Acorns to Compete with Robinhood, E*Trade, Fidelity with Direct Investing Option

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Zero-commission brokerage Robinhood, as well as mobile-based investment platforms from E*Trade and Fidelity, will face competition from the direct investing option being developed at Acorns Grow, according to news reports.

Acorns’ spare-change investing and checking account app will offer users the option to invest their money in a Customizable Portfolios feature, which they can design themselves, Bloomberg writes. Currently, users can only invest in exchange-traded funds selected by Acorns, according to the news service.

Despite the planned option of letting users select their own stocks, Acorns still plans to recommend that they put 90% of their money into the company’s offerings and only 10% into individually selected stocks, according to Noah Kerner, chief executive officer of Acorns, who confirmed the new feature to Bloomberg.

A planned message in the app will tell users that “Customizing more than 10% may expose you to more risk,” according to the news service.

Moreover, images of the new feature Acorns shared with Bloomberg show that users can’t invest more than 20% of their Acorns funds in stocks of their choice, according to the news service.

Despite the limitations on users’ choice, Kerner touts the new feature as something different from its competitors and more akin to financial planning.

“The game-changing feature here is that there is a product that lets you stay diversified but also participate with your passions,” Kerner said, according to the news service. “That’s the way a money manager would guide you.”

He added that unlike at Robinhood and some other platforms, “Acorns is not about moving money in and out of a portfolio, it’s about holding it for the long term,” according to Bloomberg.

In the coming months, Acorns is launching the feature in beta at first to users in the $5 Acorns Family monthly subscription service on iPhones and Android devices, the news service writes. Acorns also offers a $3 subscription for single users, according to Bloomberg.

Acorns — which is scheduled to go public this year — currently has over 4 million paying subscribers, which it hopes to grow to 10 million by 2025, the news service writes.

Bloomberg adds that it was alerted to the new Acorns feature by developer Steve Moser — the same developer who told Bloomberg about Robinhood’s beta app having code that would allow its users to send cryptocurrency as gifts.

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