Skip to main content

Robo-adviser Wealthsimple will transfer its U.S.-based customers to Betterment by the end of June.Eric Akaoka/The Globe and Mail

Power Financial Corp.’s online investment manager Wealthsimple is selling its U.S book of business to New York-based robo-adviser Betterment Holdings Inc.

Wealthsimple announced Thursday that it will transfer all its U.S.-based customers to Betterment by the end of June and will no longer support U.S.-based accounts.

The book of business – just under US$200-million in assets under management – was launched in 2017 when chief executive Michael Katchen had plans to expand the company globally.

Now Mr. Katchen says he wants to concentrate on the Canadian retail market and move into other areas of financial services here.

“As our company has become much more diversified in Canada, we were not executing that same strategy in the U.S., so it made sense for us to consolidate our investments and put more focus on what we are doing here in Canada,” Mr. Katchen said in an interview with The Globe and Mail.

Financial details of the transaction were not disclosed, but Mr. Katchen said Betterment was selected after reviewing several U.S companies that operate in the online-investing space.

Wealthsimple’s technology, employees and operations are not part of the deal. U.S. customers can opt out of the transfer to Betterment and move their investments to another financial institution.

Wealthsimple’s operations in Britain will not be affected by the sale and will continue to operate independently.

With more than $10-billion in assets under management, Wealthsimple provides automated wealth-management services that quickly design an investor’s portfolio based on age, financial goals and risk tolerance. Over the past several years Mr. Katchen has expanded Wealthsimple’s offerings to include a high-interest savings account, a tax-filing service and an online trading platform that also offers direct access to cryptocurrencies.

Mr. Katchen’s focus on the Canadian business began in early 2020, when he sold the business-to-business division, Wealthsimple for Advisors, to Purpose Advisor Solutions, a subsidiary of Purpose Financial LP.

At the time, he said the move away from the financial-advisory business was to allow the company to focus on expanding the consumer business into a “primary financial institution” for clients. Since then, the company has seen a spike in its online-brokerage business as do-it-yourself investors have rushed to open new trading accounts.

According to research company Investor Economics, Wealthsimple accounted for 43 per cent of new trading accounts opened in January, more than any other Canadian brokerage.

That growth has piqued the interest of several large investors. Last October, the company raised $114-million in financing from some of Silicon Valley’s best-known venture capital firms in a deal that valued Wealthsimple at $1.4-billion.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.