With more than 30,000 clients and $750 million in assets under management, Toronto-based investment platform Wealthsimple continues to grow both in its home market and in the U.S. To bolster that growth, the company has raised an additional $37 million ($50 million Candian) in funding from Power Financial.
Like other similar platforms, Wealthsimple provides automated technology that allows its users to “invest on autopilot.” That is, users provide data about their financial situation and their risk tolerance, and Wealthsimple creates a personalized, low-cost and diversified portfolio which it can later rebalance as necessary.
But while other so-called robo-advisors are focused on courting the high end of the market, Wealthsimple is trying to provide the same types of tools and advice to all users, regardless of the amount they have to invest.
Wealthsimple requires no minimum amount to open an account and charges a 0.5% fee for all assets under management. It also doesn’t charge any trading, account transferring or rebalancing fees.
“Access is a major problem in this industry,” Wealthsimple CEO Michael Katchen told me. “We’re trying to bring great services to anyone of any asset size.”
But Wealthsimple is going beyond just providing a tech platform for managing customer assets — it also provides education through a branded online magazine and gives users access to its own stable of financial advisors.
While it began operations in Canada, Wealthsimple has expanded to the U.S. to take on robo-advisors like Wealthfront and Betterment. To continue its expansion, the company has taken another $37 million from Power Financial, which is one of the largest financial institutions in Canada.
With this round, Power Financial has essentially doubled down on its investment, bringing the total amount it has put into in Wealthsimple to $74 million. “We structured the first deal with Power to be in a long-term partnership where they would put in more money if we need additional capital,” Katzen said.
Having the backing of a large financial player like Power Financial has huge benefits for Wealthsimple, especially as it looks to new markets. The strategic partner has about $1.5 trillion assets in financial services companies around the world, according to Katzen.
And while having one big, strategic investor might limit its options for acquisition, Katzen says the goal for Wealthsimple is to take the business public. “We’re trying to build something that would be lasting and long term,” he said.