Latest news with #Betterment
Business Times
3 days ago
- Business
- Business Times
Gen Z, don't be fooled by GenAI financial advisers
THE wealth management industry is prepared to court its newest potential clients: Gen Z. Instead of trotting out older professionals with decades of experience, companies are utilising generative AI to develop digital assistants. These new 'experts' even come with the ability to use slang to appear relatable and relevant to their target demographic. Embracing the newest technology is yet another cultural shift in the financial services landscape that disrupts some of the norms in the industry. We've seen it with the development of robo-advisers and the rise of 'finfluencers'. Cue the traditionalists turning their noses up at how far the financial advice field has strayed from its origins. After all, future iterations of GenAI really could accelerate the long-prophesied doomsday for flesh-and-blood financial planners. But now isn't the time for humans to declare defeat. Until advanced versions of the technology arrive, people should be doubling down on the one significant advantage they have against their digital counterparts: soft skills. Providing investing advice is only one facet of the job. The role is part therapist, accountability coach and teacher. Real people can push back against panicked requests to sell in a turbulent market instead of simply executing an order. A person understands how and when to ask more questions to determine the reason behind a request for conservative investments such as bonds or CDs (certs of deposits) even at a young age when it's detrimental to be overly cautious. The problem for many young adults is that accessing this more holistic approach, which goes beyond stats and data, is costly. Financial advisers usually get paid in one of two ways: assets under management (AUM) – a percentage of a customer's investments each year – or a flat-rate fee. The latter varies based on the level of service. A comprehensive financial plan can cost thousands of dollars. AUM ranges from 0.25 to 1.5 per cent, with some advisers reducing the cost as the size of a portfolio grows. The greater barrier to entry is the possible minimum investable assets requirement, which often hovers between US$500,000 and US$1 million. Fifteen years ago, these factors prohibited access for millennials. A NEWSLETTER FOR YOU Friday, 3 pm Thrive Money, career and life hacks to help young adults stay ahead of the curve. Sign Up Sign Up Cost-effective alternatives This reality paved the way for cost-effective alternatives in the form of robo-advisers, such as Betterment and Wealthfront, with significantly lower AUM and no asset minimum. The companies sent shockwaves through the industry as many wondered if machines would finally usurp man. As years passed, it became obvious the two could have a symbiotic relationship. In fact, it turned out millennials ultimately did crave some soft skills, which led to platforms launching versions that gave customers access to humans. Instead of cratering the industry, the robo-advisers forced their living counterparts to compete in different ways. Some diversified their services, including offering virtual counsel, and others targeted less-affluent clientele. While it's easy for the regular consumer to conflate a robo-adviser with GenAI, the two are not the same. The latter is built on language-learning models instead of the mathematical-centric AI models and machine-learning algorithms that provide the underpinnings for companies such as Betterment and Wealthfront. Gen Z investors may be more attracted to GenAI because it can simulate how people speak and even look. Plus, the cohort is more primed to be early adopters of the tool. They've grown used to receiving free, one-size-fits-all money guidance online. A stunning 77 per cent of teens and 20-somethings use online platforms and social media to answer their money questions, according to a 2025 Credit Karma survey. But they should remember that the technology's modern iteration is new and, like humans, fallible, which results in inaccurate or misleading information known as 'hallucinations'. Bullish on AI Even with all these issues to resolve, companies are bullish on GenAI's ability to spit out 24/7 guidance and woo new clients. Arta Finance, a wealth management startup, is at the forefront of providing an AI financial adviser with Arta AI. The 'AI agents', as the company refers to its investment planner, product specialist, and research analyst offerings, can respond to queries by voice or text (and do so in the aforementioned generationally appropriate slang). Arta is only available to accredited investors and offers access to human professionals, but the company plans to make Arta AI available to other financial services companies – a move that could give all kinds of retail investors access to its product. It's likely that plenty of platforms won't wait to license the service and instead will develop their own. Robinhood Markets plans to launch Robinhood Cortex, an AI-powered digital research assistant, this fall. The app offers a variety of investing options, including Robinhood Strategies, the company's robo-adviser. Unlike Arta Finance's offering of real-life advisers alongside its AI agents, Robinhood customers can currently only access a support team, which is mostly available to handle administrative questions. And that's a huge pitfall. Companies that don't prioritise establishing relationships with real professionals can cause retail investors to panic in turbulent times, especially novice ones who are able to access advanced opportunities, such as trading options. Granting inexperienced customers access to higher-level investing products without proper support can be financially, mentally and emotionally ruinous. Robinhood should know. In 2020, it paid the largest Financial Industry Regulatory Authority fine in history – US$70 million – for its technical outages, lack of due diligence before approving customers to trade options and sending of misleading information. There is a place for AI in the financial advisory sector, and in due time, it will become a dominant feature. That part is clear. But it's also obvious that rushing the timing would be a mistake. BLOOMBERG
