One of the country’s largest robo-advisors is adding a human touch to its service offerings.
New York-based Betterment announced on Tuesday a reorganization of its retail digital advice offerings into three tiers of service, two of which will involve advice provided by a team of CFP certification holders.
In addition to the three new levels of robo-advisor service, Betterment is linking its digital advice business to its institutional services, Betterment for Advisors, to allow clients to move seamlessly from the robo-advisor to a firm on the institutional platform's "Advisor Network" when they need more sophisticated financial advice.
“This is the first time we’re referring into the Betterment for Advisors platform for customers who want that relationship,” says Alex Benke, Betterment vice president of financial advice and investing. “We can help match a person with the advisor based on the firm’s capability and what the person needs.”
Betterment’s most simple advice offering, the Betterment Digital plan, will resume offering the company’s current digital service with a retirement-focused robo-advisor that recommends and implements a portfolio of low-cost ETFs based on a user’s risk tolerance and investment horizon.
Like most robo-advisors, Betterment uses a questionnaire to determine the best allocation for a client. Betterment Digital will charge a flat 0.25 percent.
The Betterment Plus plan offers the digital advice service of Betterment Digital, plus an annual financial planning call from Betterment’s New York-based team of CFP professionals and other licensed financial experts, who will also monitor client accounts throughout the year. Betterment Plus will costl 0.40 percent of a client’s AUM and will be available to accounts with a minimum $100,000.
The Betterment Premium plan adds unlimited access to Betterment’s team of CFP professionals, who will offer clients advice throughout the year. The service is only available to accounts with a minimum of $250,000 and costs 0.50 percent of AUM.
“If a customer wants some professional advice, or if they need someone to hold their hand, but they don’t want to pay one percent of AUM annually for that service, the new Plus and Premium services are designed for their needs,” Benke says. “We’re not going to do the more sophisticated things an advisor might do, but we can definitely handle the basics. Things like how to save for college and other goals, or making sure a client has designated beneficiaries on all their accounts.”
Betterment only assesses its fees on the first $2 million of client assets.