Betterment Editors

How to Start an RIA (A Guide to Going Independent) Feb 15, 2024 5:52:26 PM The process of becoming a registered independent advisor can be daunting. Here’s what you should know as you start your own advisory practice. Congrats, you’ve decided to start your own RIA! This exciting step can grant you the freedom to create a practice that better aligns with your vision, for both your business and your clients. Whether your goal is to provide personalized investment management or to expand your client base and increase profitability, we’ve got the details to help you get started. In this guide, we’ll cover how long it can take to get set up, key questions to determine if you’re truly ready, and the three phases of launching your firm. How long does it take to start an RIA? While it can take a few months to register as an RIA, the bulk of the transition work will take longer. We recommend allowing four to six months for implementing your plan to transition to an independent RIA. This process, however, could take more or less time depending on the complexity of your firm. Are you ready to go independent? At the outset, we recommend taking a thoughtful approach to answering the following questions: 1. How will your current job influence your transition to independence? 2. Are you prepared to cover the costs of launching and running your new firm? 3. Are you committed to the time requirements for starting a new firm? The next three sections in this article provide a more detailed roadmap, broken down into three phases, to fully assess your readiness to make the transition to being an independent RIA. We’ll review how to leave your current job, along with the steps involved in starting a successful firm. Please note that this content is meant to serve as general guidance, and is not legal advice. Phase 1: Leaving your job and laying the groundwork This first phase is all about building the foundation for your success. As a new business owner, you have a critical advantage: your desire to leave your current role and venture into your own firm. This motivation will give you a head start and can lead to a shorter gap between your last paycheck and your new firm’s first client invoice. Obtain legal counsel and tax guidance Throughout the entire transition process, your legal counsel can help provide guidance on specific subject matter. From reviewing your non-compete agreements with your current employer to helping you set up your business entity, your attorney will help protect your interests. If hiring an attorney for certain steps, such as establishing a legal entity, is too expensive, you may want to consider leveraging affordable services such as LegalZoom. Additionally, having access to a tax advisor early on will be convenient for addressing your tax-related questions. Consult with other RIAs who have taken this path Gaining insight from peers who have started their own RIA can help boost your confidence and better plan ahead for unexpected issues. If possible, speaking to RIAs who transitioned from your current firm can provide even greater insight. (Read how Jason Hamilton, founder of Keep It Simple Financial Planning, launched and built his $40 million firm.) Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Obtain necessary certifications You’ll most likely need a Series 65, or similar license from FINRA, to work as an Investment Advisor Representative. However, some states may waive the Series 65 if you hold another designation such as a CFP® or CFA. Find your office space It’s best to think about your office space early on to avoid potential delays later in the process. Before selecting your office space, whether it be a home office, coworking space, or a standalone physical office, remember to examine your firm’s needs. To help determine what is best for your firm, consider your own work preferences, potential growth for your team, and your clients’ desired working style. Budget for personal income and spending As you transition from your current employer to building your own firm, you’ll most likely experience a decrease in income until you rebuild your book of business. Make sure to plan ahead for personal and business expenses. Identify prospective clients While you likely can’t tell your clients that you’re leaving your existing job or starting your own firm, you can start planning. Think carefully about the types of clients you’d like to work with at your new firm. It may be helpful to select a niche you would like to serve. One way to identify a niche is by segmenting prospective clients based on factors such as their profession, age, and interests. By targeting clients who align with your existing book of business or your new firm’s vision, you can more effectively reach your ideal customers. Create a business plan A business plan will serve as a guide for your firm and should, at the very least, explain your target market, outline the unique services you will offer, define your strategies for reaching your key audience, and establish metrics to evaluate the success of your plan. Additional areas to consider including in your business plan are financial projections, competitive analysis, risk management, and a tech stack strategy. Plan your business branding It’s important to choose your firm’s name early on, as you will need it for obtaining a website, registering your business, and developing a marketing plan. Consider whether you want to use your personal name in the firm’s name or choose a new, branded name. Be sure to conduct thorough research on your preferred name to avoid any potential trademark conflicts. If you are a small firm and you are the face of the brand, your personal name can work well. However, opting for a branded name may be a strategic choice if you have a smaller niche in mind, plan to grow into a larger firm, or desire to differentiate yourself from competitors. Use your current job’s benefits While you are still employed, plan to take advantage of all the employee benefits you will miss when you are self-employed. You will have to replace some benefits, like health insurance, but some you may outright lose unless you can afford to pay for them. Maximize your current benefits by fully utilizing your healthcare plan, participating in employee-sponsored training, and acquiring certifications covered by your employer. Phase 2: Starting your business and getting your first client This phase is when the heavy lifting to get your firm up and running kicks in. From legally registering your firm to launching your first marketing campaign, you’ll end this phase with your first few clients, ready to grow. Register your business entity You’ll need to formally create a company by registering in the state where you are located or in a favorable state such as Delaware. RIAs commonly choose to establish their business as either a corporation or a limited liability company (LLC). However, your attorney and tax advisor can help determine the best option for your firm. Set up a business bank account and credit card To set up your bank account, you’ll need to get your EIN from the IRS website. With your EIN, you can go to the bank of your choice and open a business bank account and credit card. While we can’t recommend a bank, a good starting point would be your own personal bank or seeking a referral from a trusted small business. One tip: Avoid fees whenever you can. It’s worth shopping around for a bank account if your current options impose high fees. Select an RIA compliance consultant You’ll need a Chief Compliance Officer for your firm. You can serve in the role yourself, hire internally, or outsource the function to a consultant. Outsourcing can help manage risk and save time upfront during your firm’s registration. A compliance consultant can streamline the registration process with the SEC or state authorities. We recommend working with RIA in a Box, a preferred partner in the Betterment for Advisors’ RIA Tech Suite for new firms. Register your firm with the SEC or state regulators Depending on which state your firm is in and your starting AUM, you may have to register with the SEC or your state regulatory authority. Typically, if your RIA manages more than $110 million in AUM, it is required to register with the SEC. If your AUM is between $100 million and $110 million you may still be eligible to register with the SEC, depending on your state's rules. And if your RIA manages up to $100 million in AUM (or up to $110 million in some cases), it generally needs to be registered with the state securities regulators where you operate or have clients. It's important to note that states have their own specific regulations, so consult with your attorney or compliance consultant to make sure you register correctly and file all necessary forms and documents. Obtain relevant insurance You’ll want to obtain insurance to protect your firm against common risks. Common types of insurance include directors and officers liability, professional indemnity, errors & omissions (E&O), fiduciary liability, cyber liability, employment practices liability, and health/dental/vision insurance. The larger and more complex your firm becomes, the more insurance you may need. Choose an RIA custodian There are many custodian options available for your firm to choose from. If you select Betterment for Advisors, you’ll have access to a vertically integrated solution that allows you to Custody assets Build and manage custom model portfolios Open new client accounts in minutes Control billing Streamline your practice’s back-office operations with cutting-edge features Within portfolio management at Betterment for Advisors, utilize automated trading, rebalancing, tax-loss harvesting, asset location, and more. Set up your tech stack Your tech stack will include many different and often integrated softwares. The four essential pieces of software for RIAs are wealth management, financial planning, CRM, and compliance. In addition, you may also require other tools for tasks such as accounting and invoicing, file management, email marketing, and video conferencing. Create a website and email address While you can use online tools to create your own website, it may be more efficient and produce better results to hire a small, affordable web design agency. In addition to logo and website design, agencies can also provide help with setting up email accounts using Google or Microsoft, if needed. Create a marketing plan and launch your firm Launching your firm is a one-time opportunity, making it crucial to thoroughly plan your marketing strategy for both your current network and your desired target audience. You can leverage a marketing agency, hire freelancers, or choose to market yourself if you have the necessary skills and resources. As part of this initial go-to-market campaign, you’ll also want to incorporate a plan to message your current clients and introduce them to your new firm. Consult with your attorney on all marketing communications to ensure you are compliant. Phase 3: Establishing yourself in your first year Now that you’ve launched your new RIA, your first year is about establishing your firm as a leader within your financial planning niche. Establish your client pipeline Now is the time to implement your marketing strategy to grow your pipeline. Common marketing activities include networking, sharing thought leadership content on a blog or social media, attending events, and utilizing email marketing. Additionally, implementing a robust sales process, can help you move prospects from cold leads to warm opportunities and eventually, active clients. Establish your client experience The initial experience your clients have with your firm is critical. First impressions help drive future client retention and referrals. Ensure that your onboarding processes for new clients are clear and enjoyable, while also building trust both as an advisor and (more importantly) as a person. As a client’s tenure with your firm increases, it’s important to strategize tactics such as video calls, in-person meetings, newsletters, performance reports, and webinars to continue to build a strong client relationship. Establish your operations As a business owner, your operations will need to be evaluated on an ongoing basis. After implementing your tech stack, the next step is to establish processes to efficiently run your business. During your first year, it is beneficial to have monthly or quarterly process reviews to ensure that you are maximizing the potential of your tech stack. Besides managing daily business operations, it is important to plan for accounting tasks, tax filing, and other reporting requirements. Your firm’s long-term success It takes confidence and leadership to start an independent RIA. It’s very hard work. But it can be truly rewarding, and we’re here to support you. Betterment for Advisors is ready to be your end-to-end custodian, supporting your firm with our cutting-edge technology. We’re here to help you grow—you have a dedicated relationship manager who pairs with our operations and customer service teams to help scale your practice. Our platform streamlines onboarding, billing, portfolio management, and reporting to help you deliver a high-quality, personalized client experience. Ready to learn more? Get a demo today.

Marketing for Financial Advisors: Help Grow Your Practice by Growing Your Audience Feb 15, 2024 5:51:44 PM A no-nonsense, practical guide to navigating the world of marketing as a financial advisor. The RIA industry is competitive. There are thousands of firms competing for the same pool of clients. An effective marketing plan can be the difference between a growing and a dwindling firm. But as a leader of an independent RIA, the role of marketing falls on you. We’re here to help. This is your no-nonsense guide to building a marketing plan that can evolve with your firm. We’ll cover basics to consider from social media marketing to pricing strategies. Plus, you’ll learn what might be the most important part of any RIA’s marketing plan. Let's dive in. First, let’s cover marketing 101 What is marketing? It’s more than simply advertising. A framework traditionally taught in business schools called the “4 Ps” can give us a starting point for building a marketing plan. The 4 Ps consist of: Product: What unique good or service are you selling? Price: How much do you charge for your product or service? Place: What distribution channels do you use to make the product or service available to customers? Promotion: How do you communicate your product’s or service's value to your target audience? A fifth P is commonly added: People. This emphasizes the cruciality of the roles the people on your team play in marketing your firm and the importance of understanding the people you serve, your clients. A comprehensive marketing plan balances all 5 Ps, both to attract new clients and retain existing clients. You don’t need to be a marketing expert, but you do need to have a full understanding of what you’re selling, for how much, to whom, and where—all while being very clear in how you communicate the value your RIA firm can deliver. Next, we’ll dive into how you can put all the Ps together to create your own marketing strategy. How to position your product Your product is an intangible service. It’s more than simply the wealth management expertise and advice you provide. It’s the entire differentiated experience that you offer clients. That experience is what sets you apart from the advisor down the street who provides similar advice but fails to engage with clients and build trust. The question is: How do you clearly communicate your differentiated service to the world? The answer is: Write a value proposition. A value proposition is a short statement that conveys the unique benefits of your service to your target market. The statement highlights the problem(s) you solve, the benefits you offer, and how you’re different from the competition. Your value proposition serves as a guiding piece of communication for all of your marketing efforts. In addition to a value proposition, having the following resources will help you communicate and show your value to prospects and clients: Client stories and testimonials: Being able to explain how you’ve helped others in similar situations will build trust with clients. Educational resources: Communication resources like a well-written monthly newsletter or weekly blog can position you as an expert and grow relationships over time. Simple tools: Easy-to-use tools like retirement calculators or a simple online client portal that helps your clients understand their investing plans can position your services as convenient and tech-savvy. The perfect price The reality is that pricing is never perfect. It’s something you should revisit annually to make sure your pricing strategy fits your business strategy. If you’re interested in running a fee-based planning practice, the following fee structures can be applied to meet both the needs of your clients and your business model: Hourly fees: Charging by the hour is typically a good option for investors looking for introductory or circumstantial planning advice, or for those who may not have enough capital for you to consider in an asset-based fee structure. Flat fees: Fees are a flat percentage of the total value of the AUM on a certain date each year. The percentage charged can decrease as the AUM increases. Tiered fees: Charging varying fees as a percentage based on different levels of the portfolio. For example, charging 1.50% for the first $1 million, 1.25% for the next $4 million, and 1.00% for amounts above $5 million. Asset class fees: Charging different fees as a percentage of AUM for different asset classes. For example, charging 1.75% on equities, 1.00% on bonds, and 0.00% on cash. As your firm grows or if you serve different target markets, you may want to evaluate your fee structure to ensure it supports the growth of your business. It’s also wise to research how your competitors are charging to remain competitive while maintaining your margins. How to be in the right place for the right people This may be the most important part of your marketing plan: Identifying your target market and learning where you can reach them. Understanding who you serve, also known as your target market, dictates the development of your strategy. If you don’t know who you plan to serve, you can’t write a compelling value proposition, set appropriate prices, or invest in effective marketing channels. (Stay tuned—we’ll cover marketing channels in the next section.) To begin identifying your target market, consider the following questions: If you have existing clients, who are your best clients? Clients that you enjoy working with and are profitable clients over many years. If you’re just starting out, who would be an ideal client in your network? Many of your clients will come from existing relationships, so understanding who in your network would be ideal to work with may be the easiest place to start. Don’t be afraid to be specific and carve out a niche within your target market. The following data points can be helpful to analyze to determine if your target market is big enough to serve: Geography Age Interests and affiliations Career Once you have a profile of what your ideal client looks like, you can then tailor all of your efforts to their needs. Your target market will drive the creation of your value proposition and pricing to ensure it aligns with their needs. Knowing your target market will allow you to determine how to best “distribute” your services, whether that’s using digital communication tools or holding in-person meetings with clients, or a combination of both. To select marketing channels, you’ll need to research where your target