Betterment, the largest independent online financial advisor, announced earlier this week the launch of a new custom portfolio strategy, Flexible Portfolios. According to Betterment, retail investors now have the ability to control asset class weights within the Betterment portfolio, enabling them to decide how money is distributed. With the launch of this new strategy, Betterment will be the first online financial advisor to provide the tools to build a more personalized portfolio, with low-cost, fiduciary advice. Jon Stein, Founder and CEO of Betterment, stated:
“As our customer base has grown and matured, many sophisticated investors voiced the desire to allocate investments more directly with their views and outside investments. We’ve continually improved our offering to include more personalized portfolio options and deliver more value for our clients.”
Betterment reported that Flexible Portfolios balance personalization with the company’s investment philosophy by implementing behavioral guardrails encouraging positive investing behavior.
“Investors will be alerted of any allocation issues, such as poor diversification or overall risk, resulting from changes in asset class weights. Customers who utilize Flexible Portfolios will receive guidance on how they should be saving to reach their goal based on time horizon and expected returns. It is best suited for experienced investors who want greater control over their allocations, but also covet Betterment’s suite of tax minimizing features.“
Betterment also revealed that since its launch in 2010 it has continuously improved its advice model to meet the demands of its diverse customer base. The introduction of Flexible Portfolios follows a series of improvements to its platform, including enhancements to its allocation advice, portfolio optimization methodology and the addition of the Goldman Sachs Smart Beta and BlackRock Target Income portfolio strategies.
Betterment’s Flexible Portfolios will be available to retail customers with more than $100,000 in investments. The Flexible Portfolios option is complemented by Betterment’s features designed to increase after-tax returns: Tax-loss harvesting and Tax-coordinated portfolios.