Wealthsimple Knows How Millennials Want To Invest
Does the idea of investing make you want to take a nap?
You’re not alone. Fortunately, there’s a Toronto-based firm that’s changing the way young people think about money.
Weathsimple is an investment service largely aimed at millennials. It offers an easy-to-manage interface, a digitally-engaged communication channel, cool, fashion-forward branding and social media savviness. Suffice to say, it’s not your parents’ old school money manager.
At just 30 years old, Wealthsimple chief executive officer Michael Katchen launched the brand with two other founders as a way to modernize the brokering market. He wanted to appeal to a younger generation who values full transparency in communicating as well as socially responsible investing. The ex-McKinsey staffer even created a content platform centered around money called Monday Diaries, where celebrities such as Kylie Jenner and Aubrey Plaza discuss financial challenges. I had the chance to sit down with Katchen to talk investment practices, ethical investing and how the millennials view retirement.
How did Wealthsimple come about?
Michael Katchen: Our founding is an organic kind of story. I was building a company in San Francisco – tech start up we sold in 2012. Upon selling the company, some friends working with me came into money for the first time and were looking for ways to invest it. I’ve loved investing since age 12, when I won a stock-picking contest. Through the process of helping my group of friends, I started a simple way to manage money. I knew people found investing complicated, scary and expensive. So I wanted to humanize money, make it simple and accessible and help enable people to live the lives they dreamed of. I wanted to build a service and a brand that cuts through the noise and focus on the human lifestyle experience.
What are some of the biggest differences between your firm and traditional brokers?
Michael Katchen: We are the most human financial services company in the world. If you look at our site, it’s the content we produce. It’s the way we talk about money that humanizes it. Other brands cannot do that in financial services. We interview celebrities, we hear them talk about money. We are breaking the taboo around a really scary topic to make it not intimidating, accessible and simple to understand. We want to empower people to have control over their finances. The second way is the technology component. Traditionally clients work with a broker or manager. There’s 50 pages of paperwork, you have to walk to a bank branch or meet them at their offices. Clients don’t want it. They want it to fit into their lives and do it on the phone, or on a website. If they want an answer, they want to text someone. They want simple experiences done through technology. We even won a Webby Award for Best Financial Services site. We’re bringing something totally refreshing to the market.
How do you connect with clients?
Michael Katchen: We don’t meet with clients in person. We meet with them through digital channels, like email or text or a video chat. Any of our tools are available to clients. It’s better for them and it fits into their lives. It’s meant to be a lot more seamless. We have a pool of expert advisors. If you want access to an expert advisor for help with financial planning, you can speak with a licensed representative. It’s an important part of how the model works. And because of that system, you get access to a team rather than one-to-one. It’s more scaleable and less expensive.
What’s something the average person would be surprised to learn about brokering?
Michael Katchen: There’s a misconception around the world that investing is about betting on or picking stocks or betting on certain sectors. Actually smart investing is boring. It’s about building a portfolio that reflects the goals. It’s about risk tolerance and sticking to plan and rebalancing and making sure you’re always on track. Our challenge as a brand is not trying to tell you to be the best on the street, but to create a sexy brand experience around a really boring topic that sets you up for success. Smart investors are super boring.
Can you describe your demographics?
Michael Katchen: 80 percent of our clients are under 45. Our clients range from 18 to 102 years old. Clients can invest $1,000 or $10 million. We cover a broad spectrum. Our values as a company means helping everyone get access to financial services. We have no account minimums. So if you want to start by investing $1,000 a month or $1,000 a week, or you have a big portfolio of $1 million or more, we’ll help you work towards your goals.
What’s the millennial culture in terms of investing?
Michael Katchen: Transparency is really important. Millennials get a bad rap that’s unwarranted. They often expect more from institutions they trust. Big banks are typically trusted by older generations because they’re big and old, not because they have their best interests at heart. Millennials are more discerning. They ask tougher questions. Also if you think about the history of investing, all they talk about is retirement. There’s a concept that you’ll retire at 65 and you must invest towards it. But retirement won’t be the same at 65. We won’t be doing it in the same way so we’re trying to find different ways to engage younger professionals in the same conversation about saving and investing. How do you get to them to save if retirement is not even on their radar? Retirement is more open now in terms of goals.
Talk about the Money Diaries….
Michael Katchen: People don’t talk about money and we wanted to make it OK to talk about it. So we hired a really entertaining writer to talk about those challenges and make it entertaining. What’s fascinating is that no matter how famous you might be or how poor you might be, you’re thinking about money. We have French Montana who talks about blowing tons of money at strip clubs. Everyone has challenges and struggles and they are deeply personal. My favorite was Anthony Bourdain. Before he made money, he hadn’t been paid in 10 years. He didn’t make a cent until his 40s. Everyone has trials and tribulations with money and trying to figure it out. Also it’s interesting what people value and what they spend money on. French Montana spends the most on strip clubs and charities.
This article originally appeared in Forbes.