Betterment is a popular robo-advisor that provides automated investing services. It makes investment management accessible for everyone through easy sign-up, goal planning, portfolio creation, and auto-deposits. However, there may come a time when you decide to move your investments away from Betterment and need to delete your account.
This guide will provide step-by-step instructions on how to permanently delete your Betterment investment account along with important factors to consider beforehand.
Overview of Betterment
For those unfamiliar, here’s a quick overview of Betterment:
- It’s an online investment platform founded in 2008 that provides robo-advisor services and portfolio management.
- Investors can open an account easily online and get investment advice from algorithms.
- Based on your risk appetite, Betterment creates and automatically balances a diversified portfolio of low-cost ETFs.
- It offers individual investment accounts, IRAs, 401ks, and more.
- Betterment charges an annual fee of 0.25% to 0.40% as account management fees.
Reasons to Delete Your Betterment Account
Here are some common reasons you may want to delete your Betterment investment account:
- You want to switch to another robo-advisor or investment platform
- You are consolidating your investments into one place
- You no longer need automated account management
- You want more control over your investment choices
- You need certain investment options Betterment doesn’t offer
- You are unsatisfied with Betterment’s fees or performance
Step-by-Step Guide to Delete Your Account
Follow these steps to permanently delete your Betterment account:
1. Download Tax and Account Statements
Before deleting your account, download PDF statements for your records, especially any tax documents. Under the “Activity” tab, you can access account statements and tax forms.
2. Transfer Your Assets
Decide where you want your investments transferred to – a new brokerage account, IRA, or your bank. Initiate a full asset transfer out of Betterment.
3. Sell Any Remaining Assets
If any assets remain, you may need to liquidate them. Under Settings, go to “Close Account” to initiate sale of remaining assets.
4. Withdraw Cash Balance
Once all assets are withdrawn, only a cash balance will remain. Withdraw this amount to your linked bank account.
5. Close Your Account
Finally, go back to Settings -> Close Account and click “Close Account.” Confirm your account closure.
Your account will now be deleted permanently within 7-10 days.
What Happens When You Delete Your Account?
Here is what you can expect after your Betterment account is closed:
- You will no longer be able to access your account online.
- Betterment will liquidate your portfolio and transfer out any remaining cash.
- You will need to enter your investment details manually into tax software.
- Your bank account will be unlinked from Betterment’s system.
- You will stop paying Betterment’s management fees.
- Your personal data will be removed from Betterment’s servers.
- You can no longer recover deleted account data or transaction history.
Alternatives to Closing Your Account
If you don’t want to delete your Betterment account fully, here are some alternatives to consider:
- Downgrade to Basic plan – This has no management fee but lets you maintain your investments.
- Make account inactive – You can temporarily stop deposits into your account without closing it.
- Withdraw partial amounts – Withdraw just a portion of funds and assets if needed.
- Lower auto-deposits – Reduce scheduled deposits instead of stopping fully.
Can You Reopen a Closed Betterment Account?
Once you close your Betterment account, it is highly difficult to reopen the same account. However, you always have the option to open a brand new account with Betterment.
You will have to set up auto-deposits, link bank accounts, and create a new investment portfolio from scratch. Your previous performance history will not carry over.
Tips to Make the Transition Smooth
Follow these tips to ensure the transition process when closing your Betterment account is smooth:
- Initiate transfers of assets early to avoid delays.
- Double check there is no remaining balance before account closure.
- Have your new investment account open and ready before closure.
- Maintain records of your previous investments and performance.
- Consult a tax advisor regarding any consequences.
- Notify Betterment support about account closure if issues arise.
Can You Delete a Betterment Joint Account?
For Betterment joint accounts with two holders, both account holders have to approve account closure for the deletion process to be completed.
Both holders will need to communicate with each other and Betterment to close the joint investment account successfully.
Conclusion
Deleting your Betterment investment account is straightforward but needs proper planning to ensure a smooth transition of your assets. Follow the step-by-step guide outlined above to delete your account successfully and minimize disruptions. Consider the alternatives before permanent account closure as well.
