Betterment Review: Is It Safe? (2025)

Item: Betterment Safety
Rating: 4
Author: Chad Morris

Is Betterment a Legitimate Brokerage Firm?

Betterment.com is an online robo-advisor. Founded in 2010, the company offers investment management and advice. Betterment uses technology and automation to keep investment costs low and make things efficient.

It is the biggest independent “robo-advisor” in the country. This means the company works like a financial advisor but doesn’t offer the personal meetings you’d get from a human advisor. By using online forms, algorithms, and special software, Betterment handles most of the investing, paperwork, and monitoring automatically. This lets them offer professional portfolio management at a low price for everyone.

Betterment’s main idea is to build custom portfolios for each customer based on their goals, risk tolerance, and time frame. They use ten index Exchange Traded Funds (ETFs) and rebalance portfolios from time to time to keep the right mix. They also offer automatic monthly investing, automatic reinvesting of leftover cash, and fast rebalancing whenever new money or dividends are added to the account.

Another feature is their Tax Loss Harvesting+ (TLH+) program. It helps boost overall returns by selling certain ETFs at a loss to lower taxes on capital gains and income from other ETFs.

Betterment says that all this automation helps improve returns, even for people with small accounts. Their website claims, “Betterment customers can expect 4.30% higher returns than a typical DIY (do-it-yourself) investor.” Betterment says these gains come from smart rebalancing, global diversification, avoiding timing mistakes, and avoiding expensive investments.

is betterment safe?

Is Betterment Scam?

Betterment is not a scam. The company makes money by charging clients an annual management fee, which is a percentage of the total portfolio value. This fee is 0.25% of the account balance ( charges nothing for the same service).

The robo-advisor management fee is lower than what most human financial advisors charge. Those usually cost about 1% per year, and sometimes go up to 2% or more.

Is Betterment Insured and Regulated?

Betterment.com does not offer accounts that are insured by the FDIC. As a broker, there is a chance of losing money, just like with any other brokerage. Betterment Securities is a registered broker-dealer with the SEC (Securities Exchange Commission). The firm is also a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation ().

Being a member of these three groups means they follow all the rules and regulations of the investing industry. The main risk for investors is if Betterment shuts down and has to close its business. In that case, SIPC insurance protects accounts up to $500,000 (including $250,000 in cash).

Betterment is part of a new kind of investing that uses technology to make investing easier, especially for people who are not experts. It aims to give better returns than if people tried to build their own portfolios. Limiting investments to just 13 index ETFs may seem restrictive, but since there are thousands of investment options out there, simplifying things the way Betterment does can be a safe and appealing choice for many.

Betterment BBB Rating and Complaints

A check on the Better Business Bureau website shows Betterment’s BBB rating is F. There are 97 closed Betterment complaints on the site - .

Betterment BBB Review

Betterment Complaints: Business Model Problem

When you look closer at Betterment’s investment model, some issues stand out. Ten of the 13 ETFs they use are Vanguard ETFs. Anyone with a Charles Schwab account can buy these Vanguard ETFs for no commission. The other three ETFs are iShares funds managed by BlackRock. All of these can be bought commission-free at Charles Schwab. Also, you could swap the iShares ETFs for similar Vanguard ETFs. So, Betterment’s portfolio options are already low-cost or no-cost. Any investor could build a similar ETF portfolio themselves and skip the yearly management fee. This is a major complaint people have about Betterment!

So, Betterment’s main advantages are convenience, one-stop service, and automatic rebalancing and investing, which help keep emotions out of investing. Emotions often cause investors to make bad decisions—something Betterment tries to help avoid. Still, many online brokers and financial software let investors set up their own portfolios and rebalance them from time to time. But if someone prefers the discipline and automation that Betterment offers, then the small annual fee might be worth it.

Betterment Pricing

One of Betterment’s biggest selling points is its clear fee structure. Many beginner and hands-off investors don’t pay attention to fees. What often surprises them is how much a small fee, like 0.25%, can cost or save over time.

According to Betterment, many regular mutual fund fees can be close to 1% of the portfolio. Betterment says the total cost for a typical 70/30 stock portfolio of low-cost ETFs is about 0.31%. For new investors, fees of 0.3%, 0.4%, or 0.5% may not seem like a lot, but over time they make a big difference. In the next example, Betterment’s website shows how this works.

