Toby Triebel, CEO Europe for Canada’s millennial-friendly Wealthsimple, is bringing a touch of street cred to the UK’s investment market
On the face of it, designing a service to be appealing to millennials is as easy as ordering a vegan chai latte at an artisan coffee shop.
The basic formula is as follows: choose a funky, one-word name (for ease of hashtags); offer signup and full control through a minimalist app that doesn’t devour precious smartphone battery; have a handful of Instagram influencers endorse the service before their 100k-plus followers. Et voilà! You have successfully created a service fit for even the most lit (that’s up-to-speed, if you’re not) millennial.
Despite cheating slightly and fusing two words into one for its name, Canadian investment platform Wealthsimple undoubtedly ticks all the right boxes in terms of a millennial-friendly service. The company provides its own online magazine targeted at Generation Y readers, which features ‘Money Diaries’ supplied by the likes of Kylie Jenner, Kim Kardashian and celebrity dermatologist and Instagram sensation Sandra Lee (AKA Dr Pimple Popper).
It announced the platform’s US launch in January 2017 with a minute-long Super Bowl ad showing a young professional sipping a fruit smoothie, who was confused about the complexities of traditional investing. If all this wasn’t millennial-y enough for you, Wealthsimple’s head office in Toronto contains rows of succulents along almost every windowsill, an assortment of sushi boats in the large communal eating area, and a freezer stocked with complimentary popsicles. “If we took away the ping-pong table there’d be riots,” says Wealthsimple Communications Director Rachael Factor.
Nevertheless, when it comes to encouraging millennials to invest any cash left over after student loan repayments, things are not quite as simple as offering free ice lollies. According to a report published by the CFA Institute in October last year, 40 per cent of non-investing millennials cited ‘not living pay cheque to pay cheque’ as their top financial goal, whereas only 21 per cent claimed that ‘saving enough to retire and live comfortably’ was their fiscal objective. This reluctance to embrace investment opportunities can obviously be linked to increasing debt and insufficient income among millennials, however there are other barriers between twentysomethings and long-term financial planning.
Dazed and confused
Contrary to the perception of millennials as brash know-it-alls with chips on their shoulders and itchy keyboard fingers, the CFA Institute’s report uncovered that Generation Y is suffering from a distinct lack of confidence when it comes to investment decision-making. Only 21 per cent of non-investing millennials reported feeling ‘confident’ in making investment-related decisions, whereas 37 per cent claimed to ‘not feel very confident’ in deciding how best to grow their savings. Interestingly enough, millennials don’t exhibit a similar sense of doubt towards financial professionals. Seventy-two per cent of the millennials surveyed said they were ‘very satisfied’ with their current financial advisors, using words like ‘knowledgeable’, ‘savvy’ and ‘experienced’ to describe them. That being said, they also expressed a desire for financial professionals to be prepared to educate them and customise their entire approach to suit a client’s needs.
Wealthsimple’s charismatic CEO, Michael Katchen, stated that he wants his company to become ‘the Vanguard for millennials, with $1trillion in assets under management in 15 years’. In order to make this dream a reality, Wealthsimple has incorporated the needs of younger investors, such as tailored investment advice and support, into the core of its business, as Toby Triebel, CEO Europe, explains.
“When you boil it down, what makes Wealthsimple different to your typical wealth management company is the combination of technology and human,” he says. “We combine the best of both. For example, we use technology to make investing accessible, simple and intuitive, and also to provide the best user experience possible for clients looking to enter the world of investment for the first time. It takes minutes, not days, to open a Wealthsimple account and become a funded client. The human element of our service lies in the fact that every one of our clients, no matter how much they invest, has access to a qualified, human investment advisor,” he says. “We believe that this combination of technology and human is very, very powerful.”
