Wealthsimple

Wealthsimple Inc. is a Canadian online investment management service focused on millennials.[5] The firm was founded in September 2014 by Michael Katchen and is based in Toronto.[1] As of August 2019, the firm holds over C$5 billion in assets under management.[6] It is primarily owned by Power Corporation indirectly at 83.2% through investments made through their holdings in Power Financial, IGM Financial and Portag3.[7]

Wealthsimple Inc.
TypePrivate
IndustryFinancial Services, Online Investment Management
FoundedSeptember 2014 (2014-09)[1]
FounderMichael Katchen, (CEO)[2]
Headquarters
Toronto,[2] Ontario
,
Canada
Services
AUMC$5 billion (August 15, 2019)[3]
Total assets (2017[2])
Number of employees
235[4] (2019[4])
Websitewww.wealthsimple.com

History

Pre-founding

Prior to founding Wealthsimple, Michael Katchen worked for 1000Memories, a Silicon Valley-based startup.[1] After Ancestry.com bought 1000Memories in 2012, Katchen developed a spreadsheet with tips to help his colleagues set up investment portfolios.[1] Interest in the spreadsheet helped inspire the idea for Wealthsimple.[1] In 2014, he returned to Toronto to launch the company.[1][8]

2015 acquisition of Canadian ShareOwner Investments Inc.

In December 2015, Wealthsimple made its first acquisition with acquiring Canada's first robo-advisor service, Canadian ShareOwner Investments Inc.[5] Through the acquisition Wealthsimple became an owner of one of Canada's 14 discount brokerages (2015) alongside other owners of discount brokerages including Bank of Montreal and Royal Bank of Canada.[5][9] The acquisition of Canadian ShareOwner Investment Inc. resulted in the assets under management comprising CAD $400,000,000 across 10,000 customer accounts.[5]

2016 – present: focus on product offerings

In March 2016, Wealthsimple began offering clients access to socially responsible investment funds.[10]

In May 2016, the firm announced a partnership with Mint, thus allowing clients to sync their Wealthsimple investment account to Mint's budgeting software.[11]

Also in May 2016, Wealthsimple launched Wealthsimple for Advisors, an automated platform for financial advisors. The service is intended for advisors who wish to maintain clients with accounts below their minimum requirements.[12]

On April 5, 2018 the firm launched Wealthsimple Save, a high interest savings account with a rate that will always be higher than traditional banks.[13][14]

As of March 2019, Wealthsimple publicly supports Wealthica synchronization via their secure, open API.[15]

Wealthsimple Trade, a zero-commission stock and exchange-traded fund (ETF) trading mobile app, was available as a beta in August 2018 and publicly launched in March 2019.[16][17]

In January 2020, Wealthsimple launched Wealthsimple Cash for Canadian customers, a hybrid savings/chequing account offering high interest on balances. Spending features such as a visa debit card, e-transfers, bill payments and paycheque/cheque deposits are planned to be rolled out through 2020.

As of March 2020, Wealthsimple trade became unable to handle the volume of trades their customers were placing and began capping the number of users and putting some investors onto wait lists.[18]

Products and services

Wealthsimple combines a robo-advisor platform with access to live advisors.[19][20][21] Each client is provided an investment advisor who helps match investments to the client's long-term goals and risk tolerance. The firm does not occupy retail space; instead its advisors are available via phone, text message, email or video chat.[1] There is no account minimum required and no charge per transaction. An annual fee is charged ranging from 0.4% to 0.5% based on account size. Portfolios are monitored daily and automatically rebalanced if they move beyond certain thresholds.[22][23]

Wealthsimple offers their platform for advisors via Wealthsimple for Advisors and also for firms via Wealthsimple for Work.

