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Betterment Had Record-Breaking Q1

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What You Need to Know

  • Betterment announced $29 billion in AUM as of March 31, almost 50% higher than a year ago.
  • New CEO Sarah Levy said the firm added a record 56,000 new clients in Q1, up 116% year-over-year.
  • It reported record-breaking assets for Betterment for Advisors and Betterment 401(k) but did not provide details.

Betterment, one of the largest independent digital advisors, has announced a record-breaking close to the first quarter of 2021, with total assets totaling $29 billion, almost 50% higher than a year ago.

All three of its business units — retail, retirement and advisors — increased engagement over the past 12 months.

In the first full quarter under the leadership of new CEO Sarah Levy, the company added a record 56,000 new clients to the platform, up 116% year-over-year. Net client deposits grew by more than $1.5 billion, or 118% year-over-year.

Betterment will be adding 17,000 new clients, with approximately $190 million in assets, when it completes its purchase of Wealthsimple’s U.S. book of business, which is expected at the end of June.

“Our investing platform was built for 2020,” Levy in a statement. “Despite tumultuous markets, we helped our clients stay on track to meet their long-term financial goals rather than react to short-term market fluctuations.”

Schwab also reported over 50% year-over-year growth in its digitally advised assets through the first quarter of 2021, said David Goldstone, manager of research and analytics for Backend Benchmarking and The Robo Report.

“Robo-advice witnessed strong growth in 2020,” Goldstone said. “The pandemic has given robo-advisors a tailwind as Americans have adjusted to manage more of their lives from home.  Multiple providers reported surges in account growth during periods of increased market volatility in 2020. ”

Betterment’s B2B Offerings

Betterment’s Levy said the digital advisory firm has reinvested its revenue growth into its retail and B2B offerings.

One of those B2B platforms, Betterment for Advisors, a wealth management platform for RIAs, almost doubled its deposits in the first quarter, according to Betterment, but it did not disclose the actual amount of those assets.

The platform recently announced the launch of Custom Model Portfolios, which allows advisors to build their own model portfolios of ETFs while leveraging Betterment’s portfolio management features, including automated rebalancing, tax-loss harvesting, asset location, glide path rebalancing, and tax-optimized sales for withdrawals. Approximately 600 advisory firms use the platform.

Betterment’s other B2B platform, Betterment 401(k), which serves small and medium-sized businesses, also saw record growth in the past year as it expanded distribution channels,  according to the firm, but here, too, it did not provide details.

The platform serves almost 1,000 businesses, providing client services, dashboards, custodial services, ERISA consulting, compliance, and Form 5500 preparation. Employees enrolled in a Betterment 401(k) plan through their employer can access investment advice and goals-based portfolios that include socially responsible options and sync the 401(k) account with their primary Betterment account if they have one.

Betterment recently signed partnership deals with employee benefits platforms Zenefits and Bennie, expanding the reach of its 401(k) offering to users of those platforms.

(PRNewsfoto/Betterment for Advisors)