Long before Jon Stein's days as chief executive of New York-based Betterment, an online adviser with about $650 million in assets under management, he earned his keep in high school in Dallas by delivering food. He had major aspirations early on, hoping one day to be president, a journalist, a doctor, an art dealer and a rock star. Mr. Stein eventually received a bachelor's in economics at Harvard University and an MBA from Columbia University.
The risks and rewards of entrepreneurship were calling him.
"I always wanted to do something high leverage, like a startup," Mr. Stein wrote in his questionnaire for InvestmentNews' 40 Under 40 project. "My family encouraged me to go for it, to take the risk. Their support enabled me to take the leap."
Enter Betterment — a shining example of disruption in the financial advisory space. Rather than meeting with a traditional financial adviser in person, clients who work with robo-advisers invest on the web. These online platforms use technology to craft customized portfolios and charge clients a fee (from 0.15% to 0.35% at Betterment, depending on the account balance).
This model, attractive to do-it-yourself investors, is shaking up financial advisers who have based much of their business on regular, face-to-face meetings with clients to the tune of a 1% annual fee.
Mr. Stein said he sees two keys to success, at least in terms of building an online adviser.
"One, approach things with an engineering mindset: Look for things that are broken, and find a way to fix them. The other is to make things real as soon as possible. If you're starting a business, print your business cards, get an e-mail address. The faster you make it real, the sooner you get feedback."
That's a lesson Mr. Stein learned when building his business. "I found no one would listen to me until I had something to show," he said.
— Darla Mercado
President and founder, AQuest Wealth Strategies