Advisor Resources

Tax-Aware Migration Strategies Mar 14, 2025 12:00:00 PM Advisors have three options when migrating a client to a different portfolio or changing their allocation -- each with its own tax-optimization strategy. Minimize short-term capital gains and wash sales When this strategy is selected, the client’s goal will be migrated in a tax-optimized way. For taxable accounts, we’ll seek to sell tax lots that are at a loss or have experienced long-term capital gains, but will continue to hold, when possible, tax lots with short-term gains until they either become long-term gains or become losses. For tax-advantaged accounts, we will migrate without regard to embedded capital gains. Regardless of account type, we will prioritize avoiding wash sales that could lead to permanently disallowed losses for securities held at Betterment. For this strategy, it is important to remember that the account may have high drift in the short run, but if rebalancing is on Betterment’s algorithms will typically rebalance available losses or long-term gains as they arise (subject to any customized drift settings or gains allowance on your client’s account), as long as the security sales involved will not cause any disallowed losses. Set Target Only Selecting this migration strategy will disable automated rebalancing in client taxable and tax coordinated goals assigned to the portfolio. While rebalancing is off, the client’s goal will be transitioned to the new target portfolio by buying underweight securities with cash deposits and dividend reinvestments, while selling overweight securities to fund withdrawals. This election will often result in high drift, especially if the portfolio or allocation change involves a significant change in composition of the portfolio’s holdings. You can re-enable automated rebalancing from your client’s household page or by contacting us at support@bettermentadvisorsolutions.com. If you wish to further manage tax impact, you can also set a gains allowance for your client’s goal prior to re-enabling rebalancing. To learn more about how a gains allowance operates in client accounts, please review our smart transitions disclosure. Rebalance with no tax-impact constraints For this migration strategy, the client’s goal will be rebalanced as soon as possible to the target portfolio. Betterment will perform this rebalance in a tax-optimized way to the extent possible, but we will not delay selling shares even if doing so could lead to a more optimal tax outcome. Choosing this option could lead to the realization of wash sales for securities that have been recently sold. After trading is complete on the change, the account will typically be 100% in balance with the target portfolio. For each of these migration strategy options, Betterment’s Tax-Impact Preview feature is available in the individual client goal migration flow so that the advisor may see an estimation of the effects of the selection. Note that Tax-Impact Preview is not available for bulk portfolio updates.

An advisor’s guide to the benefits of solo 401(k)s Feb 27, 2025 8:00:00 AM As you work with self-employed clients, here are five big reasons why a solo 401(k) may be right for them (and your firm). A solo 401(k) might just be the biggest retirement savings growth hack for your self-employed clients — and you can help them navigate it. As more people shift toward freelance work, consulting, and small business ownership, RIAs are increasingly asked about retirement planning by clients who don’t fit the traditional W-2 profile. Enter the solo 401(k): A lesser-known retirement account that just might be the ultimate savings vehicle for self-employed clients of RIAs. However, many advisors overlook the solo 401(k) or assume it’s too complex. In reality, it can be a straightforward, flexible, and powerful option for those who have no full-time employees beyond themselves (and possibly a spouse). The basics: What exactly is a solo 401(k)? A solo 401(k) is a one-participant 401(k) plan for self-employed individuals of owner-only businesses. It works similarly to a standard 401(k)—with employee and employer contribution components—but is designed specifically for businesses that do not have full-time employees other than a spouse. It’s different from SEP IRAs (which only allow employer contributions) and SIMPLE IRAs (with lower contribution limits). For many advisors (and their clients) who are less familiar with solo 401(k)s, two misconceptions commonly get in the way of using one for savings: “Solo 401(k)s are too complicated.” Some solo 401(k) providers (like Betterment Advisor Solutions) offer streamlined setup and modern digital account management. This makes it simple to manage. Once the plan is established, annual maintenance is often minimal—though advisors and participants should be mindful of certain administrative requirements, such as filing Form 5500 once the plan balance exceeds $250,000. “They’re only for high-income earners.” Contribution limits are high (we’ll cover more on that in a minute), but that doesn’t mean a lower-income entrepreneur can’t benefit. Contributions are flexible each year, so clients can scale up or down depending on business performance. Solo 401(k)s are really a simple way for self-employed individuals to save for