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Investing

Review of Goldman Sachs Private Wealth Management

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

The private wealth arm of financial services giant Goldman Sachs focuses on high net worth individuals, as well as certain endowments and foundations. Goldman Sachs Private Wealth Management is headquartered in New York, though it serves clients throughout the United States and around the world.

All information included in this profile is accurate as of March 9, 2020. For more information, please consult Goldman Sachs Private Wealth Management’s website.

Assets under management: $902,461,604,978
Minimum investment: $100,000
Fee structure: A percentage of assets under management
Headquarters location:200 West Street
New York, NY 10282
Website
212-902-1000

Overview of Goldman Sachs Private Wealth Management

Financial services stalwart Goldman Sachs was originally founded in 1869, and today has grown to become a publicly traded corporation (ticker symbol: GS). Its investment advising business, Goldman Sachs Private Wealth Management, has accumulated assets under management of $900 billion. Goldman Sachs Private Wealth Management has 1,366 employees, 896 of whom provide wealth advisory functions.

Goldman Sachs has won numerous awards, including for its private banking and wealth management services. The company has also won awards related to diversity, including for its policies for working mothers and LGBT+ inclusivity.

What types of clients does Goldman Sachs Private Wealth Management serve?

Most of the clients served by Goldman Sachs Private Wealth Management are high net worth individuals, though the firm also serves individuals, including trusts, estates and retirement plans. On top of that, the company also works with charitable organizations, banks and pooled investment vehicles, and even provides advice to government entities, sovereign wealth funds and international bodies.

While there is no true minimum threshold to open or maintain an account with Goldman Sachs Private Wealth Management, to obtain certain services you might need to have at least $100,000 in your account. For separately managed accounts and access to private investment accounts, you generally need to be an accredited investor. According to the Securities and Exchange Commission (SEC), this means you need to have an income of at least $200,000 a year if single ($300,000 combined if married) or a net worth of at least $1 million.

Services offered by Goldman Sachs Private Wealth Management

Goldman Sachs Private Wealth Management offers an extensive menu of services for its clients. Not only can you choose from a variety of preexisting investment vehicles, but the firm can also create customized portfolio options. A version of this process was actually dramatized in the movie The Big Short, when Dr. Michael Burry (played by Christian Bale) requested a highly tailored investment to short the U.S. housing market, just for him.

Basically, whatever assistance you need to manage your wealth, Goldman Sachs Private Wealth Management can make it happen. Services offered include:

  • Investment advising
  • Trading
  • Risk management
  • Income planning
  • Estate planning
  • Gift planning
  • Philanthropy planning
  • Tax planning
  • Trust administration
  • Estate administration
  • Cash management
  • Lines of credit

How Goldman Sachs Private Wealth Management invests your money

Goldman Sachs Private Wealth Management uses several distinct teams to develop strategies tailored to each client’s needs and goals. These teams and their strategies include:

  • Fundamental Equity: Utilizes basic fundamental analysis to evaluate and invest in more “traditional” assets like stocks, REITs, equity interests in trusts and business and even convertible debt obligations.
  • Energy and Infrastructure: This team focuses on investments in energy and infrastructure, including Master Limited Partnerships (MLPs). They look at sector exposure, cash flow stability and other criteria to choose investments.
  • Global Fixed Income and Liquidity Management: In an effort to optimize return and liquidity, this team can use various methods, including setting a long-term risk budget, using risk-based portfolio construction and making adjustments based on market conditions.
  • Insurance Asset Management: This team employs proprietary models to create liability management and tax-efficient strategies. In many cases, the focus is on fixed income.
  • Credit Alternatives: This team uses fundamental analysis to make decisions investments with a focus on capital preservation, including using corporate credit, real assets (especially renewable energy) and private investments.
  • Quantitative Investment Strategies: With this team, the idea is to try to beat the market. They look at mispricings, analyze market trends and sentiment and look at business models.

