Investing carries inherent risks, primarily stemming from market fluctuations rather than brokerage practices. At Betterment, we prioritize your peace of mind by implementing robust security measures to protect your account and investments. This article outlines key strategies we employ to safeguard your financial activities.
Understanding the importance of security in the digital age is essential. As cyber threats increase, it is crucial that your investment platform employs comprehensive protective measures.
Below are the primary methods we utilize to ensure the safety of your Betterment account.
Table of Contents:
Key security features of your Betterment account
Two-factor authentication
A cornerstone of our security is two-factor authentication (2FA). This acts as an additional barrier protecting your account, similar to having two locks on your front door. In addition to your standard password, 2FA requires a secondary verification method, such as a code sent via SMS to your mobile device or one generated through an authentication app like Google Authenticator. This dual verification process ensures that even if someone obtains your Betterment password, they cannot access your account without this second form of authentication.
Data encryption
When interacting with Betterment, whether through our website or app, your data is shielded by encryption. This process scrambles the information exchanged between your device and our servers, ensuring that only authorized parties can interpret the data. Such encryption protocols are essential for maintaining the confidentiality of your sensitive information and transactions.
Password security
When you choose a password for your Betterment account, we do not store it in its original form. Instead, we utilize a technique known as password hashing, which transforms your password into a distinct string of characters. This method ensures that, in the unlikely event of a system breach, your actual password remains secure and unreadable to unauthorized individuals.
App-specific passwords
Using third-party applications with your Betterment account can enhance your experience by providing features like easy net worth tracking or simplified tax form imports. However, when a third-party app requests your Betterment credentials, we advise creating a unique password specifically for that application. This precaution means that if the app’s security is compromised, you can swiftly revoke its access without affecting your primary login. Some applications may use the OAuth standard, allowing you to use your main login while maintaining a high level of security.
Ensuring the safety of your investments
Transparency in holdings
At Betterment, we believe in transparency as a fundamental principle. We provide easy access for you to verify your investments, allowing you to view every transaction carried out on your behalf, including the exact number of shares you own. We also detail each fractional share sold, along with the respective gross proceeds and cost basis. All this information is readily available under the Holdings and Activity sections for each of your goals.
Independent audits
To further bolster your confidence, we undergo regular evaluations by independent auditors. These auditors cross-verify every dollar and share we report with our actual holdings. They also conduct random checks on customer accounts to ensure that account statements align with our internal records. If discrepancies arise, even to the slightest degree, auditors will investigate thoroughly.
Separation of funds
Your funds are always kept separate from Betterment’s operational resources. This clear separation guarantees that your investments are held in your name and are never intermingled with our company’s finances. Thus, in the rare event that Betterment encounters financial challenges, your assets will remain intact and secure.
SIPC insurance
To add an additional layer of assurance, your Betterment securities are protected by the Securities Investor Protection Corporation (SIPC). This insurance safeguards up to $500,000 per customer, with a specific limit of $250,000 for cash claims. While SIPC insurance does not cover market losses, it serves as a reliable safety net in the case of brokerage failure. For more information, you can request a brochure or visit sipc.org.
How you can contribute to your security
Understanding the importance of security in the digital age is essential. As cyber threats increase, it is crucial that your investment platform employs comprehensive protective measures. Below are the primary methods we utilize to ensure the safety of your Betterment account.0
