Jon Stein is leaving Betterment, the digital advisory firm he co-founded in 2010 and heads as CEO. He is being replaced by Sarah Kirshbaum Levy, a former executive of Viacom CBS.
According to The Wall Street Journal, which first reported the news, Levy takes over today, but Stein will stay around for daily operations through the end of the month and remain chairman of the Betterment board.
He told the Journal, “It fells like a good point to pass the torch.”
One of a just a few independent robo-advisory firms, Betterment has seen growth in all three of its business platforms this year despite the coronavirus pandemic, said Stein, listing the firm’s direct-to-consumer retail operations, 401(k) business for small and midsize companies and platform for independent advisors.
Betterment has $25 billion in assets under management and 500,000 clients. It does not break down how many assets or clients are in each of its three business lines.
“The time has come for someone else to lead the company through its next stage of growth,” Stein said in a statement.
He explained in a blog posted on the Betterment website that he had essentially realized his dream “to build a sustainable institution, to build something that will outlast me. I’ve never taken a larger step toward that accomplishment than I am today in passing the torch to Sarah.”
Stein wrote that he had met Levy virtually over the summer, had been working with her over the past few months, and is “incredibly confident that the company and the customers we serve will be in good hands under her leadership.”
He said he would be supporting Sarah and her team in various ways, “whether it be via recruiting, investor relations, telling our story, or upholding company culture and values.”
Levy told the Journal that she will focus on the evolution of the firm, including expanding opportunities for customized portfolios and client interactions with human advisors. Asked about the prospect of an IPO, she said a “clear path to strong growth and line of sight into profitability” was a prerequisite.
Levy is a former chief operating officer of Viacom Media Networks and of Nickelodeon.
David Goldstone, Manager of Research and Analytics for Backend Benchmarking, which publishes The Robo Report, said Levy is “an interesting choice” to head Betterment as she comes from a media background instead of a finance background.”
He speculated that “Betterment may be looking for someone who can help the company sustain its high level of growth,” adding that “although Betterment has catalyzed permanent changes to the financial advice landscape, it is still not a household name and can still make significant gains in brand awareness, and general awareness of robo-advice products.”
Bill Winterberg, founder and president of FPPAD, said in choosing Levy to succeed him, Stein is acknowledging “the importance of handing the reins over to capable leadership that can navigate the company in a new era of increased competition from significantly more capitalized incumbent providers with national brand recognition.”
Both Winterberg and Goldstone noted the success of Betterment, from its founding in 2010 by Stein and co-founder Eli Broverman, who left in April 2017.
“What started as a low-cost automated investment management account continually evolved and expanded into a hybrid automated and human-powered investment platform for over half a million investors,” said Winterberg. “Now that they’ve attracted copycats by incumbent providers including Charles Schwab, Wells Fargo, JP Morgan Chase and Vanguard, Betterment’s future remains uncertain,” said Winterberg.
Though it did attract copycats, Betterment “did not up-end the financial services industry like many predicted,” said Goldstone. “But its products have successfully democratized financial advice, greatly expanding the market and availability of professional advice,” he added.
Betterment has no minimum requirement to open a digital-only account that charges a 0.25% fee. Its premium account, which includes access to advisors, has a $100,000 minimum and charges 0.40%. The Betterment for Advisors platform has no minimum requirement and allows firms to use multiple billing plans — asset-based billing, fixed billing, or tiered billing, which all include a platform fee.
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