Item 5: Account Requirements and Types of Clients52 Item 6: Portfolio Manager Selection and Evaluation52 Item 7: Client Information Provided to Portfolio Managers63 Item 8: Client Contact with Portfolio Managers63 Item 9: Additional Information64 Form ADV Part 2B71 Firm Description Betterment LLC (“Betterment”), a Delaware limited liability company organized in 2009, is an SEC-registered investment adviser that maintains its principal office at 27 West 23rd Street, 6th Floor, New York, NY 10010. Betterment is a wholly-owned subsidiary of Betterment Holdings, Inc. (“Holdings”), which is also the parent company of MTG LLC dba Betterment Securities, Betterment for Business LLC, Betterment Financial LLC, and Argonaut Asset Management, LLC.
Types of Advisory Services Betterment offers investment advisory services to clients primarily over the internet via its interactive online platform and mobile application (collectively, Betterment’s “online interface”).
For certain clients receiving Supplementary Services (as defined below), Betterment also provides investment advice over the phone, video, or email communications with Betterment financial consultants.
This Brochure is meant to help you understand the nature of the advisory services offered by Betterment, whether the advisory services offered by Betterment are right for you, and the potential conflicts of interest associated with Betterment services. You should review it carefully.
Betterment provides investment advice and discretionary asset management services for clients that span (1) portfolios composed of exchange-traded funds (“ETFs”) and, in certain cases, mutual funds, and stocks (collectively, “traditional securities”), (2) portfolios composed of digital assets (“crypto” or “crypto assets”), and (3) a cash management offering. Traditional securities portfolios consist of sets of globally diversified stock and bond allocations, which Betterment typically constructs from low-cost, liquid, index-tracking ETFs, as further described in Item 8 below. Traditional securities portfolios and Betterment’s cash management offering are offered through the Wrap Fee Program, as defined and further described in the Wrap Fee Program Brochure Appendix below (traditional securities portfolios and cash management, collectively “wrap accounts”). Crypto portfolios consist of allocations of crypto assets that provide diversified exposure to a variety of crypto sectors, which Betterment typically constructs based on market capitalization, risk-return profile, and other factors, and which include a cash allocation, as further described in Item 8 below. For the avoidance of doubt, an ETF that invests in crypto assets is considered a traditional security and is offered through the Wrap Fee Program.
A wrap fee program has a fee structure that provides clients with advisory and brokerage services for a bundled fee with no additional account activity charges for execution of trades. As such, Betterment charges Wrap Fee Program clients a single bundled fee that covers the investment advisory services it provides, as well as the brokerage and custodial services associated with holding and trading securities provided by its affiliated broker-dealer, Betterment Securities.
With respect to Betterment Crypto (as defined below), clients are charged a single investment advisory fee by Betterment as well as transaction expenses associated with crypto trading and custody assessed by Betterment’s third-party partner, Gemini Trust Company LLC (“Gemini”), which serves as the custodian of client crypto accounts.
Betterment offers investment advisory services to three types of clients: (1) a retail service whereby individuals, trusts, and other legal entities receive advisory services from Betterment (such clients are referred to as “Retail Clients”); (2) a platform whereby individuals, trusts, and other legal entities receive advisory services from Betterment and from an unaffiliated registered investment adviser or other provider of investment advice (“Advisor”), subject to Betterment’s approval, with which the individual, trust or legal entity has an independent relationship (such clients are referred to as “Third-Party Advised Clients” and such business is referred to as “Betterment for Advisors”); and (3) a platform whereby employer-sponsored retirement plans (“Retirement Plan Clients”) and plan participants (“Participants”) receive 401(k) plan advisory services from Betterment, acting in an ERISA 3(38) fiduciary capacity, and 401(k) recordkeeping and/or administrative services from our affiliate, Betterment for Business LLC (such business line, collectively with other employee financial wellness products, certain of which are offered through our retail service, “Betterment at Work”).
Retail Clients, Third-Party Advised Clients, Retirement Plan Clients and Participants are collectively referred to in this brochure as “clients.” Retail Clients, as well as Third-Party Advised Clients if elected by their Advisor and agreed to by Betterment, are eligible to receive crypto advisory services (such services, “Betterment Crypto”), as well as participate in Betterment’s Wrap Fee Program. Crypto assets cannot be held in Individual Retirement Accounts (“IRA”s), 401(k) accounts, 529s, or HSAs (defined below).
