Independent digital investment advisor Betterment announced Wednesday that it has acquired the automated investing business of Ellevest, a woman-focused wealth management company.
Betterment serves more than 900,000 U.S. customers and manages over $55 billion in assets. The announcement follows other recent Betterment acquisitions, including its deals for Wealthsimple's U.S. advisory accounts in 2021 and Goldman Sachs' Marcus Invest accounts in 2024.
"This acquisition further cements our leadership in the digital investing space," said Betterment CEO Sarah Levy. "We look forward to welcoming Ellevest's clients to Betterment and to continuing to support them on their wealth-building journeys."
Ellevest CEO and Chief Investment Officer Sylvia Kwan said, "As we focus on our growing wealth management and financial planning business, Betterment was the natural home for our digital-first clients. On top of automated investing, Betterment offers features that many of our digital clients have expressed interest in, including joint accounts and other cash account options."
Subject to closing conditions, Ellevest will transfer its automated investing accounts to Betterment around April 17. Clients can choose to opt out of the transfer. Betterment will acquire only Ellevest's automated investing accounts and assets under management; it will not acquire any additional accounts, technology, employees or operations in the transaction.
Ellevest will continue to offer financial planning and wealth management services to high- and ultra-high-net-worth individuals, families and institutions looking to invest $500,000 or more.
"This is essentially Ellevest converting to a traditional advisor," David Goldstone, investment research manager at Condor Capital Wealth Management, which follows the robo-advisor industry, told ThinkAdvisor by email. "I am not surprised by this; I think Ellevest has been focusing its business efforts on traditional high-net-worth clients for some time."
The firm had $2.1 billion in assets under management per a recent regulatory filing, almost evenly split between high-net-worth clients and those with fewer assets, he noted.
"Like many others, I think Ellevest has come to terms with the difficulty of earning meaningful profits on low-asset accounts," Goldstone said. "They have repositioned their business to be a traditional advisor. Because low-asset accounts generate small amounts of revenue, it is critical to reach scale to serve low-asset clients profitably. Robo advisor businesses are built to be able to scale, but achieving and sustaining rapid growth is difficult in a crowded marketplace."
Ellevest, a fast-growing, fee-only registered investment advisor, has an all-women financial advisory and planning team. Sallie Krawcheck, who founded the firm in 2014, announced late last year that she was stepping down as CEO and transitioning to a board role, citing a health diagnosis.
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