Sharp - - GUIDE: MONEY - Keep­ing It Sim­ple Wealth­sim­ple CEO Michael Katchen on how fin­tech star­tups suc­ceed where the es­tab­lished play­ers fail

Toronto-based Wealth­sim­ple is lead­ing a pack of “robo-ad­vi­sors” that use soft­ware to build their clients' per­son­al­ized in­vest­ment port­fo­lios in just a few min­utes. Pow­ered by a sim­ple web­site that makes jokes about av­o­cado toast, it has courted a de­mo­graphic once dis­missed as in­vest­ment-averse: mil­len­ni­als. Newly ex­panded to the U.S. and U.K., the com­pany now man­ages over a bil­lion dol­lars — and isn’t plan­ning to sur­ren­der any of that cash to com­pet­ing robo-ad­vi­sors re­cently launched by RBC and BMO.

You’re a leader of Canada’s fin­tech move­ment. What’s your take on that term?

I hate it. It’s ap­plied so broadly that it means noth­ing. Tech­nol­ogy is not some sep­a­rate thing — it’s fun­da­men­tal to the way that you run any busi­ness to­day. And we don’t want to be quoted just against other fin­tech star­tups. We want to be main­stream. In the same way that no one says e-com­merce when talk­ing Ama­zon.

Ama­zon started re­shap­ing re­tail two decades ago. Why was the fi­nan­cial ser­vices in­dus­try so late to the tech revo­lu­tion?

Be­cause banks are in­cred­i­bly daunt­ing as com­peti­tors. Very few com­pa­nies had the con­vic­tion, the cap­i­tal, and the cred­i­bil­ity to go up against them.

What changed?

Peo­ple’s ex­pec­ta­tions. We launched as Uber and Airbnb had found trac­tion chal­leng­ing es­tab­lished in­dus­tries, and peo­ple were start­ing to won­der why bank­ing still sucked. For a long time, there had been no room for bet­ter al­ter­na­tives be­cause banks had a mo­nop­oly on trust — no one would take a chance on a new com­peti­tor. But to­day’s young pro­fes­sion­als lived through the fi­nan­cial cri­sis, which shook the per­spec­tive that banks should be trusted just be­cause they’re big and old.

How have the big banks re­acted to your suc­cess?

When we launched, their at­ti­tude was dis­mis­sive. They thought that, if we ever went any­where, they’d just launch their own play­ers and crush us. Now that they have in­tro­duced di­rect com­peti­tors, and we’ve still man­aged to grow our share of the mar­ket, there’s a new re­spect.

Why aren’t their com­peti­tors tak­ing off?

If a bank has a client sit­ting in a mu­tual fund who’s pay­ing a 2 per cent fee, it’s hard for that bank to can­ni­bal­ize it­self by in­tro­duc­ing a dig­i­tal ad­vice of­fer­ing that has a much lower fee. We don’t have that prob­lem — we can out-ex­e­cute them.

What’s still left to fix in the fi­nan­cial in­dus­try?

I have found a lot of in­spi­ra­tion from Asia. There isn’t the same legacy there that there is here of or­ga­niz­ing things into prod­uct lines. If you’re an in­vest­ment client of a bank who’s now ap­ply­ing for a mort­gage, those shouldn’t feel like com­pletely sep­a­rate ex­pe­ri­ences.

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