Second Betterment exec departs as new CEO Sarah Levy orients to her first month on the job and is confronted by personnel matters

Brooke's Note: Sarah Levy's taking of the baton from Jon Stein at Betterment is one of the more interesting developments to spectate in 2021. It's as much of a managerial controlled experiment as you'll see in the robo-advice world. Can the application of a seasoned operations and marketing executive to a robo-advisor all teed up by a successful entrepreneur pop off the club face and land in the fairway at an IPO? It's a definite maybe that'll begin with Levy figuring out what people she can retain, who she can hire and how much they'll be motivated to make the next big push.

Betterment's new CEO Sarah Levy will need to fill a talent void and then some to avoid any "brain drain" following Jon Stein's elevation to chairman of the company he co-founded and led from its inception. 

Dustin Lucien, a long-time employee who rose from an engineering role to chief operating officer, announced his departure shortly after Stein stepped down as CEO in December. See: Jon Stein ousts himself as Betterment CEO and taps Sarah Levy, who joins an exclusive club of top women executives, with a mission -- an IPO.

He's left the firm in good shape, Ziemer tells RIABiz, by email.

The company is advertising several open positions, and Levy also has to contend with long-standing venture capital backers eager for her to do everything to ramp up profits and make Betterment a Main Street brand. See: Betterment paints it black in robo retail, making it a 'real company,' with JP Morgan and Bank of America on its new whiteboard hit list.

"It's about building on an awesome foundation to go public," Levy told RIABiz in a December interview. "We've got to make [Betterment] famous."

Betterment, which manages $26 billion in client assets -- up from $22 billion in July, employs approximately 300, and is advertising to fill a further eight positions.

Available roles include a new head of risk and information security, a lead security engineer, and a product manager for its RIA-custody arm, Betterment for Advisors.

Betterment will not immediately fill the open COO position, a role Levy previously held at Viacom Media Networks. 

She oversaw strategy, finance and operations for the $10-billion division that housed MTV, Comedy Central and BET.

"Amongst Dustin's many contributions, he helped build an incredible team that will continue to drive the company forward," said Ziemer. 

"Over the past eight years [he has] been integral to our success," he added.

"Some level of turnover is normal and healthy," the source states. "[Lucien] had [also] been ready for a break. This felt like the cleanest and best time to do it."

Staff wanted

Lucien's departure now leaves two upper management spots for Levy to fill.

Since Kimberly Chehardy left the firm last February after less than a year, Betterment has made do with two interim chief compliance officers (CCO).

Alden has since left Betterment for a position as chief risk officer for financial services at Malvern, Pa.-based Vanguard Group, according to his LinkedIn profile.

He was replaced by Khaley Sestak, previously the firm's director of compliance and its regulatory counsel. Sestak lists the CCO position as her permanent role on LinkedIn.

"We are in the final stages of hiring a CCO," Ziemer says.

Betterment continued to advertise for a new compliance chief as late as Dec. 24.

It's also proved to be a ready talent pool for bigger firms looking to build their robo presence. 

In 2018, Morgan Stanley hired former Betterment chief marketing officer Paul Halpern as its head of deposits and banking services.

It's not unusual

In comments provided to WealthManagement.com in September, Ziemer insisted Betterment was merely biding its time in appointing a new CCO.

"While it might seem unusual to others in the compliance industry that this search would take more than a month, we're not only one of the largest RIAs in the country, but it is an incredibly complex role," he said.

"We have multiple lines of business [in] retail, advisors, 401(k), and also a custodian."

Lucien joined Betterment five years after its 2008 founding. The firm launched in 2010.

He spent just under two years as the firm's vice president for engineering, and a further two as its chief technology officer, before stepping up to the COO spot in May 2016.

Lucien told colleagues he intended to leave soon after he learned of Stein's impending departure in Summer 2020, according to a source.

His departure was first reported by WealthManagement.com.

Betterment declined to say whether Lucien has a non-compete, or if he has sold his equity stake, though typically four years is sufficient to vest at a venture-backed firm like Betterment.