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Betterment's Story

Betterment Raises $100 Million

We’ve raised capital to further our vision of better managing our customers’ financial lives, and becoming their central financial relationship.

Articles by Jon

By Jon Stein
CEO & Founder, Betterment  |  Published: March 29, 2016

Today marks an important milestone for Betterment and our more than 150,000 customers who have invested over $3.9 billion with us.

We’re excited to announce that Betterment has closed a $100 million investment, led by a new partner, Kinnevik, and including participation from previous investors Bessemer Venture Partners, Anthemis Group, Menlo Ventures, Globespan Capital Partners, and Francisco Partners.

We hope that this is seen as a significant development in the financial services industry, which may be in the midst of its largest transition in 40 years, and to millions of people who are not yet our customers, but who should be.

To our loyal and wonderful customers, thank you. We are grateful that you have trusted Betterment to help you reach your financial goals, making us the largest independent robo-advisor. Without your support and feedback, we wouldn’t be here, getting better every day.

Being the leading robo-advisor means we can never stop growing and innovating. The more we grow, the more exciting work we see ahead of us. We want to continue improving our services and technology to reshape the financial services industry. And we want to continue building a service that our customers trust, and even love. This new round of funding will help get us there.

Why We Raised Funds

Betterment opted to raise funds now to continue growing the company and improving our service. We are already fully focused on our mission of helping people to answer the question, “How should I manage my money?” Now, we can push forward faster, and build even more.

We’re fortunate to partner with Stockholm and London-based Kinnevik, who is aligned with our company vision. We value Kinnevik for their decades-long approach to company partnerships, and we are both committed to building a company that not only transforms financial services, but more importantly whose goal is to better our customers’ financial lives.

What’s New at Betterment

Now that we’ve raised additional funds, we’re continuing to work on exciting developments since our last fundraising round. Here are some of our latest updates.

Synced Accounts

Earlier this month, we rolled out our latest product feature, which allows customers to sync all of their outside accounts.

Now, our customers can log in to their Betterment accounts to see all of their wealth in one place, including how they’re invested across their portfolio in holdings, shares, and other assets and debts, such as loan, mortgage, and credit card accounts.

Customers can also add any real estate assets or other property for a full picture of their household balance sheet and total net worth.

By syncing accounts, we help optimize investment returns by alerting of excess cash, that could otherwise be invested and earning returns. With our fee analysis feature, we tell customers which of their outside investments is charging higher management fees.

Synced accounts are also factored into Betterment’s RetireGuide, our retirement tool that helps tell investors how much they need to save for a comfortable retirement.

RetireGuide is a powerful tool, given its ability to consider current and future income (including Social Security income), a 401(k) and other savings, and when and where customers plan to retire.

When our customers sync their outside accounts with Betterment and turn on RetireGuide, their retirement plans are always up to date and on track. Synced accounts and RetireGuide are available to Betterment customers at no additional cost.

Support of the Fiduciary Rule

We also look forward to the finalization of the Department of Labor’s (DOL’s) fiduciary rule.

Under the new rule, anyone who provides retirement investment advice for a fee will be considered a fiduciary, and required to act in the best interests of the investors they serve.

Betterment has long supported the fiduciary rule. We believe it is a step toward improving retirement outcomes for millions of Americans, because it will help eliminate problematic practices in the retirement advice industry.

Betterment for Business: A Better 401(k)

Betterment recently launched Betterment for Business, the only turnkey 401(k) service that includes personalized management for all 401(k) plan participants.

Simply put, too few people have 401(k) plans that offer tailored advice for their personal situations. This is why we have a retirement crisis in America.

Small- to medium-sized businesses have been underserved. Employees of these companies often pay too much in 401(k) management fees, without understanding the layers of fees that they’re being charged.

Since launching this service, we’re seeing incredible traction from employers who believe that their employees deserve a better 401(k)—one that is also customized for individual retirement goals.

Betterment for Business companies know the power of attracting and keeping workers by offering 401(k) plan benefits. Now, their employees are getting a valuable, personalized service to meet their retirement goals.

We believe that Betterment’s 401(k) is better for both employees and employers, and we are enthusiastic about growing this part of our overall business.

Betterment for Advisors

Betterment is expanding Betterment for Advisors, the leading provider of digital wealth services for investment advisors and broker-dealers.

Betterment for Advisors’ automated portfolio management, paperless back office, and award-winning user experience are designed to dramatically increase advisor efficiency so they can spend more time with their clients.

Our additional resources, combined with constructive input from the hundreds of firms we work with, will help us to significantly expand the platform’s features and capabilities.

In addition, as the DOL fiduciary rule takes effect, we expect Betterment for Advisors to play a central role in helping the broker-dealers implement new business models and continue to serve millions of clients.

Growing this part of our business reflects our commitment to advisors. Together, we will build on our strong foundation to continue changing the wealth management industry.

What’s Next at Betterment

Building a service to rival entrenched incumbent financial services is a monumental task—one that requires an opportunity created by technological innovation, consistently excellent execution over several years, and lots of capital.

We will never be able to outspend the financial services behemoths, but we can certainly out-innovate them by being nimble, by spending and operating our business efficiently, and by bringing radical transparency to the wealth management industry. We built Betterment as an alternative to the conflicted, sales-driven business models that previously dominated the market for retirement advice.

Betterment is focused on building the most transparent, customer-aligned company in wealth management—and we aim to become our customers’ central, most-trusted financial relationship.

In addition to developing product features and growing our business areas, we must continue building a stellar team. We’re fortunate that we’ve attracted the best in financial, operational, design, and engineering talent to get us this far. Just as important as fundraising is being a company where employees are proud of their work.

We are hard at work bringing unconflicted, next-generation financial services to millions of customers. We’ve built the leading independent robo-advisor—an advisory service that brings the best of technology to the best of financial advice, and one that our customers can use for the rest of their lives. We look forward to sharing with everyone the many things to come as we improve every day.

It’s an exciting time to be a part of Betterment. Learn more about joining the mission at betterment.com/careers.

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