Investing always involves risk, but that risk should primarily arise from market fluctuations, not from your brokerage. At Betterment, we prioritize the security of your account and investments through a range of protective measures. This comprehensive approach allows you to manage your finances with peace of mind.
In this article, we explore the key components that safeguard your account and investments, ensuring your financial safety remains our top priority.
Table of Contents:
Account security features
Two-factor authentication
To enhance your account’s security, we implement two-factor authentication (2FA). This serves as an additional lock on your front door. Alongside your standard password, 2FA requires a secondary verification method, such as a code sent to your mobile device or generated by an authenticator app like Google Authenticator. This ensures that even if someone obtains your password, they cannot access your account without this second verification step.
Encryption of data
Each interaction with our services, whether through our website or mobile application, is protected via encrypted connections. This encryption scrambles data transmitted between your device and our servers, ensuring that only authorized parties can decode and access your sensitive information.
Password hashing
When you create a password for your Betterment account, it is not stored in a readable format. Instead, we use a process known as hashing, which transforms your password into a unique string of characters. This means that even in the unfortunate event of a data breach, your actual password remains secure and unusable.
App-specific passwords
Linking third-party applications to your Betterment account enables functionalities such as tracking your net worth or importing tax documents. When these applications require your Betterment credentials, we recommend creating a unique password for that specific app instead of using your main login. This way, if the app’s security is compromised, you can easily revoke its access to your account.
Investment protection strategies
Transparent holdings verification
Transparency is fundamental at Betterment. We provide easy verification of your investments by offering detailed information on every trade executed on your behalf. You can view the total number of shares you own, including fractional shares, along with their respective gross proceeds and cost basis. This information is conveniently accessible under the Holdings and Activity tabs for each of your financial goals.
Independent audits
To uphold our high security standards, we undergo regular reviews by independent auditors. These professionals verify every share and dollar we report against our actual holdings, conducting random checks on customer accounts to ensure consistency between account statements and our internal records. They meticulously inquire into any discrepancies, even minor ones.
Separation of funds
Your personal funds are kept separate from Betterment’s operational finances. This separation ensures that your investments are held in your name, protecting them from any financial challenges the company may encounter. In the unlikely event of financial distress, your assets will remain secure and unaffected.
SIPC insurance coverage
As an additional safeguard, your Betterment securities are covered by the Securities Investor Protection Corporation (SIPC). This insurance policy provides protection up to $500,000 per customer, including a cash claim limit of $250,000. While SIPC does not cover losses due to market fluctuations, it serves as a safety net in the event of a brokerage failure. For further details, an explanatory brochure is available upon request or can be found at sipc.org.
Staying vigilant
In this article, we explore the key components that safeguard your account and investments, ensuring your financial safety remains our top priority.0
In this article, we explore the key components that safeguard your account and investments, ensuring your financial safety remains our top priority.1
