Advisor Technology

Introducing Mutual Funds in Custom Model Portfolios Thousands of mutual funds have been added to the custom portfolio menu. This upgrade gives RIAs even more control in meeting growing client demand for personalization. Betterment for Advisors has been laser-focused on delivering a holistic platform that includes flexible portfolio options for RIAs, across both retirement and wealth management. Today, we’re announcing that thousands of mutual funds have been added to the custom portfolio construction menu for the first time. As roughly $20 trillion in assets are held in mutual funds in the United States today, offering advisors a custodial platform that can manage those funds for clients is essential. This update gives our customers even more control in meeting growing client demand for personalization in portfolio construction. They can now combine mutual funds and ETFs in their custom models on the Betterment for Advisors platform. Options include funds from such firms as Vanguard, PIMCO, T. Rowe Price, Fidelity, with many more to be added in the coming weeks. Derek Tharp, Founder of Conscious Capital, says "I have enjoyed the ease of use and powerful capabilities of Betterment for Advisors since I started working with them, but I appreciate even more that the team continues to enhance the offerings and improve the advisor experience. The addition of mutual funds in custom portfolios allows me to use the full suite of features with even more of my clients.” Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store.

What's new from Betterment for Advisors At Betterment for Advisors, our customers are our first priority. We’re constantly working to elevate the advisor-client experience, and building scalable technology with your goals in mind. 2024 is off to a great start: Read on to get a sense of what’s new. Table of Contents Portfolio and cash management Mutual funds and more added to custom model menu Simple account migration Bring cash into focus with 5.00%* APY (variable) and recurring transfers Advisor dashboard Co-pilot: Onboarding lockouts and Summary page notifications Client activity reporting Advisor service Get the support you deserve with Transition Services Additional improvements 401(k) matching on student loan payments Editable custom model portfolios Automated 401(k) force-outs Mutual funds, Bitcoin ETFs, and more added to custom portfolio menu This year, we’re increasing our investment choice to give advisors more control in meeting growing client demand for personalization. Take a look at the most recent updates to the custom portfolio menu: Mutual funds: We added over 2,000 mutual funds to the custom portfolio menu, including Vanguard, PIMCO, T. Rowe Price, and Fidelity, in addition to the 1350+ existing ETFs. Stay tuned as we roll out thousands of additional funds in the coming months. Bitcoin spot ETFs: Advisors who want to increase investor exposure to Crypto can now access 11 Bitcoin ETF tickers in custom model construction: GBTC, BITB, HODL, ARKB, EZBC, BTCW, BTCO, FBTC, DEFI, BRRR, and IBIT. Dimensional funds: We offer access to Dimensional funds at a low cost. Now, you can create custom models combining Dimensional funds and other mutual fund families with ETFs, and set custom drift thresholds and capital market assumptions for Dimensional models. Simplify firm-wide portfolio updates with bulk actions Betterment for Advisors’ custom model portfolio builder helps RIAs construct personalized investing strategies at scale. Now, you can move all accounts from one portfolio strategy to another in a single, bulk action. To move accounts, simply: Navigate to the current portfolio assigned to relevant client accounts Select your desired destination portfolio and configure your desired allocation using risk level mapping Choose a tax-aware migration strategy to transition accounts with greater precision and tax-efficiency. You’ll be able to review impacted accounts before submitting the bulk portfolio change request. Bulk portfolio actions power you to make strategic decisions for your clients even faster. Bring cash into focus Managed cash accounts bring more of your clients' assets into your overall orbit, helping you better advise on short and long-term goals, gauge the right amount of risk to take in your clients’ investing portfolios, and open up conversations on investing excess cash. Your clients can now set their own schedule for recurring transfers from Cash Reserve† to IRAs and investing goals—and rest easy knowing there are no overdraft fees. They’ll earn a high yield on cash up until the day it’s transferred (now at 5.00% APY* variable), and you can get the visibility you need to offer more holistic advice. Learn more about Cash Reserve. Streamline client onboarding and the KYC process with Co-pilot Co-pilot is designed to intelligently surface unresolved client tasks, from pending invites and account approvals to failed ACATs and missing beneficiaries. This quarter, we introduced a new section, Onboarding lockouts, to help you quickly surface clients who are blocked from completing their onboarding due to KYC issues. Co-pilot will now signal when clients are actively stuck in the identity verification process, presenting the date of account suspension and the current status of ID review. From the Co-pilot dash, you can quickly unblock clients and streamline your personal to-do lists by: Resending identify verification instruction Uploading your client’s identity verification documents Removing accounts from the list that were already addressed offline. Our product squad is also sprucing up the dashboard Summary page. The new Co-pilot notifications display gives you an overview of active and recently resolved Co-pilot tasks as soon as you log in. Client activity reporting We rolled out a new Clients page experience, with comprehensive search functionality and reporting tools built in. You can now view historical transactions across all your clients from the Activity tab. Sort and filter transaction history by date, account type, and transaction type to get a more detailed view into total weekly flows (no client impersonation necessary). You can also search for an individual client or household by name. When you're ready, export the data you need as a CSV file. We also introduced a recent client transactions display on the new and improved Summary page. Get a detailed summary of the latest account transactions—deposits, withdrawals, rebalances, fees, and more—right from your dashboard. Get the support you deserve with Transition Services Our dedication to independent, small RIAs extends beyond technology. We've long had a human support team in place, and firmly believe that our commitment to service excellence is what sets us apart from other custodians. To that end, we’re actively growing our Transition Services Team. This team works with advisors to minimize disruption to practice operations and clients, from communicating the change, to supporting account opening, facilitating ACATs, and building the new client experience after asset transitions are complete. And the best part: no AUM commitment is required to engage our team. The Transition Services Team has hit the ground running in 2024. See how one $125mm firm with over 300 clients recently made a switch. Gain a competitive edge with 401(k) matching on student loan repayments In January, our 401(k) team introduced a new, bundled solution to help bridge the gap between retirement planning and debt repayment. Student loans are a significant financial obstacle for millions and investors are increasingly looking to their companies for help.1 With this new benefit, your plan sponsor clients can offer employees a 401(k) match on eligible student loan repayments—and gain a competitive edge in attracting top talent. "We know that student debt can be a major impediment to saving for retirement," says Sarah Levy, CEO. "Our industry-first student loan 401(k) matching solution is a compelling addition to our modern 401(k) that will help to broaden plan participation to those whose student debt previously kept them from saving for retirement." How it works: Plan participants can record qualified loan payments on their Betterment 401(k), and employers can then match those payments with a contribution to the individual’s 401(k) account annually or during each payroll period. Edit custom portfolios Managing your custom portfolios is now easier than before. With editable models, you can routinely adjust strategies across accounts to better meet your clients’ needs amidst evolving markets. To edit portfolios assigned to client accounts, simply: Add or remove portfolio holdings Update your desired target allocations Select a tax-aware migration strategy to implement changes across clients. Automated 401(k) force-outs Cut down on time and potential expenses for your plan sponsor clients with 401(k) force-outs. This feature automatically removes former employees' assets from the 401(k) plan, or transitions the assets into an IRA when their total balance is less than $5,000. This automation not only reduces per-participant record keeping fees, but can help keep plans below the 100+ participant threshold for annual independent audits.

