Investing inherently carries various risks, primarily linked to market fluctuations. At Betterment, we believe that the risk faced by investors should be tied to market conditions rather than vulnerabilities in brokerage services. To provide peace of mind while you invest or save, we have implemented a comprehensive array of security protocols designed to protect your account and assets.
Here, we outline some key security measures our platform employs to ensure you can engage with your investments confidently.
Key measures for account protection
Two-factor authentication
One foundational element of your account security is two-factor authentication (2FA). This process acts like an additional lock on your front door, requiring not just your password but also a second verification method. This could be a code sent via text message to your mobile device or a time-sensitive code generated by an authenticator app. With 2FA in place, even if someone were to acquire your password, they would still be unable to access your account without that second verification step.
Data encryption
Every interaction you have with Betterment, whether through our website or mobile application, is safeguarded by encryption. This means that any information exchanged between your device and our servers is transformed into a scrambled format that is indecipherable to outsiders. This process ensures that your sensitive information remains private and secure.
Password hashing
When you set your password for your Betterment account, it is not stored in an easily readable format. Instead, we implement a technique known as hashing, which converts your password into a unique sequence of characters. This means that even if our systems were ever compromised, your actual password would remain hidden from unauthorized access.
App-specific passwords
Connecting third-party applications to your Betterment account allows you to access various features, such as tracking your net worth or importing tax documents seamlessly. However, when these applications require your Betterment login information, we advise creating a specific password for that app instead of using your main account password. Should the third-party service be compromised, you can revoke access without jeopardizing your main account security. Some applications also use the OAuth standard, permitting you to log in while maintaining a high level of security.
Safeguarding your investments
Transparent verification of holdings
At Betterment, we prioritize transparency in all our operations. We make it easy for you to verify that your investments are accurately represented. You can view each transaction carried out on your behalf, along with the total number of shares you own, including any fractional shares sold and their respective profits and costs. This detailed information can be accessed under the Holdings and Activity tabs for your respective financial goals.
Independent oversight
To further strengthen our accountability, we undergo regular evaluations by independent auditors. These professionals reconcile every asset and dollar we report against our actual holdings. They conduct random checks on customer accounts to ensure that account statements align with our internal records, scrutinizing any discrepancies, no matter how small.
Separation of funds
All client funds are kept distinct from Betterment’s operational finances. This separation guarantees that your investments remain entirely yours and are not affected by the company’s financial situation. In the unlikely event that Betterment encounters financial trouble, your assets will remain secure and unaffected.
SIPC insurance
To provide an additional layer of security, your securities held with Betterment are protected by the Securities Investor Protection Corporation (SIPC). This insurance offers coverage up to $500,000 per customer, which includes a limit of $250,000 for cash claims. While SIPC does not guard against market volatility, it serves as a safety net in the case of brokerage failure.
How you can contribute to your account security
Here, we outline some key security measures our platform employs to ensure you can engage with your investments confidently.0
Here, we outline some key security measures our platform employs to ensure you can engage with your investments confidently.1