Is Betterment a Scam

Is Betterment Safe and Legitimate? Is Betterment a Scam? Betterment Review and BBB Complaints for 2023

Is Betterment Safe?

If you’ve listened to the financial news in the past decade, you’ve probably heard of Betterment. If you have any concerns about this company’s safety, read on. We have all the information you need.

Is Betterment Legitimate?

Betterment is registered with FINRA. This is America’s brokerage industry whistleblower and watchdog. FINRA is responsible for overseeing securities firms and making sure they follow all FINRA policies. Brokerage firms can be fined. In severe cases, they can be shut down altogether. So FINRA membership definitely provides a layer of protection for a broker’s customers.

Betterment has two FINRA membership IDs. One is for investment-advisory operations. The number is 149117. The other is for broking services. It is 47788.

is betterment safe?

Betterment has been a member of FINRA since 1999. On Betterment’s broker-dealer profile (available through BrokerCheck), there are two disclosures.

In addition to FINRA oversight, Betterment is also subject to SEC governance. The SEC is the federal government’s investment regulator. Betterment’s SEC numbers are 801-70171 and 8-51906. SEC surveillance is another layer of safety for Betterment customers.


Betterment outsources its clearing functions to Apex. This is a clearing firm that performs a lot of the back office services that are necessary in the brokerage industry. Apex handles a great deal of the necessary paperwork, including statements and trade confirmations.

Like other brokerage firms, Apex is registered with the SEC and FINRA and subject to the same rules and regulations they are subject to. Apex’s FINRA # is 13071, and its SEC # is 8-23522.

Apex has been registered with FINRA since 1979. Some of the other brokerage firms Apex has worked for include Firstrade, M1 Finance, and Webull.

Betterment BBB Review

The Better Business Bureau is a private, non-profit corporation that provides rankings, reviews, and dispute resolutions for customers of America’s businesses. Betterment has a BBB profile with details on its performance. Here are some highlights:

Betterment BBB Review

Grade of B (A+ is the highest possible grade)
1 out of 5 stars for customer reviews (only 15 reviews so far; great number considering 700,000 customers)
BBB has closed 93 customer complaints over the past 3 years (also small number)

Some of the customer complaints we found include:

Money transferred to wrong account
Account closed without customer authorization
Misleading advertising
Account locked

Betterment Top Competitors

Broker Review Promotion
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Betterment Up to a year managed for free with this promotion. na na 0.25% 0.25%

Is Betterment FDIC Insured?

Investment accounts at Betterment are covered by SIPC. This is the brokerage world’s insurance program. Every customer receives up to $500,000 in insurance. Of this amount, $250,000 can be applied to cash balances. SIPC does not protect against market loss, which makes it very different than FDIC insurance.

is betterment fdic insured

Protection with the FDIC is available on Betterment’s checking and cash accounts. Betterment sweeps uninvested cash in these accounts to program banks that are FDIC insured. Once the cash arrives in the participating banks, it automatically becomes covered by the FDIC up to regular limits. Typically, this is $250,000 per customer, per bank.

Is Betterment Safe Judgment

Betterment is an insured and legitimate brokerage firm. It is as safe as any brokerage firm can be. There are always risks in the investing world, and Betterment is no exception. With safeguards in place, a Betterment account is the real deal.

Betterment Review

Knowing that Betterment is legit, now it’s time to take a look at what financial services that company actually delivers to its customers.

Betterment Reviews

Investments Choices

Betterment offers managed accounts only. There is no self-directed option with this investment firm. Every securities account is a robo account, although there are add-on packages that have human financial planners.

Betterment’s automated accounts come with several useful features at no additional cost. These are:

- Tax-loss harvesting
- Portfolio rebalancing and auto-adjust
- Socially-responsible portfolios
- Multiple account types, like joint accounts and trusts

Inside these digitally-managed accounts, only ETFs with low expense ratios are traded. There are no other asset classes, like stocks or options. Betterment has purchased Makara, a crypto broker. This will bring digital currency choices on board at a later date. But for now, only exchange-traded funds are available. Fund families include Vanguard, SPDR, and Schwab.

Betterment Fees Review

And what does all of this cost? Surprisingly little for robo-only accounts. Betterment charges 0.25% annually for its portfolio management. There is no minimum balance. The funds in the program have expense ratios, and these will increase the overall cost of the program.

Adding a Certified Financial Planner to the mix increases the annual fee to 0.40%. The minimum balance requirement also increases from $0 to $100,000. Although this is a pretty massive change, it may be worth it for Betterment customers who feel they need some human advice. Plus, this account option comes with unlimited phone calls and emails with the company’s CFP® professionals. They will even provide advice on investments outside of Betterment.

Clients who stick with the 0.25% program can purchase one-time phone calls with CFP® advisors. These range from $299 to $399 for an hour or less.

Customer Service

Betterment does not have any physical locations, which isn’t all that surprising for a robo-only investment firm. The company’s website has a Contact Us link at the very bottom of the site. On the page it produces, we found a chat bot. During our testing of it, we found it moderately useful. Questions the bot is unable to answer can be sent to the company’s customer service desk.