In April 2018, the company starting offering a savings account with a 1.7% interest rate.[24][25] Their site now promotes the rate at 0.9%.[14]

In September 2018, the company started offering a micro-investing service called Roundup, which automatically rounds up purchases and invests the extra change into your Wealthsimple investment account.[26]

In March 2019, the company offered a stock and ETF trading account with zero-commission fees in the U.S. and Canada.[16][17]

In September 2019, Wealthsimple acquired SimpleTax, a Canadian tax software company. The acquisition of SimpleTax adds online tax-return preparation and filing service to Wealthsimple's suite of financial products.[27][28]

Wealthsimple Cash offers a higher savings rate than Wealthsimple Save, with full service chequing account features planned to be in service by the end of 2020.

Current operations

Clients
Clients
Year# of Clients
15 August 2019 175,000[3]
22 May 2019 150,000[29]
10 October 2018 100,000[30]
21 February 2018 65,000[31]
11 May 2017 30,000[32]
201715,000[2]
2016
20151,000 (April)[1]-10,000 (December)[5]
2014

Finances
Funding

In May 2014 the company initially raised CAD $1.9 million from investors Eric Kirzner, Joe Canavan, and Roger Martin.[5][1]

In April 2015, the firm received CAD $10 million from Power Financial Corporation in an agreement structured to allow for a future investment of CAD $20 million within 12 months.[33] In total Power Financial Corporation has invested $30 million in Series A funding.[2][34] It is now primarily owned by Power Corporation indirectly at 77.4% (the investments were through their holdings in Power Financial, IGM Financial and Portag3).[7]

Fees

An annual fee is charged ranging from 0.4% to 0.5% based on account size.

Wealthsimple clients whose accounts have in excess of C$100,000 whereby their management fee is 0.4%.[2]

Assets under management
Assets under management
YearCA$
15 August 2019 5 billion[3]
22 May 2019 4.5 billion[35]
14 May 2019 4.3 billion[36]
10 October 2018 3 billion[30]
21 February 2018 1.9 billion[31]
2017750 million[2][37]
2016
2015400 million[5]
2014

Corporate affairs

Recognition

In 2015, Product Hunt Toronto honored Wealthsimple with its first-ever Product of the Year Award.[38] In 2016, the 20th Annual Webby Awards named Wealthsimple its Best Financial Services/Banking website.[11]

