Wealthsimple Set to Launch Mutual Fund Investment Firm

It looks like 2019 may be the year Canadian fintechs make the jump from partnering with banks to offering bank services themselves.

Wealthsimple is set to announce the launch of their own mutual-fund investment firm according to a Globe and Mail report. The new service will be called Wealthsimple Advisor Services Inc. and it is registered with the Mutual Fund Dealers Association (MFDA), an organization that provides oversight and regulations for investors and boasts members including all big five banks. According to documents from MFDA, Wealthsimple has been registered since October 4, 2018. Running as an independent firm under a parent banner, Wealthsimple Advisor Services will allow licensed advisors to manage portfolios (including ETFs) and power advisors’ businesses.

This move follows Wealthsimple’s overall vision of providing a cheaper yet secure alternative to users who may be new to investing. Current investment advisors charge hefty fees to customers—Wealthsimple will be able to cut some of those costs by offering their patented robo-advising platform to mutual fund advisors themselves. Traditional investment firms often charge high administrative costs to their advisors, so Wealthsimple’s model streamlines the process.

A large part of this new platform’s launch began in 2015 when Wealthsimple acquired MFDA firm Canadian ShareOwner Investments, as that move gave Wealthsimple the option to control all of their own operations under one roof such as trade execution, portfolio construction and more.

Wealthsimple has reportedly partnered with money managers such as Mackenzie Investments and Forstrong Global Asset Management Inc. to offer portfolios that consist of both ETFs and mutual funds. This is the key differentiator between Wealthsimple Advisor Services and the original Wealthsimple—the latter only offers portfolios consisting of ETFs. More money managers will be added through 2019.

The savings Wealthsimple Advisor Services will provide to consumers can reach between 0.5 and 1.0 per cent, based on current management fee approximations.

One of the first advisors to join the new Wealthsimple platform is Grant Stefanowski, who has transferred over his entire $80 million book of business.

“[Wealthsimple] is a financial-technology company and they have built one of the best platforms I have seen in the last 20 years,” Stefanowski told the Globe. “Already, I have seen 80 per cent of my administrative costs disappear.”

Wealthsimple is one of Canada’s most successful fintechs with more than $2 billion in total managed assets. The Toronto-based company has been steadily expanding their services over the past few years, with the latest move coming in the form of zero-commission stock trading services.

Note: This article has been updated to clarify that Wealthsimple is not hiring in-house advisors but rather powering existing advisors’ businesses.