It’s a little-discussed fact, but employees who use their money wisely are often more productive on the job. There are many reasons for this. For one, people who are good with money tend to be systematic and disciplined in other areas. Another reason is that people who invest tend to have more peace of mind than those who have no financial preparation for the future.
While many businesses provide their employees with investment options in-house, there are a still those on your payroll who are going to find these options difficult to understand and use. This feeling is widespread, and it’s why many investors are turning to robo-advisor services. Betterment is considered by many to be the best of the bunch. To get a full understanding of what Betterment is and how it works, check out this 2017 Betterment review.
Betterment is typically used to provide incredible diversification for privately held accounts like IRAs or traditionally taxed investment accounts. However, the system can also be used to manage 401(k) funds, as well as a couple of lesser known accounts that may be available through your company. But why make the switch? We’ll give you the best reasons who Betterment increases investment participation among employees, and in so doing improves morale and productivity.
Why Betterment is the Simplest Option
Though they primarily target individual, private investors, Betterment is on the radar of some corporate bodies because it is so simple and so affordable to use. Signing up with Betterment is about as easy as creating a Facebook account. The investor makes an initial deposit and quickly see where the money goes and how much it is likely to grow in the coming years, under various market conditions.
The user selects risk tolerance, which allocates more money to stocks for high risk tolerance and more money to bonds for low risk tolerance. That’s about it. From here, Betterment allocates funds added each month (or whenever your employee decides to deposit; auto-deposits are a common choice) to the asset classes chosen when the account was made. Your employees can change their allocations at any time, but otherwise this system is accurately described as “set it and forget it”.
Why is Betterment Better That Some Workplace Plans?
Betterment is a valuable option for employees for three main reasons.
It’s cheap. Betterment charges a flat 0.25% annual rate. This is cheaper than many funds and almost all rates charged by active managers. What’s more, Betterment almost always pays for itself, because it automatically performs services like “tax-loss harvesting”, where losing funds are strategically sold and replaced so that the user can write the losses off on their taxes. Some people essentially make money on Betterment for this reason alone, without even considering the returns they get from their actual portfolio.
Betterment is the easiest investment option anywhere. That’s what the company strives to be, and we think they really nail it. There are platforms which are slightly cheaper, but no one is simpler. This increases participation, which increases employee financial security, which increases sense of wellbeing and productivity.
Betterment is fairly low risk. Account-holder funds are so widely distributed between holdings from all over the world that a single market downturn is unlikely to damage a portfolio in the same way that holdings in a single stock would suffer from the same conditions.
Betterment is a great choice to help employees manage their own retirement accounts, without giving them so many options that they feel overwhelmed. Many corporate retirement packages can be replicated with a Betterment account, for less money and with higher participation rates than with any other provider. Betterment wasn’t primarily built for business, but your business may find it’s the best option anyway.