5 Ways Betterment Differs from Its Competitors

Betterment’s investment services first came on my radar a couple of years ago. I invested $1,000 with the company as one of my investment experiments for the first Grow Your Dough Throwdown in January 2014. Later that year, I became an affiliate for the firm (gaining the opportunity for sales commissions on new accounts) and became a contributor to the firm’s online magazine.

Those in the financial industry refer to Betterment and similar companies as “robo advisors.” Robo references a robotic, rather than human, financial advisor. Advisor references the services the company provides as an SEC registered investment advisor (RIA), which involves the recommendation and management of a diversified investment portfolio for clients.

There are many similarities among robo-advisory services. But here are five ways that Betterment differs from similar advisory services, such as those from Wealthfront and TradeKing Advisors.

TradeKing Advisors Review

TradeKing Advisors offers professionally managed portfolios for investors as an alternative to self-directed investing. Investing in one of the firm’s Core Portfolios and/or Momentum Portfolios for a relatively small fee (less than 1% of assets under management).

6 Financial Goals to Consider

When I was younger, I was often told by financial professionals that I needed to set financial goals. I heard that I should first define my life ambitions. Next, I needed to marry my professional and personal aims with specific financial goals. Then I could plot my path to achieving my dreams.

However, when I was in my early twenties, I hadn’t yet gotten clarity on exactly how I might spend the next 30 to 50 years of my life. More than three decades after my first awkward conversation with a financial professional, I’ve learned that I am (relatively) normal.

Problems with Financial Advisers: Past Performance Doesn’t Predict Future Performance

A financial adviser once made a presentation to my husband that illustrated how our money invested with his firm (one of the largest financial institutions in the country) would grow over the course of the next 10 years. This projection indicated the trajectory of this growth and even indicated the investment balance each year into the future. This adviser concluded his sales pitch by saying that everything would be fine and he’d take care of our family.

I didn’t like the idea of handing my money over to this guy to manage. He had put together projections using the past performance of certain mutual funds. But past performance doesn’t predict future performance.

The adviser didn’t show him his track record in managing a portfolio or explain his rationale in choosing these mutual funds. I was pretty sure I could identify great-performing funds and then calculate future returns based on those funds’ past performance. Actually delivering returns on investments for the unknown future would be difficult. But picking winners from the past, well, that seemed pretty easy.

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