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Betterment Acquires Wealthsimple’s U.S. Customers

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What You Need to Know

  • The deal could add 17,400 customers with $190 million in assets.
  • Betterment's digital advisory business has 600,000 customers and $28 billion in AUM.
  • The digital advisor is also expanding its 401(k) platform via a new partnership with Zenefits.

Betterment, one of the largest U.S.-based independent digital advisors, is acquiring the U.S. business of Wealthsimple, a Canadian robo-advisor.

The acquisition could add as many as 17,400 customers, with $190 million in assets, to Betterment’s client base, according to a spokesperson. Terms of the deal were not disclosed.

“We are excited to bring these customers on board and help them secure a better financial future,” said Betterment CEO Sarah Levy, who succeeded Jon Stein in the job two months ago, in a statement. “This was an excellent opportunity for us to grow our customer base, and we’ll continue to be aggressive in opportunities that accelerate our business goals.”

Wealthsimple’s U.S. customer accounts will be transferred to Betterment by June 2021 if customers choose that option.

Michael Katchen, co-founder and CEO of Wealthsimple, said his firm will focus on its Canadian business “for the time being.”

David Goldstone,  the manager of research and analytics for Backend Benchmarking and The Robo Report, tells ThinkAdvisor, “Betterment took advantage of this opportunity to acquire customers and clients through acquisition” but “as Betterment and the industry as a whole matures, it will be more difficult to sustain asset and client growth rates.”

Betterment Expands 401(k) Business

In separate news, Betterment is also expanding its reach within its 401(k) platform, Betterment for Business. It has formed a partnership with Zenefits, an operations platform that provides payroll, human resources and benefits solutions for small and medium-size businesses. 

Through the partnership, Betterment will add Zenefits customers to its 401(k) platform, offering them a wider suite of employee financial wellness tools, beginning March 3.

Betterment’s 401(k) business services more than 600 plans now on the platform. Its digital advisory business has 600,000 customers and $28 billion in AUM.