Retail Client accounts are managed by Betterment pursuant to each client’s Advisory Agreement and the client’s instructions. Third-Party Advised Client accounts are managed by Betterment pursuant to each client’s Betterment for Advisors Sub-Advisory Agreement and in conjunction with the Advisor’s and/or Third-Party Advised Client’s instructions. Retirement Plan Client accounts are managed by Betterment, in its capacity as an ERISA 3(38) investment manager, pursuant to an Advisory Agreement specific to the Retirement Plan Client’s employer-sponsored 401(k) plan, as well as Participants’ instructions. Clients who receive Betterment Crypto services also agree to a specific Crypto Addendum to their Advisory Agreement, as well as Gemini’s User Agreement. Clients with an IRA also agree to specific custodial agreements with Inspira Financial, which serves as the custodian and directed trustee for Betterment IRA accounts and 401(k) plan assets, respectively. Clients with a Health Savings Account (“HSA”) agree to a specific HSA Addendum to their Advisory Agreement, as well as a Custodial and Deposit Agreement with Optum Bank. Clients with a 529 Education Savings Account (“529”) that is serviced by Ascensus College Savings Recordkeeping Services, LLC (“Ascensus”) and integrated with the Betterment interface agree to a 529 Addendum to their Advisory Agreement, Ascensus’s Terms and Conditions, as well as terms issued by their selected 529 plan. Clients who use Betterment’s Student Loan Management Services agree to a Student Loan Management Addendum to their Advisory Agreement, as well as the User Consent and Privacy Policy of Spinwheel Solutions Inc.
(“Spinwheel”).
Betterment additionally offers Retail Clients with a balance of at least $100,000 in Betterment traditional securities, crypto, and Cash Reserve (as defined below) accounts (“Account Balance Threshold”) the opportunity to receive discretionary and non-discretionary advisory services over the phone, email, video, or other mediums from Betterment’s team of financial consultants through participation in Betterment’s Premium Services. Clients who do not receive Betterment Premium Services and who receive Betterment’s investment advisory services online are referred to as clients of the Betterment Digital plan. Clients receiving Betterment Crypto services receive such crypto advisory services either online through the Betterment Digital plan, or with the addition of Betterment Premium Services. In connection with Betterment’s Premium offering, Betterment reserves the right, in its sole discretion, to reduce or waive the Account Balance Threshold. The Account Balance Threshold does not include funds held in Betterment for Advisors, Betterment at Work, or Betterment managed HSAs offered in partnership with Optum Bank (each as described below).
No minimum account size is required to maintain a Betterment Digital wrap account or crypto account. The minimum deposit is $10.
Betterment’s investment advisory services, both relating to Wrap Fee Program and Betterment Crypto, are not designed to provide clients with a comprehensive financial plan. Wrap Fee Program services are built to advise clients on how to achieve particular financial goals that clients indicate in their account. All of Betterment’s services are highly dependent on receiving accurate information from clients. If clients provide Betterment with inaccurate information or fail to update promptly the information provided to Betterment when it changes, the quality and applicability of Betterment’s investment advisory services could be materially impacted.
In addition, there are other pieces

of information about a client’s personal financial situation that are not elicited through Betterment’s online interface that could inform Betterment’s advice if it were provided to Betterment. This is true even for clients who communicate with Betterment’s financial consultants via phone, video or email. Similarly, not every piece of information that we collect is factored into your investment advice. Clients should consider this limitation on Betterment’s service, which is a function of Betterment primarily providing an internet-based service.
Before depositing funds with Betterment, or in any investment or cash account, investors should consider paying off debt, particularly to ensure that minimum debt payments are made on time to avoid late payment penalties, extra interest, and higher finance charges. Investors should also consider prioritizing paying off high-interest debt, which typically is associated with credit card debt or unsubsidized student loan debt. Also, investors should consider the options that are available to them through workplace savings plans provided by their employers that offer match programs.
Tailored Services and Investment Restrictions A. Wrap Fee Program With respect to Betterment’s Wrap Fee Program, clients customize their accounts according to their financial situation and investment goals, and choose among several portfolio strategies described in the Wrap Fee Program Appendix attached below. To use Betterment’s services, clients and/or their Advisors must inform Betterment of their financial situation and preferences through Betterment’s online interface. Based on this information, Betterment will recommend clients an asset allocation of stock to bonds for the selected securities portfolio strategy, or if a Third-Party Advised Client, the Advisor will recommend their clients an asset allocation based on the selected securities portfolio strategy or Custom Portfolio (defined below).
In its Wrap Fee Program, Betterment generally organizes its advice into one of five categories – education, retirement, emergency fund, major purchase, and general investing – each with different attributes and a discrete advice model. After identifying an advice type, clients or their Advisors select a securities portfolio strategy and provide details about their investing purpose.