There are a range of other teams that focus on more specialized strategies, including hedging, private credit, relative value and event-driven analysis. Basically, analysts and advisors can use just about any type of strategy and analysis technique available to figure out how to help you meet your goals.

Fees Goldman Sachs Private Wealth Management charges for its services

Clients with separately managed accounts usually pay fees based on a percentage of assets under management, though there may be other fees that need to be paid. Fees are generally negotiable, and are usually billed monthly or quarterly.

Some of the fees that you might be charged as part of your participation include:

  • Pooled investment vehicle
  • Servicing
  • Services to portfolio companies
  • Asset-based compensation
  • Performance-based compensation
  • Underlying fund
  • Unaffiliated advisor
  • Transaction
  • Custody and administration

Goldman Sachs Private Wealth Management offers a wrap fee program, which means that these fees might all be bundled into a single fee to cover everything. Additionally, there might be expense ratios and other fees associated with fund investments which will also impact your overall returns.

While fees are largely negotiable and there isn’t a standard fee schedule for some of the portfolios, Goldman Sachs does have fee schedules for certain asset classes. The fees, however, represent the maximum charged based on assets under management, and they might actually be lower.

Index Oriented – Tax Advantaged Core
Up to $10 million1.650%
$10 to $25 million1.050%
$25 to $50 million0.950%
$50 to $100 million0.850%
$100 to $250 million0.800%
$250 to $500 million0.750%
More than $500 million0.700%

 

Active Core Equity, MLP
Up to $10 million1.750%
$10 to $25 million1.150%
$25 to $50 million1.050%
$50 to $100 million0.950%
$100 to $250 million0.900%
$250 to $500 million0.850%
More than $500 million0.800%
Active Satellite, Real Estate
Up to $10 million1.900%
$10 to $25 million1.300%
$25 to $50 million1.200%
$50 to $100 million1.100%
$100 to $250 million1.050%
$250 to $500 million1.000%
More than $500 million0.950%
AII/Smid
Up to $10 million2.175%
$10 to $25 million1.600%
$25 to $50 million1.500%
$50 to $100 million1.400%
$100 to $250 million1.350%
$250 to $500 million1.300%
More than $500 million1.250%
Energy and Infrastructure
Up to $10 million2.050%
$10 to $25 million1.500%
$25 to $50 million1.400%
$50 to $100 million1.300%
$100 to $250 million1.250%
$250 to $500 million1.200%
More than $500 million1.150%
Dynamic Equity
Up to $10 million2.400%
$10 to $25 million1.650%
$25 to $50 million1.550%
$50 to $100 million1.450%
$100 to $250 million1.400%
$250 to $500 million1.350%
More than $500 million1.300%
Fixed Income
Up to $10 million0.750%
$10 to $25 million0.550%
$25 to $50 million0.500%
$50 to $100 million0.450%
$100 to $250 million0.400%
$250 to $500 million0.350%
More than $500 million0.300%
Short Duration Fixed Income
Up to $10 million0.500%
$10 to $25 million0.450%
$25 to $50 million0.450%
$50 to $100 million0.400%
$100 to $250 million0.350%
$250 to $500 million0.300%
More than $500 million0.300%
Corporate High Yield Fixed Income
Up to $10 million0.950%
$10 to $25 million0.950%
$25 to $50 million0.950%
$50 to $100 million0.950%
$100 to $250 million0.950%
$250 to $500 million0.950%
More than $500 million0.950%

Goldman Sachs Private Wealth Management’s highlights

  • Personalized service: It’s possible to get a truly tailored approach to wealth management, including updates and changes as needed.
  • Private banking: In addition to personalized investment help, there are also private banking services that offer help with cash management.
  • Variety of services: Goldman Sachs Private Wealth Management offers a wide selection of services, making it a potential one-stop shop for wealth management and investment management.