retirement. And, they offer some added financial benefits that savers can’t get through other plans. Top 5 benefits of solo 401(k)s for your clients As you work with self-employed clients, here are five big reasons why a solo 401(k) may be right for them (and your firm). Benefit 1: solo 401(k)s are tailored for solo entrepreneurs Sole proprietors, consultants, and gig workers have unique needs. They’re juggling business expenses, unpredictable income streams, and personal financial goals. A solo 401(k) allows them to save aggressively in profitable years, and dial back contributions if cash flow tightens. Solo 401(k)s also have the added benefit of allowing spousal contributions. If a spouse is also on the payroll, he or she can contribute just like the primary business owner. This effectively doubles the family’s retirement savings potential and can significantly reduce household taxable income if making pre-tax contributions. What does this mean for advisors? More opportunity. The rise of online platforms, remote work, and freelance marketplaces means self-employment is only becoming more popular. In fact, conservative figures estimate that there are 16 million self-employed Americans. By offering guidance on solo 401(k)s, you can expand your practice to a growing client segment that often has questions about retirement planning but limited employer-sponsored options. Your firm can offer an opportunity they may not have realized they had. Benefit 2: High contribution limits One of the biggest draws of the solo 401(k) is the dual role contribution approach: Employee contribution: In 2025, individuals can contribute up to 100% of compensation or $23,500 (or $31,000 if age 50 or over). Employer contribution: As the business owner, they can also contribute up to 25% of net self-employment income (20% for sole proprietors/partnerships). Total contributions to a participant’s account, not counting catch-up contributions for those age 50 and over, cannot exceed $70,000 for tax year 2025. Combined, dual-role contributions can lead to substantially larger total contributions than are available through SEP IRAs or SIMPLE IRAs. For instance, a SEP IRA lacks the employee deferral option, so having both an employee and employer bucket in a solo 401(k) can help maximize tax-advantaged savings. Benefit 3: Tax advantages The tax benefits are very real when it comes to solo 401(k)s. By helping clients understand these benefits, you can have a significant impact on their tax burden, both now and in retirement. Pre-tax contributions: Similar to a traditional 401(k), clients who want immediate tax relief can fund their solo 401(k) with pre-tax dollars, reducing their current taxable income. This is particularly appealing to self-employed individuals, looking to lower their overall tax burden in years of high income. Roth contributions: Many solo 401(k) providers now allow Roth contributions. This means after-tax money goes in, but withdrawals in retirement are generally tax free. Offering both pre-tax and Roth options gives clients flexibility in managing their present and future tax situations. SECURE 2.0 Automatic Enrollment Tax Credit: Many miss this one, but under the SECURE 2.0 Act, if an eligible solo 401(k) adds an auto-enrollment feature to their plan, they can claim a tax credit of $500 per year for 3 years. Benefit 4: No income restrictions on contributions Unlike Roth IRAs, which have strict income limits, solo 401(k)s do not cap your ability to make Roth contributions based on income. High earners who would be locked out of a Roth IRA can still enjoy the potential for tax-free growth through a Roth solo 401(k). And let’s not forget about catch-up contributions: For clients over 50, an additional $7,500 (as of 2024) can be contributed to the employee deferral portion. This “catch-up” feature allows those who got a late start on saving to accelerate their retirement funding. Benefit 5: Prior year contributions for new plans The SECURE Act 2.0 introduced a key benefit for solo 401(k) plans: Business owners can establish a solo 401(k) by the previous year's tax filing deadline (including extensions). Employer contributions for the prior calendar year can be made up until the business’s tax filing deadline. Example: How prior contributions work If your client sets up a new solo 401(k) in March 2024, it can still count as a 2023 plan. Your client can make 2023 employer contributions until April 15, 2024 (or October 15 if they file an extension). This is a powerful opportunity for clients to catch up on retirement savings they might have overlooked during a busy year. Adding value: The advisor's role in a client’s solo 401(k) Although solo 401(k)s can be self-directed by a client, you have an opportunity to add value by guiding your client to the right plan for their overall retirement needs. Here are four ways your firm can help clients navigate solo 401(k)s: Contribution strategy: Help clients determine whether pre-tax or Roth contributions (or a mix) best suit their goals. Timing contributions strategically—especially near tax deadlines—can optimize tax savings and cash flow. Investment guidance: solo 401(k)s often offer a wide range of investment options. Advisors can provide asset allocation and diversification strategies based on each client’s risk