Betterment Review: Make The Most of Your Money

Sal Ramezani

David Ramezani

Advertising Disclosure

Ever feel confused about what you should do with your money? Should you save, pay off debt, invest? And how? Betterment is a modern Robo-advisor whose goal is to make your financial life more comfortable with more direction and purpose.

Their fees are affordable, with access to help when needed is always available. With the ability to spend your money, save your money, invest your money and plan for retirement – all in one convenient location – Betterment may be a great fit for you to clean up your finances and secure your financial future. The question is, is it right for you?

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What Is Betterment and How Does It Work?

Betterment is a modern Robo-advisor that helps you make the most of your money. As stated by the founder, Jon Stein, “We started betterment in 2010, in the wake of a financial crisis, to be a place built to help people do what’s right with their money so they can live better.”

Currently, Betterment offers a basic checking account, savings account, different investment account types, and additional tools and features to help you plan and save more for retirement. As of this writing, they have over 500,000 happy customers with approximately $21 billion in aggregate wealth on their platform.

Betterment charges all of its users a standard annual fee of 0.25% of their invested money, which is pretty standard among managed investment accounts industry wide. You also have the option to purchase additional benefits through Betterment Premium, discussed later below in the “Access to Expert Advisors” section.

How Does Betterment Work?

If you’re not familiar with the term “Robo-advisor,” you’re not alone. It’s still a newer concept within the finance industry. Traditionally, for people to get additional help with their finances, they needed to seek a bank or a financial planner to guide them through saving, investing, and retirement planning.

With the growth of modern technology, companies like Betterment have developed technology that uses algorithms to automate much of the financial planning and advice. Tech experts build algorithms with the financial guidance of finance experts in mind.

When you open an account with a Robo-advisor, they will ask you some basic questions about your goals, plans, and investment beliefs. Example questions might be:

  • How comfortable are you with market volatility?
  • What are the objectives of your money?
  • What current savings and investments do you have outside of Betterment?
  • Will you need your money within the next year?
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Your answers to these questions determine the type of portfolio that the algorithm builds for you based on your personal finance needs and wants. Once you complete your responses, you’ll be assigned a customized, diversified investment portfolio appropriate to your risk tolerance.

Why Invest with Betterment?

In short, Betterment helps you make the right choice with your money while eliminating potential risks.

They do this by providing you with access to an FDIC insured personal checking account that has no fees or minimums, giving you access to FDIC insured savings accounts with higher than average interest rates, multiple investment account options, and access to expert retirement planning tools and resources. And that’s not all.

Here’s a list of all the main features and benefits of Betterment’s platform.

Investments Driven by Purpose

Betterment helps you make investments based on purpose. Upon opening your account, some of the questions they will ask you are questions related to your goals. Different goals have different timeframes for investing, and as a result, your recommended portfolio will be adjusted accordingly. If you’re saving for a house and need the money within three years, you’ll likely be recommended an account with lower risk by investing a large portion in bonds and blue-chip stocks.

Perhaps your goal is to help your children save for college, and you have at least ten years before you will need the money. Based on this goal, your recommended investment portfolio might have a higher risk approach because of the long time-horizon.

When you invest your money based on your actual financial needs and wants – rather than investing just because you’re told to do so – investing becomes exciting, and learning how it works takes root. With Betterment, you can be sure you’re investing with a purpose-driven plan and asset allocation.

Access to Expert Advisors

While Betterment does most of the hard work for you in putting together a customized investment portfolio, they also give you access to Certified Financial Planners (CFP) to help you navigate your finances better.

You have two options when accessing expert financial help. The first is to pay a one-time fee per advising appointment, ranging from $199 per visit to $299 per visit. The second option is by upgrading to a Betterment Premium subscription to get unlimited access to financial advisors.

Financial Advising Meeting Packages

The pay per visit meetings can be done in person or virtually through a video conference meeting. The five packages to choose from are:

  • Getting Started Package ($199): A 45-minute phone call with a CFP who gives you a brief tutorial on maximizing your money.
  • Financial Checkup Package ($299): A 60-minute phone call with a CFP to review your entire financial scenario and suggest areas for improvement.
  • College Planning Package ($299): A 60-minute phone call with a CFP to help plan, update, or review your higher education plans and how to pay for it.
  • Marriage Planning Package ($299): A 60-minute phone call with a CFP prepare you and your spouse (or future spouse) for finances during marriage, covering topics like goals, budgeting, and debt.
  • Retirement Planning Package ($299): A 60-minute phone call with a CFP to help you review, update, and plan for retirement.

Each package can be purchased online and booked online as well to accommodate your schedule.

Financial Advising Via Betterment Premium

Betterment Premium gives subscribers unlimited access to their network of Certified Financial Planners. There is a catch, however. In order to become a premium subscriber, you must have at least a $100,000 minimum balance within your Betterment account. They also charge a 0.40% annual fee for premium subscriptions, rather than the standard 0.25% fee.

Premium benefits include:

  • Advice on investments outside of Betterment such as 401k plans, real estate investments, and individual stocks that you own
  • Unlimited access to their network of CFP professionals

Each expert advisor has the CFP designation, so you can trust that their advice comes from a wealth of knowledge. Furthermore, their advisors hold fiduciary responsibility. This means that they are required by law to only recommend strategies that are in your best interest. In other words, their advice is not driven by a large commission but by what your personal wants and needs are.

All Your Finances in One Place

It’s no question that having bank accounts and investment accounts at many different institutions can be exhausting, to say the least. Having to log in to each one separately, waiting extra time for transfers between accounts to complete; different dashboards to manage; the list goes on!

With Betterment, they’ve created a smart platform that lets you do everything in one platform. Betterment offers the following products on its platform to make your finances easier:

  • Spend: A no fee and no minimum balance checking account. You also get ATM fees reimbursed, and your money is FDIC insured.
  • Save: A cash management/savings account to set aside money for short term savings (usually money needed within less than a year). The account offers interest on your saved money in the amount of up to 6x the national average.
  • Invest: You can open different investment accounts such as an individual brokerage account, joint investment accounts, and even trust accounts.
  • Retire: With access to expert financial planners, you also get access to both traditional IRA and Roth IRA investment accounts.
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Focused on Goals

All of your money is built on the foundation of setting goals and giving your money a name and a place to go, whether short term or long term. Some of the common goals, as shown on Betterment’s website, are:

  • Safety net or emergency fund savings
  • Retirement savings goals
  • Major purchases like a home or home renovation
  • Saving for higher education, for yourself or your children
  • Setting up trusts to pass on your wealth to your family or other relevant trust accounts
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Within the Betterment app, you can see your current savings for each goal you create and how you progress. It’s all broken down for you and invested according to your goal and time horizon for that goal.

Is Betterment Worth It?

It all depends on what you’re looking for in your finances. If you’re an individual who wants a smart and simple way to manage all of your money in one location with access to financial advisors, retirement planning tools, and customized investments – then Betterment is a top pick.

Other people who may benefit from Betterment might include:

  • New investors who want help getting started
  • Passive investors who don’t want to take the extra time to manage their portfolio
  • Investors with larger accounts who want a modern and digital platform with access to Certified Financial Planners
  • Goal-oriented investors