Spare change investing app Acorns now manages $1 billion. This is the first time the company has disclosed assets under management.
“Everyday Americans have saved and invested $1 billion with Acorns so far — spare change, small amounts of money,” Acorns CEO Noah Kerner told Yahoo Finance on Wednesday.
Acorns’ core feature lets users invest their spare change from everyday purchases. You can also set up recurring daily, weekly or monthly investments. That money goes into one of five ETFs, based on your age, time horizon, income, goals and risk tolerance.
Currently, 3.7 million people have Acorns accounts. Kerner has ambitions to get 100 million Americans investing on its platform — a few cents at a time.
The four-year-old company has been diversifying its offerings over the past few months. In June, Acorns launched pre-orders for a debit card called Spend. It rounds up your expenses in real-time. There’s currently 175,000 pre-orders, with 100,000 placed within the first four days of the card’s launch. It fits squarely into a larger push by fintech companies like SoFi to propose flashy debit cards as a smarter way to spend money.
“We made the card in tungsten metal. We want people to feel significant. There hasn’t been a card for everyday Americans that feels like that. And everybody should have that feeling that the Chase Sapphire card has or the Amex black card has. That’s what we’re going for,” he explained.
In April, Acorns launched a retirement offering called Later, which offers three different IRA choices. One-hundred thousand users signed up for the service in the first month. Customers are contributing about $70 per month, on average. Kerner said he’s targeting members of the gig economy who don’t have access to company-sponsored plans.
“We called it ‘Later’ because we wanted to stop using the word ‘retire.’ A lot of young people aren’t thinking about retirement, a lot of young people don’t believe they can. For the freelance economy, it can replace the 401(k), but it’s also a supplemental thing as part of the Acorns product that you’re contributing to on a regular basis,” he said.
The company charges a monthly $1 fee for a standard account and $2 for Later.
The competitive landscape
Big banks, of course, are taking a hint from the Acorns model. JPMorgan Chase and Wells Fargo have rolled out similar features, launching Finn and Daily Change, respectively, apps that are taking a hint from Acorns.
While Kerner is fully committed to the passive investing route, he has not ruled out offering people more active investing opportunities in the future.
“We try to get people investing responsibly. So we would say to the risk takers: ‘Put the bulk of your investment dollars into ETFs in a diversified portfolio.’”
Robinhood, another millennial-first app that lets users buy and sell stocks and digital currencies, currently has 5 million users on its platform. The company has not disclosed its total assets under management.
Among other pure-play robo-advisors are Betterment, which has 380,000 users and manages $14 billion, and Wealthfront, which has 200,000 users who have invested a total of $11 billion to date.
Still, Acorns’ milestone of reaching $1 billion assets under management is notable because the bulk of the money is coming from round-ups and incremental additions.
“Our fundamental product philosophy is ‘make big decisions small,’” said Kerner. “We will get into more sophisticated things, but it will always be super simple.”
Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm.