Digital financial advisers bulk up: Betterment raises $32 million

April 15, 2014, 4:56 PM UTC
A crop of new companies in the digital money management space aims to make high-end financial planning services more affordable for the masses.

FORTUNE — A crop of new websites is fighting to help manage your money. They’re offering lower fees than traditional financial advisers, improved service, and a host of bells and whistles, from slick mobile apps to elaborate interactive dashboards. Increasingly, they’re backed by deep-pocketed investors from the industry they’re trying to disrupt.

Betterment is the latest company to enter the fray. On Tuesday the firm said it has raised $32 million in a Series C round of funding led by Northwestern Mutual Capital, with participation from Citi Ventures and Globespan Capital Partners, as well as prior investors Bessemer Venture Partners, Menlo Ventures, and Anthemis Group. The company’s total venture backing is now $45 million.

That financing follows a similar-sized round from Betterment’s most well-known competitor, Wealthfront. Earlier this month, Wealthfront raised $35 million in Series C funding. The company’s total funding is now $65.5 million. Update: LearnVest, another New York-based financial advisory startup, has announced this morning that it raised $28 million. The round was also led by Northwestern Mutual Capital, with participation from Accel Partners and American Express Ventures. LearnVest has raised $72 million total.

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Other companies in the digital money management space include SigFig and Personal Capital. They all take a different approach to financial services, but they share a common goal: to make high-end financial planning services, previously only available to the super-rich, more affordable for the masses.

Betterment’s biggest differentiator is that it offers the financial adviser part of the equation, as well as the broker-dealer part. So consumers can get advice on what to invest in, and actually transact the investment, all from the same company. Others fragment those services.

Betterment now manages $500 million in assets, an amount that grew fourfold in 2013, and the company has 30,000 clients. (For context, Wealthfront has $800 million in assets under management.) Betterment says it plans to use the new funding capital to expand its team from 50 employees to 80 this year, and market its services.