Introduction
Though perhaps still best known as a robo-advisor, Betterment is making strides in competing against industry giants like Charles Schwab and Fidelity Investments in supporting RIAs. The firm recently announced plans to test a new advisor referral program, showcasing its commitment to the RIA market.
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On Feb. 10, Betterment filed with the Securities and Exchange Commission to launch an advisor referral program. This program mirrors offerings from Schwab and Fidelity, where RIAs can pay a fee for client referrals. Betterment’s fee is set at 0.25% of assets acquired through these referrals.
Like Pershing and Goldman Sachs’ Ayco unit, Betterment is expanding its services to support registered investment advisors, a rapidly growing segment in wealth management.
Alison Considine’s Role
Heading Betterment’s efforts is Alison Considine, the head of strategy and business development at Betterment Advisor Solutions. In addition to the referral program, Betterment assists advisors in building specialized portfolios for their clients.
Advisor Solutions Business
Betterment Advisor Solutions, established in 2014, provides custodial services, billing systems, and portfolio management tools for RIAs. The firm collaborates with big asset managers like Goldman Sachs and Vanguard to offer a “model marketplace” for partner advisors.
Current Business Landscape
Betterment works with around 600 firms, primarily independent RIAs, offering a flexible platform with no asset minimums. The firm caters to both small RIA startups and large established firms seeking client segmentation solutions.
Competitive Edge
Betterment’s lack of asset minimums sets it apart from competitors who may restrict access based on assets under management. The firm aims to be a modern, user-friendly alternative to traditional custodians like Schwab and Fidelity.
Future Prospects
Betterment sees its advisor solutions and 401(k) businesses as key growth pillars. With a focus on innovation and technology, the firm aims to provide a diverse product offering in a user-friendly manner, catering to the evolving needs of advisors and clients.
Conclusion
Betterment’s evolution from a robo-advisor to a comprehensive custodial and portfolio management platform demonstrates its commitment to supporting RIAs. With a focus on innovation, technology, and client-centric solutions, Betterment is poised to challenge established players in the RIA market.
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