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Betterment, which Barron’s recently declared the largest independent online financial adviser, is betting that the future of online investing includes a blend of robot and human advisers. And the plan is working, according to chief executive Jon Stein.
However, incumbents like Vanguard have leveraged existing strengths to move in to the market, and other startups like Robinhood have carved out swathes of the fast-growing market.
Response - Betterment - Series - Features - Platform
In response, Betterment has launched a series of new high-touch features on the platform, including “advice packages” that its users can buy to receive one-time advice from professional human experts.
In the interview below, Stein shares new details on the company’s growth, its plans to fend off the rise of commission-free trading, an eventual bear market and the many other challenges in the space, and eventually going public.
Gregg - Schoenberg - Things - Lot - Betterment
Gregg Schoenberg: Things have changed a lot for Betterment and the entire sector since we first sat down in early 2017. What are Betterment’s assets under management these days?
Jon Stein: We now have $15.5 billion under management and we’ve crossed 400,000 customers.
GS - Congratulations
GS: Congratulations. Is each billion getting easier to accumulate or harder?
JS: We’ve seen acceleration every year we’ve been in the business. Back in the day, I like to say that it took us a year to get to our first $10 million under management. And then six months to get to $20 million, and three months to get to $30 million. Today, $10 million is a bad day. So the scale is far greater today because assets beget assets.
GS - Environment - Peers - Traction - Incumbents
GS: That’s impressive, but when you look at the competitive environment, there are clearly some other online peers that have managed to build traction, and perhaps the incumbents watch you more closely now. What’s your core reason for optimism that when the dust settles, Betterment emerges better off?
JS: Part of it is...
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