market frequents, whether that’s in-person locations or online platforms such as LinkedIn or Facebook. How to promote your firm For many, paid advertising is the first thing that comes to mind when they think of promotions. However, you can leverage more marketing channels than only paid ads to connect with prospective clients. A marketing channel is any communication method or means of distribution used to get your firm’s services in front of the right people at the right time. Common channels for RIAs include: Social media Platforms like Facebook, TikTok, Youtube, and LinkedIn can be convenient ways to connect with prospective and current clients. As we experience the great wealth transfer from Baby Boomers to their heirs, social media can be an ideal channel to reach a younger audience. Examples of typical social media content may include educational videos and articles, information on events your firm is holding, or photos and stories of your firm’s community involvement. It’s crucial to be genuine and connect on a human level on social platforms. There is a saying about social media that “people follow people, not brands” and that is true for your firm too. Make your content personal by featuring your staff, allowing people to build a digital relationship with your advisors. Events Event marketing provides a wide range of options to get in front of your target audience. You can speak or host a booth at conferences, host a local in-person educational event, or plan a virtual event. An example of a virtual event is a webinar on the topic of inheritance and estate planning. You can even partner with other professionals like estate planning attorneys to expand your networks and increase event attendance. A valuable aspect of virtual events is that the recording can be distributed afterward or even streamed on social media platforms. The key with any event is to make sure you are reaching the right audience or you risk wasting your time. For example, you may want to avoid having a booth at a local expo that has a large, broad audience, and instead opt for smaller events with your ideal prospects in attendance. Email Email may be considered an older technology, but it is still an ideal channel to help acquire and retain clients. To successfully incorporate email into your marketing plan, consider making your messages personalized and relevant using data collected from your prospects and clients. For example, for promotional messages, rather than sending the same email to everyone in your database, take the time to automate campaigns that target specific subgroups with specific relevant messages. In addition to promotional emails, you can leverage emails to promote your events, send surveys to collect client feedback, or send an educational newsletter. If you’re consistent and send valuable content, email can be an affordable channel to build trust with your audience. Word-of-mouth Referrals from word-of-mouth are the holy grail of client acquisition. This results in clients that are so happy with your service, they go out of their way to send you likely qualified business. But how do you go about getting referrals? You have to combine being exceptional at managing your clients’ finances with being exceptional at connecting with them emotionally. They need to trust you and trust that if they refer someone they know to you, you’ll provide the same level of personal service. Once you have proved that you are an expert at managing finances and have a client’s best interest at heart, you can genuinely create opportunities for word-of-mouth business. For example, you can send your client shareable bakery items to their office or invite them to bring guests to a local event. Be creative, thinking of ways that are unique and genuine to your firm that could help put clients in a natural position to refer business. Paid advertising The options for paid advertising have grown tremendously over the last few decades. Before engaging in any form of paid advertising, it is important to understand who you will be targeting with your ads, the cost of running those ads, and the estimated number of clients the ads will drive to your firm. This will allow you to estimate the return on investment of your advertising spend before running ads and compare that to the actual outcome. It can be easy to run untargeted ads that end up costing far more than your firm can afford to bring in one client. Examples of paid advertising channels include print ads in local publications, billboards, website banner ads, and social media advertising. One potential strategy is to combine coordinated organic social posts with paid social media advertising, resulting in an integrated effort between all of your social media content. Before you do any form of marketing, it’s important to remember that all materials should follow your firm’s compliance procedures and be archived, including social media content. Take an inventory of your marketing capabilities As you dive into creating a marketing plan, knowing your strengths and weaknesses will position you for success. Focus first on the areas that you know you are capable of implementing. Use this list of questions to assess your firm’s ability to implement each marketing activity: Communications Writing - Are you able to write a blog or newsletter? Contact list - How large is your email list? Public speaking - Does your firm have the talent to present at events? In-person conversation and sales - Does your firm have the interpersonal skills to have successful 1:1 conversations? Camera presence - Does your firm have the talent to present to a camera for webinars, TV interviews, or social media feeds? Communication norms - Does your firm understand the jargon or “groupspeak” used by different target audiences or used on different marketing channels? Advertising Do you have the budget and/or talent for ad placements, graphic design, and website management? Which marketing channels do you understand or have you used in the past? What channels allow you to reach your target market? How will you measure the success of paid advertising? Do you have a marketing compliance strategy in place? Social media Which social media channels are you or your staff currently active on? Which social media channels are your prospects and clients active on? Who will create your social media content? Word-of-mouth Are you able to create opportunities to position your current clients to send you referrals? If you are already receiving referrals, which clients are sending you business and why? Pricing Does your current pricing structure support the ideal growth of your firm? Do your current systems support the ability for you to easily change your pricing or add a new offering? When assessing the list above, keep in mind your time. The more time you spend on a marketing activity is less time with prospects or clients. You don’t need to become a full-time marketer to be successful. Rather, finding the few marketing initiatives that work best for your firm will allow you to grow and maintain a high level of service for your clients. You don’t need to try to do everything. Steps for creating your marketing strategy The following steps provide a simple guide to get your marketing up and running: Calculate your revenue and client growth goals. Identify the gaps between your goals and where you are today. Research and talk to other successful small business owners to learn what works and to set expectations for what success looks like from your marketing plan. Research your competitors' marketing activities to understand how you’ll stack up in the market. Research and identify your target market. Analyze and determine your pricing strategy. Determine your marketing budget for activities like content production, website management, email marketing, and paid advertising. Write your value proposition to be used across your marketing communications. Select and implement two to three marketing activities that are most likely to succeed in achieving your goal. Review results monthly and quarterly to determine what’s working and what’s not — make adjustments as needed. The steps above can be repeated annually or even bi-annually, allowing you to recalibrate your marketing efforts as your business evolves. Marketing pitfalls to avoid Marketing isn’t easy, but it is easy to make it harder on yourself, especially for smaller businesses with fewer resources. Avoid these common pitfalls to position yourself for success. Don’t focus only on lead generation. Lead generation is the process of generating prospects and turning them into clients. This is important, but if sales becomes your sole focus you lose the brand value that comes with providing educational content and building your brand as a trusted financial expert. Don’t hire family or interns to save money. As we said, marketing isn’t easy. Just like financial advice, not all marketing advice and output is equal. It’s worth investing in a professional to make sure your firm is well-positioned in the market. Don’t lose focus and try too many things. Start small and test what you think will work best. Running too many marketing efforts at once can result in watered-down budgets and difficult-to-measure results. Now you’re ready There you have it, a framework to get your firm’s marketing plan off the ground. Do your research, start small, and remember to evolve your marketing as you learn what works and what doesn’t. We understand that as an RIA, you have a lot on your plate from marketing to every other aspect of your firm. Betterment for Advisors frees you up by providing you with tools to help streamline front-and-back office operations and the investment process. To learn more about how our automated workflows can accelerate your ability to serve existing clients and to engage with prospective clients, get in touch with a member of our team today.

