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May 23, 2017 at 09:05 AM
If imitation is the sincerest form of flattery, the increasingly crowded field of robo-advisors should make Jon Stein and company pretty confident.
“We’ve always known that if we were successful, we would have lots of competition,” Betterment’s CEO and co-founder said. “We’re changing the entire industry. We’re transforming the old way of investing into a new way that’s more customer-aligned.”
Historically, Stein said, the industry has been dominated by large mutual fund firms and brokers whose sales goals and business models didn’t always align with customers’ needs. “That’s who served the mass market in America.”
Betterment’s advantage “over the large incumbents is that we’re not encumbered by the legacy practices and legacy technology and legacy business model that they have.”
(Related: Why RBC Wealth Is Saying ‘Hold the Robo’)
The firm, the first independent robo-advisor to top $5 billion in client assets, has accumulated more than $8 billion since it launched in 2010. It currently serves nearly 210,000 clients with its ETF-based portfolios and rolled out a platform for advisors in 2014.
Betterment’s mission, Stein said, is to “maximize your money.” To do that, the robo-advisor launched a new service offering in January that connects users with a human advisor. The firm employs 220 advisors, many of whom are certified financial planners and are talking with customers personally, Stein said.
“We’ve always had relationships with our customers. There are so many ways you can get advice from us,” he said, whether that’s purely digital, an annual meeting with an advisor or a dedicated local advisor to meet with in person.
