According to a spokesperson, the New York City-based robo-advisor laid off 28 employees. Betterment, which manages $33.8 billion according to its most recent filed form ADV and was valued at $1.3 billion after raising $160 million in 2021, is also closing its Philadelphia office but continues to employ locals.
Betterment is also subleasing a floor in its New York office, according to Business Insider on Wednesday.
The spokesperson said that their business is not immune to market volatility and record levels of inflation, and as a result, they have decided to further cut expenses through headcount reductions after taking steps to adjust to the new economic reality in 2022 by tightening spending and slowing hiring.
The company declined to say whether the layoffs affected the entire company or a specific team. According to the spokesperson, the company has strong revenue growth through 2022 and is well capitalized for the future.
Betterment’s revenue, like that of other firms in the wealth management industry, was likely impacted by falling asset prices, according to David Goldstone, manager of investment research at Condor Capital Wealth Management, which publishes a quarterly report on the robo-advisor market.
Betterment has indicated a greater emphasis on profitability and efficiency, he added. In November, the company changed its pricing structure to charge investors with less than $20,000 in assets under management a $4 monthly subscription fee rather than 0.25% of assets under management.
According to a Betterment spokesperson, the company does not disclose total employee numbers. According to a form ADV filed on February 10, the firm employed 397 people, implying that the layoffs affect only 7% of the robo-workforce. advisor’s Other wealth management fintechs have taken a much bigger hit.
According to TechCrunch, DriveWealth laid off 20% of its employees. The move came after CEO Terry Angelos announced his departure from the company in January. DriveWealth did not respond to a comment request.