Yahoo
15-05-2025
- Business
- Yahoo
Betterment expands advisor solutions range with Rowboat acquisition
US-based robo advisory firm Betterment has acquired Rowboat Advisors, expanding its line-up of investment tools for RIAs. Rowboat offers portfolio management software, which includes features for direct indexing, tax optimisation, and personalised investing. Established in 2016, the company has created a range of portfolio optimisation software designed for investors who prioritise 'control, transparency, and tax efficiency'. This acquisition aims to bolster Betterment's technology platform and expedite the development of advanced tools for RIAs through Betterment Advisor Solutions. The integration of Rowboat's solutions into Betterment Advisor Solutions, which serves as an all-encompassing custodial platform for contemporary RIAs, is scheduled to commence in the latter half of 2025. As part of this acquisition, Rowboat Advisors founder and CEO Iraklis Kourtidis will join Betterment's engineering leadership team as the vice president of portfolio management, reporting directly to chief technology officer John Mileham. Kourtidis said: 'We saw a unique opportunity to join forces with Betterment's infrastructure, helping more advisors access the powerful tools they need to best serve their clients.' This acquisition follows a series of product introductions earlier this year, including Solo 401(k) plans and securities-backed lines of credit (SBLOCs). Advisors can anticipate several enhancements to portfolio management this year, with direct indexing set to be available in 2026. These enhancements include expanded support for single stocks, enabling the management of portfolios across a broader spectrum of securities, and tools that provide increased control and transparency through advanced simulations and critical data for trading. Additionally, Betterment will offer improved automation and tax management features, such as enhanced rebalancing, tax-loss harvesting, tax-efficient portfolio transitions, asset location, and intelligent withdrawals. Betterment CEO Sarah Levy said: 'This marks a significant step forward in our mission to empower advisors with modern, automated investment tools. 'Rowboat brings exceptional talent and cutting-edge technology that will help us unlock new dimensions of tax-aware, customisable investing at scale.' In February this year, Betterment acquired Ellevest's automated investing business, which focuses on women. "Betterment expands advisor solutions range with Rowboat acquisition" was originally created and published by Private Banker International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
21-04-2025
- Business
- Forbes
Why Betterment CEO Sarah Levy Isn't Afraid Of Market Volatility
Sarah Levy in Betterment's New York City headquarters. In a small meeting room in digital investment advising firm Betterment's office in Manhattan, chief executive Sarah Levy seems relaxed in a hoodie and sneakers. Just outside the room, a wall-mounted television plays a news broadcast covering the ongoing market volatility as a result of President Donald Trump's new tariff policies. Two months earlier, Betterment had just acquired the automated business of Ellevest, a robo-advisor focused on women's wealth. It was the fourth and the latest in a string of acquisitions the company had made since Levy assumed her role in 2020. Adding Ellevest to Betterment's coffers boosted its customer count by nearly 80,000 customers, adding more than $2 billion to its assets under management. Then the market lost more than $6 trillion in the first week of April. Despite the uncertainty playing out on the television outside the meeting room, Levy remains steadfast in her plans. 'I would be more than happy to continue to consolidate in the industry,' Levy says. In other words: There is an estimated $643 billion digital advice market, and Betterment is primed to snap up the fintechs that can help the firm take on Wall Street Goliaths. So far, her buying strategy has paid off: Betterment has more than doubled its assets under management from $22 billion to $56 billion under Levy's leadership, and has grown from 300 employees to nearly 550 employees. The fintech company has been profitable for two years and surpassed $200 million in revenue in 2024. Aside from the incumbents like Vanguard, Schwab and Fidelity, Betterment is one of the biggest of the digitally native firms. Wealthfront, which has more than $35 billion AUM by comparison (and another $45 billion across other accounts), reached profitability last year and recorded nearly $200 million in revenue. For all the recent growth, Levy didn't seem like an obvious choice when she was appointed to her role by Betterment founder Jon Stein nearly five years ago. She was coming off of more than 20 years at media conglomerate Paramount Global (then Viacom), where she was chief operating officer at Nickelodeon for more than a decade before taking on the same role at Viacom Media Networks. Levy, who was listed on the 2022 Forbes 50 Over 50, had spent the better part of her career merging Viacom's cable brands into a single platform – but when Viacom and CBS merged in December 2019, she said it felt like a 'rinse and repeat' of her prior work. It felt like a good time to move on. Stein, Betterment's then-CEO who founded the company in 2008, was looking for someone with experience in launching and growing plans to help manage the business, a CRO or perhaps a COO. A game of telephone got Stein all the way to Allison Mnookin, a Harvard Business School lecturer who'd been friends with Levy in college. ''I have this crazy idea,'' Mnookin recalls telling one of Stein's board members. 