Transitioning investment accounts from one provider to another can be complicated. You may be in the early days of exploration, wondering if adopting a new investment strategy is worth it. Or, you may know that making a switch is what’s best but it’s unclear how Betterment will handle the trading and operational steps required to complete your transfer.
How we help customers transition to Betterment.
We’ve largely automated the process of transferring outside investment accounts to Betterment.
For most customers, our automations fully address their specific needs and a transfer can be self-serviced entirely online. For others, our online tools provide a great foundation, but there’s still a desire for more personalized advice during their transition.
Qualified customers, looking for more high-touch support, have access to our Licensed Concierge and partner transfer-specialist teams, who provide personalized and dedicated guidance to customers exploring large and complex transfers to Betterment.
For IRAs and 401(k)s, which can be directly transferred without creating a taxable event, we focus on investment strategy comparisons, minimizing advisor pushback, and ensuring that the accounts are moved using the most efficient transfer method available. For taxable accounts, especially those with large embedded gains, we take things a step further, offering personalized tax-impact and break-even analyses.
Breaking down our taxable account guidance.
As your fiduciary, we believe that transparency is key to making well-informed investment decisions. Whether you’re in the early stages of exploring if Betterment’s right for you, or fully sold and ready to get started, knowing the potential tax implications, and the trading and operational steps required to complete your transfers is important.
Below, we offer a step-by-step preview into the Concierge-specific process.
Step 1: Review Current Situation
When a Concierge associate is connected with a new customer, our first priority is to understand the customer’s situation. We start by reviewing their current investment accounts to see if they are properly aligned to their financial goals from a fee, investment mix, and risk perspective.
Misalignment in any of these areas can impact a customer’s likelihood of reaching their goals.
Upon closer look, the individuals we work with are often surprised to find themselves invested in high-fee and high-risk accounts. Sometimes we learn they were referred to their advisor who charged a 1% management fee. Sometimes we discover they were sold actively managed funds that charged 1% to 2% in fund fees. Some were even do-it-themselves investors, who didn’t have the time to maintain proper account rebalancing, dividend reinvestment, or timely tax-loss harvesting.
Whatever the case may be, if you’re looking to review your current situation and find that collecting the necessary information is hard to do on your own, we recommend syncing your accounts to Betterment.
Our free, automated tooling will analyze your account details and let you know if you’re taking on too much (or too little) risk, paying too high of fees, or don’t have proper portfolio diversification. Syncing your accounts to Betterment will also allow our human-facing teams to better guide you, if need be.
Step 2: Establish A Plan
Once we understand a customer’s current situation, our next step is to put together a comprehensive assessment and action plan. While the details are unique to each customer, at a high-level, the moving parts are largely the same.
Based on the firm where an account is currently held, the type of taxable account (individual, joint, trust), and the underlying investments, we are able to tell our customers:
- Whether making a switch to Betterment comes highly recommended based on any red flags from our Step 1 review.
- Whether the firm and account type can be moved electronically to Betterment through the ACATS network.
- Which of the current holdings (if any) can be moved to Betterment, in-kind without having to sell at the current provider first.
- What to expect once we receive the transferred account and begin transitioning it into the target Betterment portfolio.
- What the estimated tax-impact (if any) will be to move forward with the transfer to Betterment.
The above information is delivered to the customer without industry jargon, so that making an official decision is as straightforward as possible.
Step 3: Executing The Plan
Assuming the customer would like to proceed with a transfer to Betterment, we’ll do a final check to ensure their Betterment account is set up properly. Once everything is in order from our side, we can begin implementing the transfer plan.
Since it’s highly likely that our team has performed transfers from the customer’s current provider to Betterment, we’re able to be specific about what to expect throughout the process.
We’ll communicate all of the steps involved, the expected timeline to complete, and when possible, we’ll handle any heavy lifting. We’ll regularly check-in and once the transfer has arrived, we’ll confirm with the customer and ensure any outstanding questions are answered.
Putting it all together.
Deciding whether it’s right to move money to a new provider is tough enough on its own, which is why having access to a dedicated expert can be especially valuable.
With extensive onboarding and transfer experience, the Licensed Concierge and partner teams are here to ensure you fully understand how Betterment works and that your accounts are transitioned seamlessly.
Interest in learning more about transferring an account to Betterment? Email us at: email@example.com.
Betterment is not a tax advisor, nor should any information herein be considered tax advice. Please consult a qualified tax professional.
This article is being provided solely for marketing and educational purposes and does not address the details of your personal situation and is not intended to be an individualized recommendation that you take any particular action, including rolling over an existing account. When deciding whether to roll over a retirement account, you should carefully consider your personal situation and preferences. Specific factors that may be relevant to you include: available investment options, fees and expenses, services, withdrawal penalties, protections from creditors and legal judgments, required minimum distributions, and treatment of employer stock. Before deciding to roll over, you should research the details of your current retirement account, consult tax and other advisors with any questions about your personal situation, and review our Form CRS relationship summary and other disclosures.