Author Topic: Betterment - It's a nightmare to transfer assets OUT  (Read 1202 times)

scrapper

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Betterment - It's a nightmare to transfer assets OUT
« on: July 25, 2018, 06:31:28 PM »
TL;DR - Betterment appears to be putting artificial barriers to customers transferring assets in-kind to another brokerage.  This is a dirty business practice, and it is unique to Betterment.  Wealthfront does not play these games.  I strongly urge any current or potential new Betterment customers to read and understand what you're in for if you ever want to change brokerages. 

Situation:   I established a Betterment account in Nov. 2015.  I currently have approx. $244K in a taxable account.  I recently decided to transfer my assets out to a different brokerage.  I do NOT want to cash out, as the tax bill to do so would be huge.  I want to do an in-kind transfer of my current holdings. 

This *should* be simple - I've done it before with other brokers.  The standard process is an ACATS transfer, you go to the new brokerage, fill out some information about your current account, click submit.  The process is all electronic, and it takes maybe a week or so to complete. 

Betterment does not support the ACATS method.  They use a snail mail process, documented here:  https://help.betterment.com/hc/en-us/articles/115004243163-Withdraw-or-transfer-funds-from-Betterment-to-a-different-institution

Some key points:
  • Betterment wants my new broker to send them "transfer paperwork" to an address in NYC via snail mail.  They do not specify what paperwork they need. 
  • If my account is worth > $250K, they need the transfer paperwork mediallion signature guaranteed.  Thankfully I don't fall into this category.
  • Betterment also needs "a copy of the first page of your most recent Betterment statement, which you can find on your Activity page".   That's right, Betterment wants me to send them a snail mail copy of a statement that I download from them.  Once you stop laughing, ponder this - how am I supposed to combine this statement with the "transfer paperwork" from my broker?  I have no idea.  Maybe my broker is supposed to send them a letter.  Then I send them a letter.  And somebody in NYC combines these two letters so that I have a full transfer request.
  • And finally, "Generally transfers are completed within 3-4 weeks of receiving the paperwork."   The quoted sentence is directly from a response to an email I sent to support@betterment.com.  I wrote to ask them if they can do an ACATS transfer out of Betterment.  They replied with the same information from the link above, plus this little tidbit about transfers taking 3-4 weeks *after* they receive my snail mail(s).

I am beyond pissed.  They are going out of their way to make this process difficult and time consuming.  Apparently, they believe that this will act as a deterrent to switching brokers.  It is a shameful business practice. 

In case you're wondering, Wealthfront makes this process simple and fast using ACATS.  See here: 
https://support.wealthfront.com/hc/en-us/articles/115003462743-How-do-I-transfer-my-account-out-of-Wealthfront-to-another-firm-

I'd like to hear from anyone who has successfully transferred assets in-kind from Betterment. 
I'd also like to discourage anyone from putting their assets into this company. 
Thanks.
« Last Edit: July 27, 2018, 12:36:21 PM by scrapper »

jacoavluha

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Re: Betterment - It's a nightmare to transfer assets OUT
« Reply #1 on: July 30, 2018, 11:23:40 PM »
I transferred an account in kind from Betterment to M1 finance and it was quick and simple. Actually kinda scary how easy it was. Iím not even sure I signed anything. Note that only whole shares transfer, youíll be left with sfaxtions that Betterment will probably automatically liquidate but I canít recall for sure.

dacalo

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Re: Betterment - It's a nightmare to transfer assets OUT
« Reply #2 on: August 07, 2018, 06:54:58 PM »
I transferred an account in kind from Betterment to M1 finance and it was quick and simple. Actually kinda scary how easy it was. Iím not even sure I signed anything. Note that only whole shares transfer, youíll be left with sfaxtions that Betterment will probably automatically liquidate but I canít recall for sure.

Hmm, two conflicting stories. I have read somewhere else (Bogleheads) that transfer process was really bad.

chasesfish

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Re: Betterment - It's a nightmare to transfer assets OUT
« Reply #3 on: August 09, 2018, 09:24:52 AM »
Helping a friend transfer out right now.  The projected tax bite was only $500, so after reading these stories I recommended the cash out and transfer method as she intends on just buying a Fidelity index fund with the proceeds.

chicagobluu

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Re: Betterment - It's a nightmare to transfer assets OUT
« Reply #4 on: August 13, 2018, 10:56:16 PM »
I transferred an account in kind from Betterment to M1 finance and it was quick and simple. Actually kinda scary how easy it was. Iím not even sure I signed anything. Note that only whole shares transfer, youíll be left with sfaxtions that Betterment will probably automatically liquidate but I canít recall for sure.

This is interesting to hear.  I've maintained a Betterment account for a few years and am mostly happy with them but not crazy about having to pay the management fee.   As far as I can see, M1 Finance will provide the same level of auto balancing without having to pay the fee.   I may try the transfer myself and I'll make sure to update my article that about M1 Finance being a Betterment killer.