Acorns is an American-based company that deals with financial technology and financial services. It has its headquarters in Irvine, California. The brand specializes in robo-investing and in micro-investing.
This article will focus on the SWOT analysis of the Acorns. A SWOT analysis is a great tool for competitiveness in the marketplace. It helps brands compete based on pertinent insights in the marketplace. With SWOT analysis, brands are able to understand their brand’s strengths, weaknesses, opportunities, and threats.
Acorns – At a Glance
| Name | Acorns |
| Website | http://www.acorns.com/ |
| Founders | Jeffrey James Cruttenden, Walter Wemple Cruttenden III |
| Chief Executive Officer (C.E.O.) | Noah Kerner |
| Headquarters | Irvine, California, United States |
| Year Founded | 2012 |
| Key Products/Services | fundraising |
| Key Competitors | Fundly, Givebutter, Bonfire, Snowball, 99Pledges, Indiegogo, |
Strengths of Acorns
A Strong Product Portfolio
Acorns is a Micro-investment brand that offers a simple, low-cost, and passive but admirable solution to customers’ investment needs. Acorns serves both kids and young adults in investing small amounts of money using automated tools. This automatic savings feature encourages investors to save more.
The brand Acorns rounds up its customer’s debit and credit card’s purchases to the nearest dollar and then invests the change into EFT’s diversified portfolios. The brand is unique in its offering the ‘Round-up’ feature; this is the only brand that offers users the ability to invest in their change.
Diversified Product Portfolio
Acorns consist of five main products: Acorn invest, Acorn later, Acorns spend Acorns Found Money, and Acorns early. With this diversified product portfolio, the brand is able to cater to the different customer needs in the various segments.
Additionally, the brand has been able to penetrate more customer niches and thereby diversify its revenue streams.
Ease of Use
Acorns has made its apps and platform simple and easy to use even for the customers with the most basic knowledge of technology. With the ease of use, customers are able to generate more savings.
Cash Back
The brand is able to offer its customers cash back at over 350 retail outlets.
Weaknesses of Acorns
High Fees on Small Balances
Acorns business model is a flat fee structure: for a personal account the brand charges $3/month and for a family plan the brand charges $5 per month. This structure becomes expensive when compared to the percentage-based fee structure. This is particularly true for account holders with minimum contributions.
A flat rate on a huge balance will insignificantly reduce the balance, but a flat rate on a minimal balance will significantly reduce the balance. Additionally, Acorns users have to pay fees in the event they want to access their checking amount. This is unlike other leaders in the industry; Acorn, therefore, is at a disadvantage when it comes to checking fees.
Not Tax-Loss Harvesting
There are times in a business life cycle where businesses make losses. In such a case, the government does not charge taxes on losses; the business however makes tax savings that are rolled over to the periods of profitability.
This essentially reduces the business’ tax burden. Unfortunately, Acorns does not pass on the benefits of tax loss to its users. This could deny Acorns a competitive advantage over other brands whose structure allows users to undertake tax-loss harvesting.
No Human Advisors
There is no direct contact. Unlike other robo-advisors, Acorns does not offer access to a human financial advisor. Other brands would offer such services sometimes for free and other times for an additional fee.
Acorns doesn’t serve its customers with either of these options. This is important in the robo-advisors as technology needs some human touch to give a complete experience/
Opportunities of Acorns
Technological Innovation
Technological innovation is a critical tool in the current age in the creation of opportunities. Most businesses that are in existence today have leveraged technology to soar to outstanding business experiences.
Acorns needs technological innovation to create more opportunities, increase superior customer experience, increase efficiencies and effectiveness.
Global Recovery of Economies
Many individuals and families have gone through the adverse economic experience during COVID and overall economic depression. Many families are therefore seeking to have economic stability and savings to secure their future.
Unfortunately, times are still hard and families may not have great disposable income to huge savings. Acorns, therefore, has great opportunities in reaching out to these masses who perfectly match the Acorns model.
Globalization, Mobile and Internet
Acorns has the opportunity to access more than 4 billion internet users due to globalization, the internet, and mobile which are now ubiquitous. Given majority of people use cards and mobile in shopping, the brand could strategically position itself to take advantage of the booming opportunities in e-commerce.
The world is undergoing a paradigm shift from traditional methods to embracing digitized methods of investment. All these are a plus in Acorns’ market opportunities to increase its scope in serving the market.
Threats of Acorns
Competition
The brand faces great competition from existing as well as new entrants into the market. Established major brands in this regard include SoFi Automated Investing, Vanguard Digital Advisor, WealthfrontEllevest, Axos Managed Portfolios, Stash, Ally Invest Robo Portfolios, SigFig, Schwab Intelligent Portfolios, Blooom.
Some of these brands have better brand experience in the market so that Acorns has the challenge of rising up to the competitor’s challenge and superseding their offering if it will stand out of the competition.
Advances in Technology
The financial and investment industry has seen incredible technological innovation. New technological advances have the element of rendering obsolete technologies that be.
Acorns has impressive technological automation that enables its operations. The brand however needs to consciously and continuously invest in technology innovation to institute high barriers of entry.
Conclusion
Acorns is a strong brand in the market offering a unique product for its customers in the market. Such a strong product and unique product gives the brand greater visibility from its competitors. The brand however needs to work on its tax strategy and human contact.
These two have diminished the brand’s competitive advantage and an effort in this regard would boost the brand’s competitive advantage. The brand additionally has great opportunities in the growing global economies and technology for growth.
