Betterment for Advisors debuts paperless ACATS system

Betterment for Advisors debuts paperless ACATS system
Getting rid of the paper involved in using the Automated Customer Account Transfer Service will also speed the process, robo says.
JUN 17, 2019

Betterment wants to remove more paperwork from the day-to-day lives of financial advisers. The digital advice company is making the Automated Customer Account Transfer Service, or ACATS, completely paperless for financial advisers using Betterment for Advisors, the white-label version of the Betterment robo-adviser. ACATS is a system for electronically transferring the securities held in a client's account at one brokerage or bank to another firm. Assets are moved in-kind to avoid taxable gains. (More: Betterment offering automated investing and advice for Optum Bank HSA) Yet the process still requires a lot of work on the adviser's part, said Alex Choi, head of distribution at Betterment for Advisors. Advisers have to do a lot of printing, scanning and uploading of documents, and the process involves several emails between the client, the old custodian and the new one. Even at a digital advice platform like Betterment for Advisors, which added support for ACATS in November, advisers have to print out PDF client agreements and confirm that all of an account's assets are transferrable. If some assets aren't, the adviser would have to call into Betterment's support team to coordinate which assets could be brought over. Betterment for Advisors is removing all that, letting advisers select securities from a dropdown menu and digitally submit the request to transfer. The workflow is completed with just a few clicks, and clients can approve the transfer via an automated email. (More: Can financial advisers really achieve a paperless back office?) Going paperless means an ACATS transfer will typically arrive in five or six days, Mr. Choi said. The existing system can take two weeks. "That's just kind of the way it is in the industry," Mr. Choi said. "That's essentially why we are doing this, because [ACATS] is so manual and so clunky" Betterment is making a number of moves to broaden the appeal of its product for advisers. It started offering mutual funds from Dimensional Fund Advisors to Betterment for Advisors in April, after adding commodities in December. With paperless ACATS, the robo is making it easier for advisers to move assets from traditional custodians over to Betterment for Advisors. While the company hopes this results in more assets moving to its platform, Mr. Choi said Betterment for Advisors' primary goal is just making the platform more useful to advisers. "We see things out there that are done in a completely old-school way," Mr. Choi said, adding that the the current ACATS process is "totally insane." "The real benefit for us here is that it benefits the adviser: less work on their end, less paper on their end and less hassle on their end," he added. Nina O'Neal, a partner and investment adviser with Archer Investment Management, does not use a digital advice platform at her firm, but said she would appreciate anything that helps get client money to the firm faster. "You had me at paperless," Ms. O'Neal said. "Anything paperless is welcome [given] the stacks of forms that we have to give to clients. I'm interested to see how that works for the delivering custodian to verify assets and registration." Betterment spokeswoman Arielle Sobel said that "nothing changes on the delivering custodian's end" with the paperless ACATS process. While Betterment claims it is the first custodian to offer completely paperless ACATS to advisers, TD Ameritrade Institutional spokesman Joseph Giannone said advisers can use TD's platform to enter pertinent data and submit an automated request to transfer. "Instead of printing a PDF form, end-clients can 'sign' to approve the transfer electronically via DocuSign," Mr. Giannone wrote in an email. "TD Ameritrade Institutional can complete the process without having to re-key data and with just a few clicks." Fidelity Institutional also claims that it already offers paperless ACATS transfers. Advisers can enter data and initiate a full or partial transfer online, with no printing required, a Fidelity spokesperson said. No paper is required, and clients can sign and approve the transfer with an electronic form and esignature. BNY Mellon Pershing chief information officer Ram Nagappan said in an emailed statement that the firm is developing a fully digital and paperless ACATS process as part of an "ongoing effort to streamline the service experience for advisers and their clients." Mr. Nagappan expects it to be available on the NetX360 platform in early 2020. Schwab Advisor Services doesn't currently have a fully paperless process, a spokeswoman said.

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