Canada’s largest robo-adviser, Wealthsimple Inc., has registered new business names in preparation for the launch of services that include online chequing accounts.
The online investing firm, which manages more than $6-billion in assets and is majority owned by Montreal-based Power Financial Corp., recently registered three new businesses across several provinces, including Wealthsimple Cash, according to government documents.
Wealthsimple chief executive Michael Katchen confirmed a chequing account is “definitely” on the company’s “road map," but could not provide details of the exact timing of a product launch or what an account would offer clients. "We have been open about wanting to be our client’s primary financial relationship, and a cash account is certainly an important part of that,” Mr. Katchen said in an e-mail.
Over the past three months, Wealthsimple also registered the names of Wealthsimple Payments Inc. and Wealthsimple Digital Assets Inc. Mr. Katchen did not comment on what services would be offered under these domains.
There are approximately 15 robo-advisory firms in Canada; collectively, they represent just a fraction of the asset-management market in Canada, but offer a cheaper alternative to full-service financial advisors. The web-based services give clients an online risk-assessment tool that calculates an appropriate asset allocation based on age, financial goals and risk tolerance.
Over the past two years, Wealthsimple management has been trying to broaden the company’s business beyond online investment portfolios. It says it has more than one million Canadian clients using its financial products, which include online investing, savings, trading and tax services. In 2018, it entered the discount brokerage business with Wealthsimple Trade and launched a savings account and online tax-return service.
In late 2019, the company announced it was looking for a partner to take over its financial-adviser business – Wealthsimple for Advisers – in order to focus more on its online services that it offers directly to consumers.
Digital wealth managers should be looking to expand their services as investors continue to value a one-stop banking experience, says Josh Book, CEO and founder of Parameter Insights Inc., a market research and consultancy firm.
Recent consumer data from Parameter Insights shows that the ability to view all savings and investment accounts online in one place, and the ability to move money in and out of accounts quickly, ranked among the most important factors for Canadians when considering savings and investing options.
Last month, competitor Questrade Inc. applied for a banking licence to expand its services and move into the deposit-taking business. At the time, Mr. Katchen said he had no immediate plans to apply for a banking licence.
Wealthsimple Save, a high-interest savings account provider, was launched in partnership with Equitable Bank. As a result, the deposits are directly held by Equitable Bank, so Wealthsimple is not required to have a banking licence. Mr. Katchen would not comment on whether he would have a partner, such as Equitable Bank, hold assets for the chequing accounts.
For a huge cohort of consumers who struggle with financial literacy, Wealthsimple’s approach to customer engagement, together with its expanded services, put them in a better position than traditional banks, who are slow-moving and present their services in ways that “confound consumers," Mr. Book said.
“By increasing their involvement in the overall financial services industry, Wealthsimple not only opens the door to more deposit-taking revenue, but also the ability to widen the scope of customer engagement," Mr. Book said. "With that comes an opportunity to glean more data that can help generate a better and more tailored customer relationship, as well as guide customers to better financial behaviours.”
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