is betterment a scam

Is Betterment a Scam or the Best Robo Financial Advisor?!

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Betterment is registered as a financial advisor but is Betterment a scam? There’s a common belief that only the rich invest. It is unfortunate that this discouraging mindset also prevails over finance management. Well, let me put it straight that no matter how small you think your financial capacity may be, you can still utilize a broad range of platforms to properly manage it – and possibly invest.

That all finances – great or small – should be managed doesn’t really change the fact that financial advisors charge quite exorbitant fees for their services. Nevertheless, robo-advisory platforms like Betterment have been established to ensure that people of every class can enjoy the benefits of financial management.

Below is my personal assessment of Betterment and I hope it would effectively help you decide whether or not the platform is worthy of your assets.


Company Name: Betterment

Official Website:

Owner: Jon Stein, Eli Broverman

Type: Robo-Advisor

Price: An annual fee of 0.25% (or 0.40% for premimum plan) of your total balance

Recommended? Yes

Overall Rating: 6.5 out of 10

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what is betterment

What Is Bettermen All About?

Founded in 2008, Betterment is a virtual financial advisor that renders financial management and investment services to clients on portfolio basis. With an official resumption of its investment services in 2010, the platform is well known in the virtual investment industry for concentrating on portfolio-based investment algorithm rather than the human based one.

With the belief that technology can make the act of investing democratic, the founders of Betterment established the platform to grant investors easy access to intelligent resources for investing. With over 400,000 users worldwide, Betterment manages over $15 billion worth of investments with reduced service charge.

Betterment Plans

Betterment Digital: This plan provides all the financial advisory services stated on their website at a service rate of 0.25% of client’s total balance. There is no required minimum balance for this plan.

Betterment Premium: This plan is suitable for clients with complex net worths and financial portfolios and also require the assistance of professionals. With a service fee of 0.40% on minimum balances of $100,000, users of this plan receive all the services provided on Betterment digital in addition to endless financial advice from licensed professionals.

Note that the users of both plans are entitled to a fee waiver once the charge on any of their accounts exceeds $2 million. There is also an average yearly ETF of 0.1% on every account.

  • Types of Betterment Portfolios
  1. The Betterment Portfolio that include index-based bond and stock ETFs. These bonds and funds are internal and U.S based.
  2. Blackrock Income Portfolio
  3. SR portfolios
  4. Goldman Sachs Smart Beta Portfolio

Additional Betterment Features

  • Customer Enlightenment

On this platform, customers have access to articles (but no videos and live feeds) that can enlighten them on investment strategies, taxing and market insights.

  • Mobile Application

Certain functions like withdrawals, account removal and turning on auto rebalancing are not available on the mobile version of the Betterment application. However, users can access a lot of other important functions of the platform on the mobile application.

Goals and portfolio allocations can also be changed at all times and achievement progress can also be monitored at ease on their mobile app.

  • Financial Consultation

In 2018, this feature was included in Betterment’s mobile application. Users can receive professional answers to their many financial questions via messaging.

  • Retire Guide

This new feature enables users access an all-encompassing tool to plan their retirements. A suitable retirement portfolio is developed from the retirement goals users set on the application. This is done by considering users’ income streams, expected retirement expenditure, place of residence as well as available savings.

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how betterment works

How Does Betterment Work?

Without the need to make further trade or research efforts, Betterment invests users’ savings into specified portfolios. On this platform, clients do not possess their personal stocks and bonds but their investments are secured via Exchange-Traded Funds.

Betterment also minimizes investment risk by allocating each client’s resources in every ETF in such a way that one client’s account is not exclusively held in a particular firm, asset class, economic sector or country.

After the creation of an account, clients get to answer a series of questions so as to establish their investment risk tolerance as well as their time limit. Users can also adjust these facts to their taste if they so, please.

Over time, Betterment rebalances every client’s portfolio automatically to reduce investment risks. It does this by exhausting clients’ deposits and also reinvesting clients’ investment dividends. Clients’ tax liability, therefore, reduces as time goes on since the number of assets sold is also reduced.

Is This a Platform You Should Try?

