Betterment is a financial services company and describes themselves with the mission of making people's financial lives "better" in a variety of ways. The company offers both digital tools, such as their robo advisor, tax strategies, goal planning, and the advice of human experts for an increased cost.

Since Betterment is primarily a robo advisor, it works like this. When you first go to Betterment's website you can click on the "get started" option. When you click this button, Betterment takes you to a page that gathers more information on why you are there.

You can select an option that most accurately describes your reason for being there. Some of the options include general investing to build wealth, saving for your retirement, and saving money through Betterment's cash management option.

From there, Betterment will require you to set up a profile with them. They will gather your information including your email, phone number, address, and social security number. Once you have your profile established, you can start to use Betterment's services.

Betterment will learn more about your financial goals and recommend an investing portfolio that aligns with them. Betterment builds this portfolio for you so all you must do is put money into the portfolio and they handle the rest.

Betterment currently offers five account types. These accounts simply hold the investment portfolio that Betterment recommends for you and are not investments themselves.

Individual or joint brokerage account: A brokerage account simply allows you to deposit funds and start investing. This account does not have any special tax features, but anyone can open one. You can own this account as an individual or jointly with another person.

Traditional IRA: A Traditional IRA allows you to contribute dollars to save for your retirement. The contributions you make to a Traditional IRA may be tax deductible depending if you or your spouse contribute to a 401k and what your income is.

A Traditional IRA is a tax deferred account. This means that all the money you earn from the investments in the account is not subject to taxes in retirement. Once you are 59 and a half years old you can start to withdraw from the account at which point you will owe taxes.

Roth IRA: A Roth IRA is just the opposite of a Traditional IRA. The contributions that you make to a Roth IRA are not tax deductible. Instead, you contribute to the account with dollars that you have already paid tax on. However, a Roth IRA is a tax-free investing account.

This means that you will not owe taxes as the account grows, and you will not owe taxes when you pull the money out in retirement. In general, the account must be at least 5 years old and you must be at least 59 and a half years old before you can pull money out of the account.

SEP IRA: Simplified employee pension (SEP) IRAs are retirement accounts for business owners in which the contributions are tax deductible. Investments grow tax deferred and are taxed as income upon withdrawal in retirement.

Trust account: A trust account is a legal arrangement in which funds or assets are held by a third party for the benefit of another party.   

Betterment primarily builds their investing portfolios using low-cost ETFs. When you first sign up for Better, you will get a recommended portfolio that Betterment thinks is best for you based upon your goals, and tolerance for risk as you invest.

Betterment has a list of pre-built portfolio options that are designed to meet the needs of a specific type of investor. When you invest with Betterment, the idea is to trust Betterment to choose your investments for you and forget it.

However, Betterment does offer a bit more flexibility with their flexible portfolio option. This flexible portfolio allows you to adjust the weight of the assets within your account. For example, let's say that 5% of your portfolio was made up of an ETF that primarily invests in small cap stocks.

As an example, Betterment allows you to adjust that weight up to 10% of your portfolio if you want to own more small cap stocks. Betterment does give you an assessment before you make a change so you know if your decision to adjust the assets in your portfolio is smart or not.

Betterment does not advise a flexible portfolio option if you are an inexperienced investor as it can be challenging to choose your own investment allocation. As you invest, Betterment also employs a portfolio rebalancing strategy.

This simply means that Betterment will automatically adjust the investments within your account to match the original recommendation they gave you when you signed up for their service. For example, let's say that you signed up for Betterment and got a recommendation to hold 70% stocks and 30% bonds in your portfolio.

Let's say that for whatever reason your portfolio got out of alignment to where you held 75% stocks and 25% bonds. Betterment would automatically rebalance your portfolio to the original mix of 70% stocks and 30% bonds.

In addition to a more traditional mix of assets, Betterment does allow you to invest in crypto if you desire. Betterment currently offers three crypto portfolios to choose from. The Universe portfolio allows you to gain broad exposure to crypto as a whole.

The Sustainable portfolio allows you to invest in crypto assets that use low energy or are on a path to become more sustainable. The Bitcoin and Ethereum portfolio allow you to invest in the two most popular and largest cryptos on the market.  

Betterment does not recommend placing all your investments into one of their crypto portfolios as crypto is a highly volatile investment. However, if you are interested in the new digital currency, it is a plus knowing you can get limited access to crypto through Betterment.