Simplifying practice operations and designing a better client experience with the right custodian Oct 6, 2023 3:04:41 PM For this advisor spotlight, we chat with Jason Park about building a delightful client experience and using technology to create more meaningful, human connections. Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Advisor: Jason Park Firm: Margo Park Financial Why did you decide to become a financial advisor? Honestly, I never intended to be an advisor. My dad was an advisor and he always wore starched white shirts and a full suit—that wasn’t my style. In a very roundabout way, I ended up starting my career as an insurance agent and wearing a suit and tie everyday. I became a very good salesperson in that role and, when the company offered to sponsor securities licenses, I thought why not? I saw it as a means to increase my insurance sales. I quickly learned that I could offer far better client services if I were running a fee-only advisory practice. Going independent just made sense. I could do the same work, but be in full control of the client experience. When I left my firm to go independent, I was nervous to tell my clients—but every single one of them came with me. I'm so grateful for that. Having my own RIA has been extraordinarily rewarding. I feel very lucky to have stumbled upon this business. I never take it for granted that I get to help people and make a difference in their lives. What do you think is the least understood aspect of your job? I think that advisors can sometimes miss out on creating a great client experience. It seems so simple to just put yourself in a client's shoes and ask, what would you want? But providing a delightful experience to the end customer is something that I believe is woefully missing in this industry. And I think that clients, sadly, have become accustomed to it. When I meet clients, they never talk about a great experience. Nothing stands out. Carefully designing client communication or choosing technology that purposefully offers a great client experience can really enhance an advisor's value. Why did you choose to partner with Betterment for Advisors for your practice? I hesitated when I first heard about Betterment and its automation. I remember advisors being afraid of disruption in this industry and asking, are we going to be put out of business? A lot of our jobs can be executed by software—which is excellent—but certainly not everything. We will always need a human element in the financial planning industry. So, at first, I was admittedly afraid, but when Betterment for Advisors came to market, I was thrilled. I figured I couldn’t beat Betterment’s portfolio automation, so I’d take advantage of it instead. When custom model portfolios for advisors were released, which brought Betterment’s automation into my own custom models, I remember thinking, this is really getting close to unicorn level. Since I signed up, I've slowly been using Betterment for Advisors as my core custodian. Aside from one-off, niche situations, I place every client in Betterment. The experience is so simple, fast, and easy. The way in which this platform simplifies onboarding and my day-to-day practice operations, completing any task, is noticeably different from other custodians. I also care deeply about and am very sensitive to the client's experience, and Betterment really is the best experience I've ever found for clients (and certainly for me as an advisor). Other than using Betterment for Advisors as your go-to custodian, what does the rest of your tech stack look like? Technology’s value is in making things less complex, and I think I’ve tested every tool out there. Today, my firm’s main client portal is Blue Leaf, where you can sync accounts from any custodian. I also use Riskalyze because their risk questionnaire is incredibly thought-provoking and practical. Clients and I always walk through it together, and I continue to find that, as much as this industry is about quantitative metrics, it's also really about people and feelings. Aside from this core stack, we’ve built out our own household asset location calculator and, for very specific client scenarios, we’ll use Pontera to support managing externally-held 401(k)s. Can you walk through what the typical onboarding experience looks like for a new client, and how Betterment for Advisors might fit into that onboarding flow? Onboarding is where Betterment for Advisors excels—it’s an order of magnitude better than any existing legacy custodian platform. When chatting with a prospective client, my style is to get to a familiar, informal cadence as fast as possible. After connecting and deciding to work together, onboarding is so simple. I first send the client an invitation from the advisor portal. An email is sent to them, from which they can set up their own login and verify all the information themselves. The process makes steps that other custodians force you to take look utterly superfluous—Betterment for Advisors is ten times simpler and faster. From there, we sync all clients accounts in Blue Leaf and use Riskalyze to handle the risk questionnaire. I was reflecting on how onboarding used to be with other platforms and it makes me so tired just thinking about it. With Betterment, it’s just two steps: send the invitation to open up the account, and then send a transfer request. At a legacy custodian, you have to find all of the relevant forms and manually type in all the information. It pales in comparison to Betterment. What is one critical lesson you've learned from your clients? Clients are real people, and they like to talk to real people. Often, clients don't even want to discuss business—they want to connect personally and talk about what’s going on in their lives. Being able to foster and maintain relationships is critical in this business. Has a remote or hybrid work environment changed your client relationships? Remote work hasn’t changed much about my business. I think people underestimate just how much you can get done virtually. If anything, going digital and keeping up with the technology of being virtual has just continued to make communication feel real and familiar for clients, which is my goal. What do you think is the biggest opportunity for advisors today? Creating a better client experience. It is such a beautiful thing to be able to connect with another human being. I often think about companies that have exceptional customer service. There’s this adage about Zappos, for instance, that they’re a customer service company that just happens to sell shoes. I feel the same way about this industry. What comes first is the connection with another human being—and that's the fun part. Creating an exceptional, delightful, important experience for the client is the biggest opportunity for advisors today, and for anyone else interacting with the end-client directly. If you could only give one piece of financial advice, what would it be? Time is on your side. Whatever alpha value an advisor might bring, the biggest driver of returns is time. Even my retired clients are often surprised to realize they still have decades left to grow. Realizing time carries so much weight can be calming and help you let go. With more time, you will have a better investment experience. Obviously, there's no guarantee, but we do have a century of historic data to reference. Taking a step back and focusing on this long term process can help you put things in perspective. It can give you much-needed clarity, and might ease some anxieties about investing or retirement.

How Portfolio Rebalancing Works to Manage Risk for Your Clients Sep 19, 2023 12:00:00 AM Portfolio rebalancing, when done effectively, can help manage risk and keep your clients on track to pursue the expected returns desired to meet their goals. What is rebalancing? Over time, the value of various holdings within a diversified portfolio moves up and down, drifting away from the target weights that help achieve proper diversification. Over the long term, stocks generally rise faster than bonds, so the stock portion of your client's portfolio will likely go up relative to the bond portion—except when you rebalance the client’s portfolio to target the original allocation. Clients may also transfer in assets from outside Betterment that are not part of the target portfolio strategy and/or allocation. The difference between the target allocation for your client's portfolio and the actual weights in your client's current portfolio (e.g. their actual allocation) is called portfolio drift. Measuring Portfolio Drift Betterment and partner portfolios We broadly define ETF portfolio drift as the total deviation of each super asset class (put in positive terms) from its target allocation weight, divided by two. These super asset classes are US Bonds, International Bonds, Emerging Markets Bonds, US Stocks, International Stocks, and Emerging Markets Stocks. Here’s a simplified example, with only four assets: Target Current Deviation (±) U.S. Bonds 25% 30% 5% International Bonds 25% 20% 5% U.S. Stocks 25% 30% 5% International Stocks 25% 20% 5% Total 20% Total ÷ 2 10% A high drift may expose your client to more (or less) risk than you intended when you set the target allocation. Taking actions to reduce drift is called rebalancing, which Betterment automatically does for your client in several ways, depending on the circumstances, and with an eye on tax efficiency. If you choose to take advantage of Betterment’s tax smart transition features, we will aim to respect the drift tolerance and gains allowance that you’ve set when rebalancing your clients’ goals. Learn more. Considerations for Custom Model Portfolios Your firm may elect to construct a custom Model Portfolio on our platform. If so, drift for these portfolios is calculated on the security group level, even if the security group(s) used are pre-populated options provided by Betterment in the interface. For reference, security groups are groupings of ETFs that include a primary ticker, and may include secondary and/or IRA secondary tickers designed to help avoid wash sales and allow for tax-loss harvesting opportunities. This means that for Model Portfolios, drift is calculated as the total deviation of each security group (put in positive terms) from its target allocation weight, divided by two. Considerations for DFA Mutual Fund