Betterment Partners With Fidelity To Bring Financial Advisers Into The 21st Century

The online investment platform has partnered with Fidelity Institutional Wealth Services to create a tool that will be available to Fidelity's adviser clients.

The new product, called Betterment Institutional, allows a financial adviser to provide clients with a branded Betterment portfolio, and then help manage that client's investments through the site.

By offering technology that frames Betterment as a partner, not a threat, to financial advisers, the company is bridging the gap between advisers and the new generation of online investment platforms.

While Betterment isn't the only company under the "robo-adviser" label to hybridize automated and human advice (consider companies like Personal Capital), the digital olive branch may improve the traditionally strained relationship between human advisers and robo-advisers.

"We've always found value in adviser relationships, and we've sought to work with advisers from day one," says Betterment cofounder and CEO Jon Stein. "Advisers are a great conduit to bring Betterment's platform to more end customers."

"It's what I would call a hybrid solution," says Stein. "There are tools for the end client, the web app and the mobile app, all the automated tax-loss harvesting and rebalancing, and also tools for the adviser. The adviser gets to take advantage of those same efficiencies. Plus, they get easy, streamlined account signup, fee collection, and a dashboard from which they can manage their customer accounts."

He points out that Betterment Institutional should help advisers focus on their areas of expertise, while leaving the little stuff to Betterment. "Advisers are much less interested in doing paperwork and account opening, and pushing the rebalance button once a quarter," Stein explains. "I think part of the promise of a platform like this, marrying technology with the adviser, is that they can use more time to develop client relationships, to prospect for new clients and grow their business, and to focus on areas that are really the highest margin activities."

David Canter, executive vice president of practice management and consulting at Fidelity Institutional Wealth Services, has worked with Betterment on the launch. "Over the past 12 months we've seen a lot of interest in digital adviser platforms, because advisers are starting to go more downmarket in terms of their minimum and they've been wondering, 'How can I effectively and efficiently service those clients of tomorrow, those mass affluent and emerging affluent clients?" he explains.

With the Betterment platform, he says, "rather than being on the sidelines as observers, watching the state of digital advisory firms populate the marketplace, advisers can actually take advantage of the solutions for their own practices."

"Two or three years ago, the common refrain I heard from advisers was that they had to raise their minimums because they felt like they couldn't possibly provide the full degree of services to clients that they could at these lower asset thresholds," remembers Canter.

"They realized they were turning away a lot of business," he adds. "And Americans want and need advice. It's a bull market for advice. What the promise of Betterment Institutional can provide is the ability to hopefully scaleably service those clients they couldn't otherwise accommodate into their practices, and focus on what I like to call the clients of tomorrow."