Betterment
TypePrivate
IndustryInvestment services
Founded2008 (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 launch of a new student loan management solution, as well as 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]

In 2023, Betterment at Work launched an Education Savings solution allowing employers to offer 529 plans alongside Betterment’s other solutions.[30][31]

Betterment for Advisors launched a suite of tools that help give financial advisors increased control over managing client assets and also set capital gains allowances and enable or disable rebalancing when transition client assets. The suite also includes client onboarding options, catering to multi-client households, and drift threshold controls.[30][32]

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.[33][34][35]

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.[36][35][37]

References

  1. 1 2 Welsch, Andrew. "Betterment, the Robo-Advisor Pioneer, Seeks Its Next Act". barrons. Retrieved 2023-12-07.
  2. 1 2 3 "Digital Advisory Firm Betterment Enters Crypto With Makara Acquisition". Investopedia. Retrieved 2022-03-15.
  3. 1 2 "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. 1 2 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. 1 2 Neal, Ryan W. (2023-06-15). "Betterment adds 529 plans to workplace benefits offering". InvestmentNews. Retrieved 2023-07-27.
  31. ↑ "Betterment at Work Unveils 529 Savings Solution". National Association of Plan Advisors. 2023-06-15. Retrieved 2023-07-27.
  32. ↑ Faridi, Omar (2023-07-26). "Digital Financial Advisor Platform Betterment Introduces "Tax-Smart" Transitions Features for Advisors". Crowd Funder Insider.
  33. ↑ "Betterment Valuation Rises to $1.3 Billion on Funding Round". Bloomberg.com. 29 September 2021. Retrieved 2022-03-16.
  34. ↑ "ID8 TO Platform Betterment Series F, a Series of ID8 Investments Master, LLC SEC Registration". sec.report. Retrieved 2022-03-16.
  35. 1 2 "Robo-advisory firm Betterment reaches unicorn valuation". Finextra Research. 2021-09-30. Retrieved 2022-03-16.
  36. ↑ "Betterment raises funds at $1.3bn valuation". citywireusa.com. Retrieved 2022-03-16.
  37. ↑ "Betterment Secures $160 Million in Growth Capital | Finance Magnates". Financial and Business News | Finance Magnates. Retrieved 2022-03-16.
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