Betterment sees record growth, as GameStop frenzy 'shines a light' on investing

3 weeks ago 28

Betterment launched a caller savings enactment that pays users up to 2.69% interest.

Source: Betterment

Trading apps aren't the lone ones benefiting from the emergence of meme stocks.

Betterment, a integer concern advisor, said it saw grounds maturation successful the archetypal 4th of 2021. Despite offering alleged "passive" investing and not allowing clients to hand-pick stocks, Betterment's CEO Sarah Kirshbaum Levy said excitement astir GameStop and "gambling" connected markets during the pandemic inactive boosted business.

"What it's done is radiance a airy connected investing generally," said Levy, a erstwhile ViacomCBS executive, who took implicit the relation successful December. "Strategically, we're precise antithetic from different players successful the market, but we're a bully complement."

In Betterment's archetypal afloat 4th with Levy astatine the helm, its caller clients and nett deposits grew 116% and 118%, respectively. The steadfast added $10 cardinal successful caller lawsuit assets, bringing its full nether absorption to $29 billion.

The New York-based institution was founded by erstwhile CEO Jon Stein successful 2010, and offers retail concern advice, a level for autarkic concern advisers and 401(k) plans for tiny and medium-sized businesses. Its bulk millennial clients usage Betterment for "long-term" and "safety-net" investing, and often person much than 1 account, Levy said.

"They're having amusive with idiosyncratic other for time trading," she said successful a telephone interview.

Some of Betterment's robo-advisor competitors person seen akin maturation this year.

Wealthfront told CNBC it saw the highest fig of nett deposits connected grounds successful March, and crossed $25 cardinal successful assets nether absorption successful the quarter.

Investment app Acorns doubled its accounts from the 4th fourth to the archetypal 4th for its champion 3 months connected record. Its assets topped $4.5 billion.

Free-trading app Robinhood was astatine the halfway of the GameStop controversy amid a abbreviated compression successful the stock, which was partially fueled by Reddit-driven retail investors. Still, it added 3 cardinal customers successful January alone, according to estimates from JMP Securities.

Charles Schwab connected Thursday said it added a grounds 3.2 cardinal caller clients successful the archetypal 4th — much caller accounts than successful each of 2020. CEO Walt Bettinger credited "heightened marketplace attraction to definite names via societal media" arsenic 1 origin that "significantly bolstered trading activity."

Levy, who was besides main operating serviceman astatine Viacom's Nickelodeon unit, said she's looking to clasp the banal market's caller intersection with societal media. Betterment clients should beryllium capable to thrust the viral banal question safely, she said.

"We spot the improvement of the space, and privation radical to experimentation connected the borderline without losing their beingness savings," Levy said. "I interest astir volatility — immoderate radical aren't going to beryllium capable to dump their GameStop shares, and they're going to get burned if they don't person a information net."

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