Other resources on the Contact Us page include addresses for mailing paperwork in, information on transferring accounts, and tax FAQs. A Help Center on the Betterment site has even more FAQs.

Clients who can’t find what they’re looking for can simply email the company at And then there’s old, traditional phone service. Betterment is open during the weekday only. Its phone number is not toll free.

Betterment Website Review

The Betterment site emphasizes minimalism. There are no trading tools (remember, this is a robo-only advisor). During our exploration, we found mostly account management tools. These include things like:

  • Account linking
  • Document download
  • Transaction history
  • Schedule online consultations with an advisor
  • Balance information
  • Profile update
  • Recurring deposits of cash
  • Debit card locking

The main menu is in the left-hand column. This is where most of the tools mentioned above will be found. A Transfers link has several resources on moving funds. There is even a link to donate assets in a Betterment account to charity.

Betterment Complaints

Near the bottom of the site, Betterment presents a goal creation widget. Multiple financial goals can be created, such as planning for retirement or managing cash. These goals are linked to various account types that Betterment offers.

Due to the lack of sophisticated trading tools, Betterment’s website is easy to use, which is about the only really good thing we can say about it.

Mobile App

Moving over to the company’s mobile app, the situation remains much the same. The Betterment app is designed for phones, not tablets. Most of the tools we found on the website appear on the app. Accounts (both Betterment and non-Betterment) can be linked on the app, and this is also possible on the website.

Betterment Review

Under the main menu on the app (represented by three horizontal bars in the upper-left corner), there is a Rewards section. Tapping on this link generates a new page where customers can find ways to earn rewards. One current promotion we found was a cell phone deal: pay your cell phone bill with the Betterment debit card and get reimbursed for phone theft or damage.

Tools we hoped to find on Betterment’s app but didn’t find include mobile check deposit and streaming video news.

Investment Education

But Betterment does offer a few avenues of financial education. First up is a library of articles on a wide variety of topics. These tend to cover general economics and personal finance rather than investing specifically, although we did find some articles on investing. Examples include:

- How To Keep Your Financial Data Safe
- The Betterment Portfolio Strategy
- The Role Of Life Insurance In A Financial Plan
- Welcome to Student Loan Management by Betterment
- What To Do With An Inheritance Or Major Windfall

The educational section on the Betterment site has a drop-down menu with a variety of subject headings that helps to narrow down a search. Although articles aren’t integrated in the mobile app, there is a link to a mobile-enhanced website where the articles can be accessed.

Betterment also has 7 (yes, just 7) videos on its website. These are just a few minutes long and cover topics like adding beneficiaries to an account and setting up an emergency fund.

Security Research

Betterment has almost no tools to look for investments on its platform. This shouldn’t be all that surprising from a robo firm, although we did find one page with brief information on the funds that are available through its automated investing service. This page has just a short paragraph on each ETF the software program trades. Here are some of the funds:

- VTIP: Vanguard Short-Term Inflation-Protected Securities ETF
- GBIL: Goldman Sachs Access Treasury 0-1 Year Fund
- IWS: iShares Russell Mid-Cap Value Fund

Miscellaneous Services

Extended Hours Trading: Betterment sends orders in batches to the exchanges during the regular market day. It does not use pre-market or after-hours trading.

DRIP Availability: Cash received from dividends inside a Betterment account is reinvested into additional shares of the funds that paid them.

Cash Management Features: Betterment has two deposit accounts (cash reserve and checking), and both are FDIC-insured. The cash account is basically a savings account that pays interest. At the time of publication, it’s 0.75%. The checking account pays no interest but comes with a Visa debit card and no ATM fees—ever.

Individual Retirement Accounts: Roth, Traditional, and SEP accounts are available on the Betterment platform. There are no IRA fees.

Initial Public Offerings: Something Betterment doesn’t offer is access to IPOs.

Fractional Shares: Betterment’s computer program trades ETFs using fractions of a share.

Recurring Mutual Fund Purchases: Mutual funds are not available at Betterment.


Small Accounts: Betterment has a $0 deposit requirement for its regular automated program, which is fantastic for investors who are starting without much money.

Retirement Savers and Long-Term Investors: A Betterment IRA combined with financial planning would be a good solution.

Beginning Investors: New traders just starting out will be well served with a robo account at Betterment.

ETF and Stock Trading: Betterment offers no stocks and only a handful of ETFs. A better idea would be a self-directed account at TD Ameritrade.

Mutual Funds: Although Betterment doesn’t offer any mutual funds, we can recommend Firstrade, who has over 16,000 funds open to new investors. There is no transaction fee on any fund, and over 10,000 funds have no load, too.

Betterment Review Take Away

Betterment was the company that launched robo advising. It is still the most popular choice for robo investing.

Updated on 5/24/2022.

About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for, Chad can usually be found managing his portfolio or building a new home computer.