Betterment is a robo-investing platform that launched in 2008.
Through the use of computer algorithms, investors have their money fully managed for a fraction of the cost of a traditional financial advisor.
Since this is a newer investment offering compared to some platforms that have been around for many decades, you might be wondering if Betterment is a safe investment platform.
In this article, we will be covering the SIPC insurance which covers your investments within Betterment.
We will also look at the banking offerings from Betterment, which instead have coverage through FDIC insurance.
In addition, we will look at the security features of the Betterment app itself.
Yes! Betterment is a member of the Securities Investor Protection Corporation.
This provides you with coverage of up to $500,000 in the event that your broker loses your financial assets. Since Betterment is a member, you have coverage for your assets.
There is also up to $250,000 of coverage for the cash held within your account for the purpose of investing.
However, keep in mind that this does not protect you from financial losses experienced as a result of investing in the financial markets.
It is important to understand that the FDIC only covers deposits at bank accounts. As a result, it only applies to the Betterment savings and checking accounts.
Betterment itself is not actually a bank. Instead, they partner with existing FDIC insured banks to offer banking services within the app.
In the case of their checking account, their partner is NBKC Bank which is FDIC insured. This gives you up to $250,000 of coverage for the cash held within your Betterment checking account.
For the savings account referred to as Betterment Cash Reserve, they partner with multiple banks. This actually allows them to offer higher levels of FDIC insurance, since they are able to spread deposits out across multiple banks.
Individual savings accounts have coverage for up to $1,000,000.
Joint savings accounts have coverage for up to $2,000,000.
Lastly, it is important to consider whether or not your personal information is safe with Betterment.
Here's the steps Betterment takes to safeguard client information:
Betterment takes numerous steps to keep your account and information safe and secure.