One of Canada's pioneering robo-adviser services, , is unveiling Wednesday its new rebranded image and website redefining itself as a financial services company focused on the millennial demographic.
The new brand is focused on reaching young professionals and first-time investors. While the name will remain, “everything else is going to be different: new site, new apps, new content,” says founder Michael Katchen.
“This is the first time a financial services company in Canada has explicitly targeted millennial investors,” Katchen said in an interview Tuesday.
Katchen, himself a millennial entrepreneur aged 27, says 85% of Wealthsimple's core market are investors between the ages of 25 and 45. That makes it the total inverse of the rest of Canada's financial services industry, where 90% of its clients are over the age of 50. “In our business, 90% of our clients are under 50.”
Perhaps that's why one of the country's financial conglomerates – Power Financial Corp (which owns mutual fund companies Investors Group Inc. and Mackenzie Financial) – acquired a minority interest in WealthSimple last April for $30 million. Similar deals can be expected: a few weeks ago, another mutual fund giant — C.I. Financial Corp. — bought First Asset ETFs, which offers ETFs, closed-end funds and ETFs. First Asset is not an automated online investing service (aka robo adviser) but most robo services use exchange-traded funds (ETFs) rather than mutual funds as their underlying components.
Katchen declined to comment on the latter acquisition but said Power Financial invested in his firm “not out of fear of the future but because we address a segment they just don't address with mutual funds.” Traditional banks and mutual fund companies cater to older investors with between $100,000 and $250,000, he said, and aren't set up to deal with the smaller accounts of $20,000 to $50,000 that millennials have so far accumulated.
The average Wealthsimple client has $30,000 invested with it, split equally between RRSPs, TFSAs and non-registered accounts. As part of the rebranding, the firm has dropped the minimum investment amount from $5,000 to just $500.
“We are trying to create a service that authentically speaks to this demographic,” Katchen said. So the photographs on the new revamped site at are not stock images but feature actual friends and family members that would feel at home being posted on social media sites like Facebook, Instagram, and Twitter.
For the revamp, the company did not go to an outside design agency but went inhouse to a creative team headed by Rudy Adler, who joined six months ago. Katchen and Adler spent time together in Silicon Valley, building and selling a firm called 1,000memories. Adler was also involved in some high-profile campaigns for Levis and Apple, including the iPod Nano in 2007. (Not, Katchen joked, the famous 1984 Big Brother ad: “I wasn't born yet.”)
Asked whether the two big robo-adviser leaders in the U.S. – and – also plan to target Millennials, Katchen said “I think WealthFront are taking a similar approach, but are focused on the U.S. market.” He has no reason to believe either firm is interested in entering the Canadian market.