Financial planner Michael Kitces commented on the U.S. experience and how the Wealthsimple news suggests Canada’s experience will be very similar.
“Several other major established firms have bought out robo-advisors altogether to leverage their technology internally. If Canada follows the same general flow, what started as ‘traditional companies INVESTING into robo-advisors’ will likely soon become ‘traditional companies BUYING OUT robo-advisors,’” says Kitces.
“The fundamental issue is that direct-to-consumer robo-advisors [in U.S.] just aren’t growing and monetizing very well because the robos misunderstood that the real problem is client acquisition costs that they can’t solve. Traditional companies have a bigger brand to lower acquisition costs (e.g., Vanguard and Schwab in the US space) and the means to monetize the audience.”
WP spoke with Katchen late Thursday. He was able to shed light on how this partnership will benefit advisors including those at Investors Group
“From day one our approach has always been that we [Wealthsimple] would love to work with advisors to better serve their clients,” says Katchen. “That’s always been something we’ve been excited about.”
“We’ve been approached by lots by advisors in the industry about how to work together but it hasn’t been a priority to date but I can imagine we’ll now have the resources to really pursue a wonderful platform that advisors can plug into.”
Seeking to grow assets under management to at least $1 billion within two years, Katchen’s excited about the partnership.