The Betterment Halt & The Dangers of Trusting Robo-Advisors

“Open the Trading Floor, HAL.”

In the aftermath of last month’s Brexit vote, global markets took a beating, the price of the British pound reached its lowest level in over three decades, and savvy investors were able to pounce at the opportunity to buy stocks at bargain prices. If you had invested your money in Betterment, one of the most popular robo-advisors, you were unable to capitalize on a great moneymaking opportunity due to a trading halt the firm placed on June 24th during the market selloff.

What are robo-advisors?

For those unfamiliar with the term, robo-advisors are “an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners,” according to Investopedia. They usually offer low-fee, low-minimum services, and market themselves as an easy way for you to invest without thinking or learning too much about what you’re doing. You tweak their settings based on your risk aversion and goals, and a robot does the trading for you (usually by buying and selling ETF’s).

robot hand on calculator

Sounds great! Why wouldn’t I do that and make money the easy way?

We like low fee services here at American Dream Investing, but more importantly, we like having control over our money! Last week, The Wall Street Journal published an article about the Betterment halt (subscription may be required). Not only did the firm suspend trading due to the market volatility, the humans in charge didn’t even bother communicating this halt to their customers, and only alerted financial advisers using their service.

Betterment clients with a “set it and forget it” mindset were most likely oblivious, but all Betterment investors missed out on a potential windfall from the market overreaction to the Brexit news, and questions about the liquidity of their investments were raised. Also troubling: Betterment’s algorithms are halted from trading during the first and last 30 minutes of each trading day to avoid volatility. These are usually the best times of the day to buy and sell! By investing passively with robo-advisors, you are holding yourself back from maximum returns in your portfolio.

So, what’s an alternative?

Take matters into your own hands! Our Members know that No One Loves Your Money More Than You Do™, which is why we share the trades we make in our own portfolio with our Members, and they decide for themselves if they want to follow a similar path to wealth creation.

We can’t stress enough how important it is for you to maintain control over your money and financial well-being. You never know when the ghost in the machine will close the door and not let you decide how your money should be invested.

Help Spread the Word

Ready to find out more?

Join as a Trial Member and try our service FREE for 90 days - No Credit Card Required

We watch the market so you won't have to - Get our instant text and email alerts whenever we make a trade!

Leave a Comment

Are You Sick Of Paying Commissions?

Download Your Free Guide & Learn How To Trade Stocks For Free

You'll also be signed up for The American Dream Journal, our free newsletter. We promise to never share your information with anyone and you can unsubscribe anytime.
Something went wrong. Please check your entries and try again.
how to trade stocks for free

90 Day
Money Back Guarantee

Trade alongside an individual investor who's more than DOUBLED the market over the last ten years (524% return vs. the S&P’s 247%, as of 10/31/18). Our 20.09% average annual return includes the Great Recession of 2008-2009.

Try our Membership risk-free for 90 days. If it's not for you, we'll give you a full refund -- no questions asked!