Portfolios Certain firms on the Betterment for Advisors platform have access to Dimensional mutual funds for their models. In a DFA mutual fund portfolio, we calculate drift on a per-asset basis. This means that for DFA portfolios, drift is calculated as the total deviation of each holding (put in positive terms) from its target allocation weight, divided by two. Cash Flow Rebalancing This method involves buying or selling when cash flows into or out of the portfolio happen. Cash flows (such as deposits, dividend reinvestments or withdrawals) can be used to rebalance your client's portfolio. Fractional shares allow us to allocate these cash flows with precision. Inflows: When a client makes a deposit or receives a dividend, we use the inflow to buy holdings that are currently underweight, reducing their drift. The result is that the need to sell in order to rebalance is reduced. Whenever client drift is higher than normal (generally 2% or higher), we calculate the deposit required to reduce the client's drift to zero, and make it easy for them to make the deposit. Although we show the deposit amount needed to bring drift back to 0%, smaller deposits also help reduce drift. Outflows: Withdrawals (and other outflows) are also used to rebalance, by prioritizing selling holdings that are overweight. We employ a sophisticated ‘lot selection’ algorithm called TaxMin to minimize the tax impact in taxable accounts while reducing overall portfolio drift. Sell/Buy Rebalancing In the absence of cash flows, we rebalance by selling and buying, reshuffling assets that are already in the portfolio. When cash flows are not sufficient to keep your client's portfolio’s drift within a certain tolerance, we sell just enough of the overweight holdings, and use the proceeds to buy into the underweight holdings to reduce the drift to zero. Sell/Buy rebalancing is generally triggered whenever the portfolio drift reaches or exceeds 3%, unless you set a custom threshold for your client. Once an account balance is at or past the minimum threshold, our algorithms check your client's drift approximately once per market day and rebalance if necessary. Note: In addition to the higher threshold, we built in another restriction into the rebalancing algorithm for taxable accounts. As with any sell trade, our tax minimization algorithm seeks to select the lowest tax impact lots, and stops before selling any lots that would realize short-term capital gains when possible. Since short-term capital gains are taxed at a higher rate than long-term capital gains, we can achieve higher after-tax outcomes by simply waiting for those lots to become long-term before rebalancing, if it's still necessary at that point. As a result, it’s possible for your client's portfolio to stay above the 3% drift if we have no long-term lots to sell. Almost always, it’s because the account is less than a year old. In this case, we recommend rebalancing via a deposit to avoid taxes. The Portfolio tab of a client’s goal will show your client know how much to deposit, as described above, to rebalance via cash flow. If you’d like to turn off automated buy/sell rebalancing in a client’s account, you can do so in the Clients tab of your advisor dashboard. Please note that for advised clients on our Betterment For Advisors platform, the drift threshold is 5% for portfolios that contain mutual funds. For custom model portfolios, advisors can set a custom drift threshold. Allocation Change Rebalancing Changing your client's target allocation by moving the allocation slider and confirming the change could also cause a rebalance. When you update a client's portfolio strategy and/or asset allocation, Betterment will give you the option to select one of our three tax-aware migration strategies. Depending on which option you select, this could result in selling securities and could possibly realize capital gains. As with all sell trades, we will utilize our tax minimization algorithm to help reduce the tax impact. Additionally, before confirming the allocation change, you can review the potential tax impact of the change with Tax Impact Preview. Transaction Timelines

Switching custodians: Why Sound Financial transitioned their book to Betterment for Advisors Aug 28, 2023 10:46:33 AM A conversation with Cory Shepherd, ChFC®, CFP®, President and Partner Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. Moving to a new custodian is not an easy decision. For this interview, we sat down with Cory Shepherd, President and Partner at Sound Financial Group, to learn how he navigated a decision to switch providers in 2020. Sound Financial was searching for a custodian that could offer something different than the legacy options. They needed a partner that not only met their basic pricing and operational needs, but also complemented their planning philosophy and could set their practice up to scale long term. The team ultimately landed with Betterment for Advisors, a decision that has helped the firm cut overhead costs, streamline onboarding, and invest more time in giving quality, human advice. Moreover, we discover how Sound Financial’s decision to switch to Betterment for Advisors was, in the end, a way to maintain “elegant simplicity” in their lives as independent advisors—giving their team, their clients, and their families more flexibility to pursue their goals. Read the full story below. The path to independence Cory Shepherd, ChFC®, CFP®, is the President and Partner at Sound Financial Group. The fee-based planning firm has three advisors and serves about 300 clients representing $125MM in AUM. Sound Financial’s path to independence was, in some ways, an accident. For years, co-Presidents Paul Adams and Cory Shepherd focused on expanding their team within the broker-dealer model. But a series of contract negotiations with their broker-dealer in 2016 prompted a decision to go independent. “Breaking that relationship was one of the best, ‘bad’ things that could have happened to us. After that, we stopped trying to grow horizontally with as many advisors as possible, and started prioritizing growing vertically.” The move not only changed their business strategy, it changed their perspective on independence and the beauty of deciding for yourself what work looks like. “We have this amazing life with a lot of freedom. We work closely with clients we love and avoid the multilayered requirements of larger corporations.” An action-forward planning philosophy Sound Financial is passionate about creating financial plans that won’t end up collecting dust—both figuratively and literally. “During my early days at MetLife, I was so proud of our financial planning work. We’d create these 80-page, leather-bound, beautiful plans. And then, one day, I found out that a client had wedged one under the leg of their pool table to level it out.” That epiphany underpins Sound Financial’s Wealth Design process: The biggest challenge clients face isn’t creating a financial plan, but implementing it. “If an advisor just hands over a plan document, 9 times out of 10 there will be major breakdowns in implementation.” With an average annual household income range of $250,000 to $1.5MM, the firm’s clients are largely working professionals—physicians, tech executives, and business owners—in the wealth accumulation phase. To emphasize the importance of action for these clients, Cory compares the planning process to an architect designing a house: “An architect’s job is to provide a blueprint that ensures you’re getting the best house for you, the house that will allow you to live your best life. But the design is only worthwhile if you can act on it and actually build the house.” Repapering hurdles prompt a switch Prior to transitioning to Betterment for Advisors, Sound Financial had a positive relationship with their core TAMP. However, an acquisition by another firm in late 2019 prompted a switch. About 8 months into the transition, Sound Financial was surprised to learn they were going to need to repaper the majority of their client accounts. “We honestly weren’t looking to make a move, but, because they were going to make our clients go through the trouble of repapering accounts anyway, we felt it was our responsibility to do some due diligence and see if there was a better fit for them somewhere else.” Searching for a future-forward custodial partner In their search for a new custodian, Sound Financial prioritized price, innovation, and transparency for clients. As a smaller firm, they found it challenging to find a partner that was aligned to their pricing requirements. “Our firm was being charged 42 bps at the time,” Cory noted. “We couldn’t justify the fee, and [our TAMP] wasn’t able to customize it. They didn't want to make that custom, cut-out niche for us and, at the end of the day, we just couldn't make the pricing fit.” Sound Financial also evaluated how various platforms could help improve their back-office and client onboarding experience. At the time, tech stack fragmentation was a challenge. They were layering one-off tools on top of their core systems (TD, Fidelity, and AssetMark) to support account management and opening, which created a disruptive and paper-heavy process. “Back then, it took us an hour just to open a new household’s first account. On top of that, we then needed 20 minutes for each additional account opened, just to manage all the paperwork.” Considering Betterment for Advisors Cory admits he was apprehensive when his business partner first brought up Betterment. “I thought of it as a millennial product for DIYers.” But the custodial platform’s integrated onboarding technology alone piqued his interest. “I’d been embedded in the world I’d grown up in, so it was a little like magic the first time we had a Betterment for Advisors demo. The technology made everything so simple. Even for clients to do it themselves. Click, click, click, and you open an account, even live with a client, in about five minutes. That was huge.” The team also appreciated that the platform adds transparency to the client experience. The planning and projection tools in particular felt like something they could really give to a client. Still, Sound Financial had some reservations and risks to weigh before making the leap. Chief among them: the Betterment brand. “We wondered, Are we going to have to compete against ourselves? Will folks