Betterment Will Introduce Tiered RIA Custodial Fees
The firm will shift its fee structure for advisory partners on January 1, 2027.
Updated on Sept. 28, 2026 in Investing
Live Poll
Is it worth the extra effort for your firm to switch to a cheaper investment custodian?
Betterment plans to implement a new tiered fee schedule for its custodial services starting January 1, 2027. The firm, which manages $70 billion in assets, aims to streamline its pricing to better compete with larger custodians in the market.
Why it matters
By simplifying fee structures, Betterment seeks to capture a larger share of the market by attracting registered investment advisory firms that currently manage their assets across multiple custodial relationships.
Advisory firms with under $10 million in assets will face a 0.20% platform fee, while those managing over $10 million will pay 0.12%. Betterment currently serves 600 registered investment advisory firms as a custodian.
The players
Betterment
Betterment is a New York-based financial services company that provides automated investment, 401(k), and custodial services to over 1 million retail clients.
The details
The updated pricing structure accompanies a broader push by Betterment to enhance its platform through AI-driven document reading and new client referral services. These tools are designed to support the 600 independent firms that utilize its custodial infrastructure alongside its robo-advisory and 401(k) services.
Timeline
Betterment launched its custodial business in 2014.
At the end of 2024, 50% of RIAs reported using multiple custodial relationships.
The new fee schedule will take effect on January 1, 2027.
Market Dynamics
Betterment's tiered fee introduction follows the documented trend of registered investment advisory firms increasingly splitting their assets across multiple custodial platforms. By simplifying costs, the firm aims to position itself as a primary partner in a competitive custodial landscape.
Advisory firms utilizing Betterment should prepare for these pricing shifts, which may alter the overall cost of their back-office operations starting in 2027. Clients whose advisors use Betterment may see changes in how their investment portfolios are managed as firms adjust their custodial usage.
The takeaway
Firms should evaluate their current custodial relationships against the upcoming fee changes to ensure cost efficiency. The integration of new AI-powered tools may also offer significant operational benefits for advisors looking to scale their practices in the coming years.
What happens next
Betterment plans to roll out additional automation tools and AI-powered document reading features throughout 2026 and 2027 to support its custodial partners.
Further reading
For more information on the current landscape of advisor services, visit the Investing section.
Source note: This article includes information reported by American Banker.
Live Poll
Is it worth the extra effort for your firm to switch to a cheaper investment custodian?
