Investing can sometimes feel like stepping into unknown territory, filled with potential risks. However, at Betterment, we believe that the risks associated with investing should stem from market fluctuations, not from your chosen brokerage. That’s why we have implemented a robust array of security protocols designed to protect both your account and your investments, allowing you to focus on achieving your financial goals without worry.
This article will delve into the specific measures we employ to secure your account, as well as the ways we ensure your investments remain safe and sound.
Table of Contents:
Account security measures
To create a fortress around your Betterment account, we utilize a variety of security features that work together seamlessly. Here are some of the key components:
Two-factor authentication
Two-factor authentication (2FA) serves as an additional layer of protection. Think of it as locking your door and then securing it with a second bolt. When you log in, not only do you input your regular password, but you also provide a second verification method. This could be a code sent to your mobile device or generated by an authentication app like Google Authenticator. This dual verification process ensures that even if someone were to obtain your password, they would still be unable to access your account without the second confirmation.
Advanced encryption
Whenever you interact with our platform, whether through our website or mobile application, your data is safeguarded via encrypted connections. This means that information traveling between your device and our servers is scrambled, making it unintelligible to anyone who might intercept it. Only we can decode this information, ensuring that your personal data remains confidential.
Password hashing
When you create a password for your Betterment account, it isn’t stored in a readable format. Instead, we employ a technique known as hashing, which transforms your password into a unique string of characters. This means that even if our systems were to be compromised, your actual password would remain concealed and inaccessible to unauthorized users.
App-specific passwords
Connecting third-party applications to your Betterment account can enhance your experience, allowing you to track your net worth or import tax documents seamlessly. However, to maintain security, we recommend creating unique passwords for these apps rather than using your main login credentials. If a third-party application is compromised, you can easily revoke its access without jeopardizing your account’s security. Some applications utilize the OAuth standard, enabling you to use your regular login securely.
Investment protection strategies
While securing your account is vital, protecting your investments is equally important. Here are several strategies we implement to ensure your financial assets are secure:
Transparent holdings verification
We prioritize transparency in our operations, making it straightforward for you to verify your holdings. You can easily access details about each trade made on your behalf, including the exact number of shares you own and any fractional shares sold. This information, along with gross proceeds and cost basis for each transaction, is readily available in the Holdings and Activity sections of your account dashboard.
Independent audits
To further bolster trust, we undergo regular assessments by independent auditors. These auditors meticulously verify that our reported holdings match our actual inventory. They also conduct random checks on customer accounts to ensure that account statements align with our internal records.
Segregation of funds
Your funds are kept distinct from Betterment’s operational funds. This segregation guarantees that your investments are held in your name, effectively isolating them from our corporate finances. In the unlikely event of financial difficulties, your assets remain secure and unaffected.
SIPC insurance
Additionally, your Betterment securities are protected by Securities Investor Protection Corporation (SIPC) insurance, which provides coverage up to $500,000 per customer, including a $250,000 limit for cash claims. Although this insurance does not protect against market losses, it does serve as a safety net in the event of brokerage failure.
What you can do to enhance your security
While we have implemented numerous security measures, your vigilance is paramount. Be cautious of suspicious communications, such as unexpected phone calls, texts, or emails containing unusual URLs or typographical errors. Remember, Betterment will never ask you for your password or 2FA code outside of the login process.
Utilizing a strong, unique password for your account is essential. If you encounter any questionable messages or have concerns, please reach out to us at [email protected].
In conclusion, by understanding and utilizing the multiple layers of security that Betterment offers, you can invest with confidence, knowing that both your account and your investments are well protected.
