On-demand, online wealth management solutions are attracting a new generation of investors that are looking for something simpler, and more affordable. Invest in Ontario had the opportunity to interview Wealthsimple's CEO, Michael Katchen, to learn about his company's success.

How Wealthsimple's online wealth management solution was born

Shortly after graduating from Western University's Richard Ivey School of Business, Katchen was working as a business analyst for a major consulting firm in Toronto. That was until he received a call from some of his friends that had just moved to Silicon Valley. "They had just started at Y Combinator and asked me to join them in launching their start-up. [While] knowing nothing about tech at the time, I decided to take the plunge." So Katchen moved to California to help build 1000memories, a company that would be sold a few years later to Ancestry.com.

"When we sold 1000memories, the team came into a bit of money for the first time in their lives," said Katchen. "Having been investing since I was 12 years old, they turned to me for advice on what to do with their money. Rather than sending them to another advisor or sitting down with each of them, I built an excel model. It was a very simple spreadsheet on how to build your own portfolio of exchange-traded funds (ETFs). I shared it with the ten people I worked with and a couple friends that had been asking for investment advice over the years. The general feedback was that they loved the system but hated the work associated with managing their investments. That was the first version of Wealthsimple."

Katchen returns to Toronto to launch his fintech business

Rather than remain in California, Katchen returned to Toronto to launch his online wealth management solution for Canadians. "At the time, investors in Canada had just two options to manage their money: Do it yourself or hire an advisor," explains Katchen. "They didn't want to personally manage their money or hire an investment advisor that they didn't necessarily trust. I knew there was an opportunity to build something that could manage investments in a very simple, transparent way. Over the next year, I saw a couple companies try to attack a similar sort of problem with some success and decided that this was a business I wanted to start in Canada."

Wealth management app attracting a new generation of investors

"Traditional financial institutions target those who have built up wealth, which is evident through higher account minimums," says Katchen. "There's a major gap in the investment industry where those who are just starting out in their career don't have access to quality financial advice. We're simply attempting to fill that gap. We offer on-demand financial advice along with tools and services to help simplify our clients' lives, and as they build their wealth, their fee actually goes down."

In July 2015, Wealthsimple added a mobile app, which is the first in Canada that allows someone to sign up for an entire investment account. "For new investors, opening an investment account can be very intimidating. There's a ton of paperwork, complex choices to make, and you may end up speaking with commissioned advisors. It can hold people back from getting started. We allow someone to sign up for an entire investment account online or via our mobile app. Our fastest sign-up to date took eight minutes from start to finish and we're proud of making the first step into investing that simple."

Learn more about Wealthsimple's investment management solution


November 4, 2015

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