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Betterment drops account minimums on custom portfolios

Betterment removed its minimum account size on custom portfolios that once prevented clients with lower balances from customizing their asset allocation.

The leading independent robo advisor announced that retail clients no longer need to have $100,000 invested to access the firm’s Flexible Portfolio tool, which enables them to alter allocation weights of their core portfolios. Currently, the portfolio lets clients individually customize the weights of each ETF and see their portfolio’s expected return.

“We received an increased demand for Flexible Portfolio from clients with account balances below $100,000 who typically want to make adjustments due to a specific situation,” says a Betterment spokeswoman in an email.

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The firm, which says it manages $16 billion in assets for approximately 400,000 clients, launched the Flexible Portfolio a year ago as part of a broader strategy to cater to the needs of advisors on the firm’s Betterment for Advisors platform. Since then, Betterment received an increased demand for the tool from retail clients that face extenuating circumstances, like being over-exposed to one asset class, says the firm.

Betterment clients can use the standard platform, which includes low-cost investing, automatic rebalancing and tax-saving strategies, for a 25 basis-point annual fee. The firm's Premium offering adds additional services for 40 basis points a year.

Betterment for Advisors has at least 450 companies on its platform, according to the company. Betterment does not not break down how much of the total AUM is held on the advisor platform.

The minimum was removed only for Betterment retail customers, says the spokeswoman. Advisors on the Betterment for Advisors platform had access to the service without a minimum balance and can also utilize a broader range of commodities — including, REITs and high-yield bonds — that retail customers cannot.

The only other account minimum Betterment has is for its Premium offering, where customers must maintain $100,000 in investable assets. The firm says it does not plan on removing the minimum fee in the foreseeable future.

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