from our team, book a demo.