Betterment now offering human advice with its robo

Betterment is the latest digital financial advice firm to incorporate live planners into their business model, as the line between traditional and robo-advisers continues to blur.
The New York-based firm has hired about a dozen financial advisers, half of them certified financial planners, whom Betterment’s retail clients can now reach out to for help via phone or email for an additional cost, the firm said Tuesday. It’s offering two tiers of service, with the initial digital-plus-adviser service requiring clients have a $100,000 minimum.
Additionally, Betterment will connect clients who want a full-time dedicated financial adviser with registered investment advisers who use the Betterment for Advisors platform, essentially providing a referral network to these advice professionals.
“We’re expanding our offering so Betterment can handle any kind of client that might want to come to us,” said Alex Benke, the firm’s vice president of financial advice and investing.
The Betterment Plus service will give clients with at least $100,000 in assets an annual planning call with an adviser and unlimited advice via email for 40 basis points, while Betterment Premium will provide unlimited calls and emails for clients with $250,000 in assets for 50 basis points.
“We have been testing offering live advice to clients for about a year and there’s been a lot of demand,” Mr. Benke said.
For its core digital-only clients, Betterment recently changed its pricing from a tiered system based on assets to a 25 basis point annual fee no matter the account size. As a result, clients who have less than $10,000 in their accounts will see their fee decline from 35 basis points, and clients with $100,000 or more will see it increase from 15 basis points.
The firm, which has about $7 billion in client assets in its retail, retirement-plan and adviser-focused divisions, said it’s prepared to ramp up adviser hiring if demand for live advice skyrockets.
COMPETITOR TO PARTNER
Robo-advisers like Betterment and Wealthfront provide financial advice to clients online with minimal human interaction. When the first automated platforms landed in the marketplace about six years ago, some financial advisers worried those offerings would hurt their own businesses. But many now have integrated digital-advice platforms into their business models. And more recently, robo-advisers like Betterment are adding human advice to the services they offer clients.
Charles Schwab & Co. said last month it will offer a hybrid robo-model that combines advice from financial advisers with online advice during the first half of this year. Its clients will need to have at least $25,000 in assets.
Investors have said they like getting help from both traditional and online advisers. About 40% prefer this hybrid approach, according to a survey released last month by the Financial Planning Association and Investopedia.
David Siegel, chief executive of Investopedia, said its becoming meaningless to distinguish between the two modes of advice delivery.
(More: Financial advisers must adapt quickly to competition from robos to stay in business: CFP Board)