Judging by the statistics, Michael Katchen’s plan to dominate the millennial market is progressing rather well: 85 per cent of Wealthsimple’s customers are aged 45 years and below, and one in four clients are first-time investors. Wealthsimple’s popularity among this fresh-faced demographic can be attributed in part to the quality of human advice available to all clients, regardless of their investment, but also to the platform’s extremely competitive pricing strategy. In an interview with CNBC, Katchen declared ‘not paying more than one per cent of what you are investing in a fee’ as one of his top five pieces of advice for first-time investors, and his own platform certainly adheres to this rule. Wealthsimple charges 0.7 per cent of money invested per year, compared with one to 1.25 per cent for the majority of its competitors.
For millennials who can barely gather enough pennies together to purchase a new pair of purposely ripped jeans, Wealthsimple’s exceptionally low fee makes the platform a very attractive prospect indeed. The question is, how can Wealthsimple afford to keep its fees as tight as a hipster’s trousers?
“We use technology to build scalable, largely automated systems, and we then pass the savings that come from this back to our clients,” says Triebel. “We also automate our anti-money laundering (AML) and know-your-customer (KYC) checks, which allows us to save costs, offer an accelerated onboarding process and remain fully compliant with increasingly stringent regulation.”
On account of its core values, Wealthsimple takes a different view of regulators to other investment platforms. Where some firms regard regulation as a thorn in the side of their margins, the Canadian company considers the regulator to be its BF in the fight to bring financial power to the people.
“We view regulators as strong advocates of the business model that we’re trying to develop, and also as true partners in all of the markets in which we operate,” says Triebel. “We’re fortunate enough to work with a whole variety of different regulators, some more progressive than others. Currently, the UK’s Financial Conduct Authority is by far the most progressive, since it’s very much in favour of promoting product transparency, giving clients choice and making sure that investment products are accessible to everyone, not just the wealthy,” he says. “This last point really mirrors Wealthsimple’s ethos, hence our decision to invest in low-cost portfolios, exchange traded funds (ETFs), and index funds so that our investment products are affordable to all of our clients.”
An inclusive investment club
Wealthsimple crossed the Pond only two years ago to compete with the likes of Nutmeg and Wealthify, differentiating itself from most of the competition by offering a pension product and socially responsible investing strategies.
Despite Wealthsimple’s preoccupation with becoming the most hashtagged, on-fleek (that’s flawlessly styled to you and me) and struggle-free investment platform of all time, Wealthsimple has not overlooked other demographics in the war for the millennial market.
“Our youngest client has just been born and has a junior ISA in their name, and our oldest is 103 years old,” says Triebel. “This just goes to show the diversity of clients we cater for, and we’ve introduced new products such as our Black and Generation offerings to make sure we meet the needs of all our customers.”
A long way from the ‘pay cheque to pay cheque’ clients, Wealthsimple’s Black service is available to those who invest more than £100,000 across their Wealthsimple accounts and comes with a whole host of benefits, including lower fees of just 0.5 per cent and a financial planning session with one of Wealthsimple’s expert advisors. Should your savings exceed £500,000, you’ll be eligible for the Generation service, which features even greater advantages. You’ll be assigned a dedicated advisor who’ll design you a customised budget and cash flow plan based on your financial goals. You’ll remain in touch with your dedicated advisor via monthly calls, wherein you’ll be able to ensure your investments are always aligned with your personal goals and timelines.
As a bonus, both Wealthsimple Black and Generation clients are granted access to more than 1,000 airline lounges in more than 400 cities.
A Wealthsimple account takes minutes to set up, it’ll cost you peanuts (or another vegan snack of your choosing), and you can manage your investments on
the go while simultaneously posting to Instagram. With any luck, in a few years you may even gain access to Wealthsimple’s Black service, or better yet, its Generation offering.
Think of signing up to Wealthsimple as like gaining entry to the coolest, most exclusive nightclub in town, only you’ll be making money as opposed to frittering it away on extortionately priced drinks.
And that’s surely every twentysomething’s dream, right?
This article was published in The Fintech Finance Magazine: Issue #12, Page 50.