Betterment solicits input on a client’s anticipated time horizon in order to recommend an allocation, which is a specific set of asset classes (i.e., stocks, bonds, and if applicable, other asset classes) and the relative distribution among those asset classes in which a client’s account will be invested (the “Allocation”). Betterment allows clients to adjust the recommended Allocation to their own risk preference and provides information about the risk level of the selected Allocation. An Allocation differs depending on whether a client’s goal is taxable or tax-advantaged and when the client expects to draw on their goal. In general, Betterment will recommend to clients who indicate a more conservative advice type (such as an emergency fund) or shorter time horizon a more conservative Allocation and will recommend to clients who indicate a more aggressive investment advice type or longer time horizon a more aggressive Allocation. Clients and/or their Advisor either accept the recommended Allocation or elect a different Allocation based on their or their client’s own risk tolerance or preferences.
Betterment’s advice framework is described in more detail in the Betterment Wrap Fee Program Appendix.
Clients and/or their Advisors have the ability to impose reasonable restrictions on the management of their portfolios. Clients and/or their Advisors are able to restrict the securities purchased for their accounts by electing a Flexible portfolio strategy to choose from the available pre-selected asset classes and adjust allocation weights. Clients and/or their Advisors also have the ability to enable or disable several automated portfolio management features.
The investment advisory services provided in connection with Betterment’s Wrap Fee Program are described in more detail below in the Betterment Wrap Fee Program Appendix.
With respect to Betterment Crypto services, clients choose among several crypto portfolio strategies based on their investment preferences. Clients have the ability to impose reasonable restrictions on the management of their crypto account by electing to exclude (or include if previously excluded) any crypto asset from their portfolio by using a block asset feature in Betterment's online interface, which causes Betterment to generate a trading order to sell the blocked crypto in the account’s next available trading opportunity, subject to the trading limitations described below in Item 12 - Brokerage Practices. Each crypto portfolio strategy consists of crypto assets that are chosen and weighted to fit the particular investment goal of the strategy as a whole, as well as a cash allocation used to help manage liquidity constraints with Gemini’s exchange as well as to draw from to satisfy Betterment’s annualized investment advisory fee, as described in Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss below. Betterment provides clients with information about each crypto portfolio strategy to inform their decision-making but does not make recommendations to clients that they invest in crypto. More information about the crypto portfolios is described below in Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss.
Clients should understand that investing in crypto is highly speculative and only appropriate for individuals with a high risk tolerance and who are able to bear the risk of potential loss. Due to the aggressive and speculative nature of cryptocurrency, crypto portfolios are not suitable for investors looking for conservative strategies, low risk, lack of or low volatility, or capital preservation. Betterment advises clients to limit their crypto investment to no more than 5% of their reported total investable assets, and clients who are also Third-Party Advised Clients should discuss with their Advisors the appropriate amount of investable assets to allocate to crypto, if any. Betterment does not monitor or limit the amount of a client’s crypto investments relative to the client’s reported total investable assets.
C. Other Financial Wellness Services Specific to Employees through Betterment at Work Employers If Betterment at Work employers offer, and their employees elect to receive, student loan management services from Betterment, such services will include non-discretionary financial advice relating to how clients may prioritize the repayment of their linked student loans, as well as the ability to make student loan repayments via payroll deduction, employer match (if applicable), and/or from a linked checking account. More information about Student Loan Management Services is available atwww.betterment.com/legal/student-loan-services. Additionally, if Betterment at Work employers offer, and their employees elect to receive, 529 education savings services from Betterment, such services will include non-discretionary financial advice relating to the selection of a 529 plan, as well as the ability to make contributions to certain externally managed 529 accounts with Ascensus-supported, participating plans via payroll deduction, employer match (if applicable), and/or from a linked checking account. More information about 529 education savings services is available at https://www.betterment.com/legal/529-services. Additionally, Betterment at Work allows Retirement Plan Clients to elect to match qualified student loan payments in eligible Participants 401(k) Accounts.
Betterment at Work also makes available to Plans financial coaching packages of non-discretionary advice with Betterment financial consultants.
Wrap Program As described above, Betterment offers its investment advisory services for wrap accounts through the Betterment Wrap Fee Program. For more information about the Wrap Fee Program, please see the Wrap Fee Program Brochure Appendix attached below. Betterment charges a wrap fee that covers the cost of its investment advisory services, as well as custody and trading services provided by its affiliate, Betterment Securities.
Betterment Crypto services are offered outside of its Wrap Fee Program because crypto portfolios are subject to trading fees charged by Betterment’s crypto custodian, Gemini, and Betterment charges a different investment advisory fee for Betterment Crypto as compared to its Wrap Fee Program. There are also certain automated portfolio management features, such as tax loss harvesting and dividend reinvestment, available in Betterment’s Wrap Program for wrap accounts, that are unavailable for crypto accounts. Both traditional securities portfolios and crypto portfolios are eligible to be automatically rebalanced, subject to certain account balance minimums, as described below in Item 8 - Methods of Analysis, Investment Strategies, Risk of Loss. Assets Under Management As of February 29, 2024, Betterment managed $45,932,816,617 in client assets on a discretionary basis.