Woman using Bettermint app
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Founded in 2008, Betterment is the largest player among what are known as robo-advisers, automated investing services created to help people who typically don’t have enough assets to afford or need a traditional adviser.

The company has 270,000 customers and more than $10 billion in assets under management. It offers its clients a globally diversified portfolio of exchange-traded funds, or ETFs. It is goals-based, with portfolios tweaked for things like retirement planning, wealth building and other savings goals.

Although the firm is a pioneer in the space, many others have followed close behind, ranging from micro-investing firms like Acorns to the largest banks, several of which have announced plans to either build or partner with robos to offer similar services. Suffice to say, there are lots of options out there in the robo-advisory world.

How does Betterment work?

Bettermint app
Bettermint
It is clear Betterment has committed to making the sign-up process really easy. And it is — truly, my only snag was in picking a password when creating my account. My first two tries were not strong enough.

Early in the process, you’re greeted by Alex, a photo of a guy cropped in a circle. Alex is apparently supposed to guide you along in the process. The financial services industry is experimenting a lot with making their digital offerings more “human,” but this particular effort seems a little undercooked. By the end of the process, I had forgotten Alex.

After creating an account, Betterment started by asking me if I was retired. I’m not. It then asked me why I was investing — if I was saving up for a major purpose, for instance.

Bettermint account
Bettermint
It also asked if I had high-interest debt. Beneath there was a link to a blog post that told me if I have high-interest debt, I should focus on paying down the debt rather than investing. It is comforting to know that Betterment is willing to push away customers in the name of good financial hygiene.

Alex makes another appearance here, to tell me that investing is time consuming and Betterment is going to help me look for ways to automate it — yeah, that’s why I’m herecut my tax bill, improve my returns.

In under 10 minutes, I was tinkering with my risk appetite. I picked “saving for a major purchase,” so it recommended a portfolio for me with “moderate” risk — about 65 percent stocks, 35 percent bonds. But you can refine that. For fun, I moved the cursor over to about 93 percent stocks. Betterment told me that was “too aggressive.”

“This exposes you to a potential market drop, which your portfolio is unlikely to recover from over your term,” it advised, adding, “Please only commit to this risk level if you have good reason to.”

Sentence ending in a preposition notwithstanding, it is probably wise advice.

You can also consider other portfolio options, including a socially responsible one, as well as ones from BlackRock and Goldman Sachs.

Once you set a portfolio, you’re taken to a clunky contributions calculator that lets you look at your expected returns. The clunkiness is twofold. First, you can either pick a flat amount to invest or a recurring investment. You can’t set an initial balance and then play with recurring investments. It also recalculates a lot — so you can’t enter $1,000. You have to enter “1” then wait for it to tabulate that, then one zero at a time. So frustrating.

Finally, you arrive at a dashboard, which seems straight-forward and easy to navigate, including a 401(k) rollover, if you recently left a job.

I signed up via desktop, but the mobile app is sleek, with an all-white background and a simple black font. It isn’t cluttered and seems to be build for easy access.

A lot of finance companies are trying to make their apps more interactive, with content and other added services on their homepage. Betterment seems to avoid that approach. Indeed, the somewhat hidden tab for “resources” launches the company’s website, which uses responsive design. (In other words, you don’t have to pinch and zoom.) If you’re on the app, you’re there to look at your balance, do something with your money or message with a financial adviser. You’re not there to research.

Drawbacks

Remember the part about robo-advisers’ democratizing ability to bring financial advice to people with less money? Well, it seems like how you define that group is sort of subjective.

If you’re a new investor or don’t have a lot of money to invest, there are lots of cues that suggest this platform isn’t for you. For starters, there is the current promotion that promises up to a year of the service for free. In order to qualify for that year, you need $500,000 to invest. To qualify for even a month free, you need between $10,000 to $24,999.

Granted, Betterment’s fees are still low.

Its digital plan, which includes its automated portfolio management, tax efficient investing tools, a personalized financial dashboard and the ability to message with advisors, costs 0.25 percent per year. There is no minimum balance, either.

For 0.40 percent, the firm offers its premium package, including phone calls with financial advisers, to people with balances more than $100,000.

Balances are capped at $2 million.

Keep in mind, you’ll also pay fees to the ETFs in the form of expense ratios. Betterment portfolio ETFs charge modest expense ratios ranging from 0.03 percent to 0.25 percent per year.

Bottom line

If you’re considering a robo-adviser, Betterment makes it really simple to sign up for its service, and its success points to an ongoing experience that its customers apparently like.

It is funny to think of a fintech company started in 2008 as the incumbent in an industry, but Betterment has become that for the robo space. However, given the growth in the space, you’ll want to shop around and consider some of the other players, including what your own bank might be doing.

If you recently left a job and are considering what to do with your 401(k), Betterment is a potential option that could give you a better customer experience than what you might experience elsewhere.

Betterment also offers a good value to investors who are just starting out, at 0.25 percent a year. The company might just need to step up its game a bit in making those folks feel welcome.

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