Acorns (company)
| Company type | Private |
|---|---|
| Industry | Financial technology, Financial services |
| Founded | 2012 |
| Founder | Walter Wemple Cruttenden III, Jeffrey James Cruttenden |
| Headquarters | Irvine, California , United States |
Key people | Noah Kerner (CEO), Shlomo Benartzi (Chair of behavioral economics committee) |
| Products | Micro-investing, Automated investment advice, Checking accounts, Individual retirement accounts (IRAs) |
| Website | www |
Acorns is a U.S.-based firm operating in the financial technology and financial services sectors, with its main office located in Irvine, California. The company focuses on micro-investing and offers automated investment advice. As reported by Fortune in its Impact 20 ranking, Acorns served 8.2 million clients in 2020 and managed assets surpassing $6.2 billion by 2022.
History
Established in 2012 by the entrepreneurial father-son duo Walter Wemple Cruttenden III and Jeffrey James Cruttenden, Acorns emphasizes gradual and automatic investment strategies. Its mobile application was introduced in 2014 for both iOS and Android platforms, featuring portfolio options developed with guidance from Nobel Prize-winning economist Harry Markowitz.
Following the acquisition of Portland-based fintech startup Vault, Acorns broadened its offerings to include checking accounts and individual retirement accounts (IRAs). In 2018, behavioral economist Shlomo Benartzi took on the role of chair for Acorns' behavioral economics committee, spearheading the Money Lab project aimed at analyzing consumer spending behaviors.
The company has secured roughly $100 million through venture capital funding. Prominent investors as of 2019 include celebrities such as Jennifer Lopez, Alex Rodriguez, Bono, Ashton Kutcher, and Kevin Durant, along with corporate entities like PayPal, BlackRock, and NBCUniversal.
In May 2021, Acorns revealed intentions to become a publicly traded company via a merger with the special purpose acquisition company Pioneer Merger Corp., which valued Acorns at $2.2 billion; however, this plan was abandoned in January 2022 due to unfavorable market conditions.
Services
When joining Acorns, customers choose from multiple portfolios featuring diverse asset allocations. By linking a credit or debit card, purchases can be rounded up to the nearest dollar, with the spare change invested into the user’s portfolio; manual deposits are also permitted. Initially, Acorns imposed a $1 monthly fee until September 21, 2021. Starting February 21, 2022, personal accounts are billed at a fixed price of $3 per month ($36 annually), which corresponds to a 0.36% fee on accounts holding $10,000 or 3.60% for those with $1,000 balances.
This pricing structure disproportionately affects users with smaller balances or those relying exclusively on round-ups: for instance, making one transaction daily would generate approximately $361.35 yearly before fees; after deducting the $36 charge, nearly one-tenth of contributions are consumed by fees. CEO Noah Kerner noted in 2018 that the typical account balance was around $500, translating into an effective annual fee rate of 7.20%.
Acorns’ investment portfolios are composed of passively managed exchange-traded funds (ETFs) from third parties that carry their own expense ratios. As of early 2022, these portfolios consist of combinations of seventeen ETFs primarily sourced from Vanguard and BlackRock.
Regulatory action
In 2017, the Financial Industry Regulatory Authority imposed a fine on Acorns due to inadequate maintenance of customer records.