Wealthsimple targeting older U.S. demographic

CEO says millennials are more reluctant to invest due to hefty student loan debt

TORONTO — Three months after expanding its millennial-targeted robo-adviser service to the United States, Wealthsimple is seeking to capture an older demographic south of the border due to the burden of student loan debt there.

CEO Michael Katchen said while he’s pleased with Wealthsimple’s early success in the U.S., he doesn’t expect to see 25- to 35-year-olds — the company’s key adopters in Canada — signing up for online investment management services in large numbers in the U.S. any time soon.

“If I said 25 to 35 in Canada has really been a sweet spot for us, (it is) maybe 35 to 45 in the U.S.,” he said.

Still, he added, since co-founding Toronto-based Wealthsimple about two-and-a-half years ago, “our pickup in the U.S. has actually been much faster than it ever was in Canada when we first launched the business.”

“In terms of new client numbers, we’re seeing growth that took us 18 months to get to in the Canadian business in just three months in the States,” he said, declining to specify how many clients and assets Wealthsimple has under management in the U.S.

Wealthsimple has more than $750 million in assets under administration and about 30,000 clients in Canada and the U.S.

Although student loan debt is an issue in Canada, Katchen said Wealthsimple’s anecdotal experience shows that in the U.S. it is an actual barrier to investing. “The reaction in the U.S. is often, ‘Oh amazing service, sounds great, but I’ve got 10 more years of paying down my student debt before I can even think about investing,’” he said.

Wealthsimple in part cites the higher cost of education in the U.S.; young Americans are graduating with more debt, making it harder for them to start investing.

The average Canadian student graduated with more than $28,000 in debt in 2015, according to the Canadian Federation of Students.

The average U.S. student debt for the class of 2016 is US$37,712, according to the National Association of Colleges and Employers.