Friendly heads up for anyone leaving Betterment

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whanaumark
Posts: 49
Joined: Tue Mar 14, 2017 1:15 pm

Friendly heads up for anyone leaving Betterment

Post by whanaumark »

I have recently moved from Betterment to vanguard to set things in a bogleheadish direction

I'd like to warn anyone doing this, that if they use a 'Tax Coordinated Portfolio' and submit transfer requests for the Tax Deferred and Taxable portions simultaneously that the transfers are actually done at separate times

Betterment's robos then proceeded to 'rebalance' my account, generating ~1.4 k in capital gains, although it could have been far far worse if my tax deferred was larger.

My advice if transferring from Betterment:
Call them and ask them to lock all trading from your account before submitting transfer paperwork. This prevents wanton robo trades :wink:

I have also warned Vanguard's transfer team to be on the watch for this

To their credit, Betterment did own up to the mistake and refund me the likely taxes at a federal rate. Certainly, they were under no obligation to do this for a customer leaving. The customer team there did a sterling job of correcting this mistake
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bostondan
Posts: 717
Joined: Sun Aug 18, 2013 12:21 pm
Location: Boston, MA

Re: Friendly heads up for anyone leaving Betterment

Post by bostondan »

The same issue applies when leaving other robos. I had some unwanted trades take place from FutureAdvisor. They were similarly kind in refunding some of the tax costs to me. The taxes owed were certainly my responsibility, but they accepted that the only reason for realizing the capital gains now was due to a mistake on their part.
“There may be times when we are powerless to prevent injustice, but there must never be a time when we fail to protest.” - Elie Wiesel
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