want to leave us and just go to Betterment solo? But that hasn’t happened. In fact, clients who had Betterment accounts already, before they met us, have brought them into our practice.” Making the switch: 90% of assets in 90 days An all-in-one, vertically-integrated custodian, Betterment for Advisors offered Sound Financial something new in their search for a custodian. “As an independent practice, we really liked the fact that Betterment for Advisors was focused on a different kind of value proposition: good technology, ease of communication and workflow, and efficient pricing.” The process of transitioning their client assets was a contrast to the demanding, piecemeal transition they’d made just a few years prior when going independent. “We moved 90% of our client assets within 90 days. It was super fast.” The Sound Financial team expertly navigated client conversations around the transition, emphasizing the improved client experience and technology. “It was an easy conversation to have because there is a lot of value for the client. We discussed the expected time savings, and how we planned to use this time to improve servicing for them. We also focused on the ease of use, the transparency, and being able to do things yourself.” Results Cutting overhead costs and client fees to Betterment for Advisors, Sound Financial noted they have been able to cut their custodial fees by more than 50%, and recapture these savings in the firm’s profitability. They’ve steadily increased growth rates year over year without increasing client fees—even during the turbulent COVID-19 market. Outsourcing investment management increased their team’s capacity, giving the firm greater operational leverage. “The efficiency of the technology is so much higher that we have not had to keep up the hiring pace that we were previously maintaining. With Betterment for Advisors, we could just about double the total number of clients we have and not have to hire another person.” Moreover, efficiencies unlocked in investment management allowed Sound Financial to improve pricing at the top end of their fee grid. “This gives us a clear advantage over competitors in attracting these higher-net-worth clients to work with us.” A boost to employee morale and retention Reducing hiring needs gave Sound Financial an additional, unexpected competitive edge: a happier workforce. “We’re unlocking time and capacity as we grow, and, with fewer hires, we can reward our team members more than our competitors can. Suddenly, employee retention becomes a big bonus—and one that was not as obvious.” Fostering strong employee retention is now a vital part of the firm’s business strategy. “We’re focused on doing what’s right for our team. Too much turnover, and having to frequently introduce clients to a new name on the phone, can start to erode clients’ confidence in your practice.” Future-proofing a practice in an AI-dominated culture Moving to Betterment for Advisors as their core custodian has changed how Cory thinks about growing and sustaining the practice. At first, they believed they could use automation to simply increase the number of clients served—taking on significantly more client accounts, and spreading the team thin across the base. Instead, the team now sees investing more time in each client relationship as their primary path to growth. “What we’ve realized over time is that the technology can give us more time to have a more customer-centric and intimate relationship with a client, and that’s how we want to grow.” Sound Financial believes creating a personal planning experience will help them stay ahead of the curve. “AI is at the forefront of almost every cultural conversation right now, and deepening the human experience for clients is a more valuable and ‘AI-insulated’ model than providing generic advice to the masses. “We don’t want to compete with a mass market, digital approach. We want to use automation to free up our time to grow organically — give clients such an amazing experience that they’re compelled to refer us to people they know. That’s harder for AI to disrupt.” What’s next for Sound Financial The Sound Financial team remains focused on scaling intentionally. They have a successful podcast that they use to reach new clients, and have tested paid mediums for lead generation. But they’re less interested in ramping up an online acquisition model. “I love meeting with someone who cares about someone that I already know and work with, and working with that new connection. A lot of our clients become just like friends and family to us.” Looking forward, Cory sees technology as a means for making daily operations more efficient. “We really value balance. And we want to continue using technology that helps give all of us back time. Time to work with clients and time with our families.” “Our goal is to quietly and intentionally grow the community of people we’re helping, and to use technology to streamline our work as much as possible. All so we can retain this elegant simplicity that we’ve found in our lives.”

Schwabitrade or switch? Aug 18, 2023 3:48:31 PM Learn how switching to Betterment for Advisors could power your practice into the future. The choice to define your firm’s future “Schwabitrade” — many RIA owners have their own experience with the ongoing integration of Schwab and TD Ameritrade, and many have shared their experiences on how rocky it has been for their firms and their clients. We’re not here to show you how your firm will be impacted. You know this. We’re here to show you how Betterment serves advisors, regardless of size, with a modern custodial platform. You deserve this. So you can make the choice: Schwabitrade or switch? Our service and technology can simplify the switch At Betterment for Advisors, we know switching custodians is a big move, so we’ve made sure that not only is the process easy, but that your experience in your first 12 months helps set you up for long-term success. We’ve designed a three-pronged approach to help you make the switch: #1 A dedicated relationship manager You're more than just a number or a customer — you're our partner. The high standard of service we hold ourselves to means that we have no minimum AUM requirement and every firm gets a dedicated single point of contact, no matter their size. Your relationship manager is your guide, ensuring you are fully trained on how to best use all our tools and features throughout your first year. Your relationship manager’s goal is to get you utilizing our platform to its maximum capability for your practice and your clients. #2 Fully digital onboarding Our digital onboarding streamlines the repapering process for you and your clients. You can easily onboard individuals and households, and complete account set up paperlessly. They’ll get a single email to sign off on everything at once. #3 Tax-smart asset transitions Our tooling enables you to granularly control how assets are moved from your current custodian to Betterment for Advisors in a tax-efficient manner. You can leverage our paperless workflows to move assets over in kind. Easily move your client’s funds into your preferred portfolio model while optimizing their tax impact. Our people and technology empower 600+ RIAs and their clients each day Once you’ve made the switch to Betterment for Advisors, we’re dedicated to seeing your practice grow. We take pride in being the modern end-to-end custodian for the modern RIA, balancing human support with future-forward technology. As our partner, we give you the tools that help simplify and streamline your practice operations while building a successful book of business. Dedicated advisor support Regardless of your firm’s size, we provide dedicated support to answer all of your questions. Our support team members are platform experts, here to resolve any issues you may face and answer questions from the most mundane to the most technical. We’re more than just chat support. You can reach out via email or phone for any type of issue or question. Your relationship manager isn’t just for onboarding. They’re your long-term partner every step of the way. “Advisors, especially small and mid-sized RIAs most affected by Schwabitrade, shouldn't sit back and accept lower-quality service. We’re here to provide you with a better option.” —Tom Moore, Senior Director, Betterment for Advisors Time-saving automation tools Our tools take care of critical-yet-time-intensive tasks so you can focus on your real value — planning, strategy, and client relations. We automate tax-optimization strategies for you including asset location and tax loss harvesting. Flexible billing gives you the freedom to use custom asset-based, fixed fee, or tiered billing plans and set the frequency your clients are charged. We collect the fees for you and pay them out automatically. Our Co-pilot dashboard aggregates urgent client needs all in one place, becoming your client command center, enabling you to streamline your high-priority work. Exceptional client experience Using our client-facing mobile app and web experience paired with our powerful advisor planning tools, your firm can provide one of the most delightful client experiences on the market. Empower your clients at home or on the go with our interactive portal, giving them convenient insights into their investments. Plus, you can sync held-away accounts so they see all of their savings and investments in one place. Better manage household accounts with a customizable account structure, using bucketing strategies to help clients work towards long-term goals. Engage with your clients on a deeper level with our portfolio analysis, retirement planning, and performance tracking tools. Build your seamless tech stack We integrate with other well-known tools giving you a better experience for you and your clients. And don’t worry, if you work with a tech provider we haven’t partnered with, your relationship manager will explore adding them to our integration options. Transparent pricing in a not-so-transparent world Schwab and other custodians may say their custody services are “free” but in the RIA space, it usually means that your client is the one paying for it. We charge a simple platform fee that allows us to improve our custody platform while providing exceptional support. This enables you to truly put your clients first and help them grow their wealth.

