Earlier this year when Betterment for Advisors Director Tom Moore
Be it onboarding new clients or transitioning legacy assets, the leader of the
So this week's rollout of an
Just like the advisor feedback that led to how these tools work, the release is Betterment For Advisors saying back to the advisor community that Betterment is investing in its RIA product line, and is committed to its wealth management partners in the long term.
"I think that actions always speak louder than words. And we certainly want that message to come across," Moore said. "Speaking more to the product itself, the other message we want to send is that we want our advisors and new prospective advisors to think of Betterment as a place where they can custody all of their client accounts.
"The message is that you can bring all of your clients … we can handle those clients with more complex needs."
Billed as "tax-smart asset transitions," the upgrades from Betterment come as
As wars are waged over the trillions of dollars expected to change hands over the next two decades, Arizent's exclusive great wealth transfer study was conducted online in April among 394 wealth management professionals at a mix of wirehouses, national/regional broker-dealers and RIAs.
The goal of the research is to better understand how financial advisors are addressing the greatest transfer of wealth in U.S. history. Specifically, the research explores whether advisors have the right tools and technology to attract a new cohort of younger customers who will inherit an estimated $73 trillion through 2045, effectively communicate and onboard those clients, and build tailored investment portfolios.
"It's important to note that 2045 isn't a hard deadline. Harvard University estimates that it won't be until 2060 or later that the last of the boomers who were born in the early 1960s will die," the report states. "Whatever the exact timeline, the point is that assets will be changing hands, and advisors need to prepare to serve these clients — and their offspring, who will become the beneficiaries of the next wave of wealth transfer."
Considering that 53% of respondents see generational wealth as the greatest opportunity for growth in their practices, the historic shift is on the radar of more than 1 in 2 advisors. Some 57% of respondents report having a wealth transfer strategy, defined in the research as a framework to ensure a client's ability to successfully transition assets.
Key findings of the Arizent research also include firms expressing an interest in investing in digital tools to support customer onboarding, education and ongoing communications.
Respondents with a wealth transition strategy in place are significantly more likely to invest in these digital tools compared with their counterparts that don't have one (56% versus 38%). In open-ended responses, advisors note that digital tools/technology, or a lack thereof, can be a roadblock to bringing in and supporting younger clients.
The new features on offer from Betterment will give advisors the ability to set specific capital gains allowances and easily turn rebalancing on and off on behalf of clients in order to transition client assets to new portfolio models with greater precision and tax optimization.
The new automation is built to help advisors deliver personalized, tax-efficient investment management at scale and pairs seamlessly with Betterment's latest update to its suite of digital client onboarding options for advisors, which was released in April.
Other improvements include tax optimization in which client assets are automatically moved in a tax-efficient manner; streamlined onboarding with automated features designed to help advisors onboard multi-client households; and customizable drift thresholds that allow advisors to personalize drift thresholds for each risk level and goal.
Moore said the idea is to turn over a burdensome task to automation and deliver a better client experience while saving advisors time in the process.
"Not only are we allowing advisors to custody legacy holdings, but we've actually built in automation to help unwind those securities in a tax-smart manner. There are platforms out there that do that (and)
"Let's accommodate, from a custodial perspective, these securities, which kind of brings us in line with the Schwab, TD, Fidelitys of the world. But then let's sprinkle the Betterment magic on that and create real automation that helps these advisors scale these sorts of accounts."
He added that the idea behind "smart transitions" has been around for years. Betterment's account rebalancer — built on a rules-based algorithmic system that eliminates an advisor's need to trade — is at the core of the tech, and the new transition tools are really an iteration of that rebalancer.
"It's something that has been on the mind of Betterment and our product people for years. But it really made sense to bring it to market now because of the opportunity that we see in the RIA landscape," Moore said. "But again, that's what's unique about this. Betterment is super well positioned to help advisors manage these issues, but do it in a way that doesn't cause them to incur really outsized tax hits. And we're well positioned because of that core trading technology that we've always had."
