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Portfolio > Mutual Funds

Jon Stein — Robo Pioneer: The 2017 IA 25

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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.

Although Betterment started as a digital offering, Stein said, “I’ve never thought of it as a competition [between] human advisors and technology. It’s always been the best of both.”

Stein said that in talking with customers, he’s found that they are learning more about investing.

“Our objective is to help people make better decisions and to help them make the most of their money. If in the process they’re learning how that works and what we’re doing, that’s just great,” he said.

“We’re growing fast. We’re attracting a ton of talent,” he said, among them Amy Shapero who joined the firm as chief financial officer in July. On Friday, Betterment for Business announced it had added a former Labor Department official, Judy Mares, to its advisory board.

Betterment will continue building advisor tools and portfolio personalization, Stein said, and has rolled out support for transferring mutual funds and specific stocks to its platform.

“We’re going to continue to build out that suite of services to make it easier and easier to transition your entire financial life to Betterment so that we can maximize your money.”

— Read Investors Are Killing It With 401(k)s on Autopilot: Fidelity on ThinkAdvisor. 


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