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New Betterment Feature Automatically Invests Client's Extra Cash

New Betterment Feature Automatically Invests Client's Extra Cash

Betterment, the so-called robo advisor for investors and advisors that uses algorithms to create and sustain appropriate portfolios, added a new tool Tuesday that’s designed to up the ante when it comes to auto deposits: Instead of a predetermined, static amount, it automatically pulls into the portfolio any excess funds from a client’s outside bank account above a set threshold.

Instead of just designating a dollar amount to be automatically deposited into a Betterment portfolio at regular intervals, the new "SmartDeposit" feature will check the bank account balance weekly and pull any amount of money above the amount an investor has designated for the automatic transfer. 

For example, if a client sets the level at $1,000 and an auto-deposit amount of $100, SmartDeposit will deposit $100 any time it detects the bank account exceeds $1,100.

Though most customers use the existing auto-deposit feature every month, said Matt Salefski, the project manager behind SmartDeposit, most would prefer to deposit more if they could, for instance, after receiving a paycheck.

“One of the things I do is find opportunities to automate on behalf of the customer,” Salefski said. “[It’s] a great example of us looking at our customer’s behavior and figuring out great things that we can build that can automate [and] improve their outcomes.”

The tool is available to customers on both the retail and institutional side, though Betterment is not currently allowing advisors to set it up for their clients. Investors using Betterment through an advisor have to set it up on their own.

Of course, sometimes a customer doesn’t want a computer to automatically take extra money out of their bank account. They could be saving for an upcoming expense, or receive an unexpected bonus or gift that they would rather spend than invest.

“[We] heard that concern from customers, especially around the summer time when people are going on vacation,” Salefski said. “So what happens is, every time we check, we’ll send an email to the customer saying we checked your account, will deposit x amount of dollars and they have 24 hours to cancel.”

Salefski said there is a link within the email to cancel the transaction immediately, and that it also easy to turn of SmartDeposit from the web or mobile app. Customers can also withdrawal ash from their Betterment account anytime if they need to.

Salefski said Betterment learned a lot about how much clients should keep in their checking account over time from its RetireGuide product, and said the program would help guide clients to setting an appropriate amount for SmartDeposit to withdrawal.

“[It’s] a pretty simple product, but there’s been a lot going on behind the scenes to make sure we are doing the right things for the customer,” Salefski said.

In the future, Betterment would like to improve SmartDeposit’s ability to determine how much a client should withdrawal by taking upcoming auto-deposits into account. Salefski said the company is also considering an auto-withdrawal feature that will take funds out of Betterment if it detects a client’s banking account is too low.


TAGS: Technology
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