Betterment CEO Sarah Levy: Advice is our “superpower”

This is an excerpt from AltFi’s Digital Wealth State of the Market Report 2021, which is available for free here.

The mania for day trading during Covid has helped “shine a light on investing generally” says Sarah Levy, the CEO of New York-based digital wealth giant Betterment.

During lockdown trading went gangbusters, as individuals dabbled on the stock market to pass the time and make money. Levy, a long-standing media executive with little financial services experience when she took the Betterment top job, says passive investment through Betterment can sit hand in glove with taking a punt on so-called ‘meme stocks’.

“What it’s done is shine a light on investing generally. Strategically, we’re very different from other players in the market, but we’re a nice compliment,” Levy told CNBC recently.

But speaking from Betterment’s New York office, she adds a note of caution to AltFi: “Look, when you are ready to settle down, feel free to play the field—just don’t do it with the assets that you need for your retirement. Do it with money you are willing to lose.”

Hitting Her Numbers

Levy joined Betterment in December last year, during lockdown, and was personally handpicked by her predecessor, and Betterment founder, Jon Stein.

His challenge to Levy was to make “the brand as beloved as the product”. She joined a firm that has fattened out its offering, compared to 2008, when it set out to democratise the expensive and often complicated business of investing, through technology and robo-advising.

Today, on top of its robo and human advisory services, Betterment offers cash management, SaaS and retirement products.

In its latest financial results, the first full quarter under Levy, Betterment witnessed gains in the three cogs of its business—robo-advising, 401Ks and cash management services (including new offerings like checking and savings accounts).

Assets under management swelled by $10bn or 53 per cent to $29bn for the 12 months to the end of March, while it added 56,000 new clients, up 116 per cent on the year, during the quarter. Currently, it has $32bn assets under management and 700,000 customers overall.

Betterment says more than 300 businesses have signed up to its 401k plan in the past year, but its retirement business is still relatively small.

“Fidelity has a bunch of plans that are single plans that are larger than Betterment’s entire business. These plans dwarf the entire size of Betterment’s retirement business," Mike Alfred, co-founder of Brightscope, which analyses retirement data, told RIABiz, an online journal.