Acorns CEO on Gen Z, Investing and the Future of Financial Education

Financial services and technology company Acorns is expanding its push to reach Gen Z with a new acquisition aimed at boosting financial education. Joining us now for more is Noah Kerner, CEO of Acorns. Thank you so much for being here, Noah. Good to be here. Thanks for having me. Of course. So for people who are maybe not familiar with Acorns, tell us a little bit about the company, what you do and who it's really for. So Acorns is for everyday Americans. We help everyday Americans save and invest for the long term, put them into diversified portfolios, make sure they're benefiting from compounding over 10, 20, 30, 40 years. And we've helped now over 16 million everyday Americans save and invest over $33 billion. A lot of that, by the way, in spare change and small amounts of money. Yeah, it's just incredible to think about being able to get that many people involved in investing over not that long. You guys have been around for a little bit more than a decade. Tell us a little bit about how the company has evolved since you were first founded until today? So we started with the roundup. I mean, that was the beginning. It was rounding up every purchase to the nearest dollar and investing the spare change. And we've become a full financial wellness company and app. And basically we help people manage their money holistically, but always with an eye toward making sure people save and invest as much as possible over the long term. We have a whole set of features that include retirement planning, core investing, saving and investing for your kids. We have a kids app for parents and kids called Acorns Early, which teaches kids money skills from a very early age. We have a feature called Money Manager that allows you to manage your money holistically to maximize every dollar and make sure you're putting every dollar to work. So again, we think of ourselves as a financial wellness company and we were proud of where we started with the Roundup feature, but we've evolved into something much more holistic. Yeah, it definitely seems like you've had a big evolution there and are doing so much now, again, with an app like that for kids, really getting them started at a young age and now also kind of bringing in this other generation with Gen Z. So you recently acquired Fridge, a financial education startup with a big reach among young people. So talk to us about why this company was right for Acorns to bring you to the fold. Education has always been a core part of Acorns from the beginning. I think that one of the things that we're most proud about the product is it's about doing and learning at the same time. and you know we've we've done everything from we have a learn hub center in the in the app to ask acorns which automatically gives you information you need and answers money questions for you we're scaling that into a full uh full financial advisor and we look at all kinds of ways to accelerate on on the education we provide and of course we you know i mean we like i said we have acorns early that starts allows parents to start getting their kids involved but beginning at 18 We want to start teaching young adults as much about money as possible and making sure they have as much knowledge as possible. So what I was drawn to with Fritch is that Alexandra and Katrin were basically building a community of about 1.6 million young people who are interested in learning about money, who wanted to talk openly about money. They're focused on breaking those taboos that stop people from learning about money and being as productive as possible with money. So it's building on the heritage of education that we've had and continuing to open up a new generation of consumers and bring them into financial wellness. Yeah, I mean, bringing in those people who, again, as you talked about, are 18, maybe getting out of their parents' house and now really have this responsibility to manage their own money is so important. Tell us a little bit more about what the acquisition will look like. Will Fritch remain kind of a separate entity just under the Acorns umbrella or will elements of their company actually be directly integrated into Acorns kind of existing offerings? Yeah, we're going to continue the newsletter, the Fritch newsletter that reaches 1.6 million people. And we're going to, you know, we're going to, we're bringing on the two founders to lead education for us. So they're going to bring that same mindset. I don't know how familiar you are with the Fritch newsletter, but one of the things I like most about what they do, besides focusing on trying to build community, which is also a priority for us, is bringing creators into the mix and making them part of the education process. So getting questions answered by experts and influencers and this sort of thing. And we're going to focus on scaling that into the Acorns base. We have our own newsletter called In a Nutshell, which we've been running for a long time. And these things are going to become more tightly integrated, you know, over time. And basically just I'm a huge fan, especially in this time of bringing as many entrepreneurs and builders into the company as possible. They've both proven that they're builders and they're building with an eye on one of the things that's most fundamental to us in education. And so it's just going to allow us to better deliver on our mission. Yeah, it seems like a really good fit, especially right at this time. And in thinking about those kind of influencers and others who you're mentioning, I mean, a lot of younger generations are getting their financial advice from social