The robo-adviser announced Friday that during the first quarter under the leadership of new CEO Sarah Levy, the company added 56,000 new clients to the platform, bolstering account openings 116% year over year.
By comparison, Betterment reported a first-quarter 2020 increase in account openings of just 25% when the pandemic first hit.
Moreover, the fintech added $10 billion in assets to its platform over the last year, boosting its total assets under management to $29 billion. In the first three months of 2021, client net deposits were over $1.5 billion, up 118% compared with the same period a year ago.
Betterment’s wealth management platform for RIAs, Betterment for Advisors, has seen growth over the past year as well with deposits to the platform up 96% year to date.
Dozens of wealth management firms also reported record account onboarding and assets during the Covid-19 lockdowns, which prompted retail traders and savers, who couldn’t access financial services via traditional modes, to flock to digital platforms.
“Millions of new investors have entered the market and the increased media attention has made people take a closer look at the market and see the potential in investing,” said Levy.
The robo-adviser’s growth could also be attributed to its multiple business lines and recent acquisition activity. Under its founder and former CEO Jon Stein, who stepped down as CEO in December, Betterment entered the business-to-business space with the launch of both its 401(k) arm, Betterment for Business, and adviser services platform, Betterment for Advisors, in addition to the company’s retail offering.
Betterment 401(k) signed partnership deals with Zenefits and Bennie, making its 401(k) offering available to a larger customer base. The robo-adviser is also offering joint checking accounts as of last Thursday that allows them to become the primary banking institution for more households, said David Goldstone, head of research at Backend Benchmarking.
The largest push to expand offerings for Betterment for Advisors is the launch of custom model portfolios in February, where advisers have the ability to build their own custom model portfolios of exchange-traded funds, at no additional cost, while leveraging Betterment’s portfolio management tools, including automated rebalancing, tax-loss harvesting, asset location and tax-optimized sales for withdrawals.
As for M&A activity, Betterment announced the purchase of Wealthsimple’s U.S. book of business in March, which will add more than 17,000 clients and $190 million in AUM at the end of June.
Betterment’s access for investors to get started with any size initial investment for a low 0.25% annual advisory fee could also be a factor in its growth, particularly attracting novice investors, according to Backend Benchmarking’s Robo Report.
“With no investment minimum, competitive fees, clear financial planning tools, an ability to upgrade for access to CFPs, and different options to explore, Betterment is our top choice for the first-time investor,” Goldstone said.
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