Betterment (also known as Betterment.com) is an online-investment adviser registered by the U.S. Securities and Exchange Commission based in New York, New York. Betterment provides investment advice and diversified, fully automated investment management to customers for less than the typical cost of a traditional financial adviser or wealth manager. All transactions occur online – it is an execution-only service. Betterment does not have brokerage sales representatives or advisers.
Betterment’s services opened in 2010, it was the start of a new era—that of automated investing, which uses algorithms and automation technology to manage investment portfolios. The growing popularity of automated investing has prompted the press to dub Betterment and others as “robo-advisors.” We already use robo-devices in many other parts of our daily lives to optimize transactional activities.
Robo-Advisor is the automation of every task that’s considered part of good portfolio managemen, from providing a tax-efficient diversified portfolio to advising you on allocation advice, and then following up with you on an ongoing basis to help keep your money on track to hit your goals.
Looking back on the history of Wall Street and the main street investor, one of the strongest trends has been the steady move away from hands-on, DIY investing styles toward more packaged products (like the emergence of the modern mutual fund in the last century, as well as ETF funds and target date funds in the last few decades) to more sophisticated online money management systems today.