'You're gonna think I'm nuts, because Sarah's not from the industry… but she's got the smarts to be strategic and the curiosity to learn new things.' Shortly thereafter, Stein met Levy; he remembers feeling an 'instant rapport' with Levy. 'As I got to know her, I became confident she could not only do any job, but she could do my job,' Stein said in an email to Forbes. He wondered if it was time to pass the torch – he had a young family, he wasn't sure if he wanted to be Betterment CEO forever, and he 'was out of ideas of what more to do' as CEO. For her part, Levy hadn't heard of Betterment before she met Stein, and she knew she didn't have experience in the investing industry. Still, the opportunity to grow a retail business into a wealth platform was too exciting to pass up. 'I thought this idea of expanding access to great financial advice was a really exciting idea, but in my mind, it was a brand that was unknown,' Levy said. 'So I thought, here's a great opportunity to build a brand that has great values and an incredible mission.' Her appointment gave some in the investing industry pause, Morningstar analyst Drew Carter said, because her executive experience had not been in investing. 'Investing is a trust business,' Carter said, pointing out that it's been a bit of a longer road for Betterment as they try to reach customers beyond those who are okay with an advisor that's digital-only. Carter said that the company has, under Levy's tenure, worked to improve its transparency with clients on its investment approach. Since taking the helm at the digital investment advisor, Levy has expanded the business beyond its robo-advisor roots. She's 'over the term robo,' she says, because 'it puts the wrong idea in people's minds about the services we provide.' Levy has spent time tweaking Betterment's products, too: Since 2020, Betterment has added the option of accessing human advice where needed and expanded its business-to-business services such as solo 401(k)s and mutual funds. It also replaced its expensive and convoluted cryptocurrency offerings with a more focused and cheaper crypto ETF last year. Levy's peers on Wall Street have been measured in their public statements about the market's tariff-induced swings, though the word 'uncertainty' has been a favored term in April earnings calls. Levy herself acknowledges that her customers are smarting from the whiplash, but she also says that her approach to business strategy is the same as advice to customers – 'by having a balanced portfolio, you weather the storm.' The company has positioned itself to reap different revenue streams from its products in retail, B2B, and tax savings tools. Automated tax-loss harvesting for individual investors—selling losing assets to offset other investing gains to lower taxes—kicks in during an unstable market, Levy says, making up most of the tremendous amount of trading volume the company has seen just this month alone. The platform has so far recorded $3 billion worth of trading in April, a threefold increase of its typical monthly volume. Betterment is now gearing up to introduce some new products and features, including a self-directed investing offering that will let customers buy single stocks at their discretion, Levy says—something that could increase the company's competitiveness with brokerages and other trading platforms, like Vanguard and Robinhood. Despite having never worked directly together, Mnookin credits Levy's leadership so far in the fast-changing markets to her curiosity, a quality of Levy's that she's seen since college. 'There's friends that you love, and they're good people, but you'd never want to work with them,' Mnookin told Forbes. '[Levy] was always one of those who I absolutely would bet a business I cared about on her.'
Yahoo
15-04-2025
- Business
- Yahoo
The Perfect Paycheck Deduction To Break Even on Taxes
Though many people would prefer it wasn't the case, in the United States, you're required to pay federal income taxes on the money you earn throughout the year. The self-employed have to make estimated quarterly payments directly to the IRS, whereas wage earners who fill out form W-2 pony up automatically every pay period when their employers withhold a portion of their check to fork over to the IRS on their behalf. For You: Read More: In most cases, they fork over too much in estimated taxes, which is why tens of millions of people look forward to tax refunds every spring to reload their bank accounts. However, smart taxpayers would rather break even than give the IRS a free loan. Simply put, this tax year, if you'd prefer to meet your tax obligations while also keeping every penny that's yours when you need it throughout the year, you'll have to tweak the amount that your employer deducts. While receiving a refund when you file your taxes can make your tax bill sting a little less, in the long run, it's actually a savvier financial move to aim to break even. Here's how to find the sweet spot right in the middle. So, you want to give the IRS its due without giving the government a handout — but what's the right amount to withhold from your check to break even? For reference, if you don't earn more than the Standard Deduction of $12,950, you won't have to file your income tax return. 'As with most questions in taxes, the answer is, it depends,' said Eric Bronnenkant, certified financial planner (CFP), certified public accountant (CPA) and head of tax at digital investment advisor Betterment. 