Is Betterment Safe and Should You Invest?

Betterment is a robo-advisor that allows you to create and manage your investment portfolio online. Whether you’re building wealth for retirement or other financial goals, Betterment functions as your digital investing solution. With billions in assets under management, the company offers a range of online services, including 11 pre-built portfolios, tax-loss harvesting features, and competitive management fees.

A financial advisor can offer strategies for building and managing an investment portfolio that meets your long-term goals.

Why Betterment Is Safe For Investors

Betterment is one of the largest online investing services and has a strong reputation among investors. This is good, but it also means that the company has hundreds of thousands of clients to please. Before we determine whether this robo-advisor is safe for you, let’s look at the products and services it offers. You can also check out our full Betterment review to see how it stacks up against other robo-advisors.

The investment management account options Betterment offers are a standard platform and Betterment Premium. The first option provides portfolio management to users with balances under $100,000. For balances under $24,000 there is a monthly fee of $5. Balances between $24,000 and $100,000 pay 0.25% of assets under management (AUM) per year.

Customers of the standard service get access to 11 different automated investment portfolios – including a climate impact portfolio and a social impact portfolio – automatic rebalancing and tax-loss harvesting. Betterment Premium, however, charges users with account balances of at least $100,000 a 0.65% fee. You also get phone access to Certified Financial Planners™ (CFP®).

But can you trust Betterment with your money? The answer is an unequivocal yes. When you manage your investments through Betterment, all the assets and securities in your portfolio are strictly under your ownership.

Additionally, your personal investment money and Betterment’s company’s funds remain separate for the entirety of your membership. This means you retain full control over your money, allowing you to add, withdraw or transfer as you please. Furthermore, Betterment cannot use your money to pay for any of its company costs, and it also has a fiduciary duty to invest for you and act in your best interest. In addition, if you choose to close your account with Betterment, it will simply transfer your funds back to your linked checking account.

Third-Party Protection and Regulation

Further, the Securities Investor Protection Corporation (SIPC) protects all Betterment accounts, up to $500,000 per account. This protects you against any losses that may arise as a result of broker error. So if you’re thinking about investing with Betterment, you should have both a safe and successful experience.

Finally, Betterment is a member of the Financial Industry Regulatory Authority (FINRA). It oversees and regulates brokerage firms, stock brokers and exchange markets. As a private, non-profit agency, it mandates how investors and securities participants can behave and interact. Should any participants be non-compliant, the agency has the authority to discipline those involved. At its center, FINRA works to protect investors and maintain market integrity.

Are Robo-Advisors Safe in General?

Robo-advisors have grown in popularity largely because they offer convenient, automated online investment advice and management for lower fees. Some of the top robo-advisors include Vanguard, Betterment, and Wealthfront

These digital services also provide automated tools to build your investment portfolio. While many robo-advisors primarily use non-human investing consultation, many companies are offering users both robo-advising and traditional advising options. In other words, some services also allow you to speak to a human financial advisor while building your portfolio digitally.

But are all robo-advisor services safe? Most robo-advisors, like Betterment, operate under a federal fiduciary standard. Betterment is registered with the U.S. Securities and Exchange Commission (SEC), so it has a federal duty to serve your best interests. Furthermore, most robo-advisor companies also maintain heavily encrypted websites, so you typically won’t have to worry about your data and money’s safety. However, there are certain measures you can take to enhance your safety. This includes downloading malware prevention software and turning on your computer’s firewall.

However, it’s essential to note that, like any investment platform, Betterment does not offer protection against market volatility or investment losses. Investing inherently involves risks, and returns are not guaranteed. Despite its secure structure, potential users should assess their risk tolerance before investing.

You can also determine the best advising option through a few other ways. Thorough research can go a long way in your online investing search. One way to choose the right advisor is to see what others are saying. All robo-advisor services generally apply the same safety measures for their users’ portfolios. You could gain additional insight by assessing the experiences that others, including coworkers and friends, have had with the company.

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What to Do If You Feel Your Money Isn’t Safe

If you’re concerned about the security of your money, you should first try to get in touch with the company’s customer service representatives. Normally, they’ll be able to offer comprehensive solutions on how to proceed and possibly more information on anything that has led you to be worried about your investment dollars.

However, if you’re worried that your funds are at risk and don’t want to take any chances, you can close your account with the company. The company will then transfer your money back to your checking account. This should be considered a last option.

Betterment, for instance, transfers its users’ money back to their checking accounts after they close an account. While the step is necessary for the worst-case scenario, you should first communicate with a company representative to see if the company can provide a solution. You don’t want to lose out on time when your money could be working in the market if you can avoid that result.

Account Protections vs. Investment Risk

Betterment’s safety features focus on protecting investors from broker failure, fraud, and operational issues. Account assets are held in the client’s name, segregated from company funds and protected by SIPC coverage within statutory limits. Regulatory oversight and custody rules address what happens if the firm itself encounters financial trouble.

These protections do not apply to market performance. SIPC insurance does not cover losses caused by declines in asset values, poor market conditions or portfolio volatility. If the underlying investments lose value, those losses remain the responsibility of the investor, even though the account itself is protected.

Robo-advisors like Betterment manage portfolios based on asset allocation models and risk profiles. While diversification and automated rebalancing can reduce concentration risk, they do not prevent losses during market downturns. The platform executes a strategy, but outcomes still depend on market behavior.

Separating platform safety from investment risk helps clarify expectations. Regulatory protections address custody and operational stability, while investment results depend on time horizon, asset mix and market conditions rather than the security of the provider.

Bottom Line

An investor checking up on their investments.

Overall, Betterment can be a great, low-cost online investing service if you’re confident in the security measures it takes. While the robo-advisor maintains its status as one of the largest digital services in the county, it also maintains its fiduciary duty to its users. It’s a member of FINRA, is registered with the SEC and customers are protected by the SIPC. Your money is in good hands with Betterment in terms of fraud, but we believe it’s also a good investment option for the right situation.

Tips on Investing

If you’d like to invest but aren’t sure where to begin, consider seeking professional advice. A financial advisor can help you develop a plan for reaching your financial and investing goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you decide a robo-advisor is suitable for your financial situation, make sure to carefully weigh the products and services offered by each company you research. Here are our top 10 robo-advisors to help you choose.