Wealthsimple scales with its vision of democratizing investment

Occupy Wall Street was all about delivering equity in terms of wealth distribution and earning. Maybe technology can help with that.

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Michelle Maher/IDGNS

There has been much talk in recent years about the democratization of the financial services space. The thinking goes that for too long power (and, more importantly, wealth) has been concentrated in the hands of a few, and that this concentration only worsens the inequality that exists in the world.

And while many suggest that rebellion and revolution are the ways to redress this balance, others suggest that technology can be what makes the difference. This is certainly the approach that Wealthsimple and others like it take.

Wealthsimple is an online investment manager that combines digital tools and personal financial advice to make automated investing available to everyone. Wealthsimple has low fees, no minimum account size, and has, at its heart, the vision to make investing readily available to anyone. (Well, to clarify, that means anyone who is in the U.S. and Canada, the two geographies within which Wealthsimple is currently operating.)

Ironically, at least given this theme of "by the people, for the people," Wealthsimple is backed by the same sort of people who all those Occupy Wall Street protesters were getting angry about. In Wealthsimple's case, this means the Power Financial group of companies -- a publicly listed, diversified management and holding company.

Anyway, that slightly ironic and jarring fact aside, it is interesting to look at what Wealthsimple has achieved on its journey to date. Backed by $74 million worth of funding (most recently a $37 million Series B round), Wealthsimple has, in its two-year history, amassed over $750 million of assets under administration and a client base of some 30,000 clients across North America. One assumes (or, more correctly, hopes) that a significant proportion of these customers would not have been able to experience investing under traditional models.

In terms of what it does, Wealthsimple is a mobile application (either iOS or Android) that is both a magazine (human stories about money and the world of issues related to it) as well as a platform for tools to enable users to invest. This model of advice plus investment tools makes sense and is a key part of Wealthsimple's strategy.

"Many people don't know where to start when it comes to investing, and Wealthsimple is looking to solve that problem by making investing a really simple experience," said Michael Katchen, CEO and founder of Wealthsimple. "It's been encouraging to see the response from both first-time and experienced investors, and we're looking forward to continuing our growth in the U.S. and Canada."

Perhaps not surprisingly, Wealthsimple's initial target market is skewed toward younger investors, those without existing relationships in the investment space/

"Wealthsimple is making investing approachable to people at all stages of their financial lives, and in particular younger investors who have traditionally been underserved by the financial industry," said Paul Desmarais III, chairman of Wealthsimple and senior vice president at Power Financial Corporation. "With our biggest investment in Wealthsimple to date, we're excited to see the company continue to grow and succeed."

MyPOV

Exposing information that anyone can take advantage of is, of course, a very good thing. Also positive is giving all comers the tools with which they can make investments themselves.

Of course, some within the Occupy Wall Street movement would suggest that democratization doesn't really solve the systemic problem -- that of a fundamentally broken economic model. While you may or may not have sympathy for that perspective, it's probably fair to say that there is little that Wealthsimple can do to resolve that issue.

What it can do is try and reduce the level of elitism that occurs in the investment space. Wealthsimple seems to be executing well on this opportunity, and I'll be interested to see the future product and market moves it makes as it continues to grow.

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