Betterment is introducing solo 401(k) plans for independent advisors and their clients, expanding its RIA custody platform with a product tailored for business owners without employees.
Solo 401(k)s, also known as one-participant 401(k)s, offer the same tax advantages and contribution limits as traditional 401(k) plans. For financial advisors who serve business owners, as well as those managing retirement plans, the addition of solo 401(k)s could enhance their service offerings. Built on the same technology that powers Betterment at Work, the new solution aligns with the company's broader push into the retirement and custody space.
“The solo 401(k) is one of our most requested products, and we are excited to launch a solution designed to meet the needs of self-employed individuals,” said Thomas Moore, head of Betterment Advisor Solutions. “This innovation fills a gap for independent business owners and the advisors who guide them.”
Advisors who run solo practices can also take advantage of the plan, a Betterment spokeswoman confirmed. Features of the solo 401(k) offering include paperless account opening with no setup fees, fully digital contributions, spousal participation at no additional cost, and options for both Roth and traditional tax treatment.
Betterment, originally launched over 15 years ago as a robo-advisor, built its reputation by offering automated investment management at a lower cost than traditional human advisors. The company charges an annual management fee of 0.25% on assets under management for its basic service, compared to the roughly 1% fee typically charged by human advisors.
Over the years, Betterment has expanded its retirement plan and RIA custody business, providing advisors with asset management services, technology solutions, and client asset custody. To attract more RIAs, Betterment has enhanced its platform by adding new features, such as mutual fund availability in custom portfolio construction tools.
In addition to strengthening its advisor-focused services, Betterment continues to grow its retail robo-advisor business. This week, the company announced it is acquiring the robo-advisor accounts of Ellevest, a digital wealth management firm founded by Sallie Krawcheck in 2014.
With more than 900,000 customers and over $55 billion in assets under management, Betterment is expanding its footprint in both the advisor and retail investor segments, reinforcing its position as a key player in digital wealth management.
