Betterment bolsters pitch to RIAs with Rowboat Advisors deal

Betterment, the wealth tech and custodial platform with a focus on independent advisors, has announced it is acquiring Rowboat Advisors, a portfolio management software provider, as it pushes to expand its suite of investment tools for RIAs.

The deal, disclosed Wednesday, is expected to bolster Betterment’s tax-efficient investing and direct indexing capabilities. Rowboat’s software will be integrated into Betterment Advisor Solutions, the firm's custodial platform, beginning in the second half of 2025.

Rowboat Advisors, founded in 2016, has built tools designed to provide greater transparency, control, and tax optimization in portfolio construction.

The acquisition marks Betterment’s second deal this year, following its February agreement to acquire robo-advisory accounts from Ellevest, a move that reflected the latter firm’s pivot toward traditional wealth management.

“This marks a significant step forward in our mission to empower advisors with modern, automated investment tools,” said Sarah Levy, Betterment’s chief executive, in the Wednesday release revealing the Rowboat Advisors acquisition.

In Betterment's inaugural advisor report published last year, 44 percent of the advisors surveyed said portfolio management tasks were holding them back from spending more time with clients. At the same time, 47 percent ranked investment strategy among the top three most important value propositions they believed clients considered most important, putting it in top place ahead of having a trusted investment brands and relationships.

The company said that current and future advisor clients can expect expanded functionality over the coming months, including enhanced portfolio rebalancing, tax-loss harvesting, asset location strategies, and support for more single-stock holdings. Direct indexing will be introduced in 2026.

Rowboat founder and chief executive Iraklis Kourtidis will join Betterment’s engineering leadership as vice president of portfolio management. He will report to chief technology officer John Mileham.

“We saw a unique opportunity to join forces with Betterment's infrastructure, helping more advisors access the powerful tools they need to best serve their clients,” said Kourtidis.

Betterment’s latest acquisition underscores a growing emphasis on building out services tailored to financial advisors. Earlier this year, the firm launched new offerings including solo 401(k) plans and securities-backed lines of credit.

The expansion of Betterment Advisor Solutions comes as competition intensifies among custodians to secure RIAs' business. Among numerous challengers jockeying for position, Goldman Sachs has taken several shots recently through a partnership with Dynasty Financial Partners, followed shortly after by the second annual RIA Professional Investor Forum at its headquarters in New York City.

Betterment currently manages roughly $56 billion in assets and serves nearly 1 million customers across the US. The firm has grown in recent years through acquisitions, including the US accounts of Wealthsimple in 2021 and the Marcus Invest business from Goldman Sachs in 2024.

A Morningstar assessment published this year highlighted Betterment as an investor-friendly option in the robo-advisor space, citing its value-driven pricing and user-friendly technology interface, while also noting its adoption of a glide path strategy to gradually reduce portfolio risk over time.

Though the firm holds a very small share of the RIA custodial market, there's a solid case to count it as the little platform that could. The most recent T3 advisor tech survey published earlier this year features honorable mentions of Betterment across several categories including trading and rebalancing tools, portfolio design solutions, and TAMP service providers.