media, from influencers, online communities. So how does Acorns really plan to help them separate this trustworthy guidance from misinformation that can be out there from people who maybe don't have the same backing, the same education as someone who you might want to actually have be giving you advice? Whenever anybody asks me who our competitors are, I answer the same question with misinformation, misinformation, and misinformation. So at the core of Acorns is about putting the real tools of wealth making in everybody's hands. What we don't provide are products that tend to get people into trouble. What we do provide are the tools that people who have made money have been using for decades and decades to build wealth over time. And we want to make sure all of those products are in the hands of everybody else, along with the education, so that you don't just participate and use the products, but you also get smarter as you go. And I just think that combination of real tools of wealth making, real knowledge building, Those two things coming together is really, I think, one of the primary ways we can help to level the playing field and help to move things in more of a progressive direction. One thing I'd call out among young people, which I think is important to know, is first of all, most people still don't start investing before 30, and one in three people under 30 don't even have an investing account. Most of the companies that provide the product start at the point of product adoption rather than way before the point of product adoption when people need to learn about what the right thing to do is and understand how to make decisions that are best for them. So getting in front of it, educating people before they start to decide what products to adopt. In our case, the products that we put in front of the customers are the right products for them. We want to make sure they're as smart as possible leading up to the choice of deciding what to do. And I think that carries forward really effectively. Yeah, I think so. I mean, I think that's such a good point that people don't start investing early because they don't really know what to do. Maybe they're intimidated, they're overwhelmed. They don't really know which direction to go. And now with inflation, high cost of living, making it even harder for a lot of young people to save, a lot more daunting to thinking about one day being able to get a house or not. How can they really start building that wealth, even if they only have a few dollars to invest and are kind of a little overwhelmed by the prospect of investing that money? I mean, the whole concept of acorns is that from tiny acorns, mighty oaks do grow. So little by little, small steps, building confidence, building momentum, even if it's spare change every day, that money really adds up over time. With spare change, our customers are saving and investing $40 to $50 a month. And when you add a compound rate of 8%, 9%, 10% over time, that money starts to build. And so it's really just about taking small steps, staying committed, being consistent and focusing on the long term. We like to say patience over predictions, you know, and that's really what we try to encourage. So from our brand idea all the way down to the products that we offer and the education that we provide, everything is about patience. Everything is about slow and steady, wins the race, small amounts invested regularly over time. That's the winning formula. Yeah, it really makes a lot of sense and something that can kind of calm people's fears about giving their money away, even to a sound investment. Lastly, as you look to the future, what can we really expect from Acorns now that we have this new kind of business with Fitch kind of folded in? Are you looking at more acquisitions, more focusing on education, really trying to get that younger cohort involved in Acorns? Where can we expect the company to go? You can expect us to continue delivering on our family strategy, educating and getting kids involved as early as six years old, getting parents involved in investing in their kids as early as birth, all the way through life. So the life stages in those family transitions, you can count on us to keep focusing on that and building out our Acorns Early app, which again, is built to help parents teach their kids much needed money skills. You can count on us to continue building our money manager feature, which really helps people manage their money holistically, save and invest as much as possible and try to maximize every dollar. You can count on us to continue building on our heritage of education with the Fitch acquisition, continuing to provide information and making it more and more useful with Ask Acorns, which are our AI, what's going to become AI financial planning tool. And the last thing I would say, which I think connects back to what the founders of Fitch have done really nicely, is to turn Acorns into more of a community experience where people can come and do these things and participate together. I really believe there's a big opportunity to help people get over the hump of deciding to invest by doing it together. And then by keeping people committed to investing, by investing together, holding each other accountable and providing support for one another. We get a lot of information from each other. And I think group dynamics are a really interesting space to bring more financial wellness to everybody and get get everybody more involved in investing. Yeah, it really is that community piece of the puzzle. So important. We really appreciate you walking us through all of this. Noah Kerner, CEO of Acorns. Thank you so much. Thank you.