In today’s post, It will help new investors answer the question about whether or not to join Betterment. This review is not from my point of view, but from someone that has been with them for 4 years. If you find this blog post helpful then make sure to send it to a friend!
This review on investing with Betterment comes from Reddit user rlynnk7. I have personally not used them and felt that readers that don’t read Reddit can read a review on them.
After being with Betterment for 4 years, the first thing that isn’t that great is the fees they charge on index funds.
They charge an additional fee for the same or lower returns than you would get in a standard market index fund. They put you in those funds, so you effectively have to pay both the fund fee and their fee.
I am just going to say it now then later; I strongly suggest that you really learn how to invest on your own and use a platform like Robinhood. You won’t have t deal with fees because there isn’t any and you can invest in what you want. But that is only my opinion and not professional advice..
2) Complicating Investing
I really like this second point because making investing hard for anyone can be annoying. The Reddit user states,
They overcomplicate investments. If your income is increasing over the years, you may not want the tax harvesting they apply to your account. Also, in an effort to tax harvest, they end up investing you across multiple ETFs. Therefore, if you ever want to change to a different broker and simplify your holdings to one or two market indexed ETFs, you’re going to have to sell many ETFs and realize a gain.
Tax harvesting is when you sell investments that you have in order to reduce tax liability or having to pay on gains. What I will say is that Betterment’s feature on tax loss harvesting is something that is nice to have for long term avid investors, but this review says otherwise.
3) Customer Service, Bank Transfers, fees, etc
The last point the user states is a combo of things that wouldn’t be fun to deal with when investing.
Betterment does not support ACH / In-Kind transfers for retirement funds to other brokers. If you want to transfer your IRA to another brokerage, they will force you to liquidate your IRA. In addition, they are extremely slow with poor customer service. Getting the IRA transferred can take over a month, and they have a huge lag between when they liquidate your IRA and when they send the check to the new brokerage firm. This results in the funds being out of the market for what can be weeks. In a volatile market, this can be extremely costly. I experienced it first hand and lost thousands. They also made sure to charge me their management fees immediately when I requested the transfer. When I asked for a refund of the latest management fees to compensate for the high financial loss and the poor customer service, they refused. If you have an IRA and anticipate ever wanting to transfer to another broker, avoid Betterment at all costs.
Like I said above, I have not used Betterment services so this Reddit user review is very helpful. Send this post to a friend that would also benefit from reading this review. Thank you for supporting The Finance Starter and don’t forget to read other posts that I have written.