When Betterment Co-founder and CEO Jon Stein toured a pre-school for his daughter Sasha, he encountered a teaching philosophy that aligns with the leadership values shaping his seven-year-old company.
At the New York City school, when students ask questions the teachers try not to answer them. Instead, they ask the questions back.
“We tend to recognize that when a child asks a question what they are really doing is giving us an opportunity to test their knowledge. They probably already a have a theory about the way things are,” the educator explained.
The philosophy shaping the pre-school is similar to the culture fueling Betterment.
Betterment is the largest automated investing service. The platform powers over 120,000 individuals to seamlessly manage their finances.
Founded in 2008, the company manages over $3 billion in assets and has made investing magical. Two words we previously believed were mutually exclusive.
Here’s a brief example of how it works.
You tell Betterment about yourself, what your goals are (such as making a downpayment on a house or saving for your children’s college fund), and the timeframe you need to achieve them. They’ll recommend a diversified portfolio for you.
We find you the best possible returns with the least amount of expenses and work.
While it’s difficult to believe that investing can be this simple Jon compares ‘robo-advising,’ a term he thinks will be defunct in the future, to self-driving cars.
“We’re taking people from point A to point B in the simplest, safest, and most efficient way possible.”
“We take into account unexpected occurrences that happen along the way, like human behavior and irrationality.”
We aren’t going to make all of the changes overnight, but each little change will make it feel like magic.
When his 17-month-old daughter graduates from college, Jon’s confident that Sasha will never struggle to answer the financial questions we ask ourselves today, such as: Am I saving enough for retirement? Or, should I open up an IRA or a Roth IRA?
“All of these questions will be answered for her in an automated way,” he said.
According to Jon, these features are already built into Betterment. They’re getting stronger every day.
Rebuilding the antiquated financial services industry from the ground up is an audacious goal that many advised Jon not to pursue in 2008.
“Everyone gave me all these reasons not to start the business. They’d say, maybe you should try something a little less ambitious. Or, if this is such a great idea why hasn’t someone already done it?”
“I thought, no matter how ugly it might be, the tougher it is, the more attractive it is.”
“We ripped out all of the old stuff and aligned around what customers wanted.”
We created the platform to answer the question: What should I do with my money?
Seven years in, Jon is proudly surrounded by passionate individuals who are finding new ways to help us answer that question.
The 130 team members assemble in small groups that operate like mini-startups.
The organization’s motto is: Small teams. Full hearts. Can’t lose.
Jon’s experiences leading the Betterment team have been the best of his life. He’s adamant about ensuring the same for each individual committed to the mission.
I have to make sure that the people here can do the best work of their lives.
To achieve that, Betterment’s leadership team sets individuals up to do great work.
“We empower them with information; the full context of everything that is going on in the industry, competitively, financially, and internally with our product and processes.”
Individuals and teams are then aligned around clear goals that they’re encouraged to achieve on their own.
Small teams that are not dependent on others for input or resources can execute incredibly efficiently.
Operating in small teams isn’t an indication that Betterment lacks unity or cross department collaboration. It simply means that when you have a question, you’re empowered to find the answer.
Similar to his role as CEO, Jon understands the value of individuals learning on the job.
His most important management lesson is “always having an expansive mindset that the team can get smarter.”
There’s always more that we don’t know than we do.
“Always be asking great questions. When your team member asks you something turn it back to them and ask: ‘What do you guys think? What are you hearing?’”
The best ideas are going to come from your people.
The Betterment team assesses growth with twice-annual performance reviews where they reflect on the past six months and set goals for the next.
“It’s one of the most important things we do as managers,” Jon asserted.
“This is for our people. It’s everything to them. They’ve committed their lives to this. It’s very important that they know they’re on the right track and appreciated.”
The performance reviews are thorough and begin with how an individual’s work compares to their current goals.
They conduct a self-review, their manager provides feedback, and they elect three or four team members to share thoughts on their work over the last six months. The data is then relayed anonymously by their manager.
The goal is for each team member to receive a holistic view of his or her performance.
You have to know if you’re doing the right things to make it to the next level.
The second half of the meeting is dedicated to setting goals against your current goals.
Each year, 10 – 20 percent of team members are recognized for achieving their goals at the Betterment of Betterment Awards.
This year, they’ll celebrate being the largest automated financial advisor in the world and asking more questions to make a stronger impact in 2016.