Betterment Will Introduce Tiered Fees for Advisors in 2027
The platform is rolling out a new fee structure on January 1, 2027, that charges advisory firms based on their total assets.
Updated on Sept. 28, 2026 in Investing
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Betterment announced it will transition to a tiered fee schedule for its custodial services starting January 1, 2027. This change impacts the 600 registered investment advisory firms currently using the platform.
Why it matters
By simplifying pricing, Betterment aims to compete more effectively with larger custodians and reach greater scale. This shift highlights the growing trend of advisory firms diversifying their custodial relationships to manage assets.
Betterment manages $70 billion in assets and serves 1 million retail clients. The new fee structure will apply to 600 advisory firms, with costs tiered based on assets under management.
The players
Betterment
A New York-based financial services firm that provides robo-advisory, 401(k) management, and custodial services to investment advisors.
The details
The new fee model structures costs at 0.20% for firms with less than $10 million in assets and 0.12% for those exceeding that threshold. Firms holding more than $100 million in assets will be eligible for negotiated rates. These changes follow a broader industry shift where 50% of registered investment advisory firms maintained at least two custodial relationships by the end of 2024.
Timeline
2014: Betterment launched its custodian business.
End of 2024: 50% of RIAs utilized multiple custodial relationships.
January 1, 2027: The new tiered fee schedule goes into effect.
Money Landscape
The move aligns with the 2024 trend of diversified custodial relationships among RIAs, which saw 50% of firms working with multiple providers. Betterment is positioning itself to capture a larger share of this evolving market through automated tools and tiered pricing.
Advisory firms should review their current assets under management to determine how the 0.12% or 0.20% tier will affect their cost of service. Firms managing over $100 million should consult with their representatives regarding the upcoming negotiated rate eligibility.
The takeaway
The move to tiered pricing reflects the firm's attempt to scale its custodial business for independent advisors. Firms should begin evaluating their 2027 budget and custodial costs to prepare for the January 1, 2027, implementation date.
What happens next
Betterment plans to roll out additional automation tools throughout 2026 and 2027.
Further reading
For more on how custodial shifts impact portfolio management, visit Investing.
Source note: This article includes information reported by American Banker.
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