Betterment – a large and independent robo-adviser – is allowing its customers to engage in crypto trading and investing by permitting them to place a small number of various crypto units into their portfolios. This is the first time the company has offered such services to its customers.
Betterment Is Giving Customers the Chance to Invest in Crypto
The news is a testament to how popular and powerful crypto remains. While the space is arguably experiencing some of the worst conditions it’s ever seen and prices are falling further and further into oblivion, there are still many people out there that recognize the world of crypto as a legitimate and mainstream investment space. They see the strength the arena exhibits, and despite ongoing volatility and other problems, they want to be part of the action.
They arguably know that the space is likely to make a return in the coming future once the economy comes back and that it’s probably smart to buy now when prices are low so they can benefit later down the line.
Betterment is being cautious with the crypto investments it’s offering. It’s also providing education about the space and telling its customers not to put more than five percent of their portfolios in digital assets. Jesse Proudman – vice president of crypto investing at the firm – explained in a recent interview:
The objective with this crypto product is to really simplify the entire investing experience here, particularly into a diversified portfolio versus requiring clients to sort of pick individual coins or assets to go buy on their own. The investing team did a bunch of analysis on sort of portfolio design, and ultimately sort of settled on that five percent target as sort of an optimal risk-reward allocation.
Betterment has had its heart set on making crypto available to its clients for some time, as the company recently partnered with digital trading company Gemini as a means of offering the said route to its customers. Interesting that it would choose this platform after Gemini announced a layoff streak that saw more than ten percent of its staff disappear. The firm went from roughly 1,000 employees to about 900 according to data from its LinkedIn page.
How Do Robo-Advisers Work?
Robo-advisers are unique in that they do not gather information through human interaction and questioning. In most cases, people looking to invest or take their portfolios to higher positions will speak with financial advisers in the flesh about where they should place their assets. However, with robo-advisers, everything is done online through an algorithmic system that asks basic questions about one’s portfolio and financial situation.
The person then provides all their answers through an online survey that gets used to place their assets where the robo-adviser thinks they’ll work best. Betterment serves roughly 730,000 customers at the time of writing.
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