Betterment Increasing Their Rates

[Guide2003]

Alarmist title, I know, but true for those in the $100k-$2m range. Anyone get that email today that vaguely outlines the new fee structure? I couldn't find much on their site either, but the link below had some more info. I guess it is easier to get in with smaller portfolios and in the grand scheme the benefits I get outweigh the new .25%. I would think that for most it would be cheaper to pay an independent CFP for an outside look at your finances rather than the single session that the .4% gets you.

Thoughts?

https://www.fastcompany.com/3067717/new-money/betterment-adds-human-advisors-casting-doubt-on-pure-play-robo-investment-models

[rxmurphy]

Hi, got the email today as well. Just started with them about 4 months ago in the dollar range you mention, so I am a bit put off. I was looking for pure robo, now looks like that is not a choice with Betterment? Will have to take another close look at Vanguard again.

[prognastat]

I've been with Betterment for 2 years and though they haven't been terrible I have been able to outperform them by quite a bit both years I have been with them so far. Due to this I was already planning on moving to Vanguard in the new feature to simply remove the additional fees from the equation. If they had been outperforming regular index funds I would be more interested in staying with them, but they have consistently underperformed lower fee options so though I don't think staying with them is necessarily stupid in any way since they perform decently and are still far better than leaving the money in a savings or a CD etc.

The new pricing structure is just another reason to move to vanguard as my taxable stache grows.

I can see though how lowering the fees for low range investors and capping for the extremely high range investors is likely to open them up for growing the amount invested with them which I assume is their goal.

[Guide2003]

I was looking for pure robo, now looks like that is not a choice with Betterment? Will have to take another close look at Vanguard again.

It's still "pure robo" unless you opt into the higher rates, but now you pay .25 instead of .15. Its still pretty cheap in the long run, considering the tax loss harvesting that I could not replicate on my own, and the rebalancing that I don't want to replicate on my own. I think part of it is that the honeymoon is ending and its getting time for them to start making money. I guess I always knew the rates would go up at some point in order for them to stop relying on venture capital, but the notification style (I found out through reddit/media first before the email to customers) was a little disappointing.

I guess its starting to look a little more like the Schwab and Vanguard products that were launched to compete with roboadvisors at first.

[tj]

if enough outflows happen, they might reconsider.

They've never been profitable, so will be curious to see how this shakes up and if this change makes them profitable.

 Will people pay the higher fees to utilize the CFP either annually or unlimited?

I know a lot of their business is throug Betterment Institutional with RIA's, so I wonder fi they are raising the fees on those clients too.

[MatthewK]

Looks like MMM is working on an update to this. I'm just over the 100k mark with an IRA, Roth and taxable combined. Moved a year ago from Wells Fargo who I believe was charging about 1% for accounts. I may be interested in moving to Vanguard, unfortunately I've read Betterment makes it very difficult to transfer from them. Anyone with firsthand experience?

[Guide2003]

Whoops, there was already a thread on this. Mods, I don't know if you can combine them.

http://forum.mrmoneymustache.com/investor-alley/betterment-price-increase/