tolerance and timeline. IRS rules and compliance: While solo 401(k)s are relatively straightforward, there are filing requirements (e.g., Form 5500 for account balances above $250,000) and rules about loans from the plan. Advisors can help keep clients on track. Long-term retirement planning: A solo 401(k) should be one part of a holistic retirement strategy. Advisors can integrate Social Security planning, insurance, and estate considerations to round out a client’s financial picture. Tips for getting started: Choosing a solo 401(k) provider When recommending or setting up a plan for your clients, look for a provider that offers transparent fees, an intuitive digital experience, and proven knowledge in compliance and recordkeeping. Also, consider the breadth of services a provider offers. Some providers also offer tools for RIAs, like custodial services or portfolio management, which can streamline your overall practice management. Introducing the Betterment solo 401(k) The Betterment solo 401(k) integrates smoothly with our all-in-one custodial platform purpose-built for independent RIAs. Modern, digital-first experience: Simplify plan set-up and ongoing management with a 100% digital process. We eliminate the administrative burden traditionally associated with solo 401(k)s by digitally opening and funding accounts with no paperwork required. Seamless ongoing management: We provide compliance support for your firm with no need to manually track contributions. Cost-effective plans: Minimize costs while maximizing savings potential for your self-employed clients. Give clients access to low-cost investments paired with the high contribution limits of a solo 401(k). Plus, clients can include spouses at no additional cost. Roth solo 401(k) option: Give your clients the flexibility to optimize their taxes by using a traditional solo 401(k) or a Roth, whatever is best for their situation.

RIA guide: How to explain tax loss harvesting to clients Feb 24, 2025 9:13:37 AM Tax loss harvesting can be a confusing topic for clients to understand. This guide gives you simple talking points to help explain it to your clients. Clients having trouble grasping the concept of tax loss harvesting? From a simple one-sentence explainer to details on how Betterment’s automated Tax Loss Harvesting+ works, we’ve got you covered. Table of Contents: In one sentence: “What is tax loss harvesting?” Five key concepts: The building blocks of tax loss harvesting How does tax loss harvesting work? How Tax Loss Harvesting+ works with Betterment Advisor Solutions How to answer other tax loss harvesting FAQs Explaining complex financial topics to clients is challenging. You want them to understand but, at the same time, not overwhelm them. This guide can help you explain sophisticated tax strategies to your clients without causing extra stress for them. In one sentence: “What is tax loss harvesting?” So, your client asks: “What is tax loss harvesting?” Rather than delivering a complex answer, start with a single sentence: “Tax loss harvesting aims to lower your tax bill by selling investments at a loss to offset capital gains from other investments.” Now, stop there. Ask your client if they want you to break down the details of how it works. If they say yes, start with the five key concepts below. Five key concepts: The building blocks of tax loss harvesting When talking with clients, you can share that these concepts are the building blocks that make tax loss harvesting possible. You can walk through the table below, providing examples to clients. How does tax loss harvesting work? Now that you have explained what tax loss harvesting is in one sentence and shared the five building blocks, you can explain to your client how the process generally works in three steps. Step 1: Identity your capital losses This involves looking for investments in your portfolio that have declined since they were purchased. It’s important to note that we don’t sell any investment that is down in value. We strategically select which investments to sell to help maintain the proper portfolio allocation. Step 2: Sell at a loss and replace your investment Once investments with capital losses have been identified, they are sold to “harvest” the loss. Making sure not to break the “wash sale” rule, new investments are bought to fit into your overall investment strategy. Step 3: Use loss to offset your capital gains or income on your taxes The losses you “harvested” can offset up to $3,000 of capital gains from investments or income each year. Any remaining losses over $3,000 can be carried forward indefinitely to offset gains or income in future years. How Tax Loss Harvesting+ works with Betterment Advisor Solutions It’s important to let your clients know that this is the general process for implementing. Performed manually, it can be time-consuming and potentially risky if done improperly. However, leveraging modern technology, like the Betterment Advisor Solutions platform, can help you minimize risk. As a Betterment advisor, you can offer your clients Tax Loss Harvesting+ (aka TLH+). Read the full TLH+ white paper. Here’s how to talk to your clients about Betterment’s TLH+ process As an advisor, you can use the following talking points: Fully automated: Instead of manually implementing tax loss