Goldman Sachs Private Wealth Management’s downsides

  • Account minimum might be out of reach: For certain advisory accounts, the minimum is $100,000. However, you will be faced with higher minimums for other types of accounts. In order to access the full range of services, you would need to be a high net worth individual.
  • Performance-based fees: With some accounts, you’ll end up paying performance-based fees. As a result, there’s the possibility that an advisor will take extra risks in order to hit a benchmark for an additional fee.
  • Fees are a little above average: Goldman Sachs charges fees on some of its accounts that are a little above average. For example, the average fee charged by financial planners for asset management is 0.69% on accounts of $10,000,000. However, Goldman Sachs charges more than that for many of its accounts.

Goldman Sachs Private Wealth Management disciplinary disclosures

There are no disciplinary disclosures from Goldman Sachs. This is fairly impressive, considering the long history of the company.

Goldman Sachs Private Wealth Management onboarding process

A Goldman Sachs representative will talk with you to get a feel for your goals and your situation in an attempt to help you develop a plan. It’s a high-touch process that involves personal attention in the analysis of your finances and ongoing counsel. You also receive access to your accounts and information online and through a mobile app, once you’re a client.

Is Goldman Sachs Private Wealth Management right for you?

For the most part, Goldman Sachs Private Wealth Management is aimed at high net worth individuals who want help managing various aspects of their finances. If you have a complex financial situation and a lot of assets, and you want access to premier services like private banking and a truly tailored management plan, this might be the right move for you. Additionally, if you want help with trust administration and know you’ll need other similar services, Goldman Sachs Private Wealth Management can be a good choice.

However, if you are looking for a little help with managing your investments and you aren’t quite to the point where you’re an accredited investor or a high net worth individual, you might be better off looking elsewhere.

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Review of Moneta Group Investment Advisors

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Based in St. Louis, Moneta Group focuses on providing money management services to high net worth individuals and families. This employee-owned firm operates on a fee-only basis, and notably has no minimum investment requirement. Moneta Group has 300 employees and its website boasts a client-to-advisor ratio of 48 to 1, which it claims offers a more personal touch than the industry standard of 100 to 1.

All information included in this profile is accurate as of March 6, 2020. For more information, please consult Moneta Group’s website.

Assets under management: $20,257,468,937
Minimum investment: $0
Fee structure: A negotiable percentage of assets under management, usually ranging between 50 and 100 basis points, but not exceeding 2.0%
Headquarters location:100 South Brentwood Blvd.
St. Louis, MO 63105
https://monetagroup.com/
314-726-2300

Overview of Moneta Group

Moneta Group celebrated its 150-year anniversary in 2019, tracing its roots back to the 1869 foundation of the Home Life Insurance Company. Over time, the company has gone through a series of rebrands and expansions, finally adopting the name Moneta Group in 1988. Today the firm is wholly employee owned. It has 300 employees, 120 of which are investment advisers.

What types of clients does Moneta Group serve?

The bulk of Moneta Group’s clients are high net worth individuals and families, which the firm refers to as “Family CFOs.” Moneta says 80% of its business is wealth management for Family CFOs, while the balance is a combination of retirement plan consulting and the firm’s family office.

Moneta Group requires no account minimums for its own clients. However, some of the third-party investment management partners Moneta works with, like Charles Schwab, may have their own account minimums.

Services offered by Moneta Group

Moneta Group offers a full suite of money management services, and the company prides itself on offering a full financial management plan tailored to each Family CFO client. The Family CFO concept is Moneta’s comprehensive approach to managing all aspects of an individual’s or a family’s financial planning needs, with additional consulting services provided as needed. Basically, Moneta claims that it offers its clients all the services that a chief financial officer would offer to a company.

