News, Vision & Voice for the Advisory Community


Betterment shut down trading post-Brexit to dodge 'trading blindly into extraordinary volatility'

The New York-based robo takes a 150-minute time-out saying to do otherwise would have been 'irresponsible'

Author Lisa Shidler June 24, 2016 at 7:08 PM
no description available
Tom Kimberly: Given the magnitude of today's news and the corresponding market reaction, we have elected to suspend trading during this initial period of increased volatility.

Bill Winterberg

Bill Winterberg

June 24, 2016 — 8:07 PM

Visions of ETF trading and price dislocation on August 24, 2015 come to mind…



June 24, 2016 — 8:47 PM

Another reason why I pulled all of my money out of these robo advisors



June 24, 2016 — 9:46 PM

Particularly bad decision on the part of Betterment imo. It’s one thing to discourage irrational trading through an email, it’s wholly another to dis-allow trading altogether based on their discretion. Maybe it’s in their client retail & institutional relationship agreements, but I’ve got to think they run the risk of exposing themselves to lawsuits at some point in the future.

I think the next few months should be particularly interesting times for the robos generally.

Aidan Yeaw

Aidan Yeaw

June 24, 2016 — 11:05 PM

This is a really bad precedent for Betterment. This can quickly become a slippery slope.

From Betterment’s website:
“Many investors believe (or act as if they believe) they can beat the market through timing their deposits or asset allocation.”
Do as I say not as I do, eh Betterment?


Tad Borek

Tad Borek

June 25, 2016 — 12:46 AM

There is no doubt more to the story for why trading was suspended until noon. Looking at the usual suspects, ETF volatility appeared to be extremely high only very early in the trading day, within the 30-minute window mentioned as being off limits normally. What’s the reason for the next two hours’ suspension? Pull up price charts, it looks like normal intra-day price discovery. And while the delay may have (by chance) benefited buyers, for anyone selling, a VWAP that included the period before noon would be higher than a VWAP including only the period from noon onward (in English, selling later netted less money on average).

Since the dawn of robo-ETF-allocators my question has been: can they block trade ETFs in volume? Especially, on days like June 24, 2016 when trading and market microstructure gets interesting.



June 26, 2016 — 11:12 PM

Things are not challenged when all is well…they are challenged when all is not so well (stress for example). This stuff just doesn’t work…some class action legal team is licking their chops. Good luck



June 27, 2016 — 12:58 AM

Follow the money. Or resources, or lack thereof?

Related Moves

TD Ameritrade's board suddenly pushes out Tim Hockey after his big misread of RIAs; Tom Bradley name-dropped as successor

The CEO broke the TD promise never to compete with RIAs, took it back and got sent packing

July 23, 2019 at 4:30 AM

Schwab 2,000-layoff aftershocks roil the industry as it's revealed top tech talent -- led by widely regarded veteran Kartik Srinivasan -- were axed, raising questions about future of Schwab innovation

Behind every layoff a human story as pink slip to an 'unbelievable talent' epitomizes company's determination to cut $500 million in expenses.

November 3, 2023 at 3:49 AM

Charles Schwab Corp. discloses imminent, sweeping 'TD Ameritrade' layoffs, indirectly revealed in new SEC filing that reports it will expense severance mostly in 2023 to gain 'incremental' $500 million synergy in 2024 and beyond

The Westlake, Texas, firm had not previously disclosed the cost of terminations -- people and offices -- or that so many of the farewells will happen by Dec. 30

August 22, 2023 at 12:46 AM

Biz Briefs: The sorry scene at my local First Republic branch • Schwab launches new (smaller) lay-off round • Schwab hoovers pennies passing FINRA fee to clients • Gensler pleas for funds • Fidelity owner's private equity pres. retires • an Orion-Envestnet staff switcheroo • LPL dumps FutureAdvisor

Range Rovers screeched in and drivers joined a grim queue to get their cash, and cookie • The Schwab-TDA deal cull count now stands at roughly 3.5% of its staff • FMR's hockey star president has stepped down • SEC chief wants more enforcers • An Envestnet executive proves joining a rival is good business • LPL now has an in-house robot.

April 29, 2023 at 1:36 AM

See more related moves

Mentioned in this article:

TD Ameritrade
Asset Custodian
Top Executive: Tom Nally

Betterment, LLC
Financial Planning Software
Top Executive: Jon Stein

Top Executive: Tom Kimberly

RIABiz Directory

The Industry Sourcebook for RIAs

   |    LISTING

RIABiz Directory sponsored by:

Directory Sponsor Logo