'There are taxpayers who exist all over the spectrum. On one end, people who make below the standard deduction typically pay no income tax and no withholding may be required. 'On the other end of the spectrum, someone earning a $100 million salary per year likely needs to withhold at the top tax bracket of 37% on virtually all of their income. For most people who are in between, it's a little bit harder to figure out but there are tools and guidelines to help.' Be Aware: You are, of course, trying to break even, but if you have to err, err on the side of not shortchanging the IRS. No one wants to be their own tax liability when it comes to choosing taxes withheld. 'First, a key goal for withholding should be to avoid being subject to an underpayment penalty by withholding the lesser of at least 90% of what you owe in tax for the current year or 100% of what you owe on the prior year's tax,' said Bronnenkant, who's also a professor of taxation at Seton Hall University and was an author of the EY Tax Guide for seven years. If you want to adjust the amount that your employer withholds from your check, you'll have to submit a new W-4 form to your boss, and believe it or not, the IRS itself is your best bet for getting it right. 'The IRS has a handy tool to determine what to put on a W-4 and be on track to break even, and this is going to be the easiest and most accurate way to go about this,' Bronnenkant said in reference to the IRS' Tax Withholding Estimator. The tool lets you input all the variables that will lead you to your perfect paycheck deduction amount and comprehensible tax rate. 'Greater itemized deductions and tax credits will reduce the withholding amount,' Bronnenkant said. 'A higher income from you and your spouse typically increases the expected withholding amount.' The ultimate result is a pre-filled form W-4 ready to be printed out. 'Is the system perfect for all scenarios? No,' Bronnenkant said. 'It is not designed for more complex tax situations — long-term capital gains tax, qualified dividends, pensioners without active other employment, etc. — but it is a great tool for the average taxpayer.' The IRS recommends using its withholding tool and filling out a new W-4 every year. If you're not cut out for that level of diligence, make sure that you at least recalculate your withholdings in the wake of dramatic life events. So, if you want to ensure your employer withholds the right amount from your paycheck, you should fill out a new W-4 that accurately reflects your tax situation every year or every time your situation changes, full stop. Life changes that should be reflected in your tax forms would include getting married or divorced, having a baby, having a child aged out of dependent status, getting a new job, starting a side hustle or making other changes to your tax situation. You can request and submit a W-4 to your employer at any time during the year. For the most accurate results, you should fill it out as close to the beginning of the year as possible — then the changes will affect all of your paychecks for the year. However, last-minute filers can still update this information quickly and easily. Caitlyn Moorhead contributed to the reporting for this article. More From GOBankingRates 5 Luxury Cars That Will Have Massive Price Drops in Spring 2025 4 Things You Should Do if You Want To Retire Early 5 Cities You Need To Consider If You're Retiring in 2025 5 Types of Vehicles Retirees Should Stay Away From Buying This article originally appeared on The Perfect Paycheck Deduction To Break Even on Taxes Sign in to access your portfolio
Zawya
27-03-2025
- Business
- Zawya
Robinhood to bring wealth management, private banking to retail investors
Robinhood is rolling out wealth management and private banking services for investors with modest portfolios, as the trading platform looks to have a bigger influence on its users' financial habits. The company said on Wednesday it is launching 'Robinhood Strategies' — a wealth management service with a 0.25% annual fee, capped at $250, for its premium 'Gold' subscribers. Users with as little as $50 in investments can access portfolios of exchange-traded funds managed by Robinhood's investment experts. A $500 minimum investment will unlock access to individual stocks in the portfolios. The move highlights growing demand for professional advice among retail traders, who are increasingly seeing investing as a strategic path to building wealth and securing financial independence, rather than just a hobby. A survey of retail investors by Betterment last year showed that those with financial advisers felt more confident about their personal finances. Robinhood Asset Management President Steph Guild, a JPMorgan Chase alum, said the new product could help level the playing field as personalized wealth management has long been the domain of high-net-worth clients. "When we looked across the landscape today, we felt there was a gap and an opportunity," she said. It will also roll out an AI investment tool later in 2025 to provide real-time market analysis and insights. PRIVATE BANKING The company will also launch a private banking product for its Gold subscribers later this year with estate planning, tax advice and perks such as tickets to the Met Gala and the Oscars. Tapping into users' demand for premium services could help it boost the adoption of its Gold subscription — which costs $5 a month or $50 a year — and fits into Robinhood's strategy of "democratizing" access to products traditionally reserved for the ultra wealthy. "We're not going after someone who has $10 million. We're going after everybody else," said Deepak Rao, general manager and vice president of Robinhood Money. The company's shares have risen 29% so far this year, while the Nasdaq composite index has dropped 5.4%. (Reporting by Niket Nishant and Manya Saini in Bengaluru; Editing by Sahal Muhammed) Reuters