See also

References
  1. Casey, Quentin (10 April 2015). "Wealthsimple aims to turn financial services industry on its head with new low-cost approach to investing" (FP Startups). Canada: Financial Post. Postmedia Network Inc. Retrieved 27 March 2017.
  2. Ho, Solarina (10 January 2017). "Canadian fintech startup Wealthsimple sees major 2017 growth". United States: CNBC.com. CNBC LLC. Retrieved 25 March 2017.
  3. "Wealthsimple Targets Canada's Richest With Grayhawk Partnership". www.bloomberg.com. 2019-08-15. Retrieved 2019-08-22.
  4. Wealthsimple
  5. Chevreau, Jonathan (2 December 2015). "Millennial-focused Wealthsimple to buy boomer robo-adviser ShareOwner, its first acquisition" (Personal Finance – Young Money). Canada: Financial Post. Postmedia Network Inc. Retrieved 28 March 2017.
  6. Bronstein, Will. "Wealthsimple Review: Hands-Off Investing & Saving in 2020". Best Robo Advisors. Retrieved 2020-01-30.
  7. "Power Corporation of Canada | Organization Chart". www.powercorporation.com. Retrieved 2019-05-15.
  8. Joe Castaldo, "How Wealthsimple founder Michael Katchen is shaking up financial advice," Canadian Business, March 9, 2015.
  9. "Wealthsimple Acquires Automated Investment Manager to Innovate Canadian FinTech," TechVibes, December 2, 2015.
  10. Clare OíHara, "Canadian robo-advisers plug into socially responsible investing," The Globe and Mail, March 24, 2016.
  11. "Wealthsimple Wins Webby Award, Partners with Mint," TechVibes, May 3, 2016
  12. Fiona Collie, "Wealthsimple launches platform for advisors," [Investment Executive], May 24, 2016.
  13. "Robo-adviser Wealthsimple launches savings account with premium rate | Financial Post". Financial Post. 5 April 2018. Retrieved 16 May 2019.
  14. "Wealthsimple Save: High Interest Savings". www.wealthsimple.com. Retrieved 16 May 2019.
  15. Boulet, Simon (12 March 2019). "Announcing support for the new Wealthsimple API!". Journey to $10B : Wealthica. Retrieved 16 May 2019.
  16. "The Wait(list) is Over: Say Hello to Wealthsimple Trade". Wealthsimple Magazine. March 13, 2019. Retrieved 16 May 2019.
  17. O’Hara, Clare (August 15, 2018). "Wealthsimple launching zero-commission trading platform". The Globe and Mail. Retrieved 16 May 2019.
  18. "Retail investors say they're losing thousands as brokerages struggle with record traffic due to coronavirus panic - Financial Post". 25 March 2020. Retrieved 25 March 2020.
  19. Din, Suleman (24 January 2017). "U.S. robo adviser market opens up to foreign competition". United States: Financial Planning. SourceMedia. Retrieved 25 March 2017.
  20. Kyle. "Wealthsimple Review". Retrieved 24 December 2017.
  21. Marjo Johne, "Meet the next generation of wealth," The Globe and Mail, May 9, 2016.
  22. Robb Engen, "The Comparison: Battle of the robo-advisers," Toronto Star, March 14, 2016.
  23. Andrew Rickard March, "Robo advisor drops minimum investment requirement to $0," The Insurance & Investment Journal, March 9, 2016.
  24. Greenwood, Max (5 April 2018). "Wealthsimple Launches Savings Account to Compete with Big Banks". Techvibes. Retrieved 7 April 2018.
  25. "Robo-adviser Wealthsimple launches savings account with premium rate". Financial Post. 2018-04-05. Retrieved 2018-05-14.
  26. "Introducing Roundup. Automatically Invest Your Spare Change". Magazine. Retrieved 2020-01-30.
  27. "Wealthsimple expands into tax software space with acquisition of SimpleTax". Retrieved 2019-09-27.
  28. Bloomberg, B. N. N. (2019-09-24). "Wealthsimple expands into tax software with SimpleTax acquisition - BNN Bloomberg". BNN. Retrieved 2019-09-27.
  29. Browne, Ryan (2019-05-22). "Wealthsimple raises $75 million and says it's closer on path toward an IPO". CNBC. Retrieved 2019-08-22.
  30. Browne, Ryan (10 October 2018). "Robo-advisor Wealthsimple will likely raise more funding and definitely wants to IPO, CEO says". CNBC. Retrieved 15 May 2019.
  31. "Power Financial adds to investment in robo-adviser Wealthsimple". The Globe and Mail. 2018-02-21. Retrieved 2018-02-21.
  32. "Power Financial invests C$50 million in 'robo-adviser' Wealthsimple". Reuters. 2017-05-11. Retrieved 2017-05-12.
  33. Pett, David (9 April 2015). "Power Financial Corp to invest up to $30-million in robo-adviser Wealthsimple" (FP Street). Canada: Financial Post. Postmedia Network Inc. Retrieved 28 March 2017.
  34. Alexander, Doug (18 January 2016). "Bank of Montreal Enters Robo-Advising Ahead of Other Lenders" (Tech). United States: Bloomberg News. Bloomberg L.P. Retrieved 25 March 2017.
  35. Browne, Ryan (2019-05-22). "Wealthsimple raises $75 million and says it's closer on path toward an IPO". CNBC. Retrieved 2019-08-22.
  36. Skok, David; Schwartz, Zane. "Wealthsimple hits over $4.3 billion in assets under administration (AUA) as Power Financial deepens stake". The Logic. Retrieved 15 May 2019.
  37. Lawler, Ryan. "Robo-advisor Wealthsimple raises another $37 million from Power Financial". TechCrunch. Retrieved 2017-11-20.
  38. Douglas Soltys, “Happy Birthday, #Producthuntto,” Betakit.com, August 28, 2015.
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