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Betterment for Advisors Automates Custom Model Portfolios

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What You Need to Know

  • The self-serve process eliminates the need for advisors to interact with the firm's relationship managers.
  • Advisors can choose from more than 1,500 ETFs and allocate weightings based on clients' preferences.
  • Betterment for Advisors also scrapped its minimum asset commitment, which had been $2.5 million per advisor.

Betterment for Advisors has fully automated its custom model-portfolio offering and eliminated its minimum asset commitment, which had been $2.5 million per advisor.

Advisors using the platform to build their own model portfolios will no longer have to interact with Betterment relationship managers to do so. They can do it all themselves, with no holdups due to limitations on bandwidth or other potential delays.

This “self-serve” process also makes it easier for advisors to adjust current client portfolios on the Betterment for Advisors platform and to migrate client portfolios to the platform, said Jon Mauney, general manager of Betterment for Advisors.

The largest independent digital advisor, with $32 billion in assets, expanded its advisor platform to include advisors’ own model portfolios of ETFs in February. The platform allows advisors to choose assets from more than 1,500 ETFs, allocate weightings based on risk levels of their clients, and choose secondary assets to purchase when primary assets are sold for tax-loss harvesting purposes.

Betterment for Advisors will automatically harvest losses for portfolios of taxable accounts if advisors want the service and estimate the tax implications of portfolio changes. Advisors can design taxable and nontaxable accounts on the platform.

Within the next month or so, Betterment for Advisors expects to allow advisors to input their own capital market expectations into their model portfolios on the platform rather than use Betterment’s.

The digital advisory firm is also “very interested” in offering access to cryptocurrencies on its platform, but wants to make sure it has “the right way to deliver that to investors,” said Mauney, noting that the offering should be low-cost and efficient.

When Betterment CEO Sarah Levy disclosed the firm’s interest in crypto last summer, she spoke about “crypto with a guided wrapper.” To date, the ETF wrapper that Betterment uses for all its investments is not available for direct investments in cryptocurrencies such as Bitcoin and Ether, although at least a dozen Bitcoin ETFs are awaiting approval from the Securities and Exchange Commission. There are, however, ETFs on the market that invest in companies involved in the crypto market and in blockchain.