Taking Action Against Racial Injustice
Betterment shares with our customers how we’re taking action against systemic racial injustice.
Last week, CEO Jon Stein wrote a blog post to address the killings of George Floyd, Breonna Taylor, and Ahmaud Arbery. He stated our company’s position simply: Betterment will not stand for the unequal treatment of people of color in our company, in our communities, or in our country.
Some thanked him for sharing his opinion; others were not happy that he did. There were also many emails from customers who want to hear more about what Betterment is doing to take action. Betterment team members from across the organization have pulled the themes from those emails, and we’re sharing our responses below.
You’re a financial company. Why are you making statements about racial injustice?
From Jon: I felt personally compelled to speak out, and there are a couple of reasons I felt that way.
1. It feels important to stand up for my team, our communities, and our country—because I want the best for all of them. Last week, my team shared stories of personal fear, oppression, and racism. People who give their working lives to the company I started are suffering, and it’s my responsibility to help change that. I want them to have access to the same opportunity for safety, success, and happiness that I have had, as a privileged white male. Zooming out, I want us to live in communities, and in a country, where everyone has equal opportunities to succeed. Because I believe that living in such a society makes us all better off.
2. Betterment is a mission-driven company. One of our values is to pursue happiness, and race or background should not preclude anyone from that right. I feel that our views here are non-controversial: We’re talking about human rights, not politics, not specific policies. If I boil the blog post down, it comes down to this: “These events are fresh evidence that we have a long way to go toward equality. Show your support for equality and educate yourself, particularly if you’re privileged.”
What is Betterment actually doing about it?
There’s a lot of work to do. To be most effective at combating racism and inequality, for our efforts to make a difference and to avoid returning to “business as usual,” we believe we should be organized, disciplined, and persistent. If we—as a company, as an industry, as a nation—do this right, “business as usual” will be redefined as a more equitable and safe space for everyone. Today is just the start, but we’re working toward that in several ways:
- Betterment is joining a soon-to-be announced coalition with other fintech companies, which includes signing a racial equality statement that outlines what we see as our responsibilities to affect change within our industry.
- We’ve seen an outpouring of ideas and energy from our team. We’ve begun working groups around a number of initiatives, from educational sessions on recognizing white privilege to exploring how we might make our financial advice more widely available.
- We are re-examining our services. We’re asking ourselves how we can be more inclusive in everything we do, and working to ensure that there is no implicit bias in our services. We’re compiling and researching the feasibility of product ideas to add to our long-term roadmap. We’re exploring ways we might add organizations supporting the fight against racial injustice to the Betterment Charitable Giving program. (Note: This takes time on the technical front, as do agreements with the charities themselves.)
How do I know my money isn’t invested in companies whose beliefs I don’t align with?
Let’s start with the fundamentals: The Betterment portfolio is built to provide the highest returns for an expected level of risk. We seek to achieve this through maximal diversification by investing in broad index-tracking ETFs. These ETFs can hold hundreds or even thousands of positions in different companies. Generally speaking, the ETFs in the Betterment portfolio will invest at least a small portion of assets in each publicly-traded industry. This might mean investing a portion of assets in industries or companies that don’t align with a customer’s particular values.
For investors concerned about that, we have another option. Betterment’s SRI portfolio provides a socially responsible alternative that is expected to track relatively closely with the performance of Betterment’s Core portfolio. We achieve this by investing in socially responsible ETFs, like DSI, which use Environmental, Social, and Governance (ESG) ratings to decide which companies are included in the funds.
While the SRI portfolio aims to reduce exposure to companies deemed to have a negative social impact, it’s not a perfect solution. It can be challenging to create an SRI portfolio that satisfies everyone, both because SRI funds tend to be more expensive, and because it can be challenging to disentangle what companies are associated with what values and to what degree. One way this manifests in our current SRI portfolio is that there are still some funds invested in non-ESG ETFs. We constantly monitor the market landscape for opportunities to decrease non-ESG allocations in our SRI portfolio, and are working toward removing these funds over time. Our most recent improvement to the SRI portfolio came when we substituted in a socially responsible ETF, ESGD, for our International Developed Markets stock exposure.
If you’re interested in finding out whether an ETF invests in a particular company, you can check an ETF’s quarterly holdings, typically available on the fund providers’ websites. In the meantime, you can utilize our SRI portfolio, and stay tuned for updates as we continue to work to remove non-ESG ETFs in the future.
How can I support the movement?
The Black at Betterment Employee Resource Group put together this list of resources and organizations to help us get started, and we’re sharing it with you. We want to acknowledge the burden that our Black colleagues have shouldered and continue to bear. It is not their responsibility to educate the rest of us; we thank them for their patience and guidance.
- Ways you can help: Petition, call, donate, and more
- Black Lives Matter: Fund the Movement
- 20 Actions White people and non-Black POCs can take to show up for Black People right now
- Social Change: Everyone has a role to play (#useyourprivilege #unlearnracism)
You can also sign up for updates on Betterment’s series Tech: To Elevate Color in Hiring. It’s all about cultivating community for people of color in the tech industry by creating opportunity, sharing ideas, and empowering cultural engagement.
Additionally, going forward, Betterment will be making use of our social media reach to feature more organizations and resources that align with our beliefs and are doing great work to better reach underserved communities.
What if I still have questions?
First, thank you to our customers who asked such thoughtful questions, and thank you for pushing us to better serve you. We know that you will continue to do so, and we look forward to your feedback.
If you have questions about what we’re doing to make our product more inclusive, or our hiring, interviewing, and belonging programs, then look out for more blog posts in the coming weeks.
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