Betterment Scam

In this example, if you invest about $10,000, the difference between a 1% account fee and a 0.25% fee could save you up to $5,000 over 20 years. For $100,000, you could save up to $55,000, and for $500,000, the savings could be close to $280,000.

Betterment’s fees include management fees and fund fees.

Is Betterment safe?

Fund Fees

Each ETF in Betterment’s index portfolio has an expense ratio, usually between 0.09% - 0.17%. This is a cost you pay no matter which broker you use.

Betterment Hidden Fees

Betterment does not have any hidden fees.

Find a Financial Advisor

If you are looking for a professional money management service in your area, you can (or read

Visit Wiser Advisor

Is Betterment Safe: Take Away

Don’t worry – Betterment is not a scam. The company offers smart, low-cost, and well-diversified investing strategies for regular people. The service is online 24/7 and works on both desktop and mobile. The interface is simple and easy to use. Important questions about investing can be answered in minutes. Fees are clear and very competitive.

The portfolios are based on objective methods and strong algorithms that have been used for years, making it one of the top robo-advisors. Of course, there are some Betterment complaints to think about, and a .

Betterment Review: Investing Service

Betterment was one of the first to offer robo accounts, which use automation for investing in stocks and other securities. With this setup, a computer program picks investments and makes trades for customers. Nearly twenty years after starting this type of service, Betterment still runs these automated accounts. It does not provide traditional brokerage accounts.

In its advisory accounts, Betterment lets you invest in exchange-traded funds (ETFs) with low costs. Some examples are:

VWO (Vanguard Emerging Markets Stock Index Fund)
SPSM (SPDR Portfolio S&P 600 Small Cap ETF)
AGG (iShares Core US Aggregate Bond ETF)

Betterment’s system does tax-loss harvesting in taxable accounts. Customers can also use other features. Here are a few:

Broad Impact (ESG portfolio)
Goldman Sachs Tax-Smart Bonds
BlackRock Target Income
Climate Impact (focuses on low carbon companies)
Innovative Technology
Social Impact
Crypto
Value Tilt (portfolio with value stocks)

There is also a Premium service (for an extra fee) for more help. This includes faster customer support, 20% off for trust and will planning, and access to Certified Financial Planners (CFPs).

Margin

Since there are no brokerage accounts, Betterment does not offer margin trading. There is no lending program using your investments either.

Cost

Betterment’s service is not very cheap. A robo account costs $4 per month. You can get this fee changed to 0.25% of your assets if you meet one of these conditions:

Have at least $20,000 in household assets
Set up recurring deposits of $250 or more

You can combine several accounts to meet the $20,000 minimum.

Premium clients have higher requirements. They must have $100,000 in total assets, and their fee is 0.65% per year.

Website

Betterment’s website is made for easy account management. There’s a vertical menu on the left. We found these tabs:

Home
Open new account
Performance
Activity
Transfers
Documents
Talk to an advisor
Earn rewards
Settings

The Performance hub shows your account’s results over time and gives balance details.

The Transfers hub is where you go to move cash or securities. There’s also a tool to donate shares to charity.

On the Home page, there’s a Learn section near the bottom. Scroll down to find a set of articles on different topics for both beginners and experienced investors (more can be found at Education). Examples include:

When’s the best time to invest for retirement? Now.
U.S. stocks have been hot, so why bother going global?
The benefits of estimating your tax bracket when investing

Because Betterment does not have self-directed trading, there are no trading tools on the website.

If you get lost or need help, there’s a chat widget in the bottom-right corner. It starts with a bot, but you can switch to a human.

Betterment site

Mobile App

Betterment also has a mobile app for both Android and Apple devices. You can open the main menu by tapping the hamburger icon (☰) in the upper-left corner. The app menu has the same options as the website, plus a Help section with the chat feature.

Betterment mobile

Bonus Services

DRIP Service: Dividends from ETFs in Betterment accounts are automatically reinvested.

Extended-Hours Trading: Not available. Betterment customers cannot trade even during the regular market session.

Initial Public Offerings: Not available.

Fully-Paid Securities Lending Program: Not available.

Individual Retirement Accounts: Roth, Traditional, SEP, and Inherited IRAs can be opened.

Fractional-share Trading: Betterment’s system will trade in fractional shares if needed.

Betterment Review Conclusion

Betterment is decent for planning and advisory services. People with small accounts or who want to trade by themselves should look somewhere else.

Updated on 6/20/2025.

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 Brokerage-Review.com, Chad can usually be found managing his portfolio or building a new home computer.