Hi. I'm Aaron Weinman. Today, I'm highlighting a deep dive into Betterment, the disruptive startup that pioneered the robo-advisory space. The company set a trend that saw big banks and fintechs pile into the sector.
Now, it's charting a new path, so let's dig into that.
1. Betterment changed the game for investing in the robo-advisory space. The New York investing startup pioneered the robo-advisory service and opened the door for individuals to manage their money beyond the traditional route of financial advisors.
But deep-pocketed lenders — see UBS' $1.4 billion acquisition of Betterment competitor Wealthfront — and disruptive fintechs now play in the robo-advisory sandbox.
Twelve years in, Betterment is moving away from its roots to further compete with Wall Street peers.
It's staking its future on selling retirement plans to small- and mid-sized businesses, and also focusing on financial advisors and their wealth-management firms.
Being called 'the robo' was not going to cut it if Betterment intended on being a sustainable business over the long term, Chief Executive Sarah Levy told Insider.
To set itself apart, Betterment is building out business-to-business channels for financial advisors and in the process, fit in with the legacy firms that it once sought to upend.
As it charts a new path, Betterment has experienced a raft of changes, shed some staff, and switched up much of its leadership.
Competition is fierce, but the company nabbed a round of Series F capital in the fall, which valued Betterment at $1.3 billion.
For the full story about the genesis of this robo-advisor, check out this deep dive from Insider's Rebecca Ungarino and Asia Martin.
And here's more on Betterment, the altered landscape of robo-advisory services, and wealth management:
- Betterment's CEO explains why the robo-advice pioneer is buying a crypto startup.
- Why UBS is shaking up its recruitment strategy by expanding where it trains and hires advisors.
- UBS' first digital financial advice attempt flopped. Here's why its CEO thinks Wealthfront will be different.
- How UBS' $1.4 billion splurge for Wealthfront accelerates robo-advice M&A.
- Merrill Lynch has ushered in changes for its storied 'thundering herd' of financial advisors.
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