Investing app doesn't want savings to be a 'bummer' – Colorado Springs Gazette

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By: Tribune News Service

July 8, 2017 Updated: Today at 11:32 am

Caption + Piggybank, British Currency, Calculator, Receipts and a Mug on a Table

It’s a common refrain: If you want to save money for retirement or a down payment for a house, stop buying pricey coffee.

Or there’s the more recent admonition: Lay off the avocado toast.

Fat chance on that. For most people, the link between long-term financial health and a few bucks spent here or there just isn’t strong enough – even though every little bit socked away can help.

So instead of urging customers not to buy stuff, Los Angeles-area startup Acorns has a different suggestion: Save a little bit every time you spend.

The company, through its app, rounds off customers’ credit or debit card purchases to the nearest dollar and invests the difference into stocks and bonds.

The notion is to make saving and investing not only simple but virtually invisible.

“We’re not trying to preach austerity to the client, because that’s a bummer,” said Manning Field, the company’s chief commercial officer. “Some people will say, ‘Don’t have the cup of coffee.’ We’ll tell you to have the cup of coffee and invest along the way.”

That pitch has been appealing, with the number of accounts growing from 1.1 million at the end of last year to 1.8 million this month. Most accounts are small, though – about $230 on average as of last year, the last time the company released such a figure.

Now Acorns has released an update of its app with features aimed at boosting how much customers save. And it’s looking ahead to offering more than just its saving and investing tool amid stiffening competition in the emerging business of automated money management.

Big “robo advisers,” which position themselves as online alternatives to traditional brokerage and wealth management firms, have amassed billions in client assets – much more than the $257 million that Acorns managed at the end of last year – though they have fewer and wealthier customers. New York-based Betterment, for instance, manages more than $9 billion but has just 330,000 accounts.

There are also a growing number of apps aimed, like Acorns, at small savers and investors. Investment app Stash has a similar offering, but without the save-the-change feature; Digit and Qapital both offer automated savings, but put customers’ cash into a savings account.

Noah Kerner, who has been Acorns’ chief executive since last spring, said he’s not concerned about competing apps – “I don’t believe people want to app hop.” But Kerner does acknowledge that he wants the company to offer a broader range of financial services.

“If you can tackle someone’s core financial challenges with the simplest product and the most automated solution, I think that ultimately wins the day,” he said.

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