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3 Questions with Sarah Levy, CEO of Betterment

During the third quarter of 2021 quarter, we took part in Betterment’s USD 160m funding round at a time when the company has firmly established itself as the largest independent digital investment advisor with USD 32bn in assets under management and nearly 700,000 clients. Since our first investment in 2016, Betterment has pursued its mission to make people’s lives better with easy-to-use, personalised investment solutions. The new capital will support the company's continued growth, allowing it to cement its category leadership position by hiring the industry’s best talent and to further innovate in its product suite, including its offering for small and medium sized enterprises.

Read more in our interview with Sarah Levy, Betterment’s CEO.

"What we're seeing is that consumers really want more agency and more choice in their investment solutions."

Sarah Levy, CEO of Betterment

Tell us about where the company is today and what your ambitions are for it now with the new fundraise?

We're thrilled to have the fundraise behind us and to have the support of both existing as well as a few new investors. I think it's a real validation, both of our leadership position – particularly on the consumer side – but also of our recent momentum which is incredibly exciting. And when we think about how we're going to use the funds, there are really two key vectors of growth for us. The first is in our retail business where we see an opportunity to expand portfolio options for the retail investor. Here we see a real trend towards investing choice. And the second, and perhaps more important, is to accelerate our B2B vectors where we have more nascent businesses really showing signs of very large potential.

We've seen huge changes across the board in consumers' lives from the pandemic. What changes have you noticed in the ways in which consumers are using Betterment's platform?

There is an incredible industrial shift afoot for this next generation as adoption of digital solutions increases at an incredibly fast pace. And I think that the pandemic was a real accelerator of that behaviour with consumers that no longer wanted walk to the bank or to meet an advisor, they became comfortable with these new sorts of more disruptive platforms where there was an opportunity to transact digitally. And there was a tremendous amount of attention put on meme stocks and self directed trading. But that really was an opportunity for people to gamble when they had nothing else to do. What the narrative there kind of misses is that even if they are pursuing meme stocks and day-trading, they are putting the bulk of their investable assets into long-term diversified solutions. We did a really interesting survey with both existing and potential customers about how they're investing their dollars. What we learned is that 70% of investable assets are being put into long-term diversified solutions and 30%, what I'll refer to as their "play money", is where they're engaging in that sort of riskier behaviour. Our recent incredible acceleration of net deposits, which this year are up more than 240% over a year ago, validates what consumers tell us. It’s really a testament to what is going on in the market and to our leadership position within that market. Over the years, we’ve built a strong brand that has real trust and fiduciary underpinnings that are really accelerating our growth. I think what we're seeing is that consumers really want more agency and more choice in their investment solutions but they also want to be guided. They don't want endless and infinite choice because they don't have enough hours in the day. So, they want a trusted partner in that journey.

Going forward, what are you most excited about?

We're an incredibly mission driven company and truly all of our employees are believers in making peoples' lives better. So through that lens, we're particularly excited about our 401k business because it is both mission aligned and solving an incredibly important problem in society where we see the future of social security running out for this next generation or at a minimum not being a complete solution. We really believe that employers need to be a part of the solution for their employees in setting up their long-term financial independence and really helping them to understand how to save ultimately for retirement. In the 401k business there is a real need to provide that financial wellness for employees. And it also is a differentiator for businesses

Watch our Senior Investment Director Natalie Tydeman chatting with Sarah Levy about the latest funding round and future potential

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