Betterment is an American

financial advisory Corporate services or business services are activities which combine or consolidate certain enterprise-wide needed support services, provided based on specialized knowledge, best practices, and technology to serve internal (and sometimes external) ...

company which provides digital investment and cash management services. The company is based in New York City, registered with the

Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...

, and a member of the

Financial Industry Regulatory Authority The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) that regulates member brokerage firms and exchange markets. FINRA is the successor to the National Associat ...

. It is a registered investment advisor and

broker-dealer In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and ...

. As of December 2021, Betterment had more than $33 billion of assets under management and over 700,000 customer accounts.

History

Foundation and launch

Betterment was founded in 2008 in New York City by

Jon Stein Jonathan "Jon" Stein is an American fintech entrepreneur. He is the founder and chairman of Betterment, the largest independent online financial advisor in the U.S., with over $18 billion in assets under management. Stein served as chief e ...

, a Columbia Business School MBA graduate, and Eli Broverman, a lawyer out of

NYU School of Law New York University School of Law (NYU Law) is the law school of New York University, a private research university in New York City. Established in 1835, it is the oldest law school in New York City and the oldest surviving law school in New ...

. Betterment,

LLC A limited liability company (LLC for short) is the US-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of ...

was established as a

Delaware corporation The Delaware General Corporation Law (Title 8, Chapter 1 of the Delaware Code) is the statute of the Delaware Code that governs corporate law in the U.S. state of Delaware. Adopted in 1899, the statute has since seen Delaware become the most im ...

on April 7, 2009. The parent company for Betterment LLC and Betterment Securities, Betterment Holdings, Inc. was established in Delaware on January 29, 2008. The company launched at

TechCrunch Disrupt New York TechCrunch is an American online newspaper focusing on high tech and startup companies. It was founded in June 2005 by Archimedes Ventures, led by partners Michael Arrington and Keith Teare. In 2010, AOL acquired the company for approximately $ ...

in June 2010, and won the award of "Biggest New York Disruptor." Within 24 hours, Betterment had attracted nearly 400 early customers, and the company began talks with early investors.

Operations

Betterment's business model includes three areas of business: retail investment, a platform for advisors, and a

401(k) In the United States, a 401(k) plan is an employer-sponsored, defined-contribution, personal pension (savings) account, as defined in subsection 401(k) of the U.S. Internal Revenue Code. Periodical employee contributions come directly out of the ...

for mid-market business. The company's personalized financial advice uses principles-based

robo-advisor Robo-advisors or robo-advisers are a class of financial adviser that provide financial advice and investment management online with moderate to minimal human intervention. They provide digital financial advice based on mathematical rules or algori ...

technologies such as computer algorithms. Licensed financial advisors provide over-the-phone consultations to customers who opt for additional support. Betterment's primary retail platform offers taxable and tax-advantaged investment accounts, including traditional and Roth individual retirement accounts (IRAs). In October 2014, Betterment launched a

business-to-business Business-to-business (B2B or, in some countries, BtoB) is a situation where one business makes a commercial transaction with another. This typically occurs when: * A business is sourcing materials for their production process for output (e.g., a ...

offering called Betterment Institutional, subsequently renamed Betterment for Advisors, a digital platform for managing client assets using Betterment's built-in financial advice. In January 2017, the

Financial Planning Association Financial Planning Association (FPA) is the largest membership organization in the USA representing financial planners. Current membership is 22,000. FPA is primarily focused on supporting Certified Financial Planner The Certified Financial Plann ...

(FPA) and Betterment for Advisors ran a program on digital investment advice for the association's members. In January 2016, the company launched Betterment for Business—a 401(k) platform aimed at small- to medium-sized businesses. It is built on the same underlying investment strategy and generally costs less than most traditional 401(k) plans. In February 2022, the business rebranded to Betterment at Work and announced the launch of a new student loan management solution, as well as the acquisition of the partner and customer relationships of Gradvisor, a platform that provides personalized college savings plans. In December 2020, Betterment's founder Jon Stein stepped down as CEO and was succeeded by Viacom Media Networks's former COO Sarah Levy. In November 2021, Betterment released a new logo with an icon representing a rising sun. In February 2022, Betterment announced it had acquired Makara, a cryptocurrency portfolio manager.

Finances

Betterment has received funding from Bessemer Venture Partners, Menlo Ventures, Anthemis Group, Kinnevik, Francisco Partners, Globespan Capital Partners, Citi Ventures, The Private Shares Fund, Aflac Ventures and ID8 Investments. In September 2021, the company secured $160 million in growth capital, consisting of a $60 million Series F equity round led by Treasury and a $100 million credit facility, established with ORIX Corporation USA’s Growth Capital group and Runway Growth Capital. This financing valued the company at nearly $1.3 billion.

References

External links

*{{official website, www.betterment.com Robo-advisors Financial services companies established in 2008 Financial services companies based in New York City Privately held companies based in New York City