Betterment has launched a pilot of its planned client referral program for a select group of registered investment advisors using its custodial platform, according to the firm and a recent regulatory filing.
The RIA custodian, robo advisor and 401(k) plan provider has started the Betterment Advisor Network to “connect select Betterment retail clients with independent RIAs on our platform for ongoing, personalized advice,” according to an emailed statement. “We’re beginning with a limited pilot program for a small group of advisors and plan to expand over time as we learn more about client demand and advisor needs.”
If a retail client elects to participate in the referral program, they will receive the names and contact information of one or more advisors using Betterment’s custodial services, according to a Feb. 10 regulatory filing. The advisor and client can then work out an agreement for services, with Betterment charging the advisor a 0.25% annual fee on the referred client’s account assets.
“BAN Advised Clients who enroll in the referral program may be referred based on their financial situation and investment preferences, such as service needs, cost considerations, location and desired communication (remote or in-person),” according to the filing.
The firm launched the referral program to lure RIAs from custody giants Charles Schwab and Fidelity Investments, while also fending off other tech-focused competitors such as Altruist and Robinhood/TradePMR.
Last year, BNY Pershing and Goldman Sachs’ Ayco also disclosed in regulatory filings that they had, or would soon launch, client referral programs.
New York-based Betterment currently has about 600 firms on its custodial platform, as well as 1 million clients across both retail and advisors representing more than $60 billion in assets.
Earlier this week, the firm announced it had added asset manager offerings to its model marketplace from Goldman Sachs, State Street Investment Management and Vanguard.
“Advisors are using our model marketplace to bring institutional investment expertise into their firms with less overhead,” Alison Considine, director of strategy and operations at Betterment Advisor Solutions, said in a statement.