Under this arrangement, Moneta offers the following menu of services:

  • Financial management (planning and execution)
  • Investment planning
  • Financial planning
  • Investment supervision and monitoring
  • Retirement planning
  • Insurance review and sales
  • Death claims services
  • Bill pay
  • Bookkeeping
  • Payroll
  • Variety of concierge financial services

How Moneta Group invests your money

Moneta goes through a process of setting you up with a Partner Team, which reviews your goals and risk tolerance. This team is then responsible for putting together an investing plan and portfolio, which includes a review of performance expectations and economic and tax considerations.

This process delivers each client a unique investment portfolio, closely tailored to their needs. The partner team periodically reviews the portfolio, your ongoing situation and your changing financial goals and changes your investment allocations as needed.

Moneta uses both discretionary and non-discretionary approaches. Under the discretionary approach, Moneta makes some investment choices without client approval; however, it’s possible to place restrictions on the types of investments and strategies that can be followed by talking to your advisor and team. Under the non-discretionary approach, the client signs off on all investment decisions.

Partner teams will work with clients to determine the best approach and figure out if it makes sense to use a discretionary approach, a non-discretionary approach or a combination of both.

When considering portfolio construction, Moneta focuses on three main asset classes:

  • Fixed income: These instruments provide liquidity and reduce market risk in the portfolio.
  • Equities: The equities portion of a portfolio is more about adding growth to the mix while minimizing costs.
  • Alternative investments: Beyond equities and fixed income, these include real estate funds and hedge funds, based on portfolio objectives and risk tolerance.

Moneta also uses third parties to manage some of its investments, including Schwab Intelligent Portfolios. However, even though Moneta uses Schwab, the program is based on strategies put together by Moneta, and managed by Moneta.

Fees Moneta Group charges for its services

Rather than having a fee table, Moneta charges fees on a client-by-client basis. In general, the fees are based on assets under management, and generally range from 50 to 100 basis points. For example, 100 basis points would represent a fee of 1.00% of assets under management, so fees generally range between 0.50% and 1.00%.

Additionally, Moneta clients might be subject to a minimum annual fee. However, that minimum fee usually doesn’t exceed 2.0% of the assets under management.

Institutional clients might have different fee arrangements, and those who are engaging in IRA rollovers might also be subject to alternate fees from their custodian.

Other fees that might be charged by Moneta might include different insurance fees related to advisors acting as licensed insurance agents, as well as additional fees for concierge services, like bill pay and money management. Clients are also responsible for the fees charged by third-party brokers and acknowledge that expense ratios and other fees might be part of their costs.

Moneta doesn’t participate in a wrap fee program, and its advisers don’t receive performance-based compensation.

Moneta Group’s highlights

  • No account balance minimum: Moneta does not require a minimum account balance for its clients to establish an account.
  • Personalized attention: In general, Moneta Group focuses on personal attention and tailored management.
  • Comprehensive money management: For those looking for a one-stop-shop for money management, Moneta offers a full-service experience.
  • Recognized as an independent RIA: Barron’s ranked Moneta fifth on its 2019 list of Top RIA Firms in the country. The publication also put firm partner Diane Compardo in its top 100 lists for independent advisors and women financial advisors, and she and fellow partner Brad Koeneman were among the top-ranked advisors in the state of Missouri.

Moneta Group’s downsides

  • Fees aren’t readily available: Rather than having a published fee schedule, you don’t know what your fees will be until you negotiate with the partner team.
  • Some products might have account minimums: Even though Moneta doesn’t impose an account minimum, some of the third-party programs might, possibly limiting access to certain tools and products.
  • Some advisers still receive commissions: There might be separate commissions for some advisers receiving on-going commissions from insurance or other products.

Moneta Group disciplinary disclosures

As an SEC registered investment advisor, Moneta Group is required to disclose any and all material facts regarding legal action or disciplinary events that could impact your evaluation of the firm or the integrity of its team. There are no disciplinary disclosures from Moneta Group.

Moneta Group onboarding process

The first step is contacting Moneta about your interest in working with them. Moneta provides an online form that asks for basic information about your name, email, location, phone number and company, and how you discovered the website. You can write a message and send the form in.

