As the online investment platform backed by Canada’s billionaire Desmarais family continues to grow rapidly, Wealthsimple Financial Corp. has set a target of quadrupling its assets to $100 billion in five years. This ambitious goal is based on the company’s confidence that it can capture a significant share of younger investors who are looking for alternative investment options beyond traditional money managers.
A Rapid Rise in Assets
Since 2018, Wealthsimple has experienced a tenfold increase in its assets, reaching $25 billion. This growth can be attributed to several factors, including the company’s innovative advertising campaigns and partnerships with Hollywood celebrities such as Drake, Michael J. Fox, and Ryan Reynolds. The Desmarais family, which holds a significant stake in IGM Financial Inc., has been instrumental in Wealthsimple’s success.
The Desmarais Family’s Fintech Bet
For the Desmarais clan, Wealthsimple is just one of several financial-technology investments aimed at driving growth in their company. Power Corp. of Canada, controlled by the Desmarais family, holds a 24% interest in IGM Financial Inc., which operates as a seller of mutual funds and financial advisory services in Canada. The bulk of Power Corp.’s net asset value stems from its large ownership stakes in IGM and Great-West Lifeco Inc.
Targeting Millennials
Wealthsimple is specifically targeting millennials who are looking for investment options that are more accessible, user-friendly, and digitally driven. The company’s platform offers a range of services, including wealth management, stock and crypto trading, banking, and tax filing, to its over two million clients in Canada.
Innovative Investment Options
Wealthsimple is now trying to help younger investors gain exposure to traditionally reserved investment options such as venture, private credit, and private equity funds. This move is aimed at democratizing access to these investments for a wider range of clients.
IGM’s Expansion into Digital Banking
IG Wealth Management, the largest shareholder in Wealthsimple, is branching out into serving customers who prefer digital banking over traditional human advisers. The company has partnered with Nesto Inc., a Canadian mortgage company that arranges loans exclusively online. This partnership marks IGM’s first foray into digital banking and sets the stage for further expansion in this area.
Market Trends
The mutual fund industry is facing headwinds due to changing investor habits and rising interest rates, which are forcing millions of Canadian households to allocate more income toward mortgage payments. Net flows as a percentage of average assets are declining for both the industry and IGM, according to National Bank of Canada analyst Jaeme Gloyn.
Conclusion
Wealthsimple’s ambitious goal of quadrupling its assets to $100 billion in five years is a testament to the company’s confidence in its ability to capture a significant share of the growing market for online investment platforms. With its innovative approach, range of services, and strategic partnerships, Wealthsimple is well-positioned to achieve this goal and cement its position as a leading player in the fintech industry.
Recommendations
- Investors looking for alternative investment options: Consider exploring Wealthsimple’s platform and services.
- Financial institutions seeking to expand their digital offerings: Follow IGM’s lead and explore partnerships with fintech companies to enhance your customers’ experience.
- Industry analysts and experts: Keep a close eye on Wealthsimple’s progress as it continues to disrupt the traditional financial services industry.
Share Your Thoughts
Weigh in on the comments section below. What do you think about Wealthsimple’s ambitious goal, and how does it impact the broader fintech landscape?
