Acorns to launch custom portfolios in push toward active investing

Digital investing app Acorns Grow Inc. plans to open more active investing products, like custom portfolios, to its users, and said Tuesday it tapped investment management veteran Seth Wunder as the fintech’s first chief investment officer ahead of its expected public listing this year. 

Prompting active engagement for users via custom portfolios is a part of the fintech’s larger mission to incentivize healthy investing behaviors that align with the customers best interest and long-term wealth building, Acorns CEO Noah Kerner said in an interview. 

With Wunder on board, Acorns is interested in building a platform that can cater to a maturing user base that is able to graduate from passive investing to full-blown financial advice from a professional, he said.

“Our customers are growing money in small amounts for the long run,” Kerner said. “Our vision definitely is getting into more holistic money management for the individual and the family, so nothing's off the table,” Kerner said. “Automated advice is great, but sometimes people need an actual live contact.” 

Wunder, who most recently founded and served as the sole portfolio manager for black-and-white Capital in Los Angeles, will lead efforts to create customized portfolios by adding individual stocks, sustainable investing and cryptocurrencies into diversified portfolios.

“Obviously, we have a full support team where we provide chat, email and phone support, but the fact that 99% of Americans don't get professional financial advice, we need to solve that,” Kerner said.

Wunder also has plans to assume leadership of the management and operational responsibilities of Acorns' registered investment adviser and broker-dealer subsidiaries.

“As the government pulls back on monetary stimulus and fiscal support provided throughout the pandemic, it’s more important than ever to educate investors on the significance of taking a long term view and utilizing techniques like dollar-cost averaging in a diversified portfolio when the market normalizes, or potentially enters a bear market,” Wunder said in a statement. 

Launched at the end of 2014, Acorns is a subscription-based automated investing and banking app with more than 4 million users to date, which is expected to grow to 10 million by 2025, according to a company announcement. Average age of an Acorn user is 34 years old, with 60% of users being first-time investors. To date, customers have invested more than $9.6 billion with Acorns. 

Accessing custom portfolios won’t require any barriers to entry, said Kerner, but the platform might introduce higher subscription tiers down the road. Today, Acorns subscription price ranges from $3 to $5 per month, according to its website. 

“You have to come back to the question of whether the business model and the subsequent behaviors actually line up to what's in the customer's best interest,” said Kerner. “Oftentimes in financial services, the answer to that question is no. The subscription business model allows us to build a sustainable business without driving perverse customer behaviors.” 

Wunder will also work closely with Acorns’ newly appointed chief education and content officer Kennedy Reynolds, to integrate personalized guidance and related educational resources, such as in-app Q&As and interactive learning. The idea is to launch active learning content along with the roll out of new investing products, Kerner said. 

“Diversification, passive investing and letting us help you make the right decision is always going to be a fundamental part of Acorns,” he said. “But if you really want to help solve financial literacy, you've got to get people engaged. Part of getting them engaged is giving them the freedom to customize their portfolio, while still maintaining proper diversification.” 

This new hire is the latest addition to Acorns’ growing C-suite ahead of its public listing. Acorns hired former Twitter Inc. executive Rich Sullivan as its chief financial officer in August, and former Amazon.com Inc. executive David Hijirida as the new president in September.