Allocation management

You can tell if your goal's allocation is being automatically adjusted by navigating to the goal's "Portfolio Analysis." Here you will find messaging that reads either "Auto adjust is on" or "Auto adjust is off." To enable or disable this feature, simply click on the word "Adjust" below your "Target Allocation" and follow the appropriate prompts.

What’s the difference between having Betterment adjust my allocation vs. following Betterment’s allocation advice myself? When you enable Betterment to adjust your allocation automatically, we aim to reduce your account’s risk as tax-efficiently as possible. Thus, your taxes can be lower than if you had adjusted your allocation yourself.

To automatically adjust your allocation, you must first be logged in to Betterment from a browser, not the mobile app. For existing accounts, you can edit your allocation settings from several places. Within "Advice" of a specific goal, click on “Portfolio Projections” and expand the “Target allocation” section. Clicking on the “Turn on auto-adjust” button will take you to the allocation settings page where you can switch the “auto-adjust” toggle to enable or disable automatic allocation ...

Any accounts opened before Dec. 14, 2017 that use the Betterment Portfolio Strategy, the Betterment SRI portfolio strategy, and the Goldman Sachs Smart Beta portfolio strategy were enrolled to auto-adjust, as long as the account met the following criteria: The account is funded. Your target allocation exactly follows Betterment’s allocation advice. The account is not a Safety Net goal (as Safety Net allocation advice does not change over time). After Dec. 14, 2017, any newly opened account ...

The “Auto-adjust allocation” checkbox in any Betterment account allows you to have your allocation automatically adjusted over time, helping you maintain our recommended level of risk throughout the life of your goal. We do this by systematically gliding your portfolio(s) to a lower overall risk level as you get closer to the end date of your goal. Learn more about how we automated our allocation advice.

Any automatic adjustments to your target allocation will be recorded and stored within "Activity" under “Transactions." These adjustments will be noted as an “Automatic Allocation Change.” Automatically adjusting the target allocation, will not necessarily cause a rebalance. Rebalances will occur if the portfolio drift exceeds our 3% threshold. Additionally, we use any cash flows, including dividends, to rebalance your portfolio towards the target allocation. If your account is rebalanced, we ...

If you enable the “auto-adjust” feature on an account, Betterment will check to ensure that your target allocation is in line with our recommended moderate allocation each month. If the account’s target allocation needs to be adjusted to match our recommendation, Betterment will make that adjustment automatically. Learn more about how we notify you of allocation changes. In certain cases, your target allocation may not change from month to month. This is normal. Recommended allocations on ...

Once your account balance is at or past the minimum threshold, Betterment can automatically rebalance your portfolio when it drifts beyond your target allocation threshold using several different methods. Please note, the below information only pertains to non-crypto, stock and bond investment portfolios at Betterment. For more information on how rebalancing works with Betterment’s crypto portfolios, please visit this FAQ. Cash Flow Rebalancing This method involves either buying or selling—but ...

Why Rebalancing Is Necessary Over time, the value of individual ETFs in a diversified portfolio moves up and down, drifting away from their target weights. For example, over the long term, stocks generally rise faster than bonds. The stock portion of your portfolio may go up in value faster relative to the bond portion–if you don’t rebalance. The difference between the target weights for your portfolio and the actual weights in your current portfolio is called drift. Rebalancing is what ...

Tax Coordination is designed to avoid rebalancing that would realize taxable gains as a function of its regular tax-efficient rebalancing formula. Regular rebalancing as a result of tax-coordination will occur in your taxable account without realizing taxable gains when possible (for example, when securities are trading at a loss). However, in certain circumstances, rebalancing may occur in the taxable account portion of a TCP that realizes taxable gains. For example, withdrawals or transfers ...

Our allocation advice is designed to work alongside Betterment’s tax optimization tools, including Tax Loss Harvesting+ and Tax Coordination. Learn more about how Betterment automatically optimizes your risk.

Given that your recommended allocation is expected to change gradually over time, our system uses our rebalancing algorithm to help minimize the tax implications for your account. Learn more about how we adjust your allocation tax-efficiently.