Betterment sees record growth as the GameStop frenzy sheds light on investing
Betterment has introduced a new savings option that allows users to pay up to 2.69% interest.
Trading apps aren’t the only ones benefiting from the surge in meme stocks.
Betterment, a digital asset consultant, saw record growth in the first quarter of 2021. Despite the offer of so-called “passive” investments and the fact that customers cannot choose stocks, Sarah Kirshbaum Levy, CEO of Betterment, said she was enthusiastic about GameStop and “gambling” “In the markets during the pandemic, business continued to grow.
“What is being done is shedding light on the investment in general,” said Levy, former ViacomCBS chief operating officer who took over the role in December. “Strategically, we are very different from other market participants, but we are a good addition.”
In Betterment’s first full quarter, with Levy at the helm, new customers and net deposits grew 116% and 118%, respectively. The company added $ 10 billion in new client assets and managed its total assets under management to $ 29 billion.
Founded in 2010 by former CEO Jon Stein, the New York-based company provides investment advice to private clients, a platform for independent investment advisors, and 401 (k) plans for small and medium-sized businesses. Most millennial customers use Betterment for “long term” and “safety net” investments and often have more than one account, Levy said.
“You are having fun with someone else for day trading,” she said in a telephone interview.
Some of Betterment’s robo-advisor competitors saw similar growth this year.
Wealthfront told CNBC that March saw the highest number of net deposits and that assets under management exceeded $ 25 billion in the quarter.
The investment app Acorns doubled its accounts from the fourth to the first quarter, achieving the best three months in its history. The net worth was over $ 4.5 billion.
The free-trading app Robinhood was at the center of the GameStop controversy amid brief pressure on the stock fueled in part by Reddit-fueled retail investors. JMP Securities estimates that the company added 3 million customers in January alone.
Charles Schwab announced on Thursday that it had added a record 3.2 million new customers in the first quarter – more new customers than in all of 2020. CEO Walt Bettinger cited the “increased market awareness of certain names on social media” as a factor who “greatly strengthened trade” activity. “
Levy, who was also the chief operating officer of Viacom’s Nickelodeon unit, said she wanted to leverage the exchange’s new interface with social media. Improvement customers should be able to navigate the wave of viral stocks safely, she said.
“We see space evolve and we want people to experiment on the fringes without losing their life savings,” Levy said. “I’m concerned about the volatility – some people won’t be able to dispose of their GameStop stock and they’ll get burned if they don’t have a safety net.”
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