Financial planning software company RightCapital announced a partnership with Betterment for Advisors, opening up a significant growth avenue for the young Connecticut-based firm, founded out of the CEO’s home just 3 years ago. The business agreement marks the culmination of an integration that began a year ago as a way to get the two firms’ technologies to work together.
The announcement also helped illuminate just how big Betterment for Advisors has grown since it launched its advisor-focused business, originally called Betterment Institutional, in 2014. Before the partnership “about 100 RIA firms” were already using both RightCapital and Betterment for Advisors, said RightCapital CEO Shuang Chen. With the new partnership, “a few thousand firms” in Betterment’s advisory channel will be receiving material on the partnership and will have the opportunity to advise clients using the RightCapital financial planning toolkit.
That latter characterization was not disputed by Cara Reisman, head of Betterment for Advisors, who noted that RIAs working with both companies should expect to have financial plans ready for clients more quickly than they would using other software.
The number of advisors on Betterment’s advisory channel platform has been closely guarded and Chen declined to cite a specific number of advisors who would have access to his company’s software following the partnership. “Over the long run, we’d like to grow the partnership by several thousand firms,” he said. “If we think we’re going to only double [or] triple the user base, we probably wouldn’t do the partnership.”
The partnership comes shortly after RightCapital launched a tool in early August designed to help financial planners show their clients the best way to pay back student loans. The tool demonstrates the impact of different payment tactics for clients’ student loans, a particularly important differentiator for advisors serving clients who are “high earning, not rich yet.” The company has garnered praise from advisors for its planning capabilities.
Besides pointing out the student loan repayment tool, Reisman noted that Betterment for Advisors’ firms will have tax-efficient retirement income withdrawal strategies, including Roth IRA conversions, and a Medicare module, as a result of the integration. Betterment for Advisors announced an enhanced rollover tool last month, as they continue a series of mini-launches of new features. The advisor-focused business of the automated investment platform has been working to give advisors more control of client assets.
Additionally, discounts will be offered to Betterment for Advisor firms that purchase software licenses, Chen noted, and RightCapital users will have the opportunity to sign up for Betterment for Advisors, providing cross-selling opportunities for both businesses.
Although both companies hope for an even tighter integration in the future, there is no plan for RightCapital to be absorbed by Betterment. The two company’s philosophies line up, noted Chen. “We’re happy with what we have,” he said. “They’re a very aggressive growth-type business. We are too.”