Betterment LLC

Item 5 - Fees and Compensation
   A.​ Wrap Fee Programs
Betterment charges an asset-based wrap fee that covers the costs of its investment advisory
services as well as associated trading and custody services provided by its affiliated
broker-dealer, Betterment Securities. Betterment’s asset-based wrap fees are calculated based
on client’s Total Account Balance (as defined below) as of the close of each calendar day,
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accrued daily, and, typically charged as of the first business day following the end of each
month. Third-Party Advised Client’s fees are accrued daily and typically charged as of the first
business day following the end of each month or quarter. Retirement Plan Clients’ fees are
accrued daily and typically charged as of the first business day following the end of each
quarter.
Retail Clients pay a $5 per month wrap fee for their Digital wrap accounts ($60 annually). If at
any point a Retail Client’s Total Account Balance (as defined below) exceeds $24,000, or the
Retail Client enables a monthly $200 recurring deposit (such recurring deposit amount subject
to change at any time), that client will pay an annualized Digital wrap fee of 0.25% their Total
Account Balance instead of the $5 per month fee. If a Retail Client’s Total Account Balance
fluctuates over $24,000 for any day in a given month, the Digital wrap fee for that day will be
accrued based on the daily equivalent of the 0.25% annualized fee on the Total Account Balance
rather than the daily equivalent of $5 per month. For any day that a Retail Client’s Total Account
Balance is less than $24,000 and that client does not otherwise qualify for the asset-based fee,
they will be charged the daily equivalent of the $5 monthly fee for that day. For clients with
Total Account Balances around $24,000, the monthly fee may be more than $5 per month if on
certain days the Total Account Balance exceeded $24,000. “Total Account Balance” is the
combined account balance of all Retail Client Betterment wrap accounts in a “Household” (as
that term is defined in the Advisory Agreement), inclusive of balances held in investment
portfolios, SDI accounts, and Cash Reserve accounts. The Total Account Balance does not
include funds held in Betterment Checking accounts offered through nbkc bank. Clients who
have funded a Solo 401(k) or are eligible to participate in a Betterment at Work 401(k) plan pay
an annualized wrap fee of 0.25% on all assets across their Total Account Balance. Betterment
waives its wrap fee on Client account balances held in SDI and on cash held in the Cash Sweep
Program (as defined below), including balances in Cash Reserve and cash held in managed
portfolios and SDI accounts (as further described in Item 4 of the Wrap Fee Program Appendix).
Betterment receives payments on Client cash balances from Program Banks (as defined below).
For more information on Betterment’s pricing, please review www.betterment.com/pricing.
HSA accounts are subject to an annualized fee of 0.50% of their account balance, which includes
Betterment’s annualized wrap fee of 0.25% as well as an additional, 0.25% asset-based fee for
the HSA administrator. 401(k) accounts are subject to additional fees for recordkeeping services,
unless the plan sponsor has elected to allocate those fees to itself, as described below in the
Wrap Fee Program Appendix. Solo 401(k) accounts are also subject to an additional annual
platform fee of $100. For certain clients, Betterment’s annualized wrap fee is reduced by
discounts and other promotions, including those described below. Retail Clients who receive
Betterment Premium Services pay a wrap fee of 0.65% of their account balance in annualized
fees, which includes Betterment’s 0.25% annualized wrap fee plus 0.40% for access to Premium
Services provided by Betterment’s team of financial consultants (subject to the Discount
described in Item 5B. below). Betterment waives the 0.40% fee for Premium Services on
account balances above $1 million. Betterment includes assets transferred in-kind to
Betterment in its calculation of a client’s Total Account Balance. For more information about the

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fees associated with Betterment’s Wrap Fee Program, in particular with respect to Third-Party
Advised Clients and Retirement Plan Clients, please refer to the Wrap Fee Program Brochure
Appendix attached below.

Typically on or around the first business day following the end of the applicable relevant period
(month or quarter), Betterment instructs Betterment Securities to sell securities in an amount
that will generate cash proceeds to satisfy a client’s fee obligation to the extent such obligation
has not been satisfied by available cash in the client’s account, including cash held in a managed
portfolio, and excluding, for avoidance of doubt, cash held in SDI or Cash Reserve. If a client’s
account includes mutual funds, due to small price fluctuations in mutual funds that may occur
on the transaction date, Betterment will accrue any fees over- or under-assessed and apply the
difference to adjust the following period’s fees. Betterment will automatically debit the prorated
amounts of the fees from the assets in a client’s account on a monthly or quarterly, as
applicable, basis in arrears.

Betterment Securities charges a fee of $75 per transfer for the full or partial transfer to another
brokerage firm of any Account.

