Core Insights - Betterment is enhancing its ecosystem for small registered investment advisors by planning to launch direct indexing and a client referral network in the upcoming year [1] - The acquisition of Rowboat, a direct indexing firm, aims to improve portfolio management options, including tax optimization and personalized investing [2] - Direct indexing will allow clients to access index tracking exposure without high dollar minimums or the need for full shares, marking a natural progression for Betterment since its inception in 2008 [3] Company Strategy - Betterment aims to leverage economies of scale from its retail offerings to facilitate direct indexing, which will enable it to manage fractional shares more effectively [4] - The company currently serves approximately 1 million clients with over $60 billion in assets and has around 600 firms on its custodial platform [4] - A referral program for registered investment advisors (RIAs) is set to launch in 2026, further integrating Betterment's retail client base with its advisory services [4] Market Context - Betterment's strategy contrasts with competitors like Charles Schwab, which is raising the minimum client asset range for referrals to $2 million in 2026, indicating a shift towards higher asset thresholds in the industry [5] - The firm is focused on creating a "graduation ecosystem" for clients who may transition to financial advisors, enhancing its value proposition in the wealth management space [5]