harvesting, Betterment uses an automated algorithm that regularly checks for losses that make sense to harvest. No extra costs: There are no extra trading costs to harvest your losses, so you don’t have to worry if extra fees reduce any potential gains. Automatic reinvestments: Without breaking the “wash sale” rule, every harvested dollar is automatically reinvested rather than held as cash, which allows you to keep your money in the market so you don’t miss out on potential gains. Automatic rebalancing: When shares are sold at a loss, the proceeds are automatically reinvested in the asset classes that will bring your portfolio back into balance rather than simply defaulting back to the asset class they came from. No short-term capital gains tax: Some tax loss harvesting methods switch back to the primary ETF after the 30-day wash period has passed. This can create short-term capital gains tax that may dramatically reduce the benefit of harvesting losses and even leave you owing more in taxes. Our algorithm only moves back to the primary ETF when it is appropriate for your account. IRA harvest protection: Selling an ETF for a loss in your taxable account and then buying the same ETF in your IRA can cause a permanent wash sale, destroying the benefit of loss harvesting entirely. We strive to ensure that IRA deposits do not undermine a harvest. How to answer other tax loss harvesting FAQs Below are common questions about tax loss harvesting, along with talking points to help you respond to clients within the context of Betterment’s TLH+. Is tax loss harvesting right for me? Tax loss harvesting might be right for you if you are in a higher tax bracket or have significant capital gains or losses in a taxable account. In both scenarios, tax loss harvesting may offset your capital gains to help reduce your tax bill. Using Betterment’s automated technology, we can help harvest losses in a way that reduces potential risks. What are the risks of tax loss harvesting? Risks can include extra trading fees, holding too much cash after selling at a loss, an unbalanced portfolio, or violating the wash sale rule. But don’t worry — our tech is designed to help avoid these risks so you can enjoy the benefits of tax loss harvesting. What are the benefits of tax loss harvesting? The primary benefit of tax loss harvesting can be reducing your tax bill. When done correctly using our automated technology, Betterment can lower the tax you would have paid on your capital gains. What if I have more than $3,000 in losses? You can carry forward any unused losses into future years. For example, if you have $5,000 in losses and use $3,000 to offset capital gains this year, you can carry forward $2,000 to offset capital gains or income in any future year. Can I wait until tax day to sell at a loss? No, unfortunately, tax loss harvesting transactions must be complete by December 31 each year. Can I use tax loss harvesting with any of my investment accounts? Tax loss harvesting can only be used in taxable accounts. In tax-advantaged accounts, like a 401(k), you can’t deduct the losses, so tax loss harvesting wouldn’t be applicable. It’s important to note that selling an asset at a loss in a taxable account can still trigger the wash-sale rule if you purchase the same or a substantially similar asset within 30 days in a tax-deferred account, such as a Roth IRA. For instance, selling an ETF at a loss in a brokerage account and then buying the identical ETF within 30 days in a Roth IRA could still disallow the loss for tax purposes. See how Betterment automates tax loss harvesting and more From our proprietary Tax Loss Harvesting+ process to tax-smart investing portfolios, the Betterment for Advisors Solutions platform streamlines your firm’s practices while creating value for your clients.

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 Jan 24, 2025 2:24:58 PM Overview Elements is the way to deliver financial conversations at scale. With the financial vitals framework, giving advice quickly has never been easier. Advisors can connect their firm’s client data to Elements through Betterment’s data feed to ByAllAccounts. The information sent through the ByAllAccounts feed includes: Account information Balance details Enabling the integration You can set up this integration for your firm by taking the following steps through Betterment: Log in to your advisor dashboard and navigate to Settings > Integrations. Select Morningstar from the list and click Connect to Morningstar ByAllAccounts. You will see confirmation that the integration has been enabled. Data will be sent to ByAllAccounts within one business day. To link ByAllAccounts to Elements: Log in to Elements and navigate to the puzzle piece icon. Hit view details under the ByAllAccounts and request access. Be sure to save your username and password to BAA at this stage. Once you have these credentials you can set up the feed: Navigate to BAA through the Elements platform as above. Go to the “Credentials” tab at the top. Click “Create Credential.” In the pop-up window search for “Betterment Advisor - SFTP Access.” Select it and click “Next” at the bottom. Fill in the ID and Password you set up from the previous emails. Click “Save and Aggregate” at the bottom.

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.