Betterment is a popular robo-advisor that offers automated investing services and portfolio management. Their set-it-and-forget-it approach appeals to both beginners and experienced investors alike.
However, there may come a time when you need to close your Betterment account, whether you are moving to a new investment platform or consolidating finances. Canceling your Betterment account is relatively straightforward, but there are some key steps to take for a smooth transition.
How to Cancel a Betterment Investment Account
To fully cancel your Betterment investment account, you first need to withdraw your funds before closing it. Here is the cancellation process:
- Log into your Betterment account online and go to “Settings”.
- Under settings, click on “Accounts” to view your investment accounts.
- Locate the account you want to close and click “Withdraw Funds”.
- Confirm your bank account details for the transfer. The withdrawal may take 4-5 business days to process.
- Once funds are withdrawn, go back to Accounts and click “Close Account” for the emptied account.
- Review the closure details and check the box to confirm account closure.
- Your account will now show as closed in your Betterment dashboard.
Withdrawing funds and confirming closure can be done in under 5 minutes. Easy!
Consider Downgrading vs. Full Closure
Before fully closing your Betterment account, consider simply downgrading to a free plan instead so you retain basic access:
- You can switch to the Betterment Digital plan (no advice) for no account fees.
- Or reduce your Betterment Premium fee by lowering your account balance.
Downgrading allows you to keep your Betterment investment accounts open at a lower or no cost based on your needs and balance. You can always do a full closure later on if desired.
Transferring Investments Before Closing
For taxable investment accounts, you may want to transfer holdings to another brokerage firm instead of liquidating and withdrawing entirely.
Betterment charges no account transfer fees, so you can directly transfer positions rather than selling. Here’s how:
- Open your new brokerage account with the receiving firm.
- Initiate an account transfer request with them listing account details.
- Betterment will facilitate delivering your securities to the new account.
- Once completed, you can then close your emptied Betterment account.
Direct brokerage-to-brokerage transfers avoid taxes and fees on sell transactions. Just make sure your new brokerage allows incoming transfers.
Timing Considerations When Closing Accounts
Before closing a Betterment account, factor in these timing considerations:
- Allow 5+ days for withdrawal transfers to bank accounts.
- Account transfers to new brokers may take 1-2 weeks.
- Know tax implications if liquidating retirement accounts like IRAs.
- Confirm any quarterly fee billing cycles to avoid surprises.
- Check if you’ll miss any dividend payments during transfers.
Planning the timing and transfers carefully ensures you don’t incur any unnecessary fees or tax impacts when closing your accounts.
What Happens to Your Betterment Account After Closing
Once you formally close your Betterment investment account, here is what will happen on the back end:
- Your account will be deactivated in Betterment’s systems.
- You will no longer be able to log into the account online.
- Any recurring deposits or auto-rebalancing will be discontinued.
- You’ll receive a final account closure confirmation via email.
- Betterment will retain some personal data for compliance recordkeeping.
- You can always re-open a new account in the future.
After confirming closure, treat your Betterment account as permanently cancelled on your end. Your investments and funds will now be housed elsewhere.
Avoiding Account Closing Fees
The good news is Betterment does not charge any account closure fees when you cancel an investment account. Here are some tips to keep it free:
- Withdraw funds first before closing to avoid idle balance fees.
- Ensure no pending transactions or dividends when closing.
- If transferring securities, select a broker with no incoming transfer fees.
- Close accounts in the same quarter to batch fee billing cycles.
- Double check for any ancillary fees from linked services like Cash Reserve.
Betterment aims to offer transparent pricing with no hidden closure fees. But proactive planning ensures you don’t get hit with avoidable costs when cancelling.
Alternatives to Fully Closing Your Account
Some alternatives to fully closing your Betterment account include:
- Downgrade to a free Digital plan to maintain basic access.
- Transfer accounts “in-kind” to another broker instead of liquidating.
- Consolidate multiple accounts into one to simplify.
- Withdraw funds but keep account open in case you reinvest later.
- Discuss switching to a Betterment retirement focused plan if appropriate.
Evaluate whether partially scaling back your Betterment accounts could align better with your financial needs instead of fully cancelling.
Notify Your Tax Advisor When Closing Accounts
If you are closing taxable investment accounts or retirement accounts, be sure to notify your financial advisor or tax professional.
They can help ensure you:
- Avoid any unnecessary tax implications on transfers or liquidations.
- Take any required minimum distributions (RMDs) for IRAs before closure.
- Report any realized capital gains or losses on your taxes accurately.
- Complete any custodian-to-custodian 401(k) rollovers properly.
Getting tax guidance provides an extra layer of oversight when cancelling Betterment accounts with potential tax impacts.
Steps to Take After Account Closure
Once your Betterment account is fully closed, here are some final steps to take:
- Download any account statements or tax forms you may still need.
- Confirm your final account balance withdrawals or transfers.
- Adjust any automatic deposits or payments linked to the account.
- Route future investment contributions to your new accounts or platforms.
- Shred or safely store any old Betterment account paperwork.
- Update your emergency contacts, beneficiary details, and other records.
Handling these administrative tasks ensures a clean transition after severing ties with Betterment.
Cancelling Robo-Advisor Accounts with Other Firms
The account cancellation process outlined here also generally applies to other popular robo-advisors:
- Charles Schwab Intelligent Portfolios
- SoFi Automated Investing
- M1 Finance
The platforms may vary, but withdrawing funds and confirming account closure via the website or app is standard. Just verify specific fees and transfers times with each robo-advisor.
Maintaining Future Investing Flexibility
By following best practices when cancelling your Betterment account, you can ensure a smooth transition to a new investment platform while maintaining future flexibility.
Keep tax implications in mind, avoid unnecessary fees, and tie up loose ends administratively after account closure. With some planning, you can switch your investments while keeping your financial options open down the road.
In summary, cancelling a Betterment account involves withdrawing funds then confirming closure online. Consider downgrading or transferring investments first to retain flexibility. Notify your tax advisor to avoid implications.