You are then able to hold a discussion about the services you want and get assigned a Partner Team. The Partner Team will hold a series of meetings with their client to get a feel for the client’s investment goals and ongoing financial objectives. Meetings are designed to help the Partner Team put together a comprehensive plan that includes financial and money management, financial independence, tax and investment planning, as well as estate and business succession planning. Risk management is also considered during the onboarding meeting process.

Client accounts are reviewed at least annually, and more frequent reviews can be made at the client’s request. The Partner Team might also bring different items to a client’s attention, based on what’s going on and what they hope to accomplish in the future.

Is Moneta Group right for you?

For those who are looking for a full-service money management company, Moneta Group might be a good choice. Those who have a high net worth or have family office and succession issues might also benefit from Moneta Group. However, the fee structure is somewhat opaque and could vary widely, depending on your total assets under management and a variety of other options and considerations. While there aren’t account minimums, some of the third parties used to manage portfolios might have their own minimums, so even so, if you don’t have a high net worth you might not benefit from the full functionality of this firm.

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2020 Betterment Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Robo-advisor Betterment uses exchange-traded funds (ETFs) and a high degree of automation to manage your portfolio. In addition, it’s possible to speak with financial professionals to receive more tailored advice on retirement and other financial goals.

Investors most likely to benefit from Betterment include beginning investors hoping for a low barrier to entry, as well as intermediate investors who are interested in keeping a portion of their portfolio in set-it-and-forget-it accounts. Investors interested in trading individual stocks or taking a more hands-on approach aren’t likely to benefit as much from Betterment.

Betterment
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The bottom line: Betterment is great for investors looking to get started with minimum fuss — and who aren’t interested in active trading.

  • Easy to get started
  • Set up different investing goals
  • Benefit from tax optimization

Who should consider Betterment

Betterment is for investors who would like an automated approach to investing. Anyone can benefit from Betterment, but it’s especially helpful for beginner investors hoping to start growing their wealth.

Because of the low barrier to entry — there are no account minimums and you can get started with a minimum deposit of $10 — it’s possible for almost anyone to begin investing.

It’s also a great resource for intermediate investors looking to accomplish different goals with “buckets” of money. With Betterment, it’s possible to set varying levels of risk for different goals, with different asset allocations based on when you’re likely to need the money.

Finally, intermediate and advanced traders can use Betterment to build a long-term retirement portfolio, although there is no active trading. Betterment offers a place for assets to grow over longer periods at a pace that is likely to track the market as a whole.

Consider your goals and what you hope to accomplish with your investment portfolio. While Betterment can potentially be a good choice for anyone who keeps a portion of their portfolio in long-term assets, it’s not ideal for those who prefer to actively manage their portfolios or engage in active trading.

Betterment fees and features

Amount minimum to open account
  • $0
Management fees
  • 0.25% for Digital offering (no minimum account balance)
  • 0.40% for Premium offering ($100,000 minimum account balance)
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Current promotions

Three months free for new customers who are referred by an existing Betterment account holder

Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • SEP IRA
  • Trust
Portfolio
  • 12 asset classes represented in ETF portfolio
Automatic rebalancing
Tax loss harvesting
Offers fractional shares
Ease of use
Mobile appiOS, Android
Customer supportPhone, Email

Betterment management fees

Betterment’s pricing starts with a 0.25% management fee for the basic Digital account. This pricing is in line with other robo-advisors like Wealthfront, which also charges 0.25%.

Balances above $100,000 earn Betterment’s Premium account status, featuring unlimited access to personalized advice for a management fee of 0.40%. This isn’t out of line with other robo-advisors: Wealthsimple charges 0.40% for account balances above $100,000. Wealthfront, however, maintains the 0.25% management fee, no matter the size of your account. Once your balance reaches $2 million, your fee drops to 0.15%.

