National Bank of Canada has claimed a larger stake in robo-adviser Nest Wealth as it looks to accelerate online services for clients.
National Bank announced Tuesday morning it will make an additional minority investment of up to $50-million in Nest Wealth through the bank’s venture-capital arm, NAventures. The two firms expanded their commercial agreement but did not disclose ownership-stake details.
This is the second investment the bank has made in the digital wealth management provider, previously investing $6-million in Toronto-based Nest Wealth in 2017.
Lucie Blanchet, executive vice-president of personal banking at National Bank, said over the years the partnership has allowed the bank to offer clients more online investment services.
“Our goal is to offer easy, fast and convenient solutions ... this is even more important in the current context,” she said in a statement.
The expanded agreement will allow National Bank to accelerate the development of some of its digital initiatives, including an online savings account that allows clients to set investment goals. The deal will also enhance the user experience for portfolio managers and independent brokers who do business with the bank’s custody and trading platform, National Bank Independent Network.
Once seen as a major disruptor to the industry, large robo-adviser companies are now often being acquired by large financial institutions that want to bring online capabilities in-house for their financial advisers to use directly with clients. In May, CI Financial acquired 100 per cent of online portfolio manager Wealthbar and rebranded the company CI Direct Investing. The asset manager had initially purchased a 75-per-cent stake in Wealthbar in 2018.
As well, Power Financial Corp. has increased its ownership position in Wealthsimple since its initial investment of $30-million in 2015. Over the years, Power Financial has contributed more than $238-million to Wealthsimple during investment rounds and now, along with its subsidiaries Portag3 and IGM, holds a combined voting interest of 88.9 per cent in the robo-adviser.
Nest Wealth founder and CEO Randy Cass says the company will continue to operate as a standalone business and has no plans to be fully acquired by a financial partner. Rather, he says, the money invested in the platform will help expand the Nest Wealth’s business-to-business platform into the United States.
“Mutually beneficial partnerships between established financial institutions and agile fintech firms represent the future of our industry, and we’re proud to be making this transformative move, together,” said Mr. Cass.
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