Betterment will revise custody-platform fees for registered investment advisers (RIAs) and other advisory firms starting Jan. 1, 2027. The new tiered schedule starts at 0.20% for firms with less than $10 million in assets, as the company seeks to attract advisers that already work with multiple custodians. CEO Sarah Levy said Betterment’s scale now allows it to lower and simplify pricing.
The new rates apply to Betterment Advisor Solutions. Firms with more than $10 million in custody assets will pay 0.12%, while pricing for clients with more than $100 million will be negotiated. Betterment has notified existing custody clients; some have agreements that allow them to retain at least part of their current fee structure.
New fee tiers take effect in January 2027
Betterment said the changes reflect the growth and profitability of its business. Levy said the company is now profitable, giving it more room to adjust both customer pricing and its business arrangements. Last year, Betterment also changed fees for its automated investment-advisory service for individual clients.
Based in New York, Betterment operates a custody business, a 401(k) offering called Betterment at Work, and an automated wealth-management service for consumers. The company manages more than $70 billion in assets and has 1 million retail customers. Its adviser custody service, launched in 2014, is used by about 600 RIAs; Betterment has not disclosed the assets held through the service.
The platform offers advisers portfolio management, tax optimization, client onboarding, trading, billing and reporting. Levy describes it as “a custodian plus a TAMP [turnkey asset management platform] and more.” Beyond the platform fee, Betterment charges for automated transfers of client accounts. Levy said that is the business’s only transaction-based fee.
RIAs increasingly use multiple custodians
Charles Schwab and Fidelity Investments have long dominated the RIA custody market. Betterment and other newer providers are using technology tools and comparatively transparent pricing to compete for roles as advisers’ second or third custodian.
Stephen Caruso, wealth management practice director at Cerulli Associates, said the use of multiple custodians by advisory firms is growing. Cerulli data show that, as of the end of 2024, at least 22% of RIAs worked with three or more custodians and another 28% used at least two. Larger firms are less likely to rely on a single custodian. Caruso said it remains to be seen whether Betterment can win business on the strength of its technology; changing or adding custodians takes time and resources.
Betterment says advisers can use its platform alongside Schwab or Fidelity for selected clients. After assets are transferred, clients can access built-in portfolio management, billing and account-opening tools, while firms can keep operations with other custodians separate if needed. The company also earns revenue from cash management, lending, third-party payments from fund companies, and order-flow payments through its trading and clearing partner, Apex Fintech Solutions.
The competitive landscape is also shifting. Vanguard has agreed to acquire Altruist, while some large financial institutions are working with Anthropic on Claude tools for financial advisers. Betterment’s website compares a 3.50% annual percentage yield on its Cash Reserve product with a 0.38% national average. Its FAQ says the company is independently owned; Altruist, by contrast, has agreed to be acquired.
AI tools target adviser onboarding
Alongside the fee changes, Betterment has developed an AI document-reading tool to speed up account opening for custody clients. It has also introduced a referral service for some RIA clients, which Levy said could be expanded to more customers. She said the company is continuing research with advisers and plans to roll out more automation tools this year and next, including tools aimed at reducing manual data entry.
Levy said the goal is to free advisers to spend more time on client relationships, not to replace them. She acknowledged that large RIAs may still need major custodians for requirements such as complex derivatives. For advisers seeking to reduce the number of technology integrations they manage, Betterment is positioning its custody and automation services as an alternative.
Adding tools can also increase the number of systems advisers have to oversee. Levy said that, in the short term, more tools can make their workflows more complicated. Whether the revised fees and expanded automation bring Betterment new custody assets will depend on how RIAs weigh its services, technology integration and existing custodian relationships.