Betterment also offers a range of digital financial tools that can further assist you in addition to automated investing. Most of these tools are found in Betterment's all in one financial dashboard. In the dashboard, you can do the following:

Betterment offers three strategies to help you with taxes as you use their service. First, Betterment offers tax loss harvesting. This is a strategy where Betterment will intentionally sell investments in your portfolio at a loss. This might sound counterintuitive, but selling investments at a loss can help reduce the amount of taxes you owe from investments that were profitable.

Betterment uses this strategy when it will benefit you. Secondly, Betterment employs what they call tax coordination. Betterment will place your least tax efficient investments in your most tax efficient accounts and your most tax efficient investments in your least tax efficient accounts. This strategy will help you be more tax efficient across the board as you invest.

You must turn this feature on in your account settings and it is a good idea to set it up if you have multiple investing accounts through Betterment. Thirdly, Betterment offers what is called tax impact preview. Before you make a withdrawal from your account, Betterment can help estimate what the potential tax implications of making that withdrawal would be.

Betterment estimates what the maximum amount of tax you would pay when you take your desired withdrawal. Betterment will also sell the investments within your account in the most tax efficient way when you do make a withdrawal. It is important to note that Betterment states this is only an "estimate" of the taxes you might pay and not an exact number.

Betterment has a couple options for financial advice from human advisors if you want something beyond their digital financial tools. First, you can opt to buy a "package" to meet with a certified financial planner. These packages are a one-time call of 45 to 60 minutes to get personalized financial advice. These range in price from $299 to $399.

Your second option is to upgrade to Betterment Premium. This unlocks unlimited calls, emails, and personalized advice from a certified financial planner at Betterment. To qualify for the program, you must have a minimum balance of $100,000.

The annual fee also increases from 0.25% to 0.4% if you decide to upgrade. Betterment does offer a 30-minute free consultation so you can learn more about the program and see if it is right for you.

If you not only want to manage your investments through Betterment, but also your cash, Betterment offers a couple of solutions.

High Yield Cash Account: Betterment's high yield cash account is currently paying an APY of 4.75%. The account is FDIC insured up to $2 million and there are no monthly fees, and a minimum balance is not required. You can also make unlimited withdrawals from the account.

Checking Account: Betterment's checking account has no fees, is FDIC insured up to $250k and comes with a cash back visa debit card that rewards you up to 5% cash back when you use the card to shop with select companies.

Betterment has two primary pricing tiers:
‍
Premium pricing is for Betterment premium which includes everything that you get with standard pricing plus access to a human financial advisor for personalized advice if you have a minimum account balance of $100,000 with Betterment.

Betterment offers two primary channels of customer support. First, you can opt to chat with their virtual assistant 24/7 to get answers to your questions. Second, you can contact their customer support line by calling Monday through Friday 9 am to 6 pm ET if you would rather talk to a person.

For what you get, the cost of Betterment is quite reasonable. The portfolio construction that Betterment offers is quite simple and would not impress Warren Buffet. However, if you are an inexperienced investor, Betterment's portfolios can point you in the right direction and are cost effective since Betterment uses low-cost ETFs.

Betterment has one of the best tax strategies of any robo advisor on the market today. Not only does Betterment help reduce taxes through tax loss harvesting, but it is also tax efficient by matching up inefficient tax investments with efficient tax accounts and vice versa.

Finally, Betterment does offer a few good cash management options. If you do not want to invest all your money, you can leave it in Betterment's high yield cash management account and still earn an attractive return of 4.75%.

The primary disadvantage of Betterment is the way you get access to human advisors. First, the "packages" that Betterment offers to meet with a certified financial planner are way too expensive. $299 to $399 for only 45 to 60 minutes is a big ask especially when you consider that a complete personalized financial plan can't usually be done in that amount of time.

If you do want access to a certified financial planner, it makes much more sense to upgrade to Betterment Premium so that you can always have access to a human advisor. The disadvantage to this is that you must build your account balance up to $100,000 before you qualify or transfer in $100,000.

Betterment is a good option if you are an inexperienced investor who wants to get into the investing game. Betterment does a good job of making simple investing recommendations based upon your needs. There is no minimum required to get started and the fees are relatively low which means there is a low barrier of entry.

If you are a long term investor and stick with Betterment, you will also be able to unlock access to a human financial advisor once your account balance reaches $100,000. With that being said, Betterment is primarily a low-cost digital solution to help you start investing.

It should not be considered a full-service wealth management firm. There are other components of a well rounded financial plan such as insurance planning, estate planning, and others that Betterment can not help you with.

If you are just getting started, Betterment is a good place to go. As you continue to build up your finances though, it might be better to look for a full-service wealth management company to help you create a comprehensive financial plan.