Betterment has acquired Rowboat Advisors, a portfolio optimization software provider focusing on tax efficiency and direct indexing. The company will integrate Rowboat’s tech into Betterment Advisor Solutions, its RIA custodial platform, in the second half of 2025.
Iraklis Kourtidis, who founded Rowboat Advisors in 2016, will join Betterment’s engineering leadership team as vice president of portfolio management, reporting to CTO John Mileham. Kourtidis built the first fully automated version of direct indexing in 2013 for automated investment service Wealthfront. He was named one of WealthManagement.com’s Ten to Watch in 2024.
The acquisition will allow Betterment to roll out direct indexing capabilities in 2026, said CEO Sarah Levy. But the more immediate benefits include single-stock support and tax optimization tools for advisors.
In general, the tech will help the 600 RIA firms that use Betterment go up-market and tackle more complex client situations.
Betterment initially served retail investors and expanded into the advisor market about a decade ago.
“One of the things we learned during that journey was that advisors want more control and more transparency around how the tools are operating than a retail investor,” Levy said. “As we entered 2025, one of the key strategic imperatives for us was, how do we bring more control and transparency to the advisor in our portfolio management tooling so that they can control the dials, more so than having automation do it? This will accelerate that strategy.”
Advisors can already build portfolios with ETFs and mutual funds, added last year. Now they can also incorporate single stocks into custom portfolios.
Rowboat also offers several tax optimization tools, including a backtesting suite, tax loss harvesting and asset location. The company’s tax impact previews allow advisors to model how the portfolio will perform before making trades. With its tax-aware transitions tool, advisors can set up rules for transitioning assets into a target portfolio in a more tax-conscious fashion (such as enabling capital gains allowances, for example).
Both Betterment and Rowboat are built on the same programming language, making for a seamless transition, Levy said.
Betterment, which now has $56 billion in assets under management across the firm, hopes to differentiate itself with a focus on the intersection of wealth and retirement. It recently added a digital solo 401(k) option for advisors working with self-employed clients.
Betterment is still solidly in the robo-advisory space even as other firms depart from it. In February, it announced the purchase of Ellevest’s automated investing business. Last April, it acquired Goldman Sachs Group’s automated investing business, Marcus Invest.