Today Wealthsimple announced it is selling it’s block of US accounts to US-based robo-advisor Betterment, and will no longer support US accounts. While there’s not a lot of commentary to read around the strategic rationale, it exemplifies a core design principle that we see among fintech winners: it’s better to focus on someone than everyone.
Doubling down on the Canadian consumer will allow Wealthsimple to tailor their experience to Canadians without the complications of serving the needs of two very different countries in terms of regulatory bodies, legislation, products and tax implications. Their recent move into tax planning software (through the acquisition Canadian software company SimpleTax) is consistent with a strategy of building a diverse product platform aimed at a specific geography.
Tackling new countries is likely best served with a dedicated focus, and the financial services sector happens to be one of the toughest ones in which to break new geographic ground. Revolut’s lengthy approach to expanding to Canada illustrates this.
The withdrawal of Wealthsimple from the US market is also not entirely surprising given their ownership: Power Corporation of Canada (owner of Canada Life, among many others) has a huge 77.4% ownership stake. Power Corp. is also an investor in neobank Koho Financial, which we’ve included in our LARI Report: Digital Banking – Opening an account digitally ranges from easy to egregious.
The Toronto-based FinTech company, which provides robo-advice as well as access to financial advisors, has been rapidly expanding the product line, adding new capabilities for savings and spending, crypto investing, and now peer-to-peer payments. According to The Globe and Mail, Wealthsimple accounted for 43 percent of new trading accounts opened in January, more than any other Canadian brokerage.