The rival digital wealth manager won a bidding process to absorb Canada-based Wealthsimple's US clients, at an undisclosed fee, per Insider. Wealthsimple sought a buyer that could offer its US clients a similar digital wealth management value proposition, as it prepares to hand them over by June 2021.
Here’s what the deal means for the two digital wealth managers’ businesses:
While the deal adds new AUM for Betterment, the US digital wealth management space is becoming increasingly saturated, and players need to differentiate on value-add features to stand out. There are now several large players in the US market, which might inhibit the growth trajectories of fintechs like Betterment. And incumbents like Goldman Sachs and JPMorgan are further crowding the space. Thus, digital wealth managers must focus on adding value to their offering beyond savings and personal finance management tools to differentiate their services. For example, digital wealth managers could add an insurance marketplace to their apps—where users can compare and access different insurance products—to become more of a one-stop shop for financial services. For example, Betterment already has a cell phone insurance offering and could expand this further with a marketplace to make its insurance offering more well rounded.
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