Robo-adviser Wealthsimple is partnering with independent wealth manager Grayhawk Investment Strategies Inc., as the online portfolio platform looks to gain a foothold in the arena of ultra-high-net-worth investors.
The digital financial services company – which currently manages more than $5-billion in assets – is set to announce Thursday morning that Wealthsimple for Advisors, its business-to-business (B2B) platform, will add Grayhawk Investment’s $800-million in assets under management to its roster. The deal marks the largest partnership so far for Wealthsimple’s B2B division, said J-F Courville, chief executive of Wealthsimple for Advisors.
“This partnership highlights how this matters for someone with a portfolio of $50-million as much as it does for someone with a portfolio of $50,000,” Mr. Courville said.
Grayhawk Investments, a portfolio management company serving 30 high- and ultrahigh-net-worth households across Canada, will gain access to Wealthsimple’s digital advice platform. The move will allow Grayhawk advisers to automate manual processes, such as account opening, compliance and account administration. Ultrahigh-net-worth accounts are typically more than $30-million in investable assets.
“We are disrupting the way successful families achieve intergenerational wealth transfer," said Michael Kaumeyer, president and CEO of Grayhawk. “We wanted to create a digital experience for our clients that continues to have a focus on building deep relationships with institutional style portfolios.”
Robo-advisers – also known as online portfolio managers or digital advisers – offer retail investors a quick route to building an investment portfolio through an online risk-assessment tool that calculates an appropriate asset allocation based on age, financial goals and risk tolerance. The results provide clients with a recommended investment portfolio typically made up of exchange-traded funds, which will automatically rebalance as markets move.
Once seen as a potential disruptor to financial advisers, many Canadian robo-advisers have instead partnered with the wealth-management industry to combine services that will help build scale at a quicker pace while providing technology platforms to advisers and their clients.
Last May, Wealthsimple – in which investment giant Power Financial Corp. holds a combined voting interest of 88.9 per cent – raised $100-million in a financing round led by Germany-based Allianz X. Wealthsimple CEO Michael Katchen said at the time that some of those funds would be used to “evolve” its B2B platform for advisers and financial institutions.
The platform, which is designed specifically for financial advisers looking to offset some investment-management tasks, also services approximately 300 independent advisers.
Wealthsimple is in the process of developing a personalized digital platform to support Grayhawk’s clients and investment funds, institutional style portfolios that include alternative sources of return not typically available to retail investors. (The portfolios will be made available to select independent advisers who are on the Wealthsimple for Advisor platform.)
“We are continuing to see wealth firms explore new ways to incorporate digital technology into their business models in an effort to modernize," said Josh Book, CEO of ParameterInsights, a market research and consultancy firm. “Canadian consumers continue to demand wealth advice which includes access to some human touch."
While Wealthsimple is Canada’s largest online portfolio manager, it isn’t the first to recognize the importance of collaborating directly with investment firms.
Nest Wealth was one of the first robo-advisers to cater to the wealth management community, allowing investment firms to license an online portfolio platform for their clients. Since launching, the business platform – Nest Wealth Pro – has signed more than a dozen financial institutions including the National Bank of Canada (which also holds a minority stake in Nest Wealth), Credential Financial Inc., MD Financial Management and Value Partners Investments Inc.
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