Considering a switch from TD Ameritrade to Betterment for Advisors? Here's what you need to know. Jul 28, 2023 1:32:31 PM The custodial landscape is changing. We’ve compiled answers to the most common questions we get from RIAs who are considering making the switch to Betterment for Advisors. We've supported many RIAs considering moving their client accounts to Betterment for Advisors. Here are the most common questions we receive about making the transition. How do I know if making a move is worth it? How can small RIAs evaluate a custodian's service model? What does a transition to Betterment for Advisors look like? How does Betterment for Advisors support RIAs through a transition? What type of firm is a good fit for Betterment for Advisors? What is the experience like for my clients? How long has Betterment been around and what does the future look like? What's next for the Betterment for Advisors platform? How do I know if making a move is worth it? The decision to migrate your practice and client accounts to a new custodian can be challenging. Evaluating if, and when, a switch is worthwhile often comes down to assessing a potential partner’s technology and service. Betterment for Advisors’ custodial technology can make a big difference for small firms trying to scale efficiently. It can not only help you craft a better client experience, but it can free you up from routine, administrative tasks to focus on more high-value work. Getting a feel for technology is relatively simple—advisors can request a demo to see most platforms' features in action. A custodial partner's approach to service, though, can be more challenging to nail down. How can small RIAs evaluate a custodian's service model? When considering different service models, think about who your support team will be and how easy it is to reach them. The support channels available to you should be aligned with your preferred way of doing business—whether it's for typical day-to-day inquiries, urgent requests, or more strategic discussions about how to grow your practice. For many custodians, the definition of a "small RIA" seems to be getting bigger.* Our dedication to service for firms of all sizes sets us apart. We know that quality service makes all the difference for an independent advisor, regardless of their AUM or number of clients, so we intentionally built a support team that’s accessible for all. And because some questions are best addressed on the phone, you can reach a live person fast—our advisor servicing team aims to answer calls in under two minutes.** Betterment for Advisors also prioritizes offering comprehensive support for firms, beyond transactional questions. Every firm on the Betterment for Advisors platform will partner with a dedicated relationship manager who serves as their go-to resource for training, 1-1 consulting, practice management questions, transition support, and more. What does a transition to Betterment for Advisors look like? Our vertically integrated technology aims to make the repapering process as seamless as possible via intelligent automation. You'll also have an experienced team on your side to help make the move easy. For each transition, we start by discussing your firm's current set-up, including client service model, current custodian(s), portfolios used, and your existing tech stack. This helps us understand the key pieces of the transition and any pain points or limitations we can help address. From there, we'll work together to create an implementation plan that’s tailored to your firm. It will combine your unique situation with best practices gleaned from other transitions we’ve managed and tips about how to make the most of the Betterment for Advisors platform (so you can take full advantage of our billing tools, portfolio options, integrations, and more). The plan will also include an account migration strategy that considers your clients' current models and holdings (so they can benefit from features like our tax smart transition technology if needed). Once the plan is in place and you know exactly what to expect, we'll hit the ground running. How does Betterment for Advisors support RIAs through a transition? Betterment for Advisors is dedicated to providing hands-on support. Your relationship manager will work with you on the entire process and be your go-to liasion for our in-house team. Throughout the transition you’ll have regular check-ins to monitor progress and address any questions. White-glove transition support reduces the operational burden that typically comes with repapering, while reducing disruption to client service. Our team can help manage transitions for you from start to finish, from assistance in drafting client communications, to sending out client invites and ACATS requests on your behalf. Excellent support doesn't end with the transition. You will always have a dedicated relationship manager for practice management support and growth initiatives, as well as access to a fast, knowledgeable advisor support team for the day-to-day questions. What type of firm is a good fit for Betterment for Advisors? Betterment for Advisors works with independent RIAs of all sizes—especially those just breaking away or focused on scaling an already established practice. Because we have no AUM minimums, an efficient, scalable pricing model, and dedicated support for all firms, we are uniquely suited to partner with small-and-medium sized RIAs that are often overlooked by legacy custodians. What do all of our advisor partners have in common? They recognize the opportunity that automation can unlock for their business. Our cutting-edge technology helps planning-focused advisors create more operational efficiency, so they can cultivate stronger client relationships and take their businesses to the next level. The efficiencies unlocked with Betterment for Advisors' technology enable our advisors to serve significantly more clients than at legacy custodians. What is the experience like for my clients? Simple. An easy, paperless client onboarding workflow differentiates Betterment for Advisors from legacy custodians and helps advisors impress clients from day one. With digital client onboarding, advisors can collect household signatures from clients on all new accounts in one simple, paperless package. From there, clients need only approve ACATS requests to transfer their assets to Betterment for Advisors. Your clients will have access to Betterment for Advisors' intuitive goals-based portal, which is white-labeled for your firm. The platform is designed to be flexible for advisors, so you have the tools to manage tasks on behalf of your clients, but your clients will also have a variety of easy, self-directed tools within the portal. Tasks like updating their address or setting up an auto-deposit can be done with a few simple clicks. How long has Betterment been around and what does the future look like? Betterment launched in 2010 as a pioneer in the digital investing space. 13 years later, we are the largest independent digital advisor with over $38 billion in AUM. All client assets are protected with industry-standard insurance and rigorous account security. Like many financial services companies, we've achieved scale and sustained growth by diversifying across three complementary lines of business: direct-to-consumer, Betterment for Advisors, and Betterment at Work. Betterment for Advisors has been doing things differently from the very beginning. How? By building an RIA custodian from the ground up. Our status as an independent, vertically-integrated solution is vital. It has allowed us to create bleeding-edge automation and to own the user experience for advisors and investors from end to end. We remain committed to that independence. The desire to do things differently also underpins Betterment's pricing. Instead of the traditional custodial model, we charge a transparent platform fee based on client assets that scales as your firm grows on the platform. This model is intentional—it allows us to work with RIAs of any size and offer every firm the quality, sustained support they need for the long term. With recent consolidation in the RIA custody industry, advisors may feel their options are more limited today than in the past. We believe that there is a gap for small-and-medium sized RIAs when it comes to technology and service at legacy providers. And we're here to solve that. What's next for the Betterment for Advisors platform? Betterment for Advisors is the custodian of the future for planning-focused independent advisors. We have a culture of continuous iteration and are always looking to build tools that can make advisors’ lives easier—and help them deliver more value to clients. Your feedback matters to us. As we're building an all-in-one solution where advisors can run their whole practice, we'll keep adding products and features that enable advisors to build the business they've always envisioned. If you have input, questions, or something you'd like us to build, please let us know.

