Betterment’s had a heck of a year. With the launch of Betterment for Business, its robo-401(k), and Betterment Institutional, a digital platform to aid advisors, it’s grown the number of customers it serves from 50,000 in January 2015 to 150,000 as of mid-April 2016, while assets have grown from just over $1 billion to over $4 billion.
CEO and co-founder Jon Stein started in the financial services industry at First Manhattan Consulting Group. “In my years working with banks and brokers,” he saw “they were building products, not really building advisory services,” he said.
That led him to start Betterment in 2008, right in the middle of the recession. “On the one hand, there was something of an opportunity because there was distrust in the traditional financial institutions, and at the same time, I think a lot of the traditional financial institutions were distracted by regulatory concerns and keeping their businesses afloat.” Stein saw an opportunity to bring “trusted advice” to consumers and to “make that advice accessible to anyone who wants it.” The consumer platform was officially launched in 2010.
“In my view, the future of financial services is all about advice,” Stein said. “It’s all about great, fiduciary trusted advice.” Betterment’s goal, he said, is “to be our customers’ central financial relationship. We want to continue to build out more advice, more financial planning, to really give our customers a holistic sense of what they should be doing with their money.”
Betterment isn’t necessarily competing with other robo-advisors or with traditional advisory firms, but with the “do-it-yourself kinds of brokerage firms; the traditional big firms, the Vanguards, the Schwabs, eTrade, Fidelity, etc.”