Tax-Aware Migration Strategies Betterment for Advisors allows advisors to specify trading migration strategies to easily transition their clients’ portfolios or investment allocations. Betterment for Advisors allows advisors to specify trading migration strategies to easily transition their clients’ portfolios or investment allocations. Advisors have three options when migrating a client to a different portfolio or changing their allocation -- each with its own tax-optimization strategy. Advisors can preview the tax-impact effects of their elections before submitting the change. Three options are available, each with its own approach to managing the transition. 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-deferred 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 weather high drift in the short run, but Betterment’s algorithms will typically rebalance available losses or long-term gains as they arise, as long as the security sales involved will not cause any permanently disallowed losses. Drift goal to target portfolio For this migration strategy, the client’s goal will be gradually drifted to the target portfolio by buying underweight securities with inflows / deposits through dividend reinvestments, and selling overweight securities to fund withdrawals. No securities will be sold as a result of this change. 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. When “Drift goal to target portfolio” is selected, an additional election must be made to choose whether or not to turn off automated rebalancing. This is necessary because Betterment’s standard rebalancing algorithms operate independently of the migration strategy election. Choosing to disable automated rebalancing for the goals will ensure that a rebalance will not be triggered due to high drift that can be caused by selecting “Drift goal to target portfolio.” If the advisor elects to leave rebalancing on, Betterment’s automated rebalancing algorithm may take the opportunity to rebalance the goal shortly after the portfolio or allocation change is complete. The rebalancing algorithm avoids sales that realize short-term capital gains or would result in permanently disallowed losses for securities held at Betterment. 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. After any of these changes are applied, the strategy election remains active until a subsequent change is made. For each of these migration strategy options, Betterment’s Tax-Impact Preview feature is available so that the advisor may see an estimation of the effects of the selection.