Betterment offers custom model portfolios for advisers

Advisers who are part of Betterment’s network are no longer limited to using the platform’s premade model portfolios. 

Advisers can now bring their own custom model portfolios to the platform in a move meant to amplify Betterment’s commitment to investing on its adviser-facing platform, said Jon Mauney, Betterment for Advisors’ general manager.

Betterment for Advisors currently works with approximately 2,000 advisers. Overall, Betterment manages $27 billion in assets. 

Advisers now have the ability to build their own custom model portfolios of exchange-traded funds, at no additional cost, while leveraging Betterment’s portfolio management tools, including automated rebalancing, tax-loss harvesting, asset location and tax-optimized sales for withdrawals. 

Participating advisers do, however, need to commit assets within a specified time frame to justify the cost to Betterment of constructing and maintaining these portfolios, Mauney said. Advisers will have to agree to move a minimum of $2.5 million in assets into Betterment for each portfolio that is constructed within 90 days or portfolio delivery. 

Firms on the Betterment for Advisors platform will be able to provide parameters to Betterment’s trading teams and investing analysis teams to construct portfolios, Mauney said.

“We saw enough demand from advisers, so we put the investment in our back-end technology to be able to accommodate these new models,” Mauney said. “We want to enter into that new market and engage with a new type of adviser.” 

As competition continues to heat up in the robo-advice space, Betterment’s new CEO, Sarah Kirshbaum Levy, is pushing for Betterment to continuously diversify its lines of business, Mauney said.

“It makes us a competitive differentiator in the robo space,” he said. “We’re definitely increasing investment in the Betterment for Advisor space in 2021.” 

Under its founder and former CEO Jon Stein, who stepped down as CEO in December, Betterment entered the business-to-business space with the launch of both its 401(k) arm, Betterment for Business, and adviser services platform, Betterment for Advisors, in addition to the company’s retail offering.