In addition to regular management fees, it’s also important to note that you’ll pay expense ratios on the ETFs Betterment selects on your behalf. Betterment’s recommended portfolios feature expense ratios of 0.07% to 0.15%. According to Betterment, this is much lower than the industry average.

Finally, there are additional fees if you want access to specialized financial planning. If you have $100,000 or more invested with Betterment, you get access to these services as part of your annual management fee. However, if your balance is lower, you pay a flat fee for financial advice ranging between $199 and $299 per advisory session.

Betterment portfolio options and portfolio management

Betterment chooses an investment portfolio for you based on your goals and time horizon. The core portfolio includes stock and bond ETFs allocated in a way that helps you reach your goals. It’s also possible to tweak your asset allocation in your account.

In addition, Betterment offers different portfolio options based on specific goals and targets. Here are some of the additional choices available with Betterment:

  • Socially Responsible Investing (SRI): This portfolio focuses on reducing exposure to companies that have a negative social impact. The expense ratio is a little higher with these portfolios, around 0.14% to 0.22%, depending on the allocation within the portfolio.
  • BlackRock Target Income Portfolio: Aimed at retirees, this portfolio is designed to provide a regular income stream. The portfolio focuses on bond investments that offer dividends that can be used for income rather than focusing on principal and capital appreciation.
  • Goldman Sachs Smart Beta Portfolio: Rather than using basic asset allocation principles, this portfolio focuses on assets that possess four characteristics considered to drive performance — strong momentum, good value, low volatility and high quality. It’s possible to adjust this portfolio in 101 different ways.

With all portfolios, Betterment handles automatic rebalancing when your assets experience a certain amount of drift. For example, if market performance is resulting in an asset allocation that is too far outside the target for your portfolio, Betterment will sell and buy different assets to bring your portfolio back to its target.

Another way Betterment automatically manages your portfolio is by using tax optimization strategies. Different assets are assigned to your accounts based on their overall tax efficiency. Additionally, when certain assets lose value, Betterment will sell them automatically in an effort to offset capital gains in other areas. With the help of the Tax Loss Harvesting+ feature, rebalancing can occur daily.

Betterment financial planning features

If you want a big-picture view of your finances, Betterment’s account sync feature can be helpful. With this feature, you connect some or all of your outside accounts to Betterment, which lets you view all of your financial information in one place. The app then offers personalized recommendations for managing your money.

You have the option to speak with Betterment financial professionals about planning for specific goals and life milestones. Account holders above the $100,000 balance requirement get unlimited access to personalized advice and help by phone and email as part of the management fee.

If you don’t meet this threshold, you can pay for advice packages tailored to the goals you’re working on. Here are some of the Betterment advice packages available for a flat fee:

  • Getting Started: A 45-minute phone call with a certified financial planner (CFP) who can provide step-by-step help setting up a Betterment account that helps you maximize a variety of goals. Price: $199.
  • Financial Checkup: Get a review of your investment portfolio and how it fits into your financial situation in a 60-minute call with a Certified Financial Planner. Price: $299.
  • College Planning: Aimed at families who want help getting set up for college costs and using higher education plans. It consists of a 60-minute phone call that can help you review your choices and decide what’s best for you. Price: $299.
  • Marriage Planning: Planning to tie the knot soon? Get help as you navigate goals, priorities and merging finances in a 60-minute phone call. Price: $299.
  • Retirement Planning: Set up a 60-minute holistic review of your portfolio, current situation and more that can help you make better decisions for your retirement. Price: $299.

The Betterment Advisor Network can also help you get your own dedicated financial advisor who can help you with almost any financial need. Betterment will help match you with a professional who is likely to fit your goals and priorities.

Betterment Everyday cash management account

Betterment’s cash management suite, Betterment Everyday, offers both checking and a savings features. Betterment Everyday Checking is slowly being rolled out to select customers — it charges no monthly maintenance or overdraft fees, and reimburses ATM fees worldwide. Betterment Everyday Checking offers FDIC insurance up to $250,000, with deposits held at a partner bank.