4 Ways to Wow Your Clients in their First 90 Days Feb 21, 2023 1:35:42 PM We've compiled some top practices that can help you craft a delightful experience for new clients, every time. Onboarding is a critical moment in your advisor-client relationship. It’s the time for you to ensure that your new client feels comfortable and confident in their decision to work with you. It’s also a key inflection point for ensuring long term client retention. Advisors often lose the trust of their clients by overpromising during onboarding and, over time, advisors’ communication style impacts whether clients stick around. Post-pandemic, nearly 9 out of every 10 clients consider their advisors’ communication frequency and style when deciding whether to retain their services (and when making referrals to friends and family). We've compiled some best practices for firms looking to better communicate with clients and create a delightfully smooth onboarding experience, every time. #1: Lead with your clients' values. At the very beginning of your relationship, it’s essential that you take time to understand your client’s unique financial goals. Building a goals-based financial plan is now an industry standard practice. In fact, helping “maximize a client’s potential for meeting life goals” is at the core of the CFP® Board’s definition of financial planning. It can be critical, though, to also put in extra work to understand your client’s individual values. Whether it’s prioritizing environmental sustainability, supporting extended family, or charitable giving, financial decisions can be incredibly emotional. Communicate to your client that you’re there to help guide them and to make sure their money is aligned with their core principles and beliefs. Taking the extra time necessary to discuss and nail down your client’s values—and what they hope to get out of their work with you—can help you foster a deeper relationship early on. Clients can often have a difficult time identifying their financial goals, let alone clearly defining, prioritizing, and saving towards them. Nick Holeman, Director of Financial Planning at Betterment, recommends doing a little research about your clients in advance: “Having these data points on hand will help you get your clients thinking in the right direction. It also demonstrates to your clients the personalized experience of working with you.” #2: Prioritize transparency. Committing to transparency can help you impress new customers and drive brand loyalty in the long run. According to recent consumer surveys, 88 percent of consumers say that authenticity is a key factor when deciding what brands they support, and 46 percent of consumers say that they would pay more to purchase from brands they trust. Companies may shy away from being transparent to achieve some perceived benefit in the short-term. If you hope to earn long-term client loyalty though, it’s important to pursue transparency with your clients as often and early as possible. Of course, as a business offering paid services, you should make sure the following information is clear and readily accessible: Your fees (What you charge): Whether you leverage an asset-based, tiered, or fixed fee pricing model, your client should have a solid understanding of your service fees. In any conversation around fees, it’s important to first make sure your value proposition is clear and that your clients understand what you bring to the table. Your billing cadence: Communicate what payment schedule your client can expect (monthly, quarterly, etc.). But don't overlook these other key questions: How often will you meet or check in with your client? What communication methods do you and your clients prefer? Between video calls, text, and email, define what works best for this relationship. What services will you offer (and what will you not offer)? It’s important to provide an accurate summary of the scope of your services upfront. Outline areas where you and your team might not be spending time to avoid creating false service expectations. By setting clear expectations from the start, you can ease client skepticism and start to build credibility. #3: Cut out paper and manual workflows. It’s 2023 and clients expect seamless experiences across digital channels. (In fact, 40% of investors say digital access has become a greater priority following COVID-19.) Paper-heavy processes requiring wet ink, multiple rounds of back-and-forth, and hand-carried mail no longer cut it. Going paperless becomes particularly relevant at the onboarding moment. If your firm is taking advantage of software to handle sending and collecting electronic agreements during the account opening process, that’s a great first step. Too often, though, these services still involve multiple email touchpoints that can feel disjointed and overwhelming to a new client. Explore solutions that can help you open new accounts across channels as possible. At Betterment, our technology offers built-in digital client onboarding to help advisors open accounts completely online, with minimal lift required from your client. At account opening, clients receive one email touchpoint with all information they need to approve your firm’s set up—a process that takes just minutes. Firms can leverage digital onboarding to impress clients who otherwise may be used to clunky or paper-heavy experiences with other wealth managers. Digital, minimal effort account opening can even help firms reach entirely new client segments. Matt Lohrius, lead advisor at Ritholz’s Liftoff Invest business, believes going paperless is critical to meeting demand from accumulation phase investors: “For Liftoff, it’s just huge from a technology standpoint: opening accounts, transferring money from other custodians, depositing money, linking a bank account. Everything is so easy and intuitive for the client.” Non-paid client of Betterment. Views may not be representative, see more reviews at the App Store and Google Play Store. The bottom line: Replacing manual onboarding tasks can help you spend less time on routine logistics and more time personalizing advice. When you free up more mental energy to focus on better service, your clients will take note. #4: Over communicate. Onboarding a client is more than a one-and-done touchpoint. For many clients, onboarding presents a lot of change and uncertainty—especially if this is their first time working with an advisor. Over the course of your client’s first 90 days, consider setting up a series of onboarding meetings. A schedule can help create structure, demonstrate your confidence, and convey to your client that you value their input. (Tip: As you hire and expand your team, it can be helpful to standardize this client onboarding meeting framework across your firm). The series might look like: Initial get to know you: Time for you to learn about your client and their family, likes/dislikes, values, and ambitions. The end of this introductory meeting is a great time to send a client questionnaire. A deeper evaluation of their financial state: Time for you to collect more detailed information on the clients savings, current investments, debts, income, risk tolerance. The financial plan: A meeting to present your proposal for your client’s unique financial plan. Follow up meeting: Check in with your client 30 to 45 days after the initial plan conversation. Progress meetings: After the initial follow-up, set a couple future dates to discuss progress made toward goals. The importance of the fifth step above cannot be overstated. In fact, the key to growing a loyal client base is consistent communication. Staying connected regularly can help you gain a more thorough understanding of how your client’s objectives may have shifted over time. Conversely, lack of communication sends the wrong signal to clients—and, overtime, might lead to losing the client relationship as their perception of your service value declines. When it comes to effective communication, attitude is everything. Make sure you bring positivity to each interaction and illustrate why you love what you do. Being genuine and ready to engage in small talk beyond finances (and, of course, listening more than you speak) can help you and your client get the most out of these meetings. Frequent communication is not limited to in-person interactions. Your firm’s online presence and branding are also an important arena for exceeding customer expectations and rivaling your competitors. Some steps to consider taking: Connect with new clients on social media. If you have a newsletter program, set up a system to routinely add new customers to the list. Invest in a website that speaks to both prospective and existing clients. Writing a weekly blog is a great way to distribute updates and market commentary regularly. Consider hosting webinars or an annual virtual event. Come holiday time, make sure you have a budget for a client gift or handwritten happy new year card—it’ll be a great cue to get them thinking about the year to come and your goals together.