- In a recent interview with Business Insider, Mike Reust, President of Betterment for Retail, gave an insight into the robo-consultant's opinion of the recent self-directed mania.
- Betterment is not trying to start a "robinhood clone," said Reust. However, attempts are being made to take advantage of the surge in retail with more tailored options than currently.
- "I don't know exactly where this will lead us, but we are certainly considering how much more portfolio adjustments we can offer. I suspect you will offer us more over time than we offer today. This is an area in which we will do this. " invest, "he said.
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As a result of the corona virus pandemic and the resulting market volatility, analysts, investors, executives and journalists have tried to get a grip on the rapid commitment to do-it-yourself trading. The team behind Betterment, the pioneering independent digital wealth manager, is no exception.
"For us, it's not & # 39; Oh my goodness, Robinhood is making serious revenue (order flow payment). What are we going to do about it to get some PFOF revenue? & # 39; It's not like that," Mike Reust, president of retail at Betterment in New York, said in a recent interview about Zoom with Business Insider.
"It's really more like why customers run to Robinhood a million times? What are they doing? Why do they think this is the right way?" he said.
The fact that the digital asset manager, which has made a name for itself due to its slow, steady passive investments, is considering what is driving the recent boom in fast, often volatile retail, underscores the rise and influence of average investors who jump into the market with both legs.
Betterment examines the "psychology and the human side" to see if the company should give clients more control over their portfolios or "allow them to make certain adjustments that are not possible today and help you scratch it." Need for control, "he said.
"I don't know exactly where this will take us, but we are certainly considering how much more portfolio adjustments we can offer. I suspect you will see that we offer more than we offer today. Over time, we will." invest, "said Reust, who has been with Betterment for seven years and was previously its chief technology officer.
The strong volatility of the market this spring and summer, mixed with people staying at home during pandemic closures and having access to a number of commission-free trading platforms, has helped to achieve a record level of do-it-yourself trading.
Explosive growth in retail
This month, the old online brokers E-Trade, TD Ameritrade, Charles Schwab and Interactive Brokers reported record daily trades in the second quarter.
Mike Pizzi, Chief Executive of E-Trade, described the quarter in a statement next to the result as "exceptional", with a level of customer loyalty "that is unparalleled in our nearly 40-year history"
Reust told Business Insider that Betterment will not launch a product that looks like a "robinhood clone" and the company declined to specifically comment on how customers can further customize their portfolios.
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According to Reust, the company has always sat at the interface between digital investing and human advice, and some certified financial planners (CFP) and other licensed investment professionals have employees so customers can add to their app.
"Where I think COVID has taken us a little, it is suddenly that everyone across ages is more concerned with human-powered advice – very quickly," he said. "We figured it was a nice deal that many customers used until the team was over-subscribed with phone calls and appointments."
Betterment is committed to expanding its team of experts to support users and plans to hire another CFP.
Customer service representatives, engineers and analysts have been hired in recent months. In total, more than a dozen employees employ phone calls and emails from clients who use their investment products, and nine employees for banking products. A spokesman said Betterment enlarged both teams.
On July 14, the day before this year's US tax day, there was the highest volume of incoming customer inquiries ever seen when investors were looking for help navigating their filing situations.
Betterment now also has a team of four employees who directly support its premium customers and several other CFPs that perform other functions, a spokesman said. Premium customers with Betterment have assets of at least USD 100,000 and pay a fee of 0.40% for these assets, as opposed to 0.25% for the digital level with no minimum account.
Plans from Betterment
Betterment, which manages $ 21 billion in client assets and has approximately 500,000 clients, is not trying to turn away from its core digital wealth management and banking products.
Joint checking accounts are to be set up later this year. On Thursday, a feature was introduced that allows customers to create separate buckets of cash for short- and long-term financial goals.
Other fintech players have also applied for bank charters, which Reust said was a step that Betterment might consider in the future, but which was not a priority.
Betterment raised $ 275 million in debt and most recently raised a $ 70 million capital round in 2017 – an expansion of a $ 100 million Series E the year before, led by Swedish investment company Kinnevik.
In addition to its headquarters in New York City, the robo consultant has two other offices in Denver, which opened in January, and in Philadelphia, which opened in January 2019.