Robo-advisors are apparently here to stay—that is, if Betterment has anything to say about it. The independent robo-advisor has become the first to reach $5 billion in assets under management.
The trend in robo-advisors – online algorithm-based portfolio management advice — has been steadily growing, as the services and options they offer increasing and conventional advisors seeking to add robo options to their own offerings, both in regular investing and in retirement saving. In March, for instance, Betterment added account aggregation to its platform to enable its clients to improve their retirement preparedness; that was after a January launch of its 401(k) platform Betterment for Business.
That doesn't mean that robo-advisors are risk free.
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Last year a paper titled "Robo-Advisors: A Closer Look" panned the automated wing of the financial services industry, pointing out potential hazards and flaws in the business model and the services rendered by the firms now crowding the marketplace.
But that certainly doesn't seem to have slowed things down at all, as more and more firms are dipping their toes into the robo waters and younger people increasingly turn to robo-investing as their go-to method of choice.
There also hasn't been any shortage of advocacy on behalf of robos, with such popular online resources as NerdWallet saying how much they can save millennials over the course of a career spent saving for retirement.
Betterment certainly hasn't been timid about growing, bringing in $60 million in funding in February of 2015 and another $100 million just this past March and adding quite a few sponsors to its 401(k) platform.
The firm also announced that Amy Shapero has joined as chief financial officer. Shapero was most recently CFO at Sailthru, which provides personalized marketing communication technology; earlier, she held positions at DigitalGlobe, Spot Trading and Standard & Poor's.
Betterment customers can open and customize regular investment accounts, traditional/SEP/Roth IRAs, trust accounts and accounts for retirement income, in addition to its 401(k) platform.
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