There are several things inside Betterment which can be beneficial for you. For example, your initial investment will be optimized professionally through this platform. One of the negative points of traditional investment is a low ROI (Return on Investment) which limit your potential profit but Betterment solves this issue. With the help of this investment platform, your extra money will be invested in low-risk bonds which let you experience a higher return.

To be honest, what I see in Betterment as an investment optimizing tool is something new that I’ve not experienced in other investment companies. Smart Saver is the name of this tool and it helps you optimize your investment professionally in any level.

What You Will Probably Like About This Robo-Advisor

The complete list of Betterment’s benefits are more than what I’ve listed here but to save your time, I only mention the main ones:

  • Tracking and analyzing all the financial goals through a step by step guide
  • Get help from the financial experts and contact real financial advisors anytime you like
  • The automated system of Betterment is able to choose the lowest risk with the highest return for your funds
  • MPT (Modern Portfolio Theory) is supporting Betterment so the investment risk involved in the platform will be decreased by this theory
  • You’ll pay the minimum amount of taxes with the tools provided by this company
  • You can get benefits from it if you are looking for a socially responsible portfolio which uses a smart strategy

If the above positive points are suitable for you and you think that it can affect positively on your financial life then feel free to join the community of thousands of people who use services of Betterment otherwise it’s better to find your chance somewhere else.

How to Sign Up in Betterment?

Ok, let’s say you’ve decided to try Betterment and now want to know how to signup in this platform. Well, actually this is the easiest step to enter into the online investment world and can be done in just a couple of minutes.

The first step is answering a couple of questions which let Betterment knows about your current financial situation which lets them provide you with the best investment options. Then you can simply share your amount of investment between stocks and bonds with the help of slide bar placed inside the platform. You can set the assets to 50%-50% or 30% Stocks and 70% bonds or any other allocation you like.

You need to connect your cheking account into the program after setting up the account based on your preferences. There’s an automated option which let you deposit money into your account automatically but I don’s recommend it because you need to decide how much money you want to transfer to your account depends on the result you get so it’s not a fixed amount and can be more or less every month.

So I recommend you to take control of the account manually (at least at the beginning). Many things will be done automatically after you deposit money and you have no choice for that so everytime there’s a manual option, it’s better to go for it. When the sign up process is done, EFTs (exchange-traded funds) will be bought by Betterment and it does not require any additional action from you.

Can You Make Money With Betterment?

Fortunately, this is all about investment and unlike other money making options like Paid Surveys, etc. that has some risk, your money is safe in this type of investment.

At a yearly growth rate of 8%, you can make money from investment dividends on Betterment. However, you usually do not get access to this money unless you request that it be pulled out of your account. The amount you make on the dividend is also dependent on your initial investment sum and how long you let your investment sit. The longer you leave your investment, the more it multiplies.

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betterment review

Pros And Cons


  • No Hidden Fees. Betterment, unlike most other financial advisors, do not require trading commissions, transfer charges, and account closure charges.
  • Comparatively Cheaper Cost. With Betterment, you get to enjoy every service a financial advisor can provide you at one-third of their cost.
  • Automatic Dividend Reinvestment and Account Rebalancing
  • Clients’ portfolios are constructed according to their individual goals and risk tolerance.
  • Users’ accounts are protected for safe investments
  • Minimal taxes on transaction.


  • Absence of investment tools users can utilize on their own.
  • Very little educational platform due to the absence of videos and live demonstrations.
  • Limited customer support.
  • The automation of all their services limits the financial knowledge of their customers.
  • Their investment theory might not be the best out there.
  • Betterment users may end up with tax issues.

is betterment scam

Final Word – Is Betterment a Scam or Legit? 

While a good number of inefficient robo-advisory platforms are created on a daily basis, Betterment has proved to be as efficient and genuine as they claim. Little wonder they experience growth on a yearly basis. If they were not legitimate, the complaints of their users would have prevented their customer growth in one way or the other.


The terms of transaction offered by betterment is actually genuine. Nevertheless, some individuals may perceive their features as a liability. You should properly come to terms with both sides of the platform before making up your mind. Do you want a means to efficient finance management or are you in for the knowledge? Would you willingly pay more for convenience or seek for the most competitive price in the market? Do you buy into their portfolio-building theory?

Your responses to these questions would establish whether Betterment would suit you or not.

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