Self-Directed Investing Disclosure

Betterment LLC (“Betterment”) offers its self-directed investing feature (“self-directed investing”) to clients who wish to buy, sell, and maintain securities positions of single stocks and exchange traded funds (“ETFs”) in a sub-account of their individual taxable account (such sub-account, an “SDI Account”). Clients are responsible for instructing Betterment to buy and sell securities on their behalf, and Betterment only exercises discretion with respect to the specific price and timing of placing trade orders. Self-directed investing is subject to the terms and conditions established by Betterment as set forth in the Betterment client agreements, including the SDI Addendum. You should carefully read this disclosure and consider your personal circumstances before deciding whether to participate in self-directed investing.

Summary

If you open an SDI Account, you can choose your own individual investments from a menu of investment products available in Betterment’s interface (“Eligible Securities”). Eligible Securities will generally include stocks in the Russell 1000 index as well as eligible ETFs on Betterment’s platform, and are subject to change at any time in Betterment’s sole discretion. 

Unlike with Betterment's managed portfolio strategies, where Betterment exercises discretion to buy and sell securities on your behalf to manage your portfolio in line with your investment selections and objectives, for SDI Accounts, you must select the Eligible Securities that you wish to buy and sell.

Limited Discretionary Advice

Betterment does not make investment decisions for you in your SDI Account, and you are responsible for directing Betterment to place trades in your SDI Account. Betterment has limited discretion to determine the specific time, price, number of shares, and dollar amounts for trades in your SDI Account. Betterment also provides non-discretionary advice and guidance through self-directed investing. Betterment provides general investing education and personalized advice, including diversification advice based on your self-reported investable assets and advice on the potential tax impact of trades in your account. You remain responsible for monitoring how assets held in your SDI Account fit within the context of your overall portfolio and any external accounts held outside of Betterment. Bettement’s advice generally does not consider any assets or liabilities held outside of Betterment.

Betterment does not give you feedback on the securities that you elect to buy or sell in your SDI Account. Betterment does not rebalance, reinvest dividends, or otherwise manage your asset selections. Placing trades through your SDI Account may have tax consequences. Betterment does not provide tax advice, and you should consult a tax advisor regarding your personal circumstances.

Cash Buying Power

Cash that you deposit into your SDI Account (your “Cash Buying Power”) is held through the Transfer Sweep Program (as described in the Betterment Securities Brokerage Agreement). Betterment Securities utilizes the Transfer Sweep Program to automatically deposit, or “sweep,” your funds into deposit accounts pending your direction as to the investment of those funds into securities or other investments, or the withdrawal of those funds to a linked checking account. Funds held in Cash Buying Power do not earn interest.

Cash Buying Power is eligible for FDIC insurance up to $250,000 for individual accounts, $500,000 of FDIC insurance for joint accounts, and $250,000 of FDIC insurance for trust and other corporate account types. The bank holding your funds through the Transfer Sweep Program may also hold your funds as a Program Bank through Cash Reserve or another account outside of Betterment. If a bank holds your funds through both Cash Reserve and/or an account outside of Betterment and the Transfer Sweep Program, all your deposits in that bank, including deposits made into your Cash Buying Power, through Cash Reserve, and any external accounts will be aggregated for the purpose of determining available FDIC insurance. Cash Buying Power is not protected by SIPC.

Typically, your cash will be reflected in your Cash Buying Power within one business day of initiating a deposit from a linked checking account. Transfers between a Betterment Cash Reserve account and your Cash Buying Power will be instantly reflected in the receiving account balance. If you choose to transfer funds from your Cash Buying Power to a Cash Reserve account, you should be aware that the transferred funds will not begin to accrue interest until they have reached one or more Program Banks (typically in 1-3 business days). For additional information, see the Cash Reserve Terms and Conditions.

Order Execution

All self-directed investing trades are executed through your brokerage account held by MTG LLC d/b/a Betterment Securities (“Betterment Securities”). All orders are placed as marketable limit orders and are executed on a dollar-based basis. Betterment may aggregate orders to send to Betterment Securities for execution. You should be aware that your SDI Account does not support entering buy and sell orders to be executed at particular times or at particular prices. Estimated trade timing will be displayed in the interface, and trades are generally executed at the next available execution window during market hours. Once you submit an order to Betterment, the order cannot be modified or cancelled. Betterment does not guarantee real-time prices or execution at displayed prices, and the price you receive at execution may differ from what you see when placing your order.

Betterment reserves the right, at any time and without notice, to delay or manage

trading in response to market instability, as further described in Betterment's Form ADV. In addition, Betterment maintains a general approach of not placing orders around the time of scheduled Federal Reserve interest rate announcements. In rare cases, trading may be paused for internal risk controls or operational reasons. If an order cannot be executed within four market days, it will be cancelled.

Betterment seeks to prevent pattern day trading in SDI Accounts. You will not be able to execute round-trip trades in your SDI Account if such trade would be a day trade (i.e., buying and then selling, or selling and then buying, the same security on the same trading day). In addition, trading activity in any automated investing goal at Betterment those will be considered when determining whether a transaction will be blocked to prevent a round-trip trade. This means you may be prevented from placing a trade in your SDI Account on a given day if you already bought or sold the same security in a managed goal earlier that day.

Pricing and ticker information displayed in the Betterment interface is provided by FactSet financial data and analytics. Pricing data is refreshed at regular intervals and may be delayed. The effective time of the displayed price is shown in the interface.

In-Kind Transfers

Subject to the terms and conditions of Betterment’s Automated Customer Account Transfer Service (“ACATS”) disclosure, Betterment supports in-kind transfers with SDI Accounts.

Portfolio Management Tools

Self-directed investing is not compatible with Betterment’s automated portfolio management or tax management features. This means that features such as automatic dividend reinvestment, automatic rebalancing and auto-adjust allocation, Tax Loss Harvesting, and Tax-Coordinated Portfolios are not available in the SDI Account.