   B.​ Discounts
For certain clients, Betterment’s wrap fee is reduced by discounts and other promotions,
including those described below. Betterment’s asset-based fees for Retail Clients are subject to
(i) a 0.10% discount on the portions of their balances above $1 million and up to $2 million and
(ii) a 0.15% discount on the portions of their balances above $2 million (together, the
...

Item 7 - Types of Clients
   A.​ Clients

Betterment offers investment advisory services to three types of clients: Retail Clients,
Third-Party Advised Clients and their Advisors, and Retirement Plan Clients and their
Participants (see types of clients described above in Item 4).

Betterment’s clients include individuals, trusts, employer-sponsored plans (and their
Participants) and other legal entities (subject to Betterment’s approval) who are U.S. residents
and maintain a checking account with a U.S. bank. There is no minimum account size to
maintain a wrap account with the Betterment Digital plan. Retail Clients with a balance of at
least $100,000 in Betterment wrap accounts are eligible to participate in the Betterment
Premium plan. The Account Balance Threshold does not include funds held in Betterment
Advisor Solutions, Betterment at Work, Betterment Checking accounts offered through nbkc
bank, SDI accounts, or Betterment Cash Reserve accounts. The minimum deposit is $10. See
Item 4 - Types of Advisory Services for a description of the agreements that govern each client’s
advisory relationship.

   B.​ Premium Services

Betterment Premium plan clients are eligible to schedule telephone or video consultations with
a financial consultant, affiliated with Betterment, who will provide discretionary investment
advice, non-discretionary investment advice, and/or personalized financial planning, including
advice relating to debt, such as credit card debt, mortgages, savings, and retirement (including
pensions and social security), crypto and tax-related advice that does not constitute legal advice
or advice requiring licensure as a Certified Public Accountant or IRS Enrolled Agent (such
discretionary advice and non-discretionary advice, “Premium Services”). Premium Services are

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designed to help clients articulate and quantify goals, organize financial data, identify needs and
opportunities, evaluate alternative courses of actions, and determine whether and how
Betterment can fit into clients’ broader financial plans. Betterment will base any such advice on
information provided by clients regarding, among other things, their age, marital and family
status, annual income, employment status, liquid net worth (investable assets), debt and other
investments, investment goals and investment experience during the financial consultation call,
email or onboarding questionnaire. Betterment Premium plan clients are also able to contact
financial consultants via email in order to receive more discrete investment advice.

Participation in the Betterment Premium plan will entitle such clients to an unlimited (subject to
scheduling availability) number of consultations per year with a licensed Betterment financial
consultant in order to receive Premium Services. Premium plan clients are responsible for
scheduling such consultations in order to receive such Premium Services. Betterment uses a
team-based approach to providing Premium Services —if clients receive Premium Services on
multiple occasions, they are likely to interact with multiple financial consultants. Financial
consultants do not monitor client accounts in between consultations.
Information provided by Betterment to Premium plan clients via consultations with financial
consultants will be considered in the provision of Betterment’s discretionary advisory services,
and financial consultants may modify Premium plan client wrap accounts to reflect items
discussed in such consultations. Betterment and the financial consultant have discretion over
Premium plan client assets or accounts with respect to implementing any such
recommendations, as described below in “Premium Authorized Actions”.
As a condition of receiving Premium Services, Premium plan clients grant financial consultants
the authority to view, receive, access, provide instructions, and modify client’s wrap account in
all communication mediums Betterment offers. Based on Premium plan client’s situation, as
determined through questionnaires, written or verbal communications, Premium plan client’s
account information, or Premium plan client’s instruction, financial consultants also have the
authority to modify the Premium plan client’s investment selections, including but not limited
to creating new goals, modifying existing goals, and adjusting such client’s settings (e.g.,
investment strategies, asset allocations, SDI holdings, and enabling or disabling automated
features). Premium plan clients also grant financial consultants the authority to view, receive,
and access information about such clients’ external Connected Account(s) (as defined in the
Wrap Appendix below), Betterment checking account, and Betterment 401(k) account, but
financial consultants will not have the ability to provide instructions for, or modify, such
accounts. The foregoing authorized actions are collectively, “Premium Authorized Actions”.
Premium plan clients should not expect Premium Authorized Actions to be completed
immediately following a discussion or communication with a financial consultant. Financial
consultants will implement changes discussed via consultations or email in Premium plan
client’s Account within a reasonable time period.

Betterment Premium plan clients may also individually undertake any of the foregoing Premium
Authorized Actions, except for modifying investment strategies, which must be done in

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connection with a financial consultant. Financial consultants are also able to incorporate legacy
assets transferred in-kind into the wrap account investment strategies of Premium plan clients.

   C.​ Additional Advisory Services

In addition, Betterment provides certain Retirement Plan Clients the ability to elect to offer
Participants non-discretionary advice services via telephone or video consultations (such
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