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Former Top Schwab Executive Joins Betterment Board
Less than one month after an investment round that doubled its private valuation to around $700 million, the robo-adviser Betterment is adding a former top executive from Charles Schwab, John S. Clendening, to its board.
Mr. Clendening was executive vice president and co-head of Schwab’s retail brokerage operation when he stepped down at the end of 2014 during a reorganization. He joins seven other members on the Betterment board, including the founder and chief executive, Jon Stein. The announcement is expected to be made on Tuesday.
In an interview, Mr. Clendening said that he had been talking to Betterment and other so-called fintech companies for much of the last year.
“I took the opportunity to scan the entire landscape,” he said. Betterment, he said, “is disrupting not just the business model, but creating a brand that has unique appeal.”
Mr. Clendening also recently joined a financial technology start-up called Blucora, a provider of tax preparation and wealth management technology, as its president and chief executive.
Two weeks ago, Betterment announced it had received $100 million from investors led by the Swedish investment firm Kinnevik, its biggest round of funding to date. This brought its valuation to $700 million, nearly double what it was early last year.
Investors have cooled to Silicon Valley start-ups given how high the valuations have risen in recent months, but interest in fintech remains high.
Robo-advisers are shaking up the wealth management industry by offering retail investors low-cost portfolios of exchange-traded funds through digital interaction.
New rules for brokers and advisers may raise interest in robo-adviser firms like Betterment and its big rival, Wealthfront. The rules, which govern how advisers and other financial professionals invest on their customers’ behalf, are expected to shift retirement funds to lower-cost investments.
Betterment has over $4 billion of assets under management. It also recently began a 401(k) program for small- and medium-size businesses and a program in which independent advisers can use its software under their own brands.
Though robo-advisers remain a small part of the overall wealth management industry, their rapid growth — assets under management are projected to increase 68 percent a year through 2020 — are forcing mainstream companies, including Schwab, to come up with automated advice platforms of their own.
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