The savings product, Betterment Everyday Cash Reserve, is universally available. This account features an APY of 0.30%, as well as FDIC insurance up to $1 million, as deposits are held at a network of partner banks. It also boasts a Two-Way Sweep feature. With this feature, Betterment automatically analyzes a connected account each day and will move excess cash from your connected account into your savings account. If you need the money back in your main account, Betterment will sweep it from your Everyday Cash Reserve account without the need to take further action on your part.

Strengths of Betterment

Betterment is always adding new goals and features. Here are some of the most helpful features it currently offers:

  • Tax optimization: Betterment uses tax loss harvesting to help offset taxes on your gains. The company also uses its Tax-Coordinated Portfolio to give you the maximum tax benefit. Certain assets are assigned to your IRA, while others are kept in your taxable accounts.
  • Betterment Everyday: Betterment now offers FDIC-insured checking and savings accounts. While the checking product is still in the roll-out stages, it’s possible to earn up to 0.30%APY with Everyday Cash Reserve.
  • Set up different goals: One of Betterment’s most useful features is the ability to set up different goals. It’s possible to have a traditional IRA and a rollover IRA, as well as open a Roth IRA. It’s also possible to open taxable accounts for a variety of other goals. Set different asset mixes for each type of account and adjust what you add simply and easily.
  • Chance to talk to a human: Betterment offers customer service by phone in addition to email. However, you can also speak with a financial professional with packages starting at $199, depending on what you’re looking for. It’s also possible to be matched with an advisor if you meet the requirements for access to the Betterment Advisor Network.
  • Portfolio projection tools: Set goals with the help of Betterment’s projection tools and track your progress toward reaching your objectives. Betterment offers insight into whether you’re on track with your goals as well as graphs to help you visualize the potential of your portfolio.

Drawbacks of Betterment

While Betterment is a great choice for many investors, it’s not for everyone. There are some drawbacks, and no Betterment review would be complete without mentioning them.

  • No active trading: If you’re interested in choosing your own investments and actively trading, you won’t be able to do that with Betterment. While you can do a little more self-directed investing with a Premium account, the reality is that you’re mostly limited to choosing your prefered asset mix rather than picking individual investments.
  • Lack of 529 and education savings accounts (ESAs): There are no custodial accounts with Betterment, and you can’t set up a 529 or ESA to save for your child’s education. A similar robo-investing company that does offer a 529 is Wealthfront.

Is Betterment safe?

Anytime you invest, there is a chance you could lose money. Poor market conditions can always lead to a loss. However, Betterment’s use of modern portfolio theory in its asset allocation helps reduce your exposure to risk. Additionally, Betterment carries Securities Investor Protection Corporation (SIPC) insurance, protecting each of your Betterment accounts up to $500,000 in the event of a failure by the company. (Note that market losses aren’t covered by SIPC insurance.)

In addition to making sure an investment company is SIPC-insured, you also can use the Financial Industry Regulatory Authority’s BrokerCheck to find out about disclosures and actions, and search the Consumer Financial Protection Bureau’s Consumer Complaint Database. The Better Business Bureau is also a good source of information.

Final thoughts

Betterment is a great choice for beginner investors looking to get their feet wet and for long-term investors hoping to grow a retirement portfolio. For investors with more than $100,000, it can also be a decent place to keep your money if you’re looking for basic advice.

However, for active traders and those who want a little more control over their assets, Betterment might not be the best choice. Instead, it could make more sense to use platforms like E-Trade or Robinhood if you want to get involved with active trading. Stockpile is also a good choice for investors who want to buy individual stocks using fractional shares.

Overall, though, Betterment is a great choice for building wealth for the long term, including setting accounts for specific goals and using tools that help you see if you’re on track to meet your objectives.

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Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.