Betterment (company)

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Betterment
Company typePrivate
IndustryInvestment services
Founded2008; 16 years ago (2008)
Founders
  • Jon Stein
  • Eli Broverman
Headquarters
New York City
,
United States
Key people
  • Sarah Levy (CEO)
ProductsFinancial services, asset management, portfolio management, trust services
AUMUS$40 billion (2023) [1]
ParentBetterment Holdings, Inc.
DivisionsBetterment at Work Betterment for Advisors
SubsidiariesMTG, LLC.
Websitewww.betterment.com

Betterment is an American financial advisory company which provides digital investment, retirement and cash management services.[2]

The company is based in New York City, registered with the Securities and Exchange Commission,[3] and a member of the Financial Industry Regulatory Authority. It is a registered investment advisor and broker-dealer.[4]

As of August 2023, Betterment had more than $40 billion of assets under management and over 800,000 customer accounts.[2][5][1][6]

History

Foundation and launch

Betterment was founded in 2008 in New York City by Jon Stein, a Columbia Business School MBA graduate,[7] and Eli Broverman, a lawyer out of NYU School of Law.[8]

Betterment, LLC was established as a Delaware corporation on April 7, 2009.[3] The parent company for Betterment LLC and Betterment Securities, Betterment Holdings, Inc. was established in Delaware on January 29, 2008.[9][10]

The company launched at TechCrunch Disrupt New York in June 2010, and won the award of "Biggest New York Disruptor".[11][12] Within 24 hours, Betterment had attracted nearly 400 early customers, and the company began talks with early investors.[13]

Operations

Betterment's business model includes three areas of business: retail investment, a platform for advisors, and a 401(k) product for businesses.[14]

The company's personalized financial advice uses principles-based robo-advisor technologies such as computer algorithms. Licensed financial advisors provide over-the-phone consultations to customers who opt for additional support.[15] Betterment's primary retail platform offers taxable and tax-advantaged investment accounts, including traditional and Roth individual retirement accounts (IRAs).[16][17]

In October 2014, Betterment launched a business-to-business offering called Betterment Institutional, subsequently renamed Betterment for Advisors, a digital platform for managing client assets using Betterment's built-in financial advice.[18] In January 2017, the Financial Planning Association (FPA) and Betterment for Advisors ran a program on digital investment advice for the association's members.[19]

In January 2016, the company launched Betterment for Business—a 401(k) platform aimed at small- to medium-sized businesses.[20] It is built on the same underlying investment strategy and generally costs less than most traditional 401(k) plans.[21] In February 2022, the business rebranded to Betterment at Work and announced the acquisition of the partner and customer relationships of Gradvisor, a platform that provides personalized college savings plans.[20][22]

In December 2020, Betterment's founder Jon Stein stepped down as CEO and was succeeded by Viacom Media Networks's former COO Sarah Levy.[23]

In November 2021, Betterment released a new logo with an icon representing a rising sun.[24]

In February 2022, Betterment announced it had acquired Makara, a cryptocurrency portfolio manager.[2] In October 2022, Betterment launched a crypto offering Crypto Investing by Betterment, in which customers can invest in crypto assets.[25][26]

In December 2022, Betterment made an adjustment to their pricing structure.[27][28][29]

Finances

Betterment has received funding from Bessemer Venture Partners, Menlo Ventures, Anthemis Group, Kinnevik, Francisco Partners, Globespan Capital Partners, Citi Ventures, The Private Shares Fund, Aflac Ventures and ID8 Investments.[30][31][32]

In September 2021, the company secured $160 million in growth capital, consisting of a $60 million Series F equity round led by Treasury and a $100 million credit facility, established with ORIX Corporation USA’s Growth Capital group and Runway Growth Capital. This financing valued the company at nearly $1.3 billion.[33][32][34]

References

  1. ^ a b Welsch, Andrew. "Betterment, the Robo-Advisor Pioneer, Seeks Its Next Act". barrons. Retrieved 2023-12-07.
  2. ^ a b c "Digital Advisory Firm Betterment Enters Crypto With Makara Acquisition". Investopedia. Retrieved 2022-03-15.
  3. ^ a b "Betterment LLC SEC Registration". sec.report. Retrieved 2021-08-04.
  4. ^ "Investment Safety and Security at Betterment". Betterment. 2014-03-03. Archived from the original on 2017-08-23. Retrieved 2017-06-01.
  5. ^ "Betterment AUM (Assets Under Management) (2023)". www.brokerage-review.com. Retrieved 2023-02-18.
  6. ^ Cromley, Kelly (2023-09-18). "Betterment Expands Investment Offerings with New Crypto Portfolio". CoinTrust. Retrieved 2023-12-07.
  7. ^ School, Columbia (2014-04-09). "Jon Stein '09 on the Entrepreneurial Experience". Video Library. Retrieved 2021-08-04.
  8. ^ Cohan, Peter. "Growing At 300% To $8.5 Billion, Betterment Offers Fee, Tax Edge". Forbes. Retrieved 2021-08-04.
  9. ^ "Betterment Holdings, Inc. SEC Registration". sec.report. Retrieved 2021-08-04.
  10. ^ "Division of Corporations - Filing". icis.corp.delaware.gov. Retrieved 2017-06-01.
  11. ^ "Betterment Launches On Stage At TechCrunch Disrupt - Betterment". Betterment. 2010-05-25. Retrieved 2017-06-01.
  12. ^ Arrington, Michael. "The TechCrunch Disrupt Final Five: Betterment, Movieclips, Publish2, Soluto And Ujam". Retrieved 2017-06-01.
  13. ^ "How We Got Funded: Betterment". Inc.com. March 6, 2013. Retrieved 2017-06-01.
  14. ^ Nair, Lavanya (29 March 2019). "Betterment Drops Account Minimums on Custom Portfolios". Retrieved 29 March 2019.
  15. ^ "Robo-Advisor 'Betterment' Adds Human Advice". CNBC. 31 January 2017. Archived from the original on 12 March 2017. Retrieved 19 May 2017.
  16. ^ "Betterment vs. Wealthfront: Which is Best for You?". Investopedia. Retrieved 2022-03-15.
  17. ^ "7 Best Financial Advisors in Tampa, Florida • Benzinga". Benzinga. 2020-05-12. Retrieved 2020-06-17.
  18. ^ Kane, Libby. "Betterment Allies With Fidelity To Bring Financial Advisers Into The 21st Century". Business Insider. Retrieved 2020-05-07.
  19. ^ Powell, Robert. "The robots are coming for your investments — why that might not be a bad thing". MarketWatch. Retrieved 2017-06-01.
  20. ^ a b Konish, Lorie (2021-11-05). "Betterment sees 370% retirement plan growth bolstered by financial wellness efforts". CNBC. Retrieved 2022-03-15.
  21. ^ "Robo-Advisor Betterment Launches 401(k) Plan for Employers". NerdWallet. 2015-09-11. Retrieved 2017-06-01.
  22. ^ Konish, Lorie (2022-02-23). "Betterment adds new student loan, 529 college savings features to its 401(k) business". CNBC. Retrieved 2022-03-15.
  23. ^ "Betterment's founder Jon Stein replaced by Sarah Levy as CEO". 2020-12-08.
  24. ^ "Betterment releases new brand". 2021-11-16.
  25. ^ Kim, Crystal (2022-10-12). "Betterment offers four pricey and similar crypto portfolios". Axios. Retrieved 2023-02-18.
  26. ^ Ramaswamy, Anita (2022-10-12). "Roboadvisor Betterment launches crypto offering with four themed portfolios". TechCrunch. Retrieved 2023-02-18.
  27. ^ "Betterment's Pricing". www.betterment.com. Retrieved 2023-02-18.
  28. ^ "Betterment raises fees on small investors". InvestmentNews. 2022-11-18. Retrieved 2023-02-18.
  29. ^ Breen, Oisin. "Wealthfront pounces after Betterment jacks up prices on small investors, but Betterment claims last laugh -- 'thousands' of new customers, it says". RIABiz. Retrieved 2023-02-18.
  30. ^ "Betterment Valuation Rises to $1.3 Billion on Funding Round". Bloomberg.com. 29 September 2021. Retrieved 2022-03-16.
  31. ^ "ID8 TO Platform Betterment Series F, a Series of ID8 Investments Master, LLC SEC Registration". sec.report. Retrieved 2022-03-16.
  32. ^ a b "Robo-advisory firm Betterment reaches unicorn valuation". Finextra Research. 2021-09-30. Retrieved 2022-03-16.
  33. ^ "Betterment raises funds at $1.3bn valuation". citywireusa.com. Retrieved 2022-03-16.
  34. ^ "Betterment Secures $160 Million in Growth Capital | Finance Magnates". Financial and Business News | Finance Magnates. Retrieved 2022-03-16.
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