When Wealthsimple launched in Canada nearly a decade ago, the term “robo-adviser” likely conjured images of a small robot in a suit, not the makings of a $1.5 billion financial platform.
Driving the news: Per the Canadian Press, Wealthsimple serves more than three million (mostly millennial and Gen Z) customers and has become a profitable business. In the most recent quarter, the company reported $129 million in revenue, up 88% from last year.
- In recent years, Wealthsimple has moved beyond its automated wealth-management service to offer its customers more investment capabilities and bank-like features.
Why it matters: With more than $50 billion in assets under management, Wealthsimple is only about 5% of the size of CIBC, Canada’s fifth-largest bank. But it represents the first real alternative to big banks as the company moves into trading, mortgages, and tax services.
- “The banks are much bigger than we are, but we’re capturing an enormous share of the growth of the industry,” CEO Michael Katchen told the Globe and Mail in May.
Bottom line: Skeptics have questioned how Wealthsimple would achieve profitability while waiving trading fees (the big banks still take about $10 a pop), but the company seems to have effectively leveraged those freebies and caught the attention of the Big Five.—SB