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.
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.
Apex
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 non-profit. private company that provides reviews, rankings,
and dispute resolutions for clients of America’s businesses.
Betterment has a BBB profile with
information on its performance. Here are some highlights:
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
Find a Financial Advisor
If you are looking for a professional money management service in your area, you can
find a Financial Advisor on the Wiser Advisor
(or read
Wiser Advisor review).
Visit Wiser Advisor
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.
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
Now that we know Betterment is a legitimate company, let's explore the financial services it offers to its customers.
Investment Choices
Betterment only provides managed accounts, which means you can't choose investments by yourself here. Each account is managed by a robot, but you can pay extra to get advice from human financial planners.
The automated accounts at Betterment offer several features for free, such as:
- Automatic loss adjustments to save on taxes
- Rebalancing your portfolio to keep it in line with your goals
- Investing options that consider social responsibility
- Various account types like joint accounts and trusts
These accounts typically invest in ETFs (exchange-traded funds) that have low costs. Right now, you can't invest in individual stocks or options. However, Betterment has acquired Makara, a crypto broker, and plans to offer cryptocurrency investments in the future. Current ETF options include those from Vanguard, SPDR, and Schwab.
Betterment Fees Review
What are the costs? The fees are quite low for automated accounts. Betterment charges 0.25% of your investment amount each year for managing your portfolio. There are no minimum balance requirements. The ETFs used have their own small fees, which could add to your overall cost.
If you choose to add a Certified Financial Planner, the annual fee increases to 0.40%, and you need to maintain a balance of at least $100,000. This option might be suitable if you need personalized financial advice, and it includes unlimited calls and emails with a financial planner who can also advise on investments outside of Betterment.
If you're using the basic service, you can still talk to a financial planner for a one-time fee ranging from $299 to $399 for a session under an hour.
Customer Service
Betterment operates online without physical branches. At the bottom of their website, there's a 'Contact Us' link. The page has a chatbot, which we found somewhat helpful. If the bot can't answer your question, it directs you to Betterment’s customer service.
The contact page also includes addresses for mailing documents, information on transferring accounts, and tax FAQs. The website’s Help Center has more FAQs.
If you can't find what you need, you can email Betterment at support@betterment.com or call them. They're available on weekdays, and their phone number isn't toll-free.
Betterment Website Review
Betterment’s website is minimalist, with no trading tools since it's a robo-advisor. We mostly found account management tools such as:
- Linking accounts
- Downloading documents
- Checking transaction history
- Scheduling online consultations with an advisor
- Updating personal profiles
- Setting up regular cash deposits
- Locking your debit card
Most of these tools are located in the main menu on the left side of the site. A 'Transfers' link provides resources for moving funds, including a feature to donate assets to charity from your Betterment account.
At the bottom of the site, there's a tool for creating financial goals like planning for retirement or managing cash flow, linked to different account types offered by Betterment.
Due to the absence of complex trading tools, the site is user-friendly, which is a significant advantage.
Mobile App
The Betterment mobile app follows a similar setup to the website and is meant for phone use, not tablets. It includes most of the features found on the website.
In the app’s main menu, there's a 'Rewards' section where customers can discover ways to earn rewards. One promotion lets you get reimbursed for phone theft or damage if you pay your cell phone bill with the Betterment debit card.
Unfortunately, the app lacks features like mobile check deposit and streaming video news.
Investment Education
Betterment provides a selection of financial education resources. These include articles on general economics and personal finance, with some on investment topics, such as:
- 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 website’s educational section is well-organized with categories to help narrow down topics. While articles aren’t directly accessible in the app, a mobile-friendly site link is provided for reading.
There are also 7 short videos on the Betterment website that cover practical topics like setting up an emergency fund and adding beneficiaries to an account.
Security Research
Betterment offers limited tools for investment research. This aligns with its focus as a robo-advisor, but there is a page that briefly describes the ETFs used by the service. 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 doesn’t participate in pre-market or after-hours trading. Orders are sent during the regular market hours.
DRIP Availability: Dividends earned in a Betterment account are automatically reinvested into more shares of the same funds.
Cash Management Features: Betterment offers two types of accounts: a cash reserve account that earns interest and a checking account with a debit card and no ATM fees.
Individual Retirement Accounts: Betterment supports various types of IRAs, including Roth, Traditional, and SEP, without any fees.
Initial Public Offerings: Betterment doesn’t provide access to IPOs.
Fractional Shares: Betterment’s service includes trading in fractions of a share for ETFs.
Recurring Mutual Fund Purchases: Mutual funds aren’t offered at Betterment.
Recommendations
Small Accounts: Betterment is great for investors starting with little money, thanks to its $0 deposit requirement for automated investing.
Retirement Savers and Long-Term Investors: Combining a Betterment IRA with their financial planning services could be beneficial.
Beginning Investors: New investors will find Betterment’s automated accounts easy to use and helpful.
ETF and Stock Trading: While Betterment doesn’t offer stock trading and has limited ETF options, consider using
Charles Schwab for a more comprehensive trading platform.
Mutual Funds: For access to a wide range of mutual funds without transaction fees, look to
Firstrade.
Betterment Review Take Away
Betterment pioneered robo-advising and remains a popular choice for automated investing.
Updated on 1/16/2025.
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.
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