Betterment has quietly broadened its reach. What started as one of the early robo‑advisors is now a multi‑layered fintech: a consumer investment app, a banking‑style cash and checking provider, and a technology-and‑custody platform for independent registered investment advisers (RIAs). It operates online, serves individual investors and employer plans, and supports roughly 600 advisory firms through its institutional stack.
What the platform does
– investment management: Betterment combines automated portfolio construction with optional human advisory support. Its advisory arm is SEC‑registered and separates investment advice from trade execution and custody.
– Advisor tools: Independent RIAs can use Betterment for custody, automated trading, billing, and client management. The system is modular—firms pick the elements they want.
– Cash and checking: Betterment offers a Cash Reserve that places client deposits across participating banks to broaden FDIC coverage, plus a partner‑bank checking account with a debit card.
– Third‑party integrations: The firm integrates external model strategies and partner products to round out its menu for advisors and consumers.
How the business is structured
Betterment intentionally splits responsibilities across legal entities. Advisory services come from Betterment LLC (an SEC‑registered investment adviser), while custody and brokerage functions are handled by Betterment Securities and clearing partners. That separation clarifies who advises clients versus who executes trades and holds assets—important for regulatory roles and investor protections.
Model marketplace for advisors
On the advisor platform, Betterment has launched a model marketplace aggregating ETF‑based strategies from major managers such as Goldman Sachs, State Street and Vanguard. The marketplace lets advisory firms deploy ready‑made portfolios, customize allocations, and shorten implementation time—helpful for smaller practices that lack resources to build models from scratch. Betterment says it plans to broaden the available strategies and integrations over time.
Cash management and insurance nuances
Betterment’s Cash Reserve distributes client cash among Program Banks, which can increase aggregate FDIC insurance limits compared with a single‑bank deposit. However, not all funds on the platform are the same: sweep and transit funds held inside brokerage accounts may be covered by SIPC protections rather than FDIC insurance. The checking product is offered through a partner bank and includes a debit card for everyday use. For exact coverage, limits and eligibility, investors should consult the Cash Reserve terms and Betterment’s regulatory filings.
Mortgage offer and referral experiments
Betterment is piloting a time‑limited mortgage program in partnership with a third‑party lender (Guaranteed Rate). The company is explicit that it does not act as the lender; eligibility and underwriting decisions are made by the partner. Separately, Betterment is testing an advisor referral pilot that routes customers to vetted advisors or partners and contemplates a referral fee tied to assets moved. Both pilots are in controlled rollouts and remain subject to underwriting, suitability checks and other participant rules.
Implications for advisors and clients
– For advisors: The platform reduces barriers for startups and smaller firms—no account minimums in many cases—and offers turnkey automation and model access to serve mobile or accumulation‑phase clients. The referral pilot could also change how advisory relationships form, though details and broader availability are still being tested.
– For clients: The mixed legal structure means protections depend on account type. Deposits placed at partner banks follow FDIC rules; brokerage holdings fall under SIPC; advisory services are governed by SEC disclosure and fiduciary obligations. Understanding which entity provides each service matters for risk, protection and recourse.
What to review
Before moving assets or using deposit‑style products, read the firm’s Form ADV and Form CRS and the Cash Reserve or checking terms. Those documents spell out custodial arrangements, insurance coverage, conflicts of interest and other key details. That makes the platform flexible—and potentially powerful for both retail clients and independent advisors—but it also raises